INSURED MUN SEC TR SER 26 NY NAV INS SER 6 & NJ NAV INS SER, 485BPOS, 1994-04-21

INSURED MUN SEC TR SER 26 NY NAV INS SER 6 & NJ NAV INS SER
485BPOS, 1994-04-21

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As filed with the Securities and Exchange Commission on April 21, 1994

Registration No. 33-37849 *

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

POST-EFFECTIVE AMENDMENT
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:

INSURED MUNICIPAL SECURITIES TRUST, SERIES 26, NEW YORK
NAVIGATOR INSURED SERIES 6 & NEW JERSEY NAVIGATOR INSURED SERIES
3; NEW YORK NAVIGATOR INSURED SERIES 7 & NEW JERSEY NAVIGATOR
INSURED SERIES 4; AND SERIES 28, NEW YORK NAVIGATOR INSURED
SERIES 10 & NEW JERSEY NAVIGATOR INSURED SERIES 7.

B. Name of depositors: BEAR, STEARNS & CO. INC.
GRUNTAL & CO., INCORPORATED

C. Complete address of depositors' principal executive offices:

Bear Stearns & Co., Inc. Gruntal & Co., Incorporated
245 Park Avenue 14 Wall Street
New York, NY 10167 New York, NY 10005

D. Name and complete address of agent for service:

PETER J. DeMARCO ROBERT SABLOWSKY
Managing Director Executive Vice-President
Bear, Stearns & Co. Inc. Gruntal & Co.,
245 Park Avenue Incorporated
New York, NY 10167 14 Wall Street
New York, NY 10005

Copy of comments to:
MICHAEL R. ROSELLA, ESQ.
Battle Fowler
280 Park Avenue
New York, NY 10017
(212) 856-6858

It is proposed that this filing become effective (check appropriate box)

/ / immediately upon filing pursuant to paragraph (b) of Rule 485
/ x / on April 29, 1994 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 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 Insured
Municipal Securities Trust, Series 26, New York Navigator Insured
Series 6 & New Jersey Navigator Insured Series 3; New York Navigator
Insured Series 7 & New Jersey Navigator Insured Series 4; and
Series 28, New York Navigator Insured Series 10 and New Jersey
Navigator Insured Series 7, covered by prospectuses heretofore filed
as part of separate registration statements on Form S-6 (Registration
Nos. 33-37849, 33-38847 and 33-44912, respectively) under the Act.
This filing constitutes Post-Effective Amendment No. 3 for Series 26,
New York Navigator Insured Series 6 & New Jersey Navigator Insured
Series 3, and New York Navigator Insured Series 7 & New Jersey
Navigator Insured Series 4 and Post-Effective Amendment No. 2 for
Series 28, New York Navigator Insured Series 10 and New Jersey
Navigator Insured Series 7.

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST
SERIES 26, NEW YORK NAVIGATOR INSURED SERIES 6
AND NEW JERSEY NAVIGATOR INSURED SERIES 3,
NEW YORK NAVIGATOR INSURED SERIES 7 AND
NEW JERSEY NAVIGATOR INSURED SERIES 4,
SERIES 28, NEW YORK NAVIGATOR INSURED SERIES 10 AND
NEW JERSEY NAVIGATOR INSURED SERIES 7

CROSS-REFERENCE SHEET

Pursuant to Rule 404 of Regulation C
under the Securities Act of 1933

(Form N-8B-2 Items required by Instruction as
to the Prospectus in Form S-6)

Form N-8B-2 Form S-6
Item Number Heading in Prospectus

I. Organization and General Information

1. (a) Name of trust................... Front Cover of Prospectus
(b) Title of securities issued...... "
2. Name and address of each depositor.. The Sponsors
3. Name and address of trustee......... The Trustee
4. Name and address of principal
underwriters...................... The Sponsors
5. State of organization of trust...... Organization
6. Execution and termination of
trust agreement................... Trust Agreement, Amendment and
Termination
7. Changes of name..................... Not Applicable
8. Fiscal year......................... "
9. Litigation.......................... None

II. General Description of the Trust and Securities of the Trust

10. (a) Registered or bearer
securities...................... Certificates
(b) Cumulative or distributive
securities...................... Interest and Principal
Distributions
(c) Redemption...................... Trustee Redemption
(d) Conversion, transfer, etc....... Certificates, Sponsors
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
Sponsors, 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, Sponsors' and
Underwriters' Profits, Total
Reinvestment Plan, Trust
Expenses
and Charges
(b) Certain information regarding
periodic payment certificates... Not Applicable
(c) Certain percentages............. Summary of Essential
Information,
Offering Price, Total
Reinvestment
Plan
(d) Price differences............... Volume and Other Discounts
(e) Other loads, fees, expenses..... Certificates
(f) Certain profits receivable
by depositors, principal
underwriters, trustee or
affiliated persons.............. Sponsors' 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,
Sponsors' Repurchase Price and
Redemption Price, Sponsors
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 Sponsors
21. Loans to security holders........... Not Applicable
22. Limitations on liability............ The Sponsors, The Trustee,
The Evaluator
23. Bonding arrangements................ Part II--Item A
24. Other material provisions
of trust agreement................ Not Applicable

III. Organization, Personnel and Affiliated Persons of Depositor

25. Organization of depositor........... The Sponsors
26. Fees received by depositor.......... Not Applicable
27. Business of depositor............... The Sponsors
28. Certain information as to
officials and affiliated
persons of depositor.............. Part II--Item C
29. Voting securities of depositor...... Not Applicable
30. Persons controlling depositor....... "
31. Payments by depositor for certain
services rendered to trust........ "
32. Payment by depositor for certain
other services rendered to trust.. "
33. Remuneration of employees of
depositor for certain services
rendered to trust................... "
34. Remuneration of other persons for
certain services rendered to trust.. "

IV. Distribution and Redemption of Securities

35. Distribution of trust's
securities by states.............. Distribution of Units
36. Suspension of sales of
trust's securities................ Not Applicable
37. Revocation of authority
to distribute..................... "
38. (a) Method of distribution.......... Distribution of Units, Total
Reinvestment Plan
(b) Underwriting agreements......... "
(c) Selling agreements.............. "
39. (a) Organization of principal
underwriters.................... The Sponsors
(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 Sponsors
(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,
Sponsors' 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,
Sponsors' Repurchase Price and
Redemption Price, Sponsors
Repurchase, Trustee Redemption

V. Information Concerning the Trustee or Custodian

48. Organization and regulation
of trustee........................ The Trustee
49. Fees and expenses of trustee........ Trust Expenses and Charges
50. Trustee's lien...................... "

VI. Information Concerning Insurance of Holders of Securities

51. Insurance of holders of
trust's securities................ Not Applicable

VII. Policy of Registrant

52. (a) Provisions of trust agreement
with respect to selection or
elimination of underlying
securities...................... Objectives, Portfolio, Portfolio
Supervision
(b) Transactions involving
elimination of underlying
securities...................... Not Applicable
(c) Policy regarding substitution
or elimination of underlying
securities...................... Objectives, Portfolio, Portfolio
Supervision, Substitution of
Bonds
(d) Fundamental policy not
otherwise covered............... Not Applicable
53. Tax status of trust................. Tax Status

VIII. Financial and Statistical Information

54. Trust's securities during
last ten years.................... Not Applicable
55. Hypothetical account for issuers
of periodic payment plans......... "
56. Certain information regarding
periodic payment certificates..... "
57. Certain information regarding
periodic payment plans............ "
58. Certain other information
regarding periodic payment plans.. "
59. Financial Statements
(Instruction 1(c) to Form S-6)...... Statement of Financial Condition
<PAGE>

NOTE: Part A of This Prospectus May Not Be
Distributed Unless Accompanied by Part B.

INSURED MUNICIPAL SECURITIES TRUST

SERIES 26

The Trust is a unit investment trust designated Series 26 ("Insured
Municipal Trust") with an underlying portfolio of long-term insured 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 under
existing law but may be subject to state and local taxes. Capital gains
are subject to tax. (See "Tax Status" and "The Trust--Portfolio" in
Part B of this Prospectus.) The Sponsors are Bear, Stearns & Co. Inc. 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 December 31, 1993 (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 April 29, 1994

<PAGE>

THE TRUST. The Trust is a unit investment trust formed to preserve
capital and to provide interest income (including, where applicable,
earned original issue discount) which, in the opinions of bond counsel to
the respective issuers, is, with certain exceptions, currently exempt from
regular federal income tax under existing law through investment in a
fixed, diversified portfolio of long-term insured bonds (the "Bonds")
issued by or on behalf of states, municipalities and public authorities
which, because of irrevocable insurance, are rated "AAA" by Standard &
Poor's Corporation. Although the Supreme Court has determined that
Congress has the authority to subject interest on bonds such as the Bonds
in the Trust to regular federal income taxation, existing law excludes
such interest from regular federal income tax. Such interest income may,
however, be subject to the federal corporate alternative minimum tax and
to state and local taxes. (See "Tax Status" in Part B of this
Prospectus.) For a list of ratings on the Evaluation Date, see
"Portfolio." Some of the Bonds may be "Zero Coupon Bonds", which are
original issue discount bonds that provide for payment at maturity at par
value, but do not provide for the payment of any current interest. Some
of the Bonds in the Trust have been issued with optional refunding or
refinancing provisions ("Refunded Bonds") whereby the issuer of the Bond
has the right to call such Bond prior to its stated maturity date (and
other than pursuant to sinking fund provisions) and to issue new bonds
("Refunding Bonds") in order to finance the redemption. Issuers typically
utilize refunding calls in order to take advantage of lower interest rates
in the marketplace. Some of these Refunded Bonds may be called for
redemption pursuant to pre-refunding provisions ("Pre-Refunded Bonds")
whereby the proceeds from the issue of the Refunding Bonds are typically
invested in government securities in escrow for the benefit of the holders
of the Pre-Refunded Bonds until the refunding call date. Usually, Pre-
Refunded Bonds will bear a triple-A rating because of this escrow. The
issuers of Pre-Refunded Bonds must call such Bonds on their refunding call
date. Therefore, as of such date, the Trust will receive the call price
for such bonds but will cease receiving interest income with respect to
them. For a list of those Bonds which are Pre-Refunded Bonds, if any, as
of the Evaluation Date, see "Notes to Financial Statements" in this
Part A. Some of the Bonds in the portfolio may have been purchased at an
aggregate premium over par. All of the Bonds in the Trust were rated
"AAA" by Standard & Poor's Corporation at the time originally deposited in
the Trust. This rating results from insurance relating only to the Bonds
in the Trust and not to Units of the Trust. The insurance does not remove
market risk, as it does not guarantee the market value of the Units. For
a discussion of the significance of such ratings, see "Description of Bond
Ratings" in Part B of this Prospectus, and for a list of ratings on the
Evaluation Date see the "Portfolio." The payment of interest and
preservation of capital are, of course, dependent upon the continuing
ability of issuers of the Bonds or the insurers thereof to meet their
obligations. There can be no assurance that the Trust's investment
objectives will be achieved. Investment in the Trust should be made with
an understanding of the risks which an investment in long-term fixed rate
debt obligations may entail, including the risk that the value of the
underlying portfolio will decline with increases in interest rates, and
that the value of Zero Coupon Bonds is subject to greater fluctuation than
coupon bonds in response to changes in interest rates. Each Unit in the
Trust represents a 1/4473rd undivided interest in the principal and net
income of the Trust. The principal amount of Bonds deposited in the Trust
per Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered
hereby are issued and outstanding Units which have been purchased by the
Sponsor in the secondary market.

INSURANCE. Each of the Bonds in the Trust is insured by a municipal
bond guaranty insurance policy obtained by either the Sponsor ("Sponsor-
Insured Bonds") or the issuers of the Bonds ("Pre-Insured Bonds") and
issued by one of the insurance companies (the "Insurance Companies"),
described under "Insurance on the Bonds" in Part B of this Prospectus,
covering scheduled payment of principal thereof and interest thereon when
such amounts shall become due for payment but shall not have been paid by
the issuer or any other insurer thereof. The insurance, unless obtained
by Municipal Bond Investors Assurance Corporation ("MBIA Corp."), will
also cover any accelerated payments of principal and the increase in
interest payments or premiums, if any, payable upon mandatory redemption
of the Bonds if interest on any Bonds is ultimately deemed to be subject
to regular federal income tax. Insurance obtained from MBIA Corp. only
guarantees the accelerated payments required to be made by or on behalf of
an issuer of small industrial revenue bonds and pollution control bonds if
there is an event which results in the loss of tax-exempt status of the
interest on such Bonds, including principal, interest or premium payments,
if any, as and when required. To the extent, therefore, that Bonds are
only covered by insurance obtained from MBIA Corp., such Bonds will not be
covered for the accelerated payments required to be made by or on behalf
of an issuer of other than small industrial revenue bonds or pollution
control revenue bonds if there occurs an event which results in the loss
of tax-exempt status of the interest on such Bonds. None of the insurance
will cover accelerated payments of principal or penalty interest or
premiums unrelated to taxability of interest on the Bonds (although the
insurance, including insurance obtained by MBIA Corp., does guarantee
payment of principal and interest in such amounts and at such times as
such amounts would have been due absent such acceleration). The insurance
relates only to the prompt payment of principal of and interest on the
securities in the portfolio, and does not remove market risks or guarantee
the market value of the Units in the Trust. The terms of the insurance
are more fully described under "Insurance on the Bonds" in Part B of this
Prospectus. For a discussion of the effect of an occurrence of nonpayment
of principal or interest on any Bonds in the Trust, see "Portfolio
Supervision" in Part B of this Prospectus. No representation is made
herein as to any Bond insurer's ability to meet its obligations under a
policy of insurance relating to any of the Bonds. In addition, investors
should be aware that, subsequent to the Date of Deposit, the rating of the
claims paying ability of the insurer of an underlying Bond may be
downgraded, which may result in a downgrading of the rating of the Units
in the Trust. The approximate percentage of the aggregate principal
amount of the portfolio that is insured by each insurance company is as
follows: AMBAC Indemnity Corp. ("AMBAC"), 18.6%; Capital Guaranty
Insurance Company ("Capital Guaranty") 17.6%; Financial Guaranty Insurance
Company ("Financial Guaranty"), 11.1% Financial Security Assurance Inc.
("Financial Security") 26.1%; Municipal Bond Insurance Association ("MBIA,
Inc."), 11.1%; and MBIA Corp., 15.5%.

PUBLIC OFFERING PRICE. The secondary market Public Offering Price
of each Unit is equal to the aggregate bid price of the Bonds in the Trust
divided by the number of Units outstanding, plus a sales charge of 4.9% of
the Public Offering Price, or 5.152% of the net amount invested in Bonds
per Unit. In addition, accrued interest to the expected date of
settlement is added to the Public Offering Price. If Units had been
available for sale on the Evaluation Date, the Public Offering Price per
Unit would have been $1,168.81 plus accrued interest of $12.04 under the
monthly distribution plan, $17.82 under the semi-annual distribution plan
and $17.82 under the annual distribution plan, for a total of $1,180.85,
$1,186.63 and $1,186.63, respectively. The Public Offering Price per Unit
can vary on a daily basis in accordance with fluctuations in the aggregate
bid price of the Bonds. (See "Public Offering--Offering Price" in Part B
of this Prospectus.)

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. The rate
of return on an investment in Units of the Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".

Estimated Long Term Return is calculated by: (1) computing the
yield to maturity or to an earlier call date (whichever results in a lower
yield) for each Bond in the Trust's portfolio in accordance with accepted
bond practices, which practices take into account not only the interest
payable on the Bond but also the amortization of premiums or accretion of
discounts, if any; (2) calculating the average of the yields for the Bonds
in the Trust's portfolio by weighing each Bond's yield by the market value
of the Bond and by the amount of time remaining to the date to which the
Bond is priced (thus creating an average yield for the portfolio of the
Trust); and (3) reducing the average yield for the portfolio of the Trust
in order to reflect estimated fees and expenses of the Trust and the
maximum sales charge paid by investors. The resulting Estimated Long Term
Return represents a measure of the return to investors earned over the
estimated life of the Trust. (For the Estimated Long Term Return to
Certificateholders under the monthly, semi-annual and annual distribution
plans, see "Summary of Essential Information".)

Estimated Current Return is a measure of the Trust's cash flow.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price per Unit. In
contrast to the Estimated Long Term Return, the Estimated Current Return
does not take into account the amortization of premium or accretion of
discount, if any, on the Bonds in the portfolio of the Trust. Moreover,
because interest rates on Bonds purchased at a premium are generally
higher than current interest rates on newly issued bonds of a similar type
with comparable rating, the Estimated Current Return per Unit may be
affected adversely if such Bonds are redeemed prior to their maturity.

The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the
Evaluator applicable to the Trust and with the redemption, maturity, sale
or other disposition of the Bonds in the Trust. The Public Offering Price
will vary with the changes in the bid prices of the Bonds. Therefore,
there is no assurance that the present Estimated Current Return or
Estimated Long Term Return will be realized in the future. (For the
Estimated Current Return to Certificateholders under the monthly, semi-
annual and annual distribution plans, see "Summary of Essential
Information". See "Estimated Long Term Return and Estimated Current
Return" in Part B of this Prospectus.)

A schedule of cash flow projections is available from the Sponsor
upon request.

DISTRIBUTIONS. Distributions of interest income, less expenses,
will be made by the Trust either monthly, semi-annually or annually
depending upon the plan of distribution applicable to the Unit purchased.
A purchaser of a Unit in the secondary market will initially receive
distributions in accordance with the distribution plan chosen by the prior
owner of such Unit and may thereafter change the plan as provided under
"Interest and Principal Distributions" in Part B of the Prospectus.
Distributions of principal, if any, will be made semi-annually on June 15
and December 15 of each year. (See "Rights of Certificateholders--
Interest and Principal Distributions" in Part B of this Prospectus. For
estimated monthly, semi-annual and annual interest distributions, see
"Summary of Essential Information.")

MARKET FOR UNITS. The Sponsor, although not obligated to do so,
presently maintains and intends to continue to maintain a secondary market
for the Units at prices based on the aggregate bid price of the Bonds in
the Trust portfolio. The reoffer price will be based on the aggregate bid
price of the Bonds plus a sales charge of 4.9% of the Public Offering
Price (5.152% of the net amount invested), plus net accrued interest. If
a market is not maintained a Certificateholder will be able to redeem his
Units with the Trustee at a price also based on the aggregate bid price of
the Bonds. (See "Liquidity--Sponsor Repurchase" and "Public Offering--
Offering Price" in Part B of this Prospectus.)

TOTAL REINVESTMENT PLAN. Certificateholders under the semi-annual
and annual plans of distribution have the opportunity to have all their
regular interest distributions, and principal distributions, if any,
reinvested in available series of "Insured Municipal Securities Trust" or
"Municipal Securities Trust." (See "Total Reinvestment Plan" in Part B of
this Prospectus. Residents of Texas, see "Total Reinvestment Plan for
Texas Residents" in Part B of this Prospectus.) The Plan is not designed
to be a complete investment program.

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST
SERIES 26

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1993

Date of Deposit: January 31, 1991 Minimum Principal Distribution:
Principal Amount of Bonds ...$4,515,000 $1.00 per Unit.
Number of Units .............4,473
Fractional Undivided Inter- Weighted Average Life to
est in Trust per Unit .....1/4473 Maturity:
Principal Amount of 11.4 Years.
Bonds per Unit ............$1,009.39 Minimum Value of Trust:
Secondary Market Public Trust may be terminated if
Offering Price** value of Trust is less than
Aggregate Bid Price $2,000,000 in principal amount
of Bonds in Trust .......$4,971,901+++ of Bonds.
Divided by 4,473 Units ....$1,111.54 Mandatory Termination Date:
Plus Sales Charge of 4.9% The earlier of December 31,
of Public Offering Price $57.27 2040 or the disposition of the
Public Offering Price last Bond in the Trust.
per Unit ................$1,168.81+ Trustee***: United States Trust
Redemption and Sponsors' Company of New York.
Repurchase Price Trustee's Annual Fee: Monthly
per Unit ..................$1,111.54+ plan $.96 per $1,000; semi-
+++ annual plan $.50 per $1,000;
++++ and annual plan is $.32 per
Excess of Secondary Market $1,000.
Public Offering Price Evaluator: Kenny S&P Evaluation
over Redemption and Services.
Sponsors' Repurchase Evaluator's Fee for Each
Price per Unit ............$57.27++++ Evaluation: Minimum of $8 plus
Difference between Public $.25 per each issue of Bonds in
Offering Price per Unit excess of 50 issues (treating
and Principal Amount per separate maturities as separate
Unit Premium/(Discount) ...$159.42 issues).
Evaluation Time: 4:00 p.m. Sponsors: Bear, Stearns & Co.
New York Time. Inc.
& Gruntal & Co., Incorporated.
Sponsors' Annual Fee: Maximum of
$.25 per $1,000 principal
amount of Bonds (see "Trust
Expenses and Charges" in Part B
of this Prospectus).

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# .........$70.77 $70.77 $70.77
Less estimated annual fees and
expenses ............................ 2.11 1.48 1.27
Estimated net annual interest ______ ______ ______
income (cash)# ......................$68.66 $69.29 $69.50
Estimated interest distribution# ...... 5.72 34.64 69.50
Estimated daily interest accrual# ..... .1907 .1924 .1930
Estimated current return#++ ........... 5.87% 5.93% 5.95%
Estimated long term return++ .......... 3.98% 4.03% 4.05%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15

<PAGE>
* The Date of Deposit is the date on which the Trust Agreement was
signed and the deposit of the Bonds with the Trustee made.

** For information regarding offering price per Unit and applicable
sales charge under the Total Reinvestment Plan, see "Total
Reinvestment Plan" in Part B of this Prospectus.

*** The Trustee maintains its corporate trust office at 770 Broadway,
New York, New York 10003 (tel. no.: 1-800-428-8890). For
information regarding redemption by the Trustee, see "Trustee
Redemption" in Part B of this Prospectus.

+ Plus accrued interest to the expected date of settlement
(approximately five business days after purchase) of $12.04 monthly,
$17.82 semi-annually and $17.82 annually.

++ The estimated current return and estimated long term return are
increased for transactions entitled to a discount (see "Employee
Discounts" in Part B of this Prospectus), and are higher under the
semi-annual and annual options due to lower Trustee's fees and
expenses.

+++ Based solely upon the bid side evaluation of the underlying Bonds
(including, where applicable, undistributed cash from the principal
account). Upon tender for redemption, the price to be paid will be
calculated as described under "Trustee Redemption" in Part B of this
Prospectus.

++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.

# Does not include income accrual from original issue discount bonds,
if any.

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1993

DESCRIPTION OF PORTFOLIO

The portfolio of the Trust consists of 13 issues representing
obligations of issuers located in 9 states and the District of Columbia.
The Sponsors have not participated as a sole underwriter or manager, co-
manager or member of an underwriting syndicate from which any of the
initial aggregate principal amount of the Bonds were acquired. None of
the Bonds are obligations of state and local housing authorities;
approximately 21% are hospital revenue bonds; none were issued in
connection with the financing of nuclear generating facilities; and none
are "mortgage subsidy" bonds. All of the Bonds in the Trust are subject
to redemption prior to their stated maturity dates pursuant to sinking
fund or optional 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). Two of the issues
representing $380,000 of the principal amount of the Bonds are general
obligation bonds. All 11 of the remaining issues representing $4,135,000
of the principal amount of the Bonds are payable from the income of a
specific project or authority and are not supported by the issuer's power
to levy taxes. The portfolio is divided for purpose of issue as follows:
Electric 1, Hospital 3, School District 2, Transit Facility 2, Waste
Water 1, Water 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 December 31, 1993, $380,000 (approximately 8.4% of the
aggregate principal amount of the Bonds) were original issue discount
bonds. Of these original issue discount bonds, $250,000 (approximately
5.5% of the aggregate principal amount of the Bonds) were Zero Coupon
Bonds. Zero Coupon Bonds do not provide for the payment of any current
interest and provide for payment at maturity at par value unless sooner
sold or redeemed. The market value of Zero Coupon Bonds is subject to
greater fluctuations than coupon bonds in response to changes in interest
rates. Approximately 4.4% of the aggregate principal amount of the Bonds
in the Trust were purchased at a "market" discount from par value at
maturity, approximately 81.6% were purchased at a premium and
approximately 5.6% were purchased at par. For an explanation of the
significance of these factors see "Discount and Zero Coupon Bonds" in
Part B of this Prospectus.

None of the Bonds in the Trust are subject to the federal individual
alternative minimum tax under the Tax Reform Act of 1986. See "Tax
Status" in Part B of this Prospectus.

<PAGE>
FINANCIAL AND STATISTICAL INFORMATION

Selected data for each Unit outstanding for the periods listed below:

Distribu-
tions of
Distributions of Interest Principal
During the Period (per Unit) During
Net Asset * Semi- the
Units Out- Value Monthly Annual Annual Period
Period Ended standing Per Unit Option Option Option (Per Unit)

December 31, 1991 5,000 $1,038.50 $45.50 $45.79 $45.84 -0-
December 31, 1992 5,000 1,074.00 68.76 69.36 69.55 -0-
December 31, 1993 4,473 1,128.64 68.70 69.33 69.53 -0-

* Net Asset Value per Unit is calculated by dividing net assets as
disclosed in the "Statement of Net Assets" by the number of Units
outstanding as of the date of the Statement of Net Assets. See
Note 5 of Notes to Financial Statements for a description of the
components of Net Assets.

<PAGE>

Independent Auditors' Report

The Sponsor, Trustee and Certificateholders
Insured Municipal Securities Trust, Series 26:

We have audited the accompanying statement of net assets, including
the portfolio, of Insured Municipal Securities Trust, Series 26 as of
December 31, 1993, and the related statements of operations, and changes
in net assets for each of the years in the two year period then ended,
and for the period January 31, 1991 (date of deposit) to December 31,
1991. These financial statements are the responsibility of the Trustee
(see note 2). Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1993, by correspondence with the
Trustee. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Insured
Municipal Securities Trust, Series 26 as of December 31, 1993, and
the results of its operations and the changes in its net assets for
each of the years in the two year period then ended, and for the
period January 31, 1991 to December 31, 1991 in conformity with
generally accepted accounting principles.

KPMG Peat Marwick

New York, New York
March 31, 1994
<PAGE>

Statement of Net Assets

December 31, 1993

Investments in marketable securities,
at market value (cost $4,384,628) $ 4,987,995

Excess of other assets over
total liabilities 60,402
----------

Net assets (4,473 units of fractional
undivided interest outstanding,
$1,128.64 per unit) $ 5,048,397
==========

See accompanying notes to financial statements.

<PAGE>

<TABLE>
Statements of Operations
<CAPTION>
For the Period
January 31, 1991
Years ended December 31, (date of deposit)
1993 1992 to December 31, 1991
-------- --------- --------------------
<S> <C> <C> <C>
Investment income - interest $ 337,857 357,759 325,911
-------- --------- ---------

Expenses:
Trustee's fees 5,482 5,503 3,271
Evaluator's fees 2,372 2,192 800
Sponsor's advisory fee 1,250 1,149 1,149
-------- --------- ---------

Total expenses 9,104 8,844 5,220
-------- --------- ---------

Investment income, net 328,753 348,915 320,691

Realized & unrealized gain
on investments:
Unrealized appreciation
for the year 207,795 172,858 222,714
Realized gain on bonds
sold or called 53,054 - -
-------- --------- ---------

Net increase in net
assets resulting
from operations $ 589,602 521,773 543,405
======== ========= =========

See accompanying notes to financial statements.
</TABLE>
<PAGE>

<TABLE>

Statements of Changes in Net Assets
<CAPTION>
For the Period
January 31, 1991
Years ended December 31, (date of deposit)
----------------------------------------------------
1993 1992 to December 31, 1991
---------- ----------- ---------------------
<S> <C> <C> <C>
Operations:
Investment income, net $ 328,753 $ 348,915 320,691
Realized gain on bonds
sold or called 53,054 - -
Unrealized appreciation
for the year 207,795 172,858 222,714
---------- ----------- -----------

Net increase in net
assets resulting
from operations 589,602 521,773 543,405
---------- ----------- -----------

Distributions:
To Certificateholders:
Investment income 326,301 344,279 228,621
To Sponsor of accrued interest
to date of settlement - - 6,409

Redemptions:
Interest 8,622 - -
Principal 576,259 - -
---------- ----------- -----------

Total distributions and redemptions 911,182 344,279 235,030

Total increase (decrease) (321,580) 177,494 308,375

Net assets at beginning of period 5,369,977 5,192,483 4,884,108
---------- ----------- -----------

Net assets at end of year (including
undistributed net investment
income of $84,127 , and $90,297,
$85,661 respectively) 5,048,397 $ 5,369,977 5,192,483
========== =========== ===========

See accompanying notes to financial statements.
</TABLE>

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST, SERIES 26

Notes to Financial Statements

December 31, 1993, 1992 and 1991

(1) Organization

Insured Municipal Securities Trust, Series 26 (Trust) was organized
on January 31, 1991 by Bear Stearns & Co. Inc. and Gruntal & Co.,
Incorporated (Co-Sponsors) under the laws of the State of New York
by a Trust Indenture and Agreement, and is registered under the
Investment Company Act of 1940.

(2) Summary of Significant Accounting Policies

United States Trust Company of New York (Trustee) has custody of and
responsibility for the accounting records and financial statements of
the Trust and is responsible for establishing and maintaining a
system of internal control related thereto.

The Trustee is also responsible for all estimates of expenses and
accruals reflected in the Trust's financial statements. The
accompanying financial statements have been adjusted to record
the unrealized appreciation (depreciation) of investments and to
record interest income and expenses on the accrual basis.

The discount on the zero-coupon bonds is accreted by the interest
method over the respective lives of the bonds. The accretion of
such discount is included in interest income; however, it is not
distributed until realized in cash upon maturity or sale of the
respective bonds.

Investments are carried at market value which is determined by
either Standard & Poor's Corporation or Moody's Investors Service,
Inc. (Evaluator) as discussed in Footnotes to Portfolio. The
market value of the investments is based upon the bid prices for
the bonds at the end of the year, except that the market value on
the date of deposit represents the cost to the Trust based on
the offering prices for investments at that date. The difference
between cost (including accumulated accretion of original issue
discount on zero-coupon bonds) and market value is reflected as
unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains
(losses) from securities transactions are determined on the basis
of average cost of the securities sold or redeemed.

(3) Income Taxes

The Trust is not subject to Federal income taxes as provided for
by the Internal Revenue Code.

(4) Trust Administration

The fees and expenses of the Trust are incurred and paid on the basis
set forth under "Trust Expenses and Charges" in Part B of this
Prospectus.

The Trust Indenture and Agreement provides for interest distributions
as often as monthly (depending upon the distribution plan elected by
the Certificateholders).

The Trust Indenture and Agreement further requires that principal
received from the disposition of bonds, other than those bonds sold
in connection with the redemption of units, be distributed to
Certificateholders.

See "Financial and Statistical Information" in Part A of this
Prospectus for the amounts of per unit distributions during the periods
ended December 31, 1993, 1992 and 1991.

The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. 527 units were redeemed by the Trust during the year
ended, December 31, 1993. No units were redeemed by the Trust during
the periods ended December 31, 1992 and 1991.

(5) Net Assets

At December 31, 1993, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $ 5,135,760
Less initial gross underwriting commission ( 251,652)
4,884,108

Accumulated cost of bonds sold or called (507,111)
Net unrealized appreciation 603,367
Undistributed net investment income 84,127
Distributions in excess of proceeds
from bonds sold or called (16,094)

Total $ 5,048,397

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 5,000 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 $ 7,631.
<PAGE>

<TABLE>

INSURED MUNICIPAL SECURITIES TRUST, SERIES 26

Portfolio
December 31, 1993

Port- Aggregate Coupon Rate/ Redemption Feature
folio Principal Name of Issuer Ratings Date(s) of S.F.--Sinking Fund Market
No. Amount and Title of Bonds (1) Maturity(2) Ref.--Refunding (2) (7) Value(3)
- ---- ---------- --------------------- ------- ------------ ----------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 $ 200,000 Birmingham Ala. AAA 7.000% 1/01/16 @ 100 S.F. $ 221,204
Baptist Med. Cntr. 1/01/2021 1/01/01 @ 102 Ref.
Spec. Care Facs.
Fincg. Auth. Rev.
Bonds (The Baptist
Med. Cntrs.) Series
1991A (MBIA Corp.)

2 540,000 Chicago Ill. Waste AAA 7.200 11/15/09 @ 100 S.F. 635,359
Wtr. Transmission 11/15/2019 11/15/99 @ 102 Ref.
Rev. Bonds Series
1989 (AMBAC) (5)

3 500,000 Chicago Ill. Schl. AAA 7.750 6/01/06 @ 100 S.F. 559,620
Finc. Auth. Rfndg. 6/01/2009 6/01/96 @ 102 Ref.
Bonds Series B (MBIA
Corp.) (5)

4 500,000 Ind. Hlth. Fac. AAA 7.750 8/15/07 @ 100 S.F. 606,650
Fincg. Auth. Hosp. 8/15/2020 8/15/00 @ 102 Ref.
Rev. Bonds
(Bartholomew Cnty.
Hosp. Prjt.) Series
1990 (Capital
Guaranty) (5)

5 300,000 Mass. State Hlth. & AAA 7.500 10/01/04 @ 100 S.F. 340,500
Ed. Facs. Auth. Rev. 10/01/2008 10/01/98 @ 102 Ref.
Bonds No. Eastrn
Univ. Issue Series B
(AMBAC)

6 500,000 Mass Bay Trans. Auth. AAA 7.650 8/01/05 @ 100 S.F. 592,470
Certs. of Part 1990 8/01/2015 8/01/00 @ 102 Ref.
Series A (Financial
Security)

7 295,000 Centennial Minn. AAA 7.150 No Sinking Fund 340,763
Indpndnt. Schl. 2/01/2011 2/01/00 @ 100 Ref.
Dstrct. No. 12 Gen.
Oblig. Schl. Bldg.
Rev. Bonds Series
1991A (Capital
Guaranty) (5)

8 130,000 City of N.Y. Gen. AAA 6.000 No Sinking Fund 135,672
Oblig. Rev. Bonds 8/01/2017 8/01/97 @ 100 Ref.
Fiscal 1990 Series A
(Financial Security)

9 250,000 City of N.Y. Gen. AAA 7.250 No Sinking Fund 287,475
Oblig. Rev. Bonds 3/15/2019 3/15/00 @ 101.5 Ref.
Fiscal 1990 Series A
(Financial Security)

10 300,000 N.Y. City Trans. AAA 7.500 1/01/11 @ 100 S.f. 356,862
Auth. Trans. Facs. 1/01/2020 1/01/00 @ 102 Ref.
Rev. Bonds (Livington
Plaza Prjt.) Series
1990 (Financial
Security) (5)

11 500,000 N.Y. City Muni. Wtr. AAA 7.625 6/15/14 @ 100 S.F. 581,929
Finc. Auth. Wtr. & 6/15/2017 6/15/98 @ 101.5 Ref.
Swr. Sys. Rev. Bonds
Fiscal 1989 B
(Financial Guaranty)
(5)

12 250,000 Wisc. Hlth. & Ed. AAA 7.125 10/01/06 @ 100 S.F. 280,633
Facs. Auth. Rev. 10/01/2019 10/01/99 @ 102 Ref.
Bonds (Srs. of The
Sorrowful-Ministry
Corp.) Series 1990 B
(MBIA Corp.)

13 250,000 Redding Cal. Elec. AAA 0.000 7/01/15 @ 75.356 S.F. 48,858
Sys. Rev. Certs. of 7/01/2019 7/01/99 @ 24.786 Ref.
Part. Series 1989 A
(MBIA Corp.) (5)
---------- ---------
$ 4,515,000 $ 4,987,995
========== =========

See accompanying footnotes to portfolio and notes to financial statements.
</TABLE>

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST, SERIES 26

Footnotes to Portfolio

December 31, 1993

(1) All ratings are by Standard & Poor's Corporation. A brief
description of the ratings symbols and their meanings is set forth
under "Description of Bond Ratings" in Part B of this Prospectus.

(2) See "The Trust - Portfolio" in Part B of this Prospectus for an
explanation of redemption features. See "Tax Status" in Part B of
this Prospectus for a statement of the Federal tax consequences
to a Certificateholder upon the sale, redemption or maturity of
a bond.

(3) At December 31, 1993, the net unrealized appreciation of all
the bonds was comprised of the gross unrealized appreciation of
$603,367.

(4) The annual interest income, based upon bonds held at December 31,
1993, (excluding accretion of original issue discount on zero-coupon
bonds) to the Trust is $316,585.

(5) The bonds have been prerefunded and will be redeemed at the next
refunding call date.

(6) Bonds sold or called after December 31, 1993 are noted in a
footnote "Changes in Trust Portfolio" under "Description of Portfolio"
in Part A of this Prospectus.

(7) The Bonds may also be subject to other calls, which may be
permitted or required by events which cannot be predicted (such as
destruction, condemnation, termination of a contract, or receipt of
excess or unanticipated revenues).
<PAGE>

NOTE: Part A of This Prospectus May Not Be
Distributed Unless Accompanied by Part B.

INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED

SERIES 6

The Trust is a unit investment trust designated Series 6 ("New
York Navigator Trust") with an underlying portfolio of long-term insured
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 under existing law and from New York State and City
personal income tax. Capital gains are subject to tax. (See "Tax Status"
and "The Trust--Portfolio" in Part B of this Prospectus.) The Sponsors
are Bear, Stearns & Co. Inc. 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.

Investors should retain both parts of this
Prospectus for future reference.

Prospectus Part A Dated October 29, 1993

<PAGE>

THE TRUST. The Trust is a unit investment trust and was formed to
preserve capital and to provide interest income (including 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 and from state and local taxes to
the extent indicated herein when received by persons subject to state and
local income taxation in a state in which the issuers of the Bonds are
located. The Trust seeks to achieve its investment objectives through
investment in a fixed, diversified portfolio of long-term insured bonds
(the "Bonds") issued by or on behalf of states, municipalities and public
authorities which, because of irrevocable insurance, are rated "AAA" by
Standard & Poor's Corporation. Although the Supreme Court has determined
that Congress has the authority to subject the 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 a specific preference item for purposes of the
federal individual and/or corporate alternative minimum tax. (See
"Description of Portfolio" in this Part A for a list of these 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
aggregate principal amount of the Bonds in the Trust may be "Zero Coupon
Bonds," which are original issue discount bonds that provide for payment
at maturity at par value, but do not provide for the payment of current
interest (for the amount of Zero Coupon Bonds in each Trust, and the cost
of such Bonds to that Trust, see "Description of Portfolio" in this
Part A). All of the Bonds in the Trust were rated "AAA" by Standard &
Poor's Corporation at the time originally deposited in the Trust (see
"Portfolio"). This rating results from insurance relating only to the
Bonds in the Trust and not to Units of the Trust. The insurance does not
remove market risk, as it does not guarantee the market value of the
Units. For a discussion of the significance of such ratings, see
"Description of Bond Ratings" in Part B of this Prospectus. The payment
of interest and preservation of capital are, of course, dependent upon the
continuing ability of the issuers of the Bonds or the insurer thereof to
meet their obligations. There can be no assurance that the Trust's
investment objectives will be achieved. Investment in the Trust should be
made with an understanding of the risks which an investment in long-term
fixed rate debt obligations may entail, including the risk that the value
of the underlying portfolio will decline with increases in interest rates,
and that the value of Zero Coupon Bonds is subject to greater fluctuation
than coupon bonds in response to such changes in interest rates. (See
"Portfolio" in Part B of this Prospectus.) Each Unit in the Trust
represents a 1/3895th undivided interest in the principal and net income
of the Trust. The principal amount of Bonds deposited in the Trust per
Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered
hereby are issued and outstanding Units which have been purchased by the
Sponsors in the secondary market.

INSURANCE. Each of the Bonds in the Navigator Trust is insured by a
municipal bond guaranty insurance policy obtained by the Sponsors (the
"Navigator Sponsor-Insured Bonds") from Municipal Bond Investors Assurance
Corporation ("MBIA Corp.") covering regularly scheduled payments of
principal thereof and interest thereon when such amounts become due for
payment but shall not have been paid. Such amounts shall be reduced by
any amounts received by the holders or the owners of the Bonds from any
trustee for the Bond issuers, any other Bond insurers or any other source
other than MBIA Corp. MBIA Corp. has issued such policy or policies
covering each of the Bonds in the New York Navigator Trust and each such
policy will remain in force until the payment in full of such Bonds,
whether or not such Bonds continue to be held in the New York Navigator
Trust. The insurer's policies relating to small industrial development
bonds and pollution control revenue bonds also guarantee the accelerated
payments required to be made by or on behalf of an issuer of Bonds
pursuant to the terms of the Bonds if there occurs an event which results
in the loss of the tax-exempt status of the interest on such Bonds,
including principal, interest or premium payments, if any, as and when
required. Such insurance does not cover accelerated payments required to
be made by or on behalf of an issuer of other than small industrial
revenue bonds or pollution control revenue bonds if there occurs an event
which results in the loss of the tax exempt status of the interest on such
Bonds nor does the insurance cover accelerated payments of principal or
penalty interest or premiums unrelated to taxability of interest on any of
the Bonds, including pollution control revenue bonds or small industrial
development bonds. In the event of accelerated payments on any such Bonds
unrelated to the taxability of interest on any such Bonds, the payments
guaranteed by MBIA Corp. shall be made in such amounts and at such times
such payment would have been made absent such an acceleration. The
insurance relates only to the prompt payment of principal of and interest
on the securities in the New York Navigator Trust and does not remove
market risk nor does it guarantee the market value of Units in the New
York Navigator Trust. The terms of the insurance are more fully described
under "Insurance on the Bonds" in Part B of this Prospectus. For
discussion of the effect of an occurrence of non-payment of principal or
interest on any Bonds in the New York Navigator Trust see "Portfolio
Supervision" in Part B of this Prospectus. No representation is made
herein as to any bond insurer's ability to meet its obligations under a
policy of insurance relating to any of the Bonds in the New York Navigator
Trust. In addition, investors should be aware that subsequent to the Date
of Deposit the rating of the claims-paying ability of MBIA Corp. may be
downgraded, which may result in a downgrading of the rating of the Units
in the New York Navigator Trust. The premiums for the Navigator Sponsor-
Insured Bonds are obligations of the Sponsors. Additionally, some of the
Bonds in the New York Navigator Trust may be Pre-Insured Bonds (as
described below). The premium for the Pre-Insured Bonds is an obligation
of the issuers, underwriters or prior owners of those Bonds. The
insurance policy or policies relating to the Navigator Sponsor-Insured
Bonds provides that, to the extent that Bonds are both Pre-Insured Bonds
and Navigator Sponsor-Insured Bonds, coverage is effective after a claim
has been made upon the insurer of the Pre-Insured Bonds.

Upon notification from the trustee for any bond issuer or any holder
or owner of the Bonds that such trustee or paying agent has insufficient
funds to pay any principal or interest in full when due, MBIA Corp. will
be obligated to deposit funds promptly with Citibank, N.A., New York, New
York, as fiscal agent for MBIA Corp., sufficient to fully cover the
deficit. If notice of nonpayment is received on or after the due date,
MBIA Corp. will provide for payment within one business day following
receipt of the notice. Upon payment by MBIA Corp. of any Bonds, coupons,
or interest payments, MBIA Corp. shall succeed to the rights of the owner
of such Bonds, coupons or interest payments with respect thereto.

Some of the Bonds in the New York Navigator Trust may additionally
be insured by a municipal bond guaranty insurance policy obtained by
issuers, underwriters or prior owners of the Bonds ("Pre-Insured Bonds")
and issued by one of the insurance companies described under "Insurance on
the Bonds" in Part B of this Prospectus (the "Insurance Companies"). Such
insurance covers the scheduled payment of principal thereof and interest
thereon when such amounts shall become due for payment but shall not have
been paid by the issuer or any other insurer thereof. The insurance,
unless obtained by MBIA Corp., will also cover any accelerated payments of
principal and any increase in interest payments or premiums, if any,
payable upon mandatory redemption of the Bonds if interest on any such
Bond is ultimately deemed to be subject to federal income tax. Insurance
obtained from MBIA Corp. only guarantees the full and complete payments
required to be made by or on behalf of an issuer of small industrial
revenue bonds and pollution control revenue bonds if there occurs an event
which results in the loss of tax-exempt status of the interest on such
Bonds, including principal, interest or premium payments, if any, as and
when required. To the extent, therefore, that Bonds are only covered by
insurance obtained from MBIA Corp., such Bonds will not be covered for the
full and complete payments required to be made by or on behalf of an
issuer of other than small industrial revenue bonds or pollution control
revenue bonds if there occurs an event which results in the loss of tax-
exempt status of the interest on such Bonds. None of the insurance will
cover accelerated payments of principal or penalty interest or premiums
unrelated to taxability of interest on the Bonds. The insurance relates
only to the prompt payment of principal of and interest on the securities
in the portfolios, and does not remove market risks nor does it guarantee
the market value of Units in the Trusts. The terms of the insurance are
more fully described herein. No representation is made herein as to any
Bond insurer's ability to meet its obligations under a policy of insurance
relating to any of the Pre-Insured Bonds. In addition, investors should
be aware that subsequent to the Date of Deposit the rating of the claims-
paying ability of the insurer of an underlying Pre-Insured Bond may be
downgraded.

All of the Bonds in the New York Navigator Trust are covered by
insurance obtained by the Sponsors from MBIA Corp. and 36.5% of the Bonds
in the New York Navigator Trust are Pre-Insured Bonds. The approximate
percentage of the aggregate principal amount of the Portfolio that is
insured by each Insurance Company with respect to Pre-Insured Bonds is as
follows: AMBAC Indemnity Corp. ("AMBAC"), 12.8%; Bond Investor Guaranty
("BIG"), 12.8%; Financial Security Assurance Inc. ("Financial Security"),
6.5%; and Municipal Bond Investors Assurance Corporation ("MBIA Corp."),
4.4%.

PUBLIC OFFERING PRICE. The secondary market Public Offering Price
of each Unit is equal to the aggregate offering price of the Bonds in such
Trust divided by the number of Units outstanding, plus a sales charge of
4.9% of the Public Offering Price, or 5.152% of the net amount invested in
Bonds per Unit. In addition, accrued interest to the expected date of
settlement is added to the Public Offering Price. If Units had been
available for sale on the Evaluation Date, the Public Offering Price per
Unit would have been $1,174.76 plus accrued interest of $12.41 under the
monthly distribution plan, $18.17 under the semi-annual distribution plan
and $18.16 under the annual distribution plan, for a total of $1,187.17,
$1,192.93 and $1,192.92, respectively. The Public Offering Price per Unit
can vary on a daily basis in accordance with fluctuations in the aggregate
bid price of the Bonds. (See "Public Offering--Offering Price" in Part B
of this Prospectus.)

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. The rate
of return on an investment in Units of the Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".

The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the
Evaluator applicable to the Trust and with the redemption, maturity, sale
or other disposition of the Bonds in the Trust. The Public Offering Price
will vary with changes in the bid prices of the Bonds. Therefore, there
is no assurance that the present Estimated Current Return or Estimated
Long Term Return will be realized in the future. (For the Estimated
Current Return to Certificateholders under the monthly, semi-annual and
annual distribution plans, see "Summary of Essential Information". See
"Estimated Long Term Return and Estimated Current Return" in Part B of
this Prospectus.)

A schedule of cash flow projections is available from the Sponsors
upon request.

DISTRIBUTIONS. Distributions of interest income, less expenses,
will be made by the Trust either monthly, semi-annually or annually
depending upon the plan chosen by the Certificateholder.
Certificateholders purchasing Units in the secondary market will initially
receive distributions in accordance with the elections of the prior owner
and may thereafter change the plan as provided under "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,
presently maintain and intend to continue to maintain a secondary market
for the Units at a price based on the aggregate bid price of the Bonds in
the Trust portfolio. The reoffer price will be based on the aggregate bid
price of the Bonds plus a sales charge of 4.9% of the Public Offering
Price (5.152% of the net amount invested), plus net accrued interest. If
a market is not maintained a Certificateholder will be able to redeem his
Units with the Trustee at a price based on 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 all their
regular interest distributions, and principal distributions, if any,
reinvested in available series of "Insured Municipal Securities Trust" or
"Municipal Securities Trust." (See "Total Reinvestment Plan" in Part B of
this Prospectus. Residents of Texas see "Total Reinvestment Plan for
Texas Residents" in Part B of this Prospectus.) The Plan is not designed
to be a complete investment program.

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED
SERIES 6

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1993

Date of Deposit: January 31, 1991 Weighted Average Life to
Principal Amount of Bonds ...$3,900,000 Maturity: 14.1 Years.
Number of Units .............3,895 Minimum Value of Trust:
Fractional Undivided Inter- Trust may be terminated if
est in Trust per Unit .....1/3895 value of Trust is less than
Principal Amount of $1,600,000 in principal amount
Bonds per Unit ............$1001.28 of Bonds.
Secondary Market Public Mandatory Termination Date:
Offering Price** The earlier of December 31,
Aggregate Bid Price 2040 or the disposition of the
of Bonds in Trust .......$4,351,488+++ last Bond in the Trust.
Divided by 3,895 Units ....$1,117.20 Trustee***: United States Trust
Plus Sales Charge of 4.9% Company of New York.
of Public Offering Price $57.56 Trustee's Annual Fee: Monthly
Public Offering Price plan $1.09 per $1,000; semi-
per Unit ................$1,174.76+ annual plan $.64 per $1,000;
Redemption and Sponsors' and annual plan is $.39 per
Repurchase Price $1,000.
per Unit ..................$1,117.20+ Evaluator: Kenny S&P Evaluation
+++ Services.
++++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $8 plus
Public Offering Price $.25 per each issue of Bonds in
over Redemption and excess of 50 issues (treating
Sponsors' Repurchase separate maturities as separate
Price per Unit ............$57.56++++ issues).
Difference between Public Sponsors: Bear, Stearns & Co.
Offering Price per Unit Inc. and Gruntal & Co.,
and Principal Amount per Incorporated.
Unit Premium/(Discount) ...$173.48 Sponsors' Annual Fee: Maximum of
Evaluation Time: 4:00 p.m. $.25 per $1,000 principal
New York Time. amount of Bonds (see "Trust
Minimum Principal Distribution: Expenses and Charges" in Part B
$1.00 per Unit. of this Prospectus).

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# .........$72.54 $72.54 $72.54
Less estimated annual fees and
expenses ............................ 2.40 1.79 1.51
Estimated net annual interest ______ ______ ______
income (cash)# ......................$70.14 $70.75 $71.03
Estimated interest distribution# ...... 5.85 35.37 71.03
Estimated daily interest accrual# ..... .1948 .1965 .1973
Estimated current return#++ ........... 5.97% 6.02% 6.05%
Estimated long term return++ .......... 4.09% 4.14% 4.16%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15

<PAGE>
* The Date of Deposit is the date on which the Trust Agreement was
signed and the deposit of the Bonds with the Trustee made.

** For information regarding offering price per Unit and applicable
sales charge under the Total Reinvestment Plan, see "Total
Reinvestment Plan" in Part B of this Prospectus.

+ Plus accrued interest to the expected date of settlement
(approximately five business days after purchase) of $12.41 monthly,
$18.17 semi-annually and $18.16 annually.

++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.

# Does not include income accrual from original issue discount bonds,
if any.

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1993

DESCRIPTION OF PORTFOLIO

The portfolio of the Trust consists of 11 issues representing
obligations of 9 issuers located in the state of New York and in Puerto
Rico. The Sponsors have 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 4.4% of the Bonds are obligations of state and local housing
authorities; approximately 30.8% are hospital revenue bonds; none were
issued in connection with the financing of nuclear generating facilities;
and none are "mortgage subsidy" bonds. All of the Bonds in the Trust are
subject to redemption prior to their stated maturity dates pursuant to
sinking fund or optional 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). Two of the
issues representing $695,000 of the principal amount of the Bonds are
general obligation bonds. All 9 of the remaining issues representing
$3,205,000 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: Convention Center 1, Correctional Facility 1, Hospital
3, Single Family Mortgage Revenue 1, University 1 and Water 2. For an
explanation of the significance of these factors see "The Trust--
Portfolio" in Part B of this Prospectus.

As of December 31, 1993, $425,000 (approximately 10.9% of the
aggregate principal amount of the Bonds) were original issue discount
bonds. Of these original issue discount bonds, $170,000 (approximately
4.4% of the aggregate principal amount of the Bonds) were Zero Coupon
Bonds. Zero Coupon Bonds do not provide for the payment of any current
interest and provide for payment at maturity at par value unless sooner
sold or redeemed. The market value of Zero Coupon Bonds is subject to
greater fluctuations than coupon bonds in response to changes in interest
rates. Approximately 12.8% of the aggregate principal amount of the Bonds
in the Trust were purchased at a "market" discount from par value at
maturity, approximately 63.5% were purchased at a premium and
approximately 12.8% were purchased at par. For an explanation of the
significance of these factors see "Discount and Zero Coupon Bonds" in
Part B of this Prospectus.

None of the Bonds in the Trust are subject to the federal individual
alternative minimum tax under the Tax Reform Act of 1986. See "Tax
Status" in Part B of this Prospectus.

<PAGE>
FINANCIAL AND STATISTICAL INFORMATION

Selected data for each Unit outstanding for the periods listed below:

December 31, 1991 4,000 $1,050.35 $45.99 $ 46.31 $46.45 -0-
December 31, 1992 4,000 1,083.70 69.60 140.60 70.56 -0-
December 31, 1993 3,895 1,134.66 69.78 70.43 70.70 -0-

<PAGE>
Independent Auditors' Report

The Sponsor, Trustee and Certificateholders
Insured Municipal Securities Trust,
New York Navigator Insured Series 6:

We have audited the accompanying statement of net assets, including
the portfolio, of Insured Municipal Securities Trust, New York
Navigator Insured Series 6 as of December 31, 1993, and the related
statements of operations, and changes in net assets for each of the
years in the two year period then ended, and for the period January 31,
1991 (date of deposit) to December 31, 1991. These financial statements
are the responsibility of the Trustee (see note 2). Our responsibility
is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1993, by correspondence with
the Trustee. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Insured
Municipal Securities Trust, New York Navigator Insured Series 6 as
of December 31, 1993, and the results of its operations and the
changes in its net assets for each of the years in the two year period
then ended, and for the period January 31, 1991 to December 31, 1991
in comformity with generally acceptd accounting principles.

KPMG Peat Marwick

New York, New York
March 31, 1994

<PAGE>

Statement of Net Assets

December 31, 1993

Investments in marketable securities,
at market value (cost $3,818,176) $ 4,378,144

Excess of other assets over total liabilities 41,375
-----------

Net assets (3,895 units of fractional undivided
interest outstanding, $1,134.66 per unit) $ 4,419,519
===========

See accompanying notes to financial statements.
<PAGE>

<TABLE>

Statements of Operations
<CAPTION>
For the period
January 31, 1991
Years ended December 31, (date of deposit)
----------- - --------- ---------------------
1993 1992 to December 31, 1991
----------- --------- ---------------------
<S> <C> <C> <C>
Investment income - interest $ 287,210 290,936 265,050
----------- --------- -----------

Expenses:
Trustee's fees 4,915 4,827 3,279
Evaluator's fees 2,372 2,033 1,720
Sponsor's advisory fee 999 1,000 914
----------- --------- -----------

Total expenses 8,286 7,860 5,913
----------- --------- -----------

Investment income, net 278,924 283,076 259,137
----------- --------- -----------

Realized and unrealized gain
(loss) on investments:
Realized gain (loss) on
bonds sold or called 8,111 (44) -
Unrealized appreciation
for the year 192,386 130,181 237,401
----------- --------- -----------

Net gain on investments 200,497 130,137 237,401
----------- --------- -----------

Net increase in net
assets resulting
from operations $ 479,421 413,213 496,538
=========== ========= ===========

See accompanying notes to financial statements.
</TABLE>

<PAGE>

<TABLE>

Statements of Changes in Net Assets
<CAPTION>
For the period
January 31, 1991
Years ended December 31, (date of deposit)
---------- - ------------ --------------------
1993 1992 to December 31, 1991
---------- ------------ --------------------
<S> <C> <C> <C>
Operations:
Investment income, net $ 278,924 283,076 259,137
Net realized gain (loss) on
bonds sold or called 8,111 (44) -
Unrealized appreciation
for the year 192,386 130,181 237,401
---------- ------------ -----------

Net increase in net
assets resulting
from operations 479,421 413,213 496,538
---------- ------------ -----------

Distributions:
To Certificateholders:
Investment income 276,631 279,802 184,617
To Sponsor of accrued interest
to date of settlement - - 4,806
Redemptions:
Interest 2,058
Principal 116,017 - -
---------- ------------ -----------

Total distributions
and redemptions 394,706 279,802 189,423
---------- ------------ -----------

Total increase 84,715 133,411 307,115

Net assets at beginning of period 4,334,804 4,201,393 3,894,278
---------- ------------ -----------

Net assets at end of period (including
undistributed net investment
income of $70,365 , $72,915
and $69,714, respectively) $ 4,419,519 4,334,804 4,201,393
========== ============ ===========

See accompanying notes to financial statements.
</TABLE>

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST,

NEW YORK NAVIGATOR INSURED SERIES 6

Notes to Financial Statements

December 31, 1993, 1992 and 1991

(1) Organization

Insured Municipal Securities Trust, New York Navigator Insured
Series 6 (Trust) was organized on January 31, 1991 by Bear, Stearns
& Co. Inc. and Gruntal & Co., Incorporated (Co-Sponsors) under the
laws of the State of New York by a Trust Indenture and Agreement, and
is registered under the Investment Company Act of 1940.

(2) Summary of Significant Accounting Policies

United States Trust Company of New York (Trustee) has custody of and
responsibility for the accounting records and financial statements
of the Trust and is responsible for establishing and maintaining a
system of internal control related thereto.

The Trustee is also responsible for all estimates of expenses and
accruals reflected in the Trust's financial statements. The
accompanying financial statements have been adjusted to record the
unrealized appreciation (depreciation) of investments and to record
interest income and expenses on the accrual basis.

Investments are carried at market value which is determined by either
Standard & Poor's Corporation or Moody's Investors Service, Inc.
(Evaluator) as discussed in Footnotes to Portfolio. The market value
of the investments is based upon the bid prices for the bonds at the
end of the period, except that the market value on the date of deposit
represents the cost to the Trust based on the offering prices for
investments at that date. The difference between cost (including
accumulated accretion of original issue discount on zero-coupon bonds)
and market value is reflected as unrealized appreciation (depreciation)
of investments. Securities transactions are recorded on the
trade date. Realized gains (losses) from securities transactions are
determined on the basis of average cost of the securities sold or
redeemed.

(3) Income Taxes

The Trust is not subject to Federal income taxes as provided for by
the Internal Revenue Code.

(4) Trust Administration

The fees and expenses of the Trust are incurred and paid on the basis
set forth under "Trust Expenses and Charges" in Part B of this Prospectus.

The Trust Indenture and Agreement provides for interest distributions as
often as monthly (depending upon the distribution plan elected by the
Certificateholders).

The Trust Indenture and Agreement further requires that principal received
from the disposition of bonds, other than those bonds sold in connection
with the redemption of units, be distributed to Certificateholders.

See "Financial and Statistical Information" in Part A of this Prospectus
for the amounts of per unit distributions during the period ended
December 31, 1993, 1992, and 1991.

The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. 105 units were redeemed during the year ended December 31,
1993.
No units were redeemed during the periods ended December 31, 1992 and
1991.

(5) Net Assets

At December 31, 1993, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $ 4,094,930
Less initial gross underwriting commission (200,652)
3,894,278

Cost of securities sold or called (78,436)
Net unrealized appreciation 559,968
Undistributed net investment income 70,365
Distributions in excess of proceeds
from bonds sold or called (26,656)

Total $ 4,419,519

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 4,000 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 $2,334.
<PAGE>

<TABLE>

INSURED MUNICIPAL SECURITIES TRUST,

NEW YORK NAVIGATOR INSURED SERIES 6

Portfolio
December 31, 1993

Port- Aggregate Coupon Rate/ Redemption Feature
folio Principal Name of Issuer Ratings Date(s) of S.F.--Sinking Fund Market
No. Amount and Title of Bonds (1) Maturity(2) Ref. -- Refunding (2)(7) Value(3)
------ --------- --------------------- ------ ------------ ------------------------ ---------
<S> <C> <C> <C> <C> <C> <C>
1 $ 500,000 N.Y. State Dorm. AAA 7.700% 5/15/06 @ 100 S.F. $ 603,335
Auth. State Univ. Ed. 5/15/2012 5/15/00 @ 102 Ref.
Facs. Rev. Bonds
Series 1990A (MBIA
Corp.) (5)

2 500,000 N.Y. State Med. Care AAA 7.100 8/15/02 @ 100 S.F. 558,785
(Bronx Lebanon Hosp.) 2/15/2027 2/15/97 @ 102 Ref.
Rev. Bonds (MBIA
Corp.)

3 200,000 N.Y. State Med. Care AAA 7.450 2/15/98 @ 100 S.F. 238,096
Facs. Finc. Agency 2/15/2029 2/15/00 @ 102 Ref.
St. Luke's Roosevelt
Hosp. Cntr. FHA
Insurd. Mtg. Rev.
Bonds Series B (MBIA
Corp.) (5)

4 500,000 N.Y. State Med. Care AAA 8.625 7/15/98 @ 100 S.F. 561,530
Facs. Finc. Agncy. 1/15/2006 1/15/96 @ 102 Ref.
Insrd. Hosp. Mtg.
Rev. Bonds 1985
Series C (MBIA Corp.)
(5)

5 500,000 N.Y. State Urb. Dev. AAA 7.500 1/01/04 @ 100 S.F. 565,670
Corp. Correc. Facs. 1/01/2012 1/01/98 @ 102 Ref.
Rev. Bonds Series C
(MBIA Corp.)

6 430,000 N.Y. City Gen. Oblig. AAA 8.250 No Sinking Fund 542,191
Rev. Bonds. Fiscal 6/01/2018 6/01/01 @ 101.5 Ref.
1991 Series B (MBIA
Corp.) (5)

7 255,000 N.Y. City Muni. Wtr. AAA 6.000 No Sinking Fund 264,718
Finc. Auth. Wtr. & 6/15/2020 6/15/00 @ 100 Ref.
Swr. Sys. Rev. Bonds
Series A (MBIA Corp.)

8 250,000 N.Y. City Muni. Wtr. AAA 7.625 6/15/09 @ 100 S.F. 285,485
Finc. Auth. Wtr. & 6/15/2016 6/15/97 @ 101.5 Ref.
Swr. Sys. Rev. Bonds
Fiscal 1989 Series A
(MBIA Corp.) (5)

9 500,000 Triborough Bridge & AAA 7.250 1/01/04 @ 100 S.F. 622,910
Tunnel Auth. of N.Y. 1/01/2010 None
Convntn. Cntr. Prjt.
Bonds Series E (MBIA
Corp.)

10 95,000 Commnwlth. of P.R. AAA 7.300 7/01/11 @ 100 S.F. 112,871
Pub. Imprvmnt. Bonds 7/01/2020 7/01/00 @ 102 Ref.
of 1991 Gen. Oblg.
Rev. Bonds (MBIA
Corp.) (5)

11 170,000 N.Y. State Mtg. AAA 0.000 4/01/12 @ 52.88 S.F. 22,553
Agncy. Hmownr. Mtg. 4/01/2020 4/01/02 @ 23.845 Ref.
Rev. Bonds Series II
(MBIA Corp.)
--------- ---------
$ 3,900,000 $ 4,378,144
========= =========

See accompanying footnotes to portfolio and notes to financial statements.
</TABLE>

<PAGE>

Footnotes to Portfolio

December 31, 1993

(1) All ratings are by Standard & Poor's Corporation. A brief
description of the ratings symbols and their meanings is set forth
under "Description of Bond Ratings" in Part B of this Prospectus.

(2) See "The Trust - Portfolio" in Part B of this Prospectus for an
explanation of redemption features. See "Tax Status" in Part B of
this Prospectus for a statement of the Federal tax consequences to a
Certificateholder upon the sale, redemption or maturity of a bond.

(3) At December 31, 1993, the net unrealized appreciation of all
bonds was comprised of gross unrealized appreciation of $559,968.

(4) The annual interest income, based upon bonds held at December 31,
1993, (excluding accretion of original issue discount on zero-coupon
bonds) to the Trust is $282,548.

(5) The bonds have been prerefunded and will be redeemed at the next
refunding call date.

(6) Bonds sold or called after December 31, 1993 are noted in a
footnote "Changes in Trust Portfolio" under "Description of
Portfolio" in Part A of this Prospectus.

NOTE: Part A of This Prospectus May Not Be
Distributed Unless Accompanied by Part B.

INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED

SERIES 3

The Trust is a unit investment trust designated Series 3 ("New
Jersey Navigator Trust") with an underlying portfolio of long-term insured
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 under existing law and from New Jersey gross income
tax. Capital gains are subject to tax. (See "Tax Status" and "The
Trust--Portfolio" in Part B of this Prospectus.) The Sponsors are Bear,
Stearns & Co. Inc. 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 December 31, 1993 (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 April 29, 1994

<PAGE>

THE TRUST. The Trust is a unit investment trust and was formed
to preserve capital and to provide interest income (including 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 and from state and local
taxes to the extent indicated herein when received by persons subject to
state and local income taxation in a state in which the issuers of the
Bonds are located. The Trust seeks to achieve its investment objectives
through investment in a fixed, diversified portfolio of long-term insured
bonds (the "Bonds") issued by or on behalf of states, municipalities and
public authorities which, because of irrevocable insurance, are rated
"AAA" by Standard & Poor's Corporation. Although the Supreme Court has
determined that Congress has the authority to subject the 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 a specific preference item for purposes
of the federal individual and/or corporate alternative minimum tax. (See
"Description of Portfolio" in this Part A for a list of these 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
aggregate principal amount of the Bonds in the Trust may be "Zero Coupon
Bonds," which are original issue discount bonds that provide for payment
at maturity at par value, but do not provide for the payment of current
interest (for the amount of Zero Coupon Bonds in the Trust, and the cost
of such Bonds to the Trust, see "Description of Portfolio" in this
Part A). All of the Bonds in the Trust were rated "AAA" by Standard &
Poor's Corporation at the time originally deposited in the Trust (see
"Portfolio"). This rating results from insurance relating only to the
Bonds in the Trust and not to Units of the Trust. The insurance does not
remove market risk, as it does not guarantee the market value of the
Units. For a discussion of the significance of such ratings, see
"Description of Bond Ratings" in Part B of this Prospectus. The payment
of interest and preservation of capital are, of course, dependent upon the
continuing ability of the issuers of the Bonds or the insurer thereof to
meet their obligations. There can be no assurance that the Trust's
investment objectives will be achieved. Investment in the Trust should be
made with an understanding of the risks which an investment in long-term
fixed rate debt obligations may entail, including the risk that the value
of the underlying portfolio will decline with increases in interest rates,
and that the value of Zero Coupon Bonds is subject to greater fluctuation
than coupon bonds in response to such changes in interest rates. (See
"Portfolio" in Part B of this Prospectus.) Each Unit in the Trust
represents a 1/4000th undivided interest in the principal and net income
of the Trust. The principal amount of Bonds deposited in the Trust per
Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered
hereby are issued and outstanding Units which have been purchased by the
Sponsors in the secondary market.

INSURANCE. Each of the Bonds in the New Jersey Navigator Trust
is insured by a municipal bond guaranty insurance policy obtained by the
Sponsors (the "Navigator Sponsor-Insured Bonds") from Municipal Bond
Investors Assurance Corporation ("MBIA Corp.") covering regularly
scheduled payments of principal thereof and interest thereon when such
amounts become due for payment but shall not have been paid. Such amounts
shall be reduced by any amounts received by the holders or the owners of
the Bonds from any trustee for the Bond issuers, any other Bond insurers
or any other source other than MBIA Corp. MBIA Corp. has issued such
policy or policies covering each of the Bonds in the New Jersey Navigator
Trust and each such policy will remain in force until the payment in full
of such Bonds, whether or not such Bonds continue to be held in the New
Jersey Navigator Trust. The insurer's policies relating to small
industrial development bonds and pollution control revenue bonds also
guarantee the accelerated payments required to be made by or on behalf of
an issuer of Bonds pursuant to the terms of the Bonds if there occurs an
event which results in the loss of the tax-exempt status of the interest
on such Bonds, including principal, interest or premium payments, if any,
as and when required. Such insurance does not cover accelerated payments
required to be made by or on behalf of an issuer of other than small
industrial revenue bonds or pollution control revenue bonds if there
occurs an event which results in the loss of the tax exempt status of the
interest on such Bonds nor does the insurance cover accelerated payments
of principal or penalty interest or premiums unrelated to taxability of
interest on any of the Bonds, including pollution control revenue bonds or
small industrial development bonds. In the event of accelerated payments
on any Bonds unrelated to the taxability of interest on any such Bonds,
the payments guaranteed by MBIA Corp. shall be made in such amounts and at
such times such payment would have been made absent such an acceleration.
The insurance relates only to the prompt payment of principal of and
interest on the securities in the New Jersey Navigator Trust and does not
remove market risk nor does it guarantee the market value of Units in the
New Jersey Navigator Trust. The terms of the insurance are more fully
described under "Insurance of the Bonds" in Part B of this Prospectus.
For discussion of the effect of an occurrence of non-payment of principal
or interest on any Bonds in the New Jersey Navigator Trust see "Portfolio
Supervision" in Part B of this Prospectus. No representation is made
herein as to any bond insurer's ability to meet its obligations under a
policy of insurance relating to any of the Bonds in the New Jersey
Navigator Trust. In addition, investors should be aware that subsequent
to the Date of Deposit the rating of the claims-paying ability of MBIA
Corp. may be downgraded, which may result in a downgrading of the rating
of the Units in the New Jersey Navigator Trust. The premiums for the
Navigator Sponsor-Insured Bonds are obligations of the Sponsors.
Additionally, some of the Bonds in the New Jersey Navigator Trust may be
Pre-Insured Bonds (as described below). The premium for the Pre-Insured
Bonds is an obligation of the issuers, underwriters or prior owners of
those Bonds. The insurance policy or policies relating to the Navigator
Sponsor-Insured Bonds provides that, to the extent that Bonds are both
Pre-Insured Bonds and Navigator Sponsor-Insured Bonds, coverage is
effective after a claim has been made upon the insurer of the Pre-Insured
Bonds.

Upon notification from the trustee for any bond issuer or any
holder or owner of the Bonds that such trustee or paying agent has
insufficient funds to pay any principal or interest in full when due, MBIA
Corp. will be obligated to deposit funds promptly with Citibank, N.A., New
York, New York, as fiscal agent for MBIA Corp., sufficient to fully cover
the deficit. If notice of nonpayment is received on or after the due
date, MBIA Corp. will provide for payment within one business day
following receipt of the notice. Upon payment by MBIA Corp. of any Bonds,
coupons, or interest payments, MBIA Corp. shall succeed to the rights of
the owner of such Bonds, coupons or interest payments with respect
thereto.

Some of the Bonds in the New Jersey Navigator Trust may
additionally be insured by a municipal bond guaranty insurance policy
obtained by issuers, underwriters or prior owners of the Bonds ("Pre-
Insured Bonds") and issued by one of the insurance companies described
under "Insurance on the Bonds" in Part B of this Prospectus (the
"Insurance Companies"). Such insurance covers the scheduled payment of
principal thereof and interest thereon when such amounts shall become due
for payment but shall not have been paid by the issuer or any other
insurer thereof. The insurance, unless obtained by MBIA Corp., will also
cover any accelerated payments of principal and any increase in interest
payments or premiums, if any, payable upon mandatory redemption of the
Bonds if interest on any such Bond is ultimately deemed to be subject to
federal income tax. Insurance obtained from MBIA Corp. only guarantees
the full and complete payments required to be made by or on behalf of an
issuer of small industrial revenue bonds and pollution control revenue
bonds if there occurs an event which results in the loss of tax-exempt
status of the interest on such Bonds, including principal, interest or
premium payments, if any, as and when required. To the extent, therefore,
that Bonds are only covered by insurance obtained from MBIA Corp., such
Bonds will not be covered for the full and complete payments required to
be made by or on behalf of an issuer of other than small industrial
revenue bonds or pollution control revenue bonds if there occurs an event
which results in the loss of tax-exempt status of the interest on such
Bonds. None of the insurance will cover accelerated payments of principal
or penalty interest or premiums unrelated to taxability of interest on the
Bonds. The insurance relates only to the prompt payment of principal of
and interest on the securities in the portfolios, and does not remove
market risks nor does it guarantee the market value of Units in the
Trusts. The terms of the insurance are more fully described under
"Insurance on the Bonds" in Part B of this Prospectus. No representation
is made herein as to any Bond insurer's ability to meet its obligations
under a policy of insurance relating to any of the Pre-Insured Bonds. In
addition, investors should be aware that subsequent to the Date of Deposit
the rating of the claims-paying ability of the insurer of an underlying
Pre-Insured Bond may be downgraded.

All of the Bonds in the New Jersey Navigator Trust are covered
by insurance obtained by the Sponsors from MBIA Corp. and 68.6% of the
Bonds in the New Jersey Navigator Trust are Pre-Insured Bonds. The
approximate percentage of the aggregate principal amount of the Trust that
is insured by each Insurance Company with respect to Pre-Insured Bonds is
as follows: Financial Guaranty Insurance Company ("Financial Guaranty"),
5.7%; Financial Security Assurance Inc. ("Financial Security"), 42.9%;
Bond Investors Guaranty ("BIG"), 14.3%; and MBIA Corp., 5.7%.

PUBLIC OFFERING PRICE. The secondary market Public Offering
Price of each Unit is equal to the aggregate offering price of the Bonds
in such Trust divided by the number of Units outstanding, plus a sales
charge of 4.9% of the Public Offering Price, or 5.152% of the net amount
invested in Bonds per Unit. In addition, accrued interest to the expected
date of settlement is added to the Public Offering Price. If Units had
been available for sale on the Evaluation Date, the Public Offering Price
per Unit would have been $998.08 plus accrued interest of $11.48 under the
monthly distribution plan, $16.11 under the semi-annual distribution plan
and $16.13 under the annual distribution plan, for a total of $1,009.56,
$1,014.19 and $1,014.21, respectively. The Public Offering Price per Unit
can vary on a daily basis in accordance with fluctuations in the aggregate
bid price of the Bonds. (See "Public Offering--Offering Price" in Part B
of this Prospectus.)

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. The
rate of return on an investment in Units of the Trust is measured in terms
of "Estimated Current Return" and "Estimated Long Term Return".

The Estimated Net Annual Interest Income per Unit of the Trust
will vary with changes in the fees and expenses of the Trustee and the
Evaluator applicable to the Trust and with the redemption, maturity, sale
or other disposition of the Bonds in the Trust. The Public Offering Price
will vary with changes in the bid prices of the Bonds. Therefore, there
is no assurance that the present Estimated Current Return or Estimated
Long Term Return will be realized in the future. (For the Estimated
Current Return to Certificateholders under the monthly, semi-annual and
annual distribution plans, see "Summary of Essential Information". See
"Estimated Long Term Return and Estimated Current Return" in Part B of
this Prospectus.)

A schedule of cash flow projections is available from the
Sponsors upon request.

MARKET FOR UNITS. The Sponsors, although not obligated to do
so, presently maintain and intend to continue to maintain a secondary
market for the Units at a price based on the aggregate bid price of the
Bonds in the Trust portfolio. The reoffer price will be based on the
aggregate bid price of the Bonds plus a sales charge of 4.9% of the Public
Offering Price (5.152% of the net amount invested), plus net accrued
interest. If a market is not maintained a Certificateholder will be able
to redeem his Units with the Trustee at a price based on 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 all
their regular interest distributions, and principal distributions, if any,
reinvested in available series of "Insured Municipal Securities Trust" or
"Municipal Securities Trust." (See "Total Reinvestment Plan" in Part B of
this Prospectus. Residents of Texas see "Total Reinvestment Plan for
Texas Residents" in Part B of this Prospectus.) The Plan is not designed
to be a complete investment program.

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED
SERIES 3

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1993

Date of Deposit: January 31, 1991 Minimum Principal Distribution:
Principal Amount of Bonds ...$3,500,000 $1.00 per Unit.
Number of Units .............4,000 Weighted Average Life to
Fractional Undivided Inter- Maturity:
est in Trust per Unit .....1/4000 19.4 Years.
Principal Amount of Minimum Value of Trust:
Bonds per Unit ............$875.00 Trust may be terminated if
Secondary Market Public value of Trust is less than
Offering Price** $2,000,000 in principal amount
Aggregate Bid Price of Bonds.
of Bonds in Trust .......$3,796,680+++ Mandatory Termination Date:
Divided by 4,000 Units ....$949.17 The earlier of December 31,
Plus Sales Charge of 4.9% 2040 or the disposition of the
of Public Offering Price $48.91 last Bond in the Trust.
Public Offering Price Trustee***: United States Trust
per Unit ................$998.08+ Company of New York.
Redemption and Sponsors' Trustee's Annual Fee: Monthly
Repurchase Price plan $.96 per $1,000; semi-
per Unit ..................$949.17+ annual plan $.50 per $1,000;
+++ and annual plan is $.32 per
++++ $1,000.
Excess of Secondary Market Evaluator: Kenny S&P Evaluation
Public Offering Price Services.
over Redemption and Evaluator's Fee for Each
Sponsors' Repurchase Evaluation: Minimum of $8 plus
Price per Unit ............$48.91++++ $.25 per each issue of Bonds in
Difference between Public excess of 50 issues (treating
Offering Price per Unit separate maturities as separate
and Principal Amount per issues).
Unit Premium/(Discount) ...$123.08
Evaluation Time: 4:00 p.m. Sponsors: Bear, Stearns & Co.
New York Time. Inc.
Gruntal & Co., Incorporated
Sponsors' Annual Fee: Maximum of
$.25 per $1,000 principal
amount of Bonds (see "Trust
Expenses and Charges" in Part B
of this Prospectus).

Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# .........$58.33 $58.33 $58.33
Less estimated annual fees and
expenses ............................ 2.25 1.70 1.45
Estimated net annual interest ______ ______ ______
income (cash)# ......................$56.08 $56.63 $56.88
Estimated interest distribution# ...... 4.67 28.31 56.88
Estimated daily interest accrual# ..... .1558 .1573 .1580
Estimated current return#++ ........... 5.62% 5.67% 5.70%
Estimated long term return++ .......... 4.39% 4.45% 4.47%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15

<PAGE>

* The Date of Deposit is the date on which the Trust Agreement was
signed and the deposit of the Bonds with the Trustee made.

** For information regarding offering price per Unit and applicable
sales charge under the Total Reinvestment Plan, see "Total
Reinvestment Plan" in Part B of this Prospectus.

+ Plus accrued interest to the expected date of settlement
(approximately five business days after purchase) of $11.48 monthly,
$16.11 semi-annually and $16.13 annually.

++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.

# Does not include income accrual from original issue discount bonds,
if any.

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1993

DESCRIPTION OF PORTFOLIO

The portfolio of the Trust consists of 9 isues representing
obligations of 8 issuers located in the state of New Jersey and 1 in
Puerto Rico. The Sponsors have not participated as a sole underwriter or
manager, co-manager or member of an underwriting syndicate from which any
of the initial aggregate principal amount of the Bonds were acquired.
None of the Bonds are obligations of state and local housing authorities;
approximately 28.6% are hospital revenue bonds; none were issued in
connection with the financing of nuclear generating facilities; and none
are "mortgage subsidy" bonds. All of the Bonds in the Trust are subject
to redemption prior to their stated maturity dates pursuant to sinking
fund or optional 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
$420,000 of the principal amount of the Bonds is a general obligation
bond. All 8 of the remaining issues representing $3,080,000 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:
Building Authority 1, Correctional Facility 1, Hospital 2, Port
Facility 1, School District 1, Sewer Revenue 1, and Utility Revenue 1.
For an explanation of the significance of these factors see "The Trust--
Portfolio" in Part B of this Prospectus.

As of December 31, 1993, $380,000 (approximately 10.9% of the
aggregate principal amount of the Bonds) were original issue discount
bonds. Of these original issue discount bonds, $200,000 (approximately
5.7% of the aggregate principal amount of the Bonds) were Zero Coupon
Bonds. Zero Coupon Bonds do not provide for the payment of any current
interest and provide for payment at maturity at par value unless sooner
sold or redeemed. The market value of Zero Coupon Bonds is subject to
greater fluctuations than coupon bonds in response to changes in interest
rates. Approximately 14.3% of the aggregate principal amount of the Bonds
in the Trust were purchased at a "market" discount from par value at
maturity, approximately 74.8% 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.

<PAGE>

FINANCIAL AND STATISTICAL INFORMATION

Selected data for each Unit outstanding for the periods listed below:

December 31, 1991 4,000 $1,021.58 $43.50 $43.85 $43.97 -0-
December 31, 1992 4,000 975.96 36.95 64.54 64.82 $67.50
December 31, 1993 4,000 964.68 58.18 58.74 58.98 57.50

<PAGE>

Independent Auditors' Report

The Sponsor, Trustee and Certificateholders
Insured Municipal Securities Trust,
New Jersey Navigator Insured Series 3:

We have audited the accompanying statement of net assets, including the
portfolio, of Insured Municipal Securities Trust, New Jersey Navigator
Insured Series 3 as of December 31, 1993, and the related statements
of operations, and changes in net assets for each of the years in the
two year period then ended, and for the period January 31, 1991 (date
of deposit) to December 31, 1991. These financial statements are the
responsibility of the Trustee (see note 2). Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1993, by correspondence with the
Trustee. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Insured
Municipal Securities Trust, New Jersey Navigator Insured Series 3
as of December 31, 1993, and the results of its operations and the
changes in its net assets for each of the years in the two year period
then ended, and for the period January 31, 1991 to December 31, 1991
in conformity with generally accepted accounting principles.

KPMG Peat Marwick

New York, New York
March 31, 1994
<PAGE>

INSURED MUNICIPAL SECURITIES TRUST,

NEW JERSEY NAVIGATOR INSURED SERIES 3

Statement of Net Assets

December 31, 1993

Investments in marketable securities,
at market value (cost $3,384,673) $ 3,796,680

Excess of other assets over total liabilities 62,052
--------

Net assets (4,000 units of fractional undivided
interest outstanding, $964.68 per unit) $ 3,858,732
========

See accompanying notes to financial statements.
<PAGE>
<TABLE>

INSURED MUNICIPAL SECURITIES TRUST,

NEW JERSEY NAVIGATOR INSURED SERIES 3

Statements of Operations
<CAPTION>
For the period
January 31, 1991
Years ended December 31, (date of deposit)
----------- - --------
1993 1992 to December 31, 1991
----------- -------- -- --------- ---
<S> <C> <C> <C>
Investment income - interest $ 242,648 266,409 251,445
----------- -------- ---------

Expenses:
Trustee's fees 4,802 4,679 3,174
Evaluator's fees 2,372 2,193 1,320
Sponsor's advisory fee 933 1,000 919
----------- -------- ---------

Total expenses 8,107 7,872 5,413
----------- -------- ---------

Investment income, net 234,541 258,537 246,032
----------- -------- ---------

Realized and unrealized gain
(loss) on investments:
Realized loss on
bonds sold or called (9,729) (11,421) -
Unrealized appreciation
for the year 194,152 97,574 120,281
----------- -------- ---------

Net gain on investments 184,423 86,153 120,281
----------- -------- ---------

Net increase in net
assets resulting
from operations $ 418,964 344,690 366,313
=========== ======== =========

See accompanying notes to financial statements.
</TABLE>

<PAGE>

<TABLE>
INSURED MUNICIPAL SECURITIES TRUST,

NEW JERSEY NAVIGATOR INSURED SERIES 3

Statements of Changes in Net Assets
<CAPTION>
For the period
January 31, 1991
Years ended December 31, (date of deposit)
---------- -- ----------
1993 1992 to December 31, 1991
---------- ---------- -- ------------ ---
<S> <C> <C> <C>
Operations:
Investment income, net $ 234,541 258,537 246,032
Net realized loss on
bonds sold or called (9,729) (11,421) -
Unrealized appreciation
for the year 194,152 97,574 120,281
---------- ---------- ------------

Net increase in net
assets resulting
from operations 418,964 344,690 366,313
---------- ---------- ------------

Distributions:
To Certificateholders:
Investment income 234,074 257,173 174,884
Principal 230,000 270,000 -
To Sponsor of accrued interest
to date of settlement - - 4,552
---------- ---------- ------------

Total distributions 464,074 527,173 179,436
---------- ---------- ------------

Total increase (decrease) (45,110) (182,483) 186,877

Net assets at beginning of period 3,903,842 4,086,325 3,899,448
---------- ---------- ------------

Net assets at end of the period (including
undistributed net investment
income of $68,427 $67,960
and $66,596 respectively) $ 3,858,732 3,903,842 4,086,325
========== ========== ============

See accompanying notes to financial statements.
</TABLE>

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST,

NEW JERSEY NAVIGATOR INSURED SERIES 3

Notes to Financial Statements

December 31, 1993, 1992 and 1991

(1) Organization

Insured Municipal Securities Trust, New Jersey Navigator Insured Series 3
(Trust) was organized on January 31, 1991 by Bear, Stearns & Co. Inc. and
Gruntal & Co., Incorporated (Co-Sponsors) under the laws of the State of
New York by a Trust Indenture and Agreement, and is registered under the
Investment Company Act of 1940.

(2) Summary of Significant Accounting Policies

United States Trust Company of New York (Trustee) has custody of and
responsibility for the accounting records and financial statements of the
Trust and is responsible for establishing and maintaining a system of
internal control related thereto.

The Trustee is also responsible for all estimates of expenses and accruals
reflected in the Trust's financial statements. The accompanying financial
statements have been adjusted to record the unrealized appreciation
(depreciation) of investments and to record interest income and expenses on
the accrual basis.

The discount on the zero-coupon bonds is accreted by the interest method
over the respective lives of the bonds. The accretion of such discount is
included in interest income; however, it is not distributed until realized
in cash upon maturity or sale of the respective bonds.

Investments are carried at market value which is determined by either
Standard & Poor's Corporation or Moody's Investors Service, Inc.
(Evaluator) as discussed in Footnotes to Portfolio. The market value
of the investments is based upon the bid prices for the bonds at the
end of the period, except that the market value on the date of deposit
represents the cost to the Trust based on the offering prices for
investments at that date. The difference between cost (including
accumulated accretion of original issue discount on zero-coupon bonds)
and market value is reflected as unrealized appreciation (depreciation)
of investments. Securities transactions are recorded on the trade date.
Realized gains (losses) from securities transactions are determined on
the basis of average cost of the securities sold or redeemed.

(3) Income Taxes

The Trust is not subject to Federal income taxes as provided for by the
Internal Revenue Code.

(4) Trust Administration

The fees and expenses of the Trust are incurred and paid on the basis set
forth under "Trust Expenses and Charges" in Part B of this Prospectus.

The Trust Indenture and Agreement provides for interest distributions as
often as monthly (depending upon the distribution plan elected by the
Certificateholders).

The Trust Indenture and Agreement further requires that principal received
from the disposition of bonds, other than those bonds sold in connection
with the redemption of units, be distributed to Certificateholders.

See "Financial and Statistical Information" in Part A of this Prospectus
for the amounts of per unit distributions during the period ended
December 31, 1993.

The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. No units have been redeemed since the inception of the Trust.

(5) Net Assets

At December 31, 1993, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $ 4,100,366
Less initial gross underwriting commission (200,918)
3,899,448

Accumulated cost of bonds sold or called (521,150)
Net unrealized appreciation 412,007
Undistributed net investment income 68,427

Total $ 3,858,732

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 4,000 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 $6,375.
<PAGE>
<TABLE>

INSURED MUNICIPAL SECURITIES TRUST,

NEW JERSEY NAVIGATOR INSURED SERIES 3

Portfolio

December 31, 1993

Port- Aggregate Coupon Rate/ Redemption Feature
folio Principal Name of Issuer Ratings Date(s) of S.F.--Sinking Fund Market
No. Amount and Title of Bonds (1) Maturity(2) Ref. -- Refunding (2)(7) Value(3)
----- --------- --------------------- ------- ------------ ------------------------ ---------
<S> <C> <C> <C> <C> <C> <C>
1 $ 500,000 N.J. Hlth. Care Facs. AAA 6.750% 7/01/08 @ 100 S.F. $ 555,465
Fincg. Auth. Rev. 7/01/2020 7/01/01 @ 102 Ref.
Bonds The Med. Cntr.
of Ocean Cnty. Issue
Series C (MBIA Corp.)

2 500,000 N.J. Hlth. Care Facs. AAA 7.250 5/15/08 @ 100 S.F. 559,960
Fincg. Auth. Rev. 2/15/2021 2/15/01 @ 102 Ref.
Bonds Cathedral Hlth.
Servs. Inc. Issue
(FHA Insrd. Mtg.)
Series A (MBIA Corp.)

3 500,000 N.Y. & N.J. Port. AAA 6.875 7/01/12 @ 100 S.F. 556,415
Auth. Consldtd. Rev. 1/01/2025 1/01/00 @ 101 Ref.
Bonds Sixty-Seventh
Series (MBIA Corp.)

4 500,000 N.J. Bd. of Ed. AAA 7.000 6/15/11 @ 100 S.F. 566,220
Certs. of Part Rev. 12/15/2015 6/15/01 @ 102 Ref.
Bonds The Twnshp. of
Hamilton N.J. Series
B (MBIA Corp.)

5 200,000 Hoboken-Union AAA 7.250 8/01/09 @ 100 S.F. 234,444
City-Weehawken N.J. 8/01/2019 8/01/99 @ 102 Ref.
Swrg. Auth. Swr. Rev.
Bonds Series 1989
(MBIA Corp.) (5)

6 500,000 Hudson Cnty. N.J. AAA 7.600 12/01/99 @ 100 S.F. 588,565
Certs. of Part 12/01/2021 12/01/98 @ 102 Ref.
(Correc. Fac.) Rev.
Bonds Series 1988
(MBIA Corp.) (5)

7 420,000 Cmmnwlth. of P.R. AAA 7.300 7/01/11 @ 100 S.F. 499,010
Imprvmt. Bonds of 7/01/2020 7/01/00 @ 102 Ref.
1991 Gen. Oblig. Rev.
Bonds (MBIA Corp.)
(5)

8 180,000 P.R. Pub. Bldgs. AAA 6.000 7/01/07 @ 100 S.F. 186,417
Auth. Pub. Ed. & 7/01/2012 7/01/99 @ 100 Ref.
Hlth. Facs. Ref.
Rfndg. Bonds Series I
(MBIA Corp.)

9 200,000 Camden Cnty. N.J. AAA 0.000 No Sinking Fund 50,184
Muni. Utils. Auth. 9/01/2019 None
Cnty. Agreement Swr.
Rev. Cap. Apprec.
Bonds Series 1990A
(MBIA Corp.)

--------- ---------
$ 3,500,000 $ 3,796,680
========= =========

See accompanying footnotes to portfolio and notes to financial statements.
</TABLE>

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST,

NEW JERSEY NAVIGATOR INSURED SERIES 3

Footnotes to Portfolio

December 31, 1993

(1) All ratings are by Standard & Poor's Corporation. A brief description
of the ratings symbols and their meanings is set forth under "Description of
Bond Ratings" in Part B of this Prospectus.

(2) See "The Trust - Portfolio" in Part B of this Prospectus for an
explanation of redemption features. See "Tax Status" in Part B of this
Prospectus for a statement of the Federal tax consequences to a
Certificateholder upon the sale, redemption or maturity of a bond.

(3) At December 31, 1993, the net unrealized appreciation of all the bonds
was comprised of gross unrealized appreciation of $412,007.

(4) The annual interest income, based upon bonds held at December 31, 1993,
(excluding accretion of original issue discount on zero-coupon bonds) to the
Trust is $233,335.

(5) The bonds have been prerefunded and will be redeemed at the next
refunding call date.

(6) Bonds sold or called after December 31, 1993 are noted in a footnote
"Changes in Trust Portfolio" under "Description of Portfolio" in Part A of
this Prospectus.

(7) The Bonds may also be subject to other calls, which may be permitted
or required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or
unanticipated revenues).
<PAGE>

NOTE: Part A of This Prospectus May Not Be
Distributed Unless Accompanied by Part B.

INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED

SERIES 7

The Trust is a unit investment trust designated Series 7 ("New York
Navigator Trust") with an underlying portfolio of long-term insured 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 under
existing law and from New York State and City personal income tax.
Capital gains are subject to tax. (See "Tax Status" and "The Trust--
Portfolio" in Part B of this Prospectus.) The Sponsors are Bear, Stearns
& Co. Inc. 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.

Investors should retain both parts of this
Prospectus for future reference.

Prospectus Part A Dated April 29, 1994

<PAGE>

THE TRUST. The Trust is a unit investment trust and was formed to
preserve capital and to provide interest income (including 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 and from state and local taxes to
the extent indicated herein when received by persons subject to state and
local income taxation in a state in which the issuers of the Bonds are
located. The Trust seeks to achieve its investment objectives through
investment in a fixed, diversified portfolio of long-term insured bonds
(the "Bonds") issued by or on behalf of states, municipalities and public
authorities which, because of irrevocable insurance, are rated "AAA" by
Standard & Poor's Corporation. Although the Supreme Court has determined
that Congress has the authority to subject the 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 a specific preference item for purposes of the
federal individual and/or corporate alternative minimum tax. (See
"Description of Portfolio" in this Part A for a list of these 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
aggregate principal amount of the Bonds in the Trust may be "Zero Coupon
Bonds," which are original issue discount bonds that provide for payment
at maturity at par value, but do not provide for the payment of current
interest (for the amount of Zero Coupon Bonds in each Trust, and the cost
of such Bonds to that Trust, see "Description of Portfolio" in this
Part A). All of the Bonds in the Trust were rated "AAA" by Standard &
Poor's Corporation at the time originally deposited in the Trust (see
"Portfolio"). This rating results from insurance relating only to the
Bonds in the Trust and not to Units of the Trust. The insurance does not
remove market risk, as it does not guarantee the market value of the
Units. For a discussion of the significance of such ratings, see
"Description of Bond Ratings" in Part B of this Prospectus. The payment
of interest and preservation of capital are, of course, dependent upon the
continuing ability of the issuers of the Bonds or the insurer thereof to
meet their obligations. There can be no assurance that the Trust's
investment objectives will be achieved. Investment in the Trust should be
made with an understanding of the risks which an investment in long-term
fixed rate debt obligations may entail, including the risk that the value
of the underlying portfolio will decline with increases in interest rates,
and that the value of Zero Coupon Bonds is subject to greater fluctuation
than coupon bonds in response to such changes in interest rates. (See
"Portfolio" in Part B of this Prospectus.) Each Unit in the Trust
represents a 1/4838th undivided interest in the principal and net income
of the Trust. The principal amount of Bonds deposited in the Trust per
Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered
hereby are issued and outstanding Units which have been purchased by the
Sponsors in the secondary market.

All of the Bonds in the New York Navigator Trust are covered by
insurance obtained by the Sponsors from MBIA Corp. and 36% of the Bonds in
the New York Navigator Trust are Pre-Insured Bonds. The approximate
percentage of the aggregate principal amount of the Portfolio that is
insured by each Insurance Company with respect to Pre-Insured Bonds is as
follows: MBIA Corp., 36%.

PUBLIC OFFERING PRICE. The secondary market Public Offering Price
of each Unit is equal to the aggregate offering price of the Bonds in such
Trust divided by the number of Units outstanding, plus a sales charge of
4.9% of the Public Offering Price, or 5.152% of the net amount invested in
Bonds per Unit. In addition, accrued interest to the expected date of
settlement is added to the Public Offering Price. If Units had been
available for sale on the Evaluation Date, the Public Offering Price per
Unit would have been $1,701.17 plus accrued interest of $12.05 under the
monthly distribution plan, $17.63 under the semi-annual distribution plan
and $17.65 under the annual distribution plan, for a total of $1,182.22,
$1,187.80 and $1,187.82, respectively. The Public Offering Price per Unit
can vary on a daily basis in accordance with fluctuations in the aggregate
bid price of the Bonds. (See "Public Offering--Offering Price" in Part B
of this Prospectus.)

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. The rate
of return on an investment in Units of the Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".

The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the
Evaluator applicable to the Trust and with the redemption, maturity, sale
or other disposition of the Bonds in the Trust. The Public Offering Price
will vary with changes in the bid prices of the Bonds. Therefore, there
is no assurance that the present Estimated Current Return or Estimated
Long Term Return will be realized in the future. (For the Estimated
Current Return to Certificateholders under the monthly, semi-annual and
annual distribution plans, see "Summary of Essential Information". See
"Estimated Long Term Return and Estimated Current Return" in Part B of
this Prospectus.)

A schedule of cash flow projections is available from the Sponsors
upon request.

TOTAL REINVESTMENT PLAN. Certificateholders under the semi-annual
and annual plans of distribution have the opportunity to have all their
regular interest distributions, and principal distributions, if any,
reinvested in available series of "Insured Municipal Securities Trust" or
"Municipal Securities Trust." (See "Total Reinvestment Plan" in Part B of
this Prospectus. Residents of Texas see "Total Reinvestment Plan for
Texas Residents" in Part B of this Prospectus.) The Plan is not designed
to be a complete investment program.

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED
SERIES 7

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1993

Date of Deposit: May 2, 1991 Weighted Average Life to
Principal Amount of Bonds ...$4,825,000 Maturity: 18.2 Years.
Number of Units .............4,838 Minimum Value of Trust:
Fractional Undivided Inter- Trust may be terminated if
est in Trust per Unit .....1/4838 value of Trust is less than
Principal Amount of $2,000,000 in principal amount
Bonds per Unit ............$997.31 of Bonds.
Secondary Market Public Mandatory Termination Date:
Offering Price** The earlier of December 31,
Aggregate Bid Price 2040 or the disposition of the
of Bonds in Trust .......$5,383,864+++ last Bond in the Trust.
Divided by 4,838 Units ....$1,112.83 Trustee***: United States Trust
Plus Sales Charge of 4.9% Company of New York.
of Public Offering Price $57.34 Trustee's Annual Fee: Monthly
Public Offering Price plan $.99 per $1,000; semi-
per Unit ................$1,170.17+ annual plan $.53 per $1,000;
Redemption and Sponsors' and annual plan is $.35 per
Repurchase Price $1,000.
per Unit ..................$1,112.83+ Evaluator: Kenny S&P Evaluation
+++ Services.
++++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $8 plus
Public Offering Price $.25 per each issue of Bonds in
over Redemption and excess of 50 issues (treating
Sponsors' Repurchase separate maturities as separate
Price per Unit ............$57.34++++ issues).
Difference between Public Sponsors: Bear, Stearns & Co.
Offering Price per Unit Inc.
and Principal Amount per & Gruntal & Co., Incorporated.
Unit Premium/(Discount) ...$172.86 Sponsors' Annual Fee: Maximum of
Evaluation Time: 4:00 p.m. $.25 per $1,000 principal
New York Time. amount of Bonds (see "Trust
Minimum Principal Distribution: Expenses and Charges" in Part B
$1.00 per Unit. of this Prospectus).

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# .........$70.18 $70.18 $70.18
Less estimated annual fees and
expenses ............................ 2.14 1.51 1.30
Estimated net annual interest ______ ______ ______
income (cash)# ......................$68.04 $68.67 $68.88
Estimated interest distribution# ...... 5.67 34.33 68.88
Estimated daily interest accrual# ..... .1890 .1907 .1913
Estimated current return#++ ........... 5.81% 5.87% 5.89%
Estimated long term return++ .......... 4.10% 4.15% 4.17%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15

<PAGE>
* The Date of Deposit is the date on which the Trust Agreement was
signed and the deposit of the Bonds with the Trustee made.

** For information regarding offering price per Unit and applicable
sales charge under the Total Reinvestment Plan, see "Total
Reinvestment Plan" in Part B of this Prospectus.

+ Plus accrued interest to the expected date of settlement
(approximately five business days after purchase) of $12.05 monthly,
$17.63 semi-annually and $17.65 annually.

++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.

# Does not include income accrual from original issue discount bonds,
if any.

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1993

DESCRIPTION OF PORTFOLIO

The portfolio of the Trust consists of 11 issues representing
obligations of 10 issuers located in the state of New York. The Sponsors
have not participated as a sole underwriter or manager, co-manager or
member of an underwriting syndicate from any of the initial aggregate
principal amount of the Bonds were acquired. None of the Bonds are
obligations of state and local housing authorities; approximately 36.9%
are hospital revenue bonds; none were issued in connection with the
financing of nuclear generating facilities; and approximately 4.4% are
"mortgage subsidy" bonds. All of the Bonds in the Trust are subject to
redemption prior to their stated maturity dates pursuant to sinking fund
or optional 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
$635,000 of the principal amount of the Bonds is a general obligation
bond. All 10 of the remaining issues representing $4,190,000 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:
Assistance Corporation 1, Commuter Facility 1, Dormitory Authority 1,
Hospital 3, Single Family Mortgage Revenue 1, University 1 and Water 2.
For an explanation of the significance of these factors see "The Trust--
Portfolio" in Part B of this Prospectus.

As of December 31, 1993, $1,210,000 (approximately 25.1% of the
aggregate principal amount of the Bonds) were original issue discount
bonds. Of these original issue discount bonds, $210,000 (approximately
4.4% of the aggregate principal amount of the Bonds) were Zero Coupon
Bonds. Zero Coupon Bonds do not provide for the payment of any current
interest and provide for payment at maturity at par value unless sooner
sold or redeemed. The market value of Zero Coupon Bonds is subject to
greater fluctuations than coupon bonds in response to changes in interest
rates. None of the Bonds in the Trust were purchased at a "market"
discount from par value at maturity, approximately 74.9% 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.

<PAGE>
FINANCIAL AND STATISTICAL INFORMATION

Selected data for each Unit outstanding for the periods listed below:

December 31, 1991 5,000 $1,038.50 $45.47 $45.79 $45.84 -0-
December 31, 1992 5,000 1,067.87 67.74 68.43 68.65 $2.00
December 31, 1993 4,838 1,129.63 67.74 68.40 68.61 -0-

<PAGE>

Independent Auditors' Report

The Sponsor, Trustee and Certificateholders
Insured Municipal Securities Trust,
New York Navigator Insured Series 7:

We have audited the accompanying statement of net assets, including the
portfolio, of Insured Municipal Securities Trust, New York Navigator
Insured Series 7 as of December 31, 1993, and the related statements of
operations, and changes in net assets for each of the years in the two
year period then ended, and for the period of May 2, 1991 (date of
deposit) to December 31, 1991. These financial statements are the
responsibility of the Trustee (see note 2). Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1993, by correspondence with
the Trustee. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Insured
Municipal Securities Trust, New York Navigator Insured Series 7 as
of December 31, 1993, and the results of its operations and the
changes in its net assets for each of the years in the two year
period then ended, and for the period May 2, 1991 to December 31,
1991 in conformity with generally accepted accounting principles.

KPMG Peat Marwick

New York, New York
March 31, 1994
<PAGE>

INSURED MUNICIPAL SECURITIES TRUST,
NEW YORK NAVIGATOR INSURED SERIES 7

Statement of Net Assets

December 31, 1993

Investments in marketable securities,
at market value (cost $4,723,617) $ 5,412,456

Excess of other assets over total liabilities 52,685
-----------

Net assets ( 4,838 units of fractional undivided
interest outstanding, $1,129.63 per unit) $ 5,465,141
===========

See accompanying notes to financial statements.
<PAGE>

<TABLE>
INSURED MUNICIPAL SECURITIES TRUST,
NEW YORK NAVIGATOR INSURED SERIES 7

Statement of Operations
<CAPTION>
For the Period
May 2, 1991
Years ended December 31, (date of deposit)
1993 1992 to December 31, 1991
----------------------------------------------------
<S> <C> <C> <C>
Investment income - interest $ 346,829 352,857 233,008
---------- --------- ---------

Expenses:
Trustee's fees 5,463 5,096 2,471
Evaluator's fees 2,372 2,192 904
Sponsor's advisory fee 1,245 1,250 830
---------- --------- ---------

Total expenses 9,080 8,538 4,205
---------- --------- ---------

Investment income, net 337,749 344,319 228,803
---------- --------- ---------

Realized and unrealized gain
(loss) on investments:
Net realized gain (loss) on
bonds sold or called 11,066 (632) -
Unrealized appreciation
for the year 293,315 130,772 264,752
---------- --------- ---------

Net gain on investments 304,381 130,140 264,752
---------- --------- ---------

Net increase in net
assets resulting
from operations $ 642,130 474,459 493,555
========== ========= =========

See accompanying notes to financial statements.
</TABLE>

<PAGE>

<TABLE>
INSURED MUNICIPAL SECURITIES TRUST,
NEW YORK NAVIGATOR INSURED SERIES 7

Statement of Changes in Net Assets
<CAPTION>
For the period
May 2, 1991
Years ended December 31, (date of deposit)
1993 1992 to December 31, 1991
----------------------------------------------------
<S> <C> <C> <C>
Operations:
Investment income, net $ 337,749 344,319 228,803
Net realized gain (loss) on
bonds sold or called 11,066 (632) -
Unrealized appreciation
of investments for the year 293,315 130,772 264,752
------------ ----------- ------------

Net increase in net
assets resulting
from operations 642,130 474,459 493,555
------------ ----------- ------------

Distributions:
To Certificateholders:
Investment income 335,280 340,854 137,631
Principal - 10,000 -

Redemptions:
Interest 3,106
Principal 177,970 - 6,812
------------ ----------- ------------

Total distribuitons and redemptions 516,356 350,854 144,443
------------ ----------- ------------

Total increase 125,774 123,605 349,112

Net assets at beginning of period 5,339,367 5,215,762 4,866,650
------------ ----------- ------------

Net assets at end of year (including
undistributed net investment
income of $86,467 , $87,701 and
$84,360 respectively) $ 5,465,141 5,339,367 5,215,762
============ =========== ============

See accompanying notes to financial statements.
</TABLE>

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST,
NEW YORK NAVIGATOR INSURED SERIES 7

Notes to Financial Statements

December 31, 1993, 1992 and 1991

(1) Organization

Insured Municipal Securities Trust, New York Navigator Insured Series 7
(Trust) was organized on May 2, 1991 by Bear, Stearns & Co. Inc.
and Gruntal & Co., Incorporated (Co-Sponsors) under the laws of the
State of New York by a Trust Indenture and Agreement, and is registered
under the Investment Company Act of 1940.

(2) Summary of Significant Accounting Policies

The Trustee is also responsible for all estimates of expenses and
accruals reflected in the Trust's financial statements. The
accompanying financial statements have been adjusted to record the
unrealized appreciation (depreciation) of investments and to record
interest income and expenses on the accrual basis.

Investments are carried at market value which is determined by
either Standard & Poor's Corporation or Moody's Investors Service,
Inc. (Evaluator) as discussed in Footnotes to Portfolio. The
market value of the investments is based upon the bid prices for
the bonds at the end of the year, except that the market value on
the date of deposit represents the cost to the Trust based on the
offering prices for investments at that date. The difference between
cost (including accumulated accretion of original issue discount on
zero-coupon bonds) and market value is reflected as unrealized
appreciation (depreciation) of investments. Securities transactions
are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost
of the securities sold or redeemed.

(3) Income Taxes

The Trust is not subject to Federal income taxes as provided for by
the Internal Revenue Code.

(4) Trust Administration

The fees and expenses of the Trust are incurred and paid on the basis
set forth under "Trust Expenses and Charges" in Part B of this
Prospectus.

The Trust Indenture and Agreement provides for interest distributions
as often as monthly (depending upon the distribution plan elected
by the Certificateholders).

See "Financial and Statistical Information" in Part A of this
Prospectus for the amounts of per unit distributions during the
periods ended December 31, 1993, 1992 and 1991.

The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. 162 units were redeemed by the Trust during the year
ended December 31, 1993. No units were redeemed by the Trust during
periods ending December 31, 1992 and 1991.

(5) Net Assets

At December 31, 1993, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $ 5,117,403
Less initial gross underwriting commission (250,753)
4,866,650

Cost of securities sold or called (148,223)
Net unrealized appreciation 688,839
Undistributed net investment income 86,467
Distributions in excess of proceeds
from bonds sold or called (28,592)

Total $ 5,465,141

Undistributed net investment income includes accumulated accretion of
original issue discount of $5,190.
<PAGE>

<TABLE>

INSURED MUNICIPAL SECURITIES TRUST,

NEW YORK NAVIGATOR INSURED SERIES 7

Portfolio
December 31, 1993
<CAPTION>

Port- Aggregate Coupon Rate/ Redemption Feature
folio Principal Name of Issuer Ratings Date(s) of S.F.--Sinking Fund Market
No. Amount and Title of Bonds (1) Maturity(2) Ref.--Refunding(2)(7) Value(3)
- -- ----------- --------------------- ------ -------------- --------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 $ 500,000 N.Y. State Dorm. AAA 7.625% 7/01/06 @ 100 S.F. $ 604,435
Auth. City Univ Sys. 7/01/2020 7/01/00 @ 102 Ref.
Cnsldtd. Rev. Bonds
Series 1990A (MBIA
Corp.) (5)

2 205,000 N.Y. State Dorm. AAA 6.125 5/15/19 @ 100 S.F. 214,885
Auth. State Univ. Ed. 5/15/2020 5/15/00 @ 100 Ref.
Facs. Rev Bonds
Series 1990C (MBIA
Corp.)

3 590,000 N.Y. Local Gov. AAA 6.500 4/01/19 @ 100 S.F. 645,649
Assis. Corp. (A Pub. 4/01/2020 4/01/01 @ 102 Ref.
Benefit Corp. of the
State of N.Y.) Rev.
Bonds Series 1991A
(MBIA Corp.)

4 600,000 N.Y. State Med. Care AAA 7.100 8/15/02 @ 100 S.F. 670,542
(Bronx Lebanon Hosp. 2/15/2027 2/15/97 @ 102 Ref.
Rev. Bonds (MBIA
Corp.)

5 600,000 N.Y. State Med. Care AAA 7.450 2/15/98 @ 100 S.F. 714,288
Facs. Finc. Agncy. 2/15/2029 2/15/00 @ 102 Ref.
St. Luke's Roosevelt
Hosp. Cntr. FHA
Insrd. Mtg. Rev.
Bonds Series B (MBIA
Corp.) (5)

6 580,000 N.Y. State Med. Care AAA 7.750 2/01/11 @ 100 S.F. 687,538
Facs. Finc. Agncy. 2/15/2020 2/15/00 @ 102 Ref.
Mental Hlth. Facs.
Imprvmnt. Rev. Bonds
Series 1990A (MBIA
Corp.)

7 300,000 Metro Trans. Auth. AAA 7.875 7/01/09 @ 100 S.F. 364,050
Commtr. Facs. 1987 7/01/2017 7/01/00 @ 101.5 Ref.
Serv. Cntract. Rev.
Bonds Series 4 (MBIA
Corp.) (5)

8 205,000 N.Y. City Muni Wtr. AAA 7.000 6/15/17 @ 100 S.F. 228,909
Finc. Ath. Wtr. & 6/15/2018 6/15/97 @ 101 Ref.
Swr. Sys. Rev. Bonds
Fiscal 1989 Series A
(MBIA Corp.) (5)

9 400,000 N.Y. City Muni. Wtr. AAA 7.375 No Sinking Fund 480,116
Finc. Auth. Wtr. & 6/15/2014 6/15/01 @ 101.5 Ref.
Swr. Sys. Rev. Bonds
Fiscal 1991 Series C
(MBIA Corp.) (5)

10 635,000 N.Y. City Gen. Oblig. AAA 8.000 No Sinking Fund 774,185
Rev. Bonds Fiscal 8/01/2015 8/01/01 @ 101.5 Ref.
1991 Series D (MBIA
Corp.

11 210,000 N.Y. State Mtg. AAA 0.000 4/01/12 @ 52.88 S.F. 27,859
Agncy. Hmownr. Mtg 4/01/2020 4/01/02 @ 23.845 Ref.
Rev. Bonds Series II
(MBIA Corp.)
----------- ---------
$ 4,825,000 $ 5,412,456
=========== =========

See accompanying footnotes to portfolios and notes to financial statements.
</TABLE>

<PAGE>

Footnotes to Portfolio

December 31, 1993

(1) All ratings are by Standard & Poor's Corporation. A brief
description of the ratings symbols and their meanings is set forth
under "Description of Bond Ratings" in Part B of this Prospectus.

(2) See "The Trust - Portfolio" in Part B of this Prospectus for an
explanation of redemption features. See "Tax Status" in Part B of this
Prospectus for a statement of the Federal tax consequences to a
Certificateholder upon the sale, redemption or maturity of a bond.

(3) At December 31, 1993, the net unrealized appreciation of all the
bonds was comprised of the gross unrealized appreciation of 688,839.

(4) The annual interest income, based upon bonds held at December 31,
1993, (excluding accretion of original issue discount on zero-coupon
bonds) to the Trust is $339,556.

(5) The bonds have been prerefunded and will be redeemed at the next
refunding call date.

(6) Bonds sold or called after December 31, 1993 are noted in a
footnote "Changes in Trust Portfolio" under "Description of Portfolio"
in Part A of this Prospectus.

(7) The Bonds may also be subject to other calls, which may be permitted
or required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or
unanticipated revenues).
<PAGE>

NOTE: Part A of This Prospectus May Not Be
Distributed Unless Accompanied by Part B.

INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED

SERIES 4

The Trust is a unit investment trust designated Series 4 ("New
Jersey Navigator Trust") with an underlying portfolio of long-term insured
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 under existing law and from New Jersey gross income
tax. Capital gains are subject to tax. (See "Tax Status" and "The
Trust--Portfolio" in Part B of this Prospectus.) The Sponsors are Bear,
Stearns & Co. Inc. 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.

Investors should retain both parts of this
Prospectus for future reference.

Prospectus Part A Dated April 29, 1994

<PAGE>

THE TRUST. The Trust is a unit investment trust and was formed to
preserve capital and to provide interest income (including 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 and from state and local taxes to
the extent indicated herein when received by persons subject to state and
local income taxation in a state in which the issuers of the Bonds are
located. The Trust seeks to achieve its investment objectives through
investment in a fixed, diversified portfolio of long-term insured bonds
(the "Bonds") issued by or on behalf of states, municipalities and public
authorities which, because of irrevocable insurance, are rated "AAA" by
Standard & Poor's Corporation. Although the Supreme Court has determined
that Congress has the authority to subject the 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 a specific preference item for purposes of the
federal individual and/or corporate alternative minimum tax. (See
"Description of Portfolio" in this Part A for a list of these 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
aggregate principal amount of the Bonds in the Trust may be "Zero Coupon
Bonds," which are original issue discount bonds that provide for payment
at maturity at par value, but do not provide for the payment of current
interest (for the amount of Zero Coupon Bonds in the Trust, and the cost
of such Bonds to the Trust, see "Description of Portfolio" in this
Part A). All of the Bonds in the Trust were rated "AAA" by Standard &
Poor's Corporation at the time originally deposited in the Trust (see
"Portfolio"). This rating results from insurance relating only to the
Bonds in the Trust and not to Units of the Trust. The insurance does not
remove market risk, as it does not guarantee the market value of the
Units. For a discussion of the significance of such ratings, see
"Description of Bond Ratings" in Part B of this Prospectus. The payment
of interest and preservation of capital are, of course, dependent upon the
continuing ability of the issuers of the Bonds or the insurer thereof to
meet their obligations. There can be no assurance that the Trust's
investment objectives will be achieved. Investment in the Trust should be
made with an understanding of the risks which an investment in long-term
fixed rate debt obligations may entail, including the risk that the value
of the underlying portfolio will decline with increases in interest rates,
and that the value of Zero Coupon Bonds is subject to greater fluctuation
than coupon bonds in response to such changes in interest rates. (See
"Portfolio" in Part B of this Prospectus.) Each Unit in the Trust
represents a 1/5000th undivided interest in the principal and net income
of the Trust. The principal amount of Bonds deposited in the Trust per
Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered
hereby are issued and outstanding Units which have been purchased by the
Sponsors in the secondary market.

INSURANCE. Each of the Bonds in the New Jersey Navigator Trust is
insured by a municipal bond guaranty insurance policy obtained by the
Sponsors (the "Navigator Sponsor-Insured Bonds") from Municipal Bond
Investors Assurance Corporation ("MBIA Corp.") covering regularly
scheduled payments of principal thereof and interest thereon when such
amounts become due for payment but shall not have been paid. Such amounts
shall be reduced by any amounts received by the holders or the owners of
the Bonds from any trustee for the Bond issuers, any other Bond insurers
or any other source other than MBIA Corp. MBIA Corp. has issued such
policy or policies covering each of the Bonds in the New Jersey Navigator
Trust and each such policy will remain in force until the payment in full
of such Bonds, whether or not such Bonds continue to be held in the New
Jersey Navigator Trust. The insurer's policies relating to small
industrial development bonds and pollution control revenue bonds also
guarantee the accelerated payments required to be made by or on behalf of
an issuer of Bonds pursuant to the terms of the Bonds if there occurs an
event which results in the loss of the tax-exempt status of the interest
on such Bonds, including principal, interest or premium payments, if any,
as and when required. Such insurance does not cover accelerated payments
required to be made by or on behalf of an issuer of other than small
industrial revenue bonds or pollution control revenue bonds if there
occurs an event which results in the loss of the tax exempt status of the
interest on such Bonds nor does the insurance cover accelerated payments
of principal or penalty interest or premiums unrelated to taxability of
interest on any of the Bonds, including pollution control revenue bonds or
small industrial development bonds. In the event of accelerated payments
on any Bonds unrelated to the taxability of interest on any such Bonds,
the payments guaranteed by MBIA Corp. shall be made in such amounts and at
such times such payment would have been made absent such an acceleration.
The insurance relates only to the prompt payment of principal of and
interest on the securities in the New Jersey Navigator Trust and does not
remove market risk nor does it guarantee the market value of Units in the
New Jersey Navigator Trust. The terms of the insurance are more fully
described under "Insurance of the Bonds" in Part B of this Prospectus.
For discussion of the effect of an occurrence of non-payment of principal
or interest on any Bonds in the New Jersey Navigator Trust see "Portfolio
Supervision" in Part B of this Prospectus. No representation is made
herein as to any bond insurer's ability to meet its obligations under a
policy of insurance relating to any of the Bonds in the New Jersey
Navigator Trust. In addition, investors should be aware that subsequent
to the Date of Deposit the rating of the claims-paying ability of MBIA
Corp. may be downgraded, which may result in a downgrading of the rating
of the Units in the New Jersey Navigator Trust. The premiums for the
Navigator Sponsor-Insured Bonds are obligations of the Sponsors.
Additionally, some of the Bonds in the New Jersey Navigator Trust may be
Pre-Insured Bonds (as described below). The premium for the Pre-Insured
Bonds is an obligation of the issuers, underwriters or prior owners of
those Bonds. The insurance policy or policies relating to the Navigator
Sponsor-Insured Bonds provides that, to the extent that Bonds are both
Pre-Insured Bonds and Navigator Sponsor-Insured Bonds, coverage is
effective after a claim has been made upon the insurer of the Pre-Insured
Bonds.

Some of the Bonds in the New Jersey Navigator Trust may additionally
be insured by a municipal bond guaranty insurance policy obtained by
issuers, underwriters or prior owners of the Bonds ("Pre-Insured Bonds")
and issued by one of the insurance companies described under "Insurance on
the Bonds" in Part B of this Prospectus (the "Insurance Companies"). Such
insurance covers the scheduled payment of principal thereof and interest
thereon when such amounts shall become due for payment but shall not have
been paid by the issuer or any other insurer thereof. The insurance,
unless obtained by MBIA Corp., will also cover any accelerated payments of
principal and any increase in interest payments or premiums, if any,
payable upon mandatory redemption of the Bonds if interest on any such
Bond is ultimately deemed to be subject to federal income tax. Insurance
obtained from MBIA Corp. only guarantees the full and complete payments
required to be made by or on behalf of an issuer of small industrial
revenue bonds and pollution control revenue bonds if there occurs an event
which results in the loss of tax-exempt status of the interest on such
Bonds, including principal, interest or premium payments, if any, as and
when required. To the extent, therefore, that Bonds are only covered by
insurance obtained from MBIA Corp., such Bonds will not be covered for the
full and complete payments required to be made by or on behalf of an
issuer of other than small industrial revenue bonds or pollution control
revenue bonds if there occurs an event which results in the loss of tax-
exempt status of the interest on such Bonds. None of the insurance will
cover accelerated payments of principal or penalty interest or premiums
unrelated to taxability of interest on the Bonds. The insurance relates
only to the prompt payment of principal of and interest on the securities
in the portfolios, and does not remove market risks nor does it guarantee
the market value of Units in the Trusts. The terms of the insurance are
more fully described under "Insurance on the Bonds" in Part B of this
Prospectus. No representation is made herein as to any Bond insurer's
ability to meet its obligations under a policy of insurance relating to
any of the Pre-Insured Bonds. In addition, investors should be aware that
subsequent to the Date of Deposit the rating of the claims-paying ability
of the insurer of an underlying Pre-Insured Bond may be downgraded.

All of the Bonds in the New Jersey Navigator Trust are covered by
insurance obtained by the Sponsors from MBIA Corp. and 59.8% of the Bonds
in the New Jersey Navigator Trust are Pre-Insured Bonds. The approximate
percentage of the aggregate principal amount of the Trust that is insured
by each Insurance Company with respect to Pre-Insured Bonds is as follows:
AMBAC Indemnity Corp. ("AMBAC"), 10.6%; Financial Guaranty Insurance
Company ("Financial Guaranty"), 13.8%; Municipal Bond Insurance
Association ("MBIA"), 10.6%; and MBIA Corp., 24.8%.

PUBLIC OFFERING PRICE. The secondary market Public Offering Price
of each Unit is equal to the aggregate offering price of the Bonds in such
Trust divided by the number of Units outstanding, plus a sales charge of
4.9% of the Public Offering Price, or 5.152% of the net amount invested in
Bonds per Unit. In addition, accrued interest to the expected date of
settlement is added to the Public Offering Price. If Units had been
available for sale on the Evaluation Date, the Public Offering Price per
Unit would have been $1,069.61 plus accrued interest of $11.94 under the
monthly distribution plan, $16.90 under the semi-annual distribution plan
and $16.91 under the annual distribution plan, for a total of $1,081.55,
$1,086.51 and $1,086.52, respectively. The Public Offering Price per Unit
can vary on a daily basis in accordance with fluctuations in the aggregate
bid price of the Bonds. (See "Public Offering--Offering Price" in Part B
of this Prospectus.)

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. The rate
of return on an investment in Units of the Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".

The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the
Evaluator applicable to the Trust and with the redemption, maturity, sale
or other disposition of the Bonds in the Trust. The Public Offering Price
will vary with changes in the bid prices of the Bonds. Therefore, there
is no assurance that the present Estimated Current Return or Estimated
Long Term Return will be realized in the future. (For the Estimated
Current Return to Certificateholders under the monthly, semi-annual and
annual distribution plans, see "Summary of Essential Information". See
"Estimated Long Term Return and Estimated Current Return" in Part B of
this Prospectus.)

A schedule of cash flow projections is available from the Sponsors
upon request.

TOTAL REINVESTMENT PLAN. Certificateholders under the semi-annual
and annual plans of distribution have the opportunity to have all their
regular interest distributions, and principal distributions, if any,
reinvested in available series of "Insured Municipal Securities Trust" or
"Municipal Securities Trust." (See "Total Reinvestment Plan" in Part B of
this Prospectus. Residents of Texas see "Total Reinvestment Plan for
Texas Residents" in Part B of this Prospectus.) The Plan is not designed
to be a complete investment program.

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED
SERIES 4

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1993

Date of Deposit: May 2, 1991 Minimum Principal Distribution:
Principal Amount of Bonds ...$4,700,000 $1.00 per Unit.
Number of Units .............5,000 Weighted Average Life to
Fractional Undivided Inter- Maturity:
est in Trust per Unit .....1/5000 15.7 Years.
Principal Amount of Minimum Value of Trust:
Bonds per Unit ............$940.00 Trust may be terminated if
Secondary Market Public value of Trust is less than
Offering Price** $2,000,000 in principal amount
Aggregate Bid Price of Bonds.
of Bonds in Trust .......$5,085,976+++ Mandatory Termination Date:
Divided by 5,000 Units ....$1,017.20 The earlier of December 31,
Plus Sales Charge of 4.9% 2040 or the disposition of the
of Public Offering Price $52.41 last Bond in the Trust.
Public Offering Price Trustee***: United States Trust
per Unit ................$1,069.61+ Company of New York.
Redemption and Sponsors' Trustee's Annual Fee: Monthly
Repurchase Price plan $.98 per $1,000; semi-
per Unit ..................$1,017.20+ annual plan $.52 per $1,000;
+++ and annual plan is $.34 per
++++ $1,000.
Excess of Secondary Market Evaluator: Kenny S&P Evaluation
Public Offering Price Services.
over Redemption and Evaluator's Fee for Each
Sponsors' Repurchase Evaluation: Minimum of $8 plus
Price per Unit ............$52.41++++ $.25 per each issue of Bonds in
Difference between Public excess of 50 issues (treating
Offering Price per Unit separate maturities as separate
and Principal Amount per issues).
Unit Premium/(Discount) ...$129.61 Sponsors: Bear, Stearns & Co.
Evaluation Time: 4:00 p.m. Inc.
New York Time. Gruntal & Co., Incorporated
Sponsors' Annual Fee: Maximum of
$.25 per $1,000 principal
amount of Bonds (see "Trust
Expenses and Charges" in Part B
of this Prospectus).

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# .........$62.21 $62.21 $62.21
Less estimated annual fees and
expenses ............................ 2.07 1.47 1.27
Estimated net annual interest ______ ______ ______
income (cash)# ......................$60.14 $60.74 $60.94
Estimated interest distribution# ...... 5.01 30.37 60.94
Estimated daily interest accrual# ..... .1670 .1687 .1692
Estimated current return#++ ........... 5.62% 5.68% 5.70%
Estimated long term return++ .......... 4.56% 4.61% 4.63%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15

<PAGE>
* The Date of Deposit is the date on which the Trust Agreement was
signed and the deposit of the Bonds with the Trustee made.

** For information regarding offering price per Unit and applicable
sales charge under the Total Reinvestment Plan, see "Total
Reinvestment Plan" in Part B of this Prospectus.

+ Plus accrued interest to the expected date of settlement
(approximately five business days after purchase) of $11.94 monthly,
$16.90 semi-annually and $16.91 annually.

++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.

# Does not include income accrual from original issue discount bonds,
if any.

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1993

DESCRIPTION OF PORTFOLIO

The portfolio of the Trust consists of 10 issues representing
obligations of 9 issuers located in the state of New Jersey and 1 in
Puerto Rico. The Sponsors have not participated as a sole underwriter or
manager, co-manager or member of an underwriting syndicate from which any
of the initial aggregate principal amount of the Bonds were acquired.
None of the Bonds are obligations of state and local housing authorities;
none are hospital revenue bonds; none were issued in connection with the
financing of nuclear generating facilities; and none are "mortgage
subsidy" bonds. All of the Bonds in the Trust are subject to redemption
prior to their stated maturity dates pursuant to sinking fund or optional
call provisions. The Bonds may also be subject to other calls, which may
be permitted or required by events which cannot be predicted (such as
destruction, condemnation, termination of a contract, or receipt of excess
or unanticipated revenues). None of the Bonds are general obligation
bonds. Ten issues representing $4,700,000 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: Convention Center 1, Education
Facility 1, Mortgage Revenue 1, Port Facility 1, Public Facility 1, Sewer
Revenue 2 and Utility 3. For an explanation of the significance of these
factors see "The Trust--Portfolio" in Part B of this Prospectus.

As of December 31, 1993, $945,000 (approximately 20.1% of the
aggregate principal amount of the Bonds) were original issue discount
bonds. Of these original issue discount bonds, $250,000 (approximately
5.3% of the aggregate principal amount of the Bonds) were Zero Coupon
Bonds. Zero Coupon Bonds do not provide for the payment of any current
interest and provide for payment at maturity at par value unless sooner
sold or redeemed. The market value of Zero Coupon Bonds is subject to
greater fluctuations than coupon bonds in response to changes in interest
rates. None of the Bonds in the Trust were purchased at a "market"
discount from par value at maturity, approximately 79.9% 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.

<PAGE>
FINANCIAL AND STATISTICAL INFORMATION

Selected data for each Unit outstanding for the periods listed below:

December 31, 1991 5,000 $1,009.51 $25.64 $25.85 $25.91 -0-
December 31, 1992 5,000 1,006.76 63.90 64.52 64.74 $33.00
December 31, 1993 5,000 1,033.41 61.09 61.73 61.91 27.00

Independent Auditors' Report

The Sponsor, Trustee and Certificateholders
Insured Municipal Securities Trust,
New Jersey Navigator Insured Series 4:

We have audited the accompanying statement of net assets, including the
portfolio, of Insured Municipal Securities Trust, New Jersey Navigator
Insured Series 4 as of December 31, 1993, and the related statements of
operations, and changes in net assets for each of the years in the two
year period then ended, and for the period May 2, 1991 (date of deposit)
to December 31, 1991. These financial statements are the responsibility
of the Trustee (see note 2). Our responsibility is to express an
opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Insured
Municipal Securities Trust, New Jersey Navigator Insured Series 4 as
of December 31, 1993, and the results of its operations and the changes
in its net assets for each of the years in the two year period then
ended, and for the period May 2, 1991 to December 31, 1991 in
conformity with generally accepted accounting principles.

KPMG Peat Marwick

New York, New York
March 31, 1994

<PAGE>

Statement of Net Assets

December 31, 1993

Investments in marketable securities,
at market value (cost $4,537,947) $ 5,085,976

Excess of other assets over total liabilities 81,075
-----------

Net assets (5,000 units of fractional undivided
interest outstanding, $1,033.41 per unit) $ 5,167,051
===========

See accompanying notes to financial statements.

<PAGE>

<TABLE>
Statements of Operation
<CAPTION>
For the period
May 2, 1991
Years ended December 31, (date of deposit)
-----------------------------------------------
1993 1992 to December 31, 1991
--------- --------- --------------------
<S> <C> <C> <C>
Investment income - interest $ 318,100 332,742 223,183
--------- --------- ---------

Expenses:
Trustee's fees 5,371 5,277 1,902
Evaluator's fees 2,372 2,192 848
Sponsor's advisory fee 1,209 1,250 830
--------- --------- ---------

Total expenses 8,952 8,719 3,580
--------- --------- ---------

Investment income, net 309,148 324,023 219,603
--------- --------- ---------

Realized and unrealized gain
(loss) on investments:
Net realized loss on
bonds sold or called (7,777) (9,506) -
Net unrealized appreciation
for the year 274,043 160,269 113,717
--------- --------- ---------

Net gain on investments 266,266 150,763 113,717
--------- --------- ---------

Net increase in net
assets resulting
from operations $ 575,414 474,786 333,320
========= ========= =========

See accompanying notes to financial statements.
</TABLE>

<PAGE>

<TABLE>

Statements of Changes in Net Assets
<CAPTION>
For the period
May 2, 1991
Years ended December 31, (date of deposit)
----------- - ---------- ---------------------
1993 1992 to December 31, 1991
----------- ---------- ---------------------
<S> <C> <C> <C>
Operations:
Investment income, net $ 309,148 324,023 219,603
Net realized loss on
bonds sold or called (7,777) (9,506) -
Net unrealized appreciation
for the year 274,043 160,269 113,717
----------- ---------- -----------

Net increase in net
assets resulting
from operations 575,414 474,786 333,320
----------- ---------- -----------

Distributions:
To Certificateholders:
Investment income 307,179 321,229 128,803
Principal 135,000 165,000 -
To Sponsor of accrued interest
to date of settlement - - 7,034
----------- ---------- -----------

Total distributions 442,179 486,229 135,837
----------- ---------- -----------

Total increase (decrease) 133,235 (11,443) 197,483

Net assets at beginning of period 5,033,816 5,045,259 4,847,776
----------- ---------- -----------

Net assets at end of year (including
undistributed net investment
income of $88,529 , $86,560
and $83,766 respectively) $ 5,167,051 5,033,816 5,045,259
=========== ========== ===========

See accompanying notes to financial statements.
</TABLE>

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST,

NEW JERSEY NAVIGATOR INSURED SERIES 4

Notes to Financial Statements

December 31, 1993, 1992 and 1991

(1) Organization

Insured Municipal Securities Trust, New Jersey Navigator Insured
Series 4 (Trust) was organized on May 2, 1991 by Bear, Stearns & Co.
Inc. and Gruntal & Co., Incorporated (Co-Sponsors) under the laws of
the State of New York by a Trust Indenture and Agreement, and is
registered under the Investment Company Act of 1940.

(2) Summary of Significant Accounting Policies

United States Trust Company of New York (Trustee) has custody of and
responsibility for the accounting records and financial statements
of the Trust and is responsible for establishing and maintaining a
system of internal control related thereto.

The Trustee is also responsible for all estimates of expenses and
accruals reflected in the Trust's financial statements. The
accompanying financial statements have been adjusted to record the
unrealized appreciation (depreciation) of investments and to record
interest income and expenses on the accrual basis.

The discount on the zero-coupon bonds is accreted by the interest method
over the respective lives of the bonds. The accretion of such discount
is included in interest income; however, it is not distributed until
realized in cash upon maturity or sale of the respective bonds.

Investments are carried at market value which is determined by either
Standard & Poor's Corporation or Moody's Investors Service, Inc.
(Evaluator) as discussed in Footnotes to Portfolio. The market value
of the investments is based upon the bid prices for the bonds at the
end of the period, except that the market value on the date of deposit
represents the cost to the Trust based on the offering prices for
investments at that date. The difference between cost (including
accumulated accretion of original issue discount on zero-coupon bonds)
and market value is reflected as unrealized appreciation (depreciation)
of investments. Securities transactions are recorded on the trade date.
Realized gains (losses) from securities transactions are determined on
the basis of average cost of the securities sold or redeemed.

(3) Income Taxes

The Trust is not subject to Federal income taxes as provided for by the
Internal Revenue Code.

(4) Trust Administration

The fees and expenses of the Trust are incurred and paid on the basis
set forth under "Trust Expenses and Charges" in Part B of this Prospectus.

The Trust Indenture and Agreement provides for interest distributions as
often as monthly (depending upon the distribution plan elected by the
Certificateholders).

The Trust Indenture and Agreement further requires that principal received
from the disposition of bonds, other than those bonds sold in connection
with the redemption of units, be distributed to Certificateholders.

See "Financial and Statistical Information" in Part A of this Prospectus
for the amounts of per unit distributions during the period ended
December 31, 1993, 1992 and 1991, respectively.

The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. No units have been redeemed since the inception of
the Trust.

(5) Net Assets

At December 31, 1993, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $ 5,097,556
Less initial gross underwriting commission (249,780)
4,847,776

Accumulated cost of bonds sold or called (317,283)
Net unrealized appreciation 548,029
Undistributed net investment income 88,529

Total $ 5,167,051

Undistributed net investment income includes accumulated accretion of
original issue discount of $7,454.

<PAGE>

<TABLE>

INSURED MUNICIPAL SECURITIES TRUST,

NEW JERSEY NAVIGATOR INSURED SERIES 4

Portfolio

December 31, 1993
<CAPTION>
Port- Aggregate Coupon Rate/ Redemption Feature
folio Principal Name of Issuer Ratings Date(s) of S.F.--Sinking Fund Market
No. Amount and Title of Bonds (1) Maturity(2) Ref. -- Refunding (2)(7) Value(3)
------ --------- --------------------- ----- ------------ ------------------------ -----------
<S> <C> <C> <C> <C> <C> <C>
1 $ 400,000 Aberdeen Twnshp. N.J. AAA 7.750% 2/01/99 @ 100 S.F. $ 457,620
Muni. Utils. Auth. 2/01/2015 2/01/97 @ 103 Ref.
Monmouth Cnty. Swr.
Rev. Series 1985
(MBIA Corp.) (5)

2 500,000 Atlantic Cnty. N.J. AAA 7.375 7/01/02 @ 100 S.F. 610,145
Imprvmnt. Auth. 7/01/2010 None
Convntn. Cntr. Rev.
Bonds Series 1985
(MBIA Corp.)

3 500,000 Essex Cnty. N.J. AAA 7.000 12/01/05 @ 100 S.F. 589,765
Imprvmnt. Auth. Gen. 12/01/2020 12/01/00 @ 102 Ref.
Oblig. Lease Rev.
Bonds Series 1990
(MBIA Corp.) (5)

4 590,000 Evesham N.J. Muni. AAA 7.000 7/01/10 @ 100 S.F. 661,030
Utils. Auth. 7/01/2015 7/01/00 @ 100 Ref.
(Burlington Cnty.
N.J.) Rev. Bonds
Series 1990A (MBIA
Corp.)

5 455,000 Hoboken-Union AAA 7.250 8/01/09 @ 100 S.F. 533,360
City-Weehawken N.J. 8/01/2019 8/01/99 @ 102 Ref.
Swrg. Auth. Swr. Rev.
Bonds Series 1989
(MBIA Corp.) (5)

6 310,000 N.J. Hsg. & Mtg. AAA 7.800 10/01/06 @ 100 S.F. 322,270
Finc. Agncy. Home 10/01/2010 10/01/00 @ 102 Ref.
Buyer Rev. Bonds
Series 1990F (AMT)
(MBIA Corp.)

7 400,000 N.E. Monmouth Cnty. AAA 6.700 11/01/12 @ 100 S.F. 461,076
N.J. Rgnl. Swrg. 11/01/2016 11/01/00 @ 101 Ref.
Auth. Rev. Bonds
Series 1991 (MBIA
Corp.) (5)

8 600,000 N.Y. & N.J. Port AAA 6.875 7/01/12 @ 100 S.f. 667,698
Auth. Consldtd. Rev. 1/01/2025 1/01/00 @ 101 Ref.
Bonds Sixty-Seventh
Series (MBIA Corp.)

9 695,000 P.R. Pub. Bldgs. AAA 6.000 7/01/07 @ 100 S.f. 719,777
Auth. Ref. Rfndg. 7/01/2012 7/01/99 @ 100 Ref.
Bonds Series G (MBIA
Corp.)

10 50,000 Camden Cnty. N.J. AAA 0.000 No Sinking Fund 13,051
Muni. Utils. Auth. 9/01/2018 None
Cnty. Agreement Swr.
Rev. Cap. Apprec.
Bonds Series 1990A
(MBIA Corp.)

11 200,000 Camden Cnty. N.J. AAA 0.000 No Sinking Fund 50,184
Muni. Utils. Auth. 9/01/2019 None
Cnty. Agreement Swr.
Rev. Cap. Apprec.
Bonds Series 1990A
(MBIA Corp.)

--------- -----------
$ 4,700,000 $ 5,085,976
========= ===========

See accompanying footnotes to portfolio and notes to financial statements.
</TABLE>

<PAGE>

Footnotes to the Portfolio

December 31, 1993

(1) All ratings are by Standard & Poor's Corporation. A brief
description of the ratings symbols and their meanings is set forth
under "Description of Bond Ratings" in Part B of this Prospectus.

(2) See "The Trust - Portfolio" in Part B of this Prospectus for
an explanation of redemption features. See "Tax Status" in Part B of
this Prospectus for a statement of the Federal tax consequences to a
Certificateholder upon the sale, redemption or maturity of a bond.

(3) At December 31, 1993, the net unrealized appreciation of all
the bonds was comprised of the following:

Gross unrealized appreciation $ 550,040
Gross unrealized depreciation (2,011)

Net unrealized appreciation $ 548,029

(4) The annual interest income, based upon bonds held at December 31,
1993, (excluding accretion of original issue discount on zero-coupon
bonds) to the Trust is $311,092.

(5) The bonds have been prerefunded and will be redeemed at the next
refunding call date.

(6) Bonds sold or called after December 31, 1993 are noted in a footnote
"Changes in Trust Portfolio" under "Description of Portfolio" in Part A
of this Prospectus.

(7) The Bonds may also be subject to other calls, which may be permi
ed or required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or
unanticipated revenues).
<PAGE>

NOTE: Part A of This Prospectus May Not Be
Distributed Unless Accompanied by Part B.

INSURED MUNICIPAL SECURITIES TRUST

SERIES 28

The Trust is a unit investment trust designated Series 28 ("Insured
Municipal Trust") with an underlying portfolio of long-term insured 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 under
existing law but may be subject to state and local taxes. Capital gains
are subject to tax. (See "Tax Status" and "The Trust--Portfolio" in
Part B of this Prospectus.) The Sponsors are Bear, Stearns & Co. Inc. 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.

Investors should retain both parts of this
Prospectus for future reference.

Prospectus Part A Dated April 29, 1994

<PAGE>

THE TRUST. The Trust is a unit investment trust formed to preserve
capital and to provide interest income (including, where applicable,
earned original issue discount) which, in the opinions of bond counsel to
the respective issuers, is, with certain exceptions, currently exempt from
regular federal income tax under existing law through investment in a
fixed, diversified portfolio of long-term insured bonds (the "Bonds")
issued by or on behalf of states, municipalities and public authorities
which, because of irrevocable insurance, are rated "AAA" by Standard &
Poor's Corporation. Although the Supreme Court has determined that
Congress has the authority to subject interest on bonds such as the Bonds
in the Trust to regular federal income taxation, existing law excludes
such interest from regular federal income tax. Such interest income may,
however, be subject to the federal corporate alternative minimum tax and
to state and local taxes. (See "Tax Status" in Part B of this
Prospectus.) For a list of ratings on the Evaluation Date, see
"Portfolio." Some of the Bonds may be "Zero Coupon Bonds", which are
original issue discount bonds that provide for payment at maturity at par
value, but do not provide for the payment of any current interest. Some
of the Bonds in the Trust have been issued with optional refunding or
refinancing provisions ("Refunded Bonds") whereby the issuer of the Bond
has the right to call such Bond prior to its stated maturity date (and
other than pursuant to sinking fund provisions) and to issue new bonds
("Refunding Bonds") in order to finance the redemption. Issuers typically
utilize refunding calls in order to take advantage of lower interest rates
in the marketplace. Some of these Refunded Bonds may be called for
redemption pursuant to pre-refunding provisions ("Pre-Refunded Bonds")
whereby the proceeds from the issue of the Refunding Bonds are typically
invested in government securities in escrow for the benefit of the holders
of the Pre-Refunded Bonds until the refunding call date. Usually, Pre-
Refunded Bonds will bear a triple-A rating because of this escrow. The
issuers of Pre-Refunded Bonds must call such Bonds on their refunding call
date. Therefore, as of such date, the Trust will receive the call price
for such bonds but will cease receiving interest income with respect to
them. For a list of those Bonds which are Pre-Refunded Bonds, if any, as
of the Evaluation Date, see "Notes to Financial Statements" in this
Part A. Some of the Bonds in the portfolio may have been purchased at an
aggregate premium over par. All of the Bonds in the Trust were rated
"AAA" by Standard & Poor's Corporation on the Date of Deposit. This
rating results from insurance relating only to the Bonds in the Trust and
not to Units of the Trust. The insurance does not remove market risk, as
it does not guarantee the market value of the Units. For a discussion of
the significance of such ratings, see "Description of Bond Ratings" in
Part B of this Prospectus, and for a list of ratings on the Evaluation
Date see the "Portfolio." The payment of interest and preservation of
capital are, of course, dependent upon the continuing ability of issuers
of the Bonds or the insurers thereof to meet their obligations. There can
be no assurance that the Trust's investment objectives will be achieved.
Investment in the Trust should be made with an understanding of the risks
which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline
with increases in interest rates, and that the value of Zero Coupon Bonds
is subject to greater fluctuation than coupon bonds in response to changes
in interest rates. Each Unit in the Trust represents a 1/2878th undivided
interest in the principal and net income of the Trust. The principal
amount of Bonds deposited in the Trust per Unit is reflected in the
Summary of Essential Information. (See "Organization" in Part B of this
Prospectus.) The Units being offered hereby are issued and outstanding
Units which have been purchased by the Sponsor in the secondary market.

INSURANCE. Each of the Bonds in the Trust is insured by a municipal
bond guaranty insurance policy obtained by either the Sponsor ("Sponsor-
Insured Bonds") or the issuers of the Bonds ("Pre-Insured Bonds") and
issued by one of the insurance companies (the "Insurance Companies"),
described under "Insurance on the Bonds" in Part B of this Prospectus,
covering scheduled payment of principal thereof and interest thereon when
such amounts shall become due for payment but shall not have been paid by
the issuer or any other insurer thereof. The insurance, unless obtained
by Municipal Bond Investors Assurance Corporation ("MBIA Corp."), will
also cover any accelerated payments of principal and the increase in
interest payments or premiums, if any, payable upon mandatory redemption
of the Bonds if interest on any Bonds is ultimately deemed to be subject
to regular federal income tax. Insurance obtained from MBIA Corp. only
guarantees the accelerated payments required to be made by or on behalf of
an issuer of small industrial revenue bonds and pollution control bonds if
there is an event which results in the loss of tax-exempt status of the
interest on such Bonds, including principal, interest or premium payments,
if any, as and when required. To the extent, therefore, that Bonds are
only covered by insurance obtained from MBIA Corp., such Bonds will not be
covered for the accelerated payments required to be made by or on behalf
of an issuer of other than small industrial revenue bonds or pollution
control revenue bonds if there occurs an event which results in the loss
of tax-exempt status of the interest on such Bonds. None of the insurance
will cover accelerated payments of principal or penalty interest or
premiums unrelated to taxability of interest on the Bonds (although the
insurance, including insurance obtained by MBIA Corp., does guarantee
payment of principal and interest in such amounts and at such times as
such amounts would have been due absent such acceleration). The insurance
relates only to the prompt payment of principal of and interest on the
securities in the portfolio, and does not remove market risks or guarantee
the market value of the Units in the Trust. The terms of the insurance
are more fully described under "Insurance on the Bonds" in Part B of this
Prospectus. For a discussion of the effect of an occurrence of nonpayment
of principal or interest on any Bonds in the Trust, see "Portfolio
Supervision" in Part B of this Prospectus. No representation is made
herein as to any Bond insurer's ability to meet its obligations under a
policy of insurance relating to any of the Bonds. In addition, investors
should be aware that, subsequent to the Date of Deposit, the rating of the
claims paying ability of the insurer of an underlying Bond may be
downgraded, which may result in a downgrading of the rating of the Units
in the Trust. The approximate percentage of the aggregate principal
amount of the portfolio that is insured by each insurance company is as
follows: AMBAC Indemnity Corp. ("AMBAC"), 19.9%; Financial Guaranty
Insurance Company ("Financial Guaranty"), 31.9%; and MBIA Corp., 48.2%.

PUBLIC OFFERING PRICE. The secondary market Public Offering Price
of each Unit is equal to the aggregate bid price of the Bonds in the Trust
divided by the number of Units outstanding, plus a sales charge of 4.9% of
the Public Offering Price, or 5.152% of the net amount invested in Bonds
per Unit. In addition, accrued interest to the expected date of
settlement is added to the Public Offering Price. If Units had been
available for sale on the Evaluation Date, the Public Offering Price per
Unit would have been $1,157.31 plus accrued interest of $11.28 under the
monthly distribution plan, $16.47 under the semi-annual distribution plan
and $16.50 under the annual distribution plan, for a total of $1,168.59,
$1,173.78 and $1,173.81, respectively. The Public Offering Price per Unit
can vary on a daily basis in accordance with fluctuations in the aggregate
bid price of the Bonds. (See "Public Offering--Offering Price" in Part B
of this Prospectus.)

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. The rate
of return on an investment in Units of the Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".

A schedule of cash flow projections is available from the Sponsor
upon request.

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST
SERIES 28

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1993

Date of Deposit: January 24, 1992 Minimum Principal Distribution:
Principal Amount of Bonds ...$2,895,000 $1.00 per Unit.
Number of Units .............2,878 Weighted Average Life to
Fractional Undivided Inter- Maturity:
est in Trust per Unit .....1/2878 15.1 Years.
Principal Amount of Minimum Value of Trust:
Bonds per Unit ............$1,005.91 Trust may be terminated if
Secondary Market Public value of Trust is less than
Offering Price**
Aggregate Bid Price $1,200,000 in principal amount
of Bonds in Trust .......$3,167,548+++ of Bonds.
Divided by 2,878 Units ....$1,100.61 Mandatory Termination Date:
Plus Sales Charge of 4.9% The earlier of December 31,
of Public Offering Price $56.70 2041 or the disposition of the
Public Offering Price last Bond in the Trust.
per Unit ................$1,157.31+ Trustee***: United States Trust
Redemption and Sponsors' Company of New York.
Repurchase Price Trustee's Annual Fee: Monthly
per Unit ..................$1,100.61+ plan $1.05 per $1,000; semi-
+++ annual plan $.60 per $1,000;
++++ and annual plan is $.35 per
Excess of Secondary Market $1,000.
Public Offering Price Evaluator: Kenny S&P Evaluation
over Redemption and Services.
Sponsors' Repurchase Evaluator's Fee for Each
Price per Unit ............$56.70++++ Evaluation: Minimum of $8 plus
Difference between Public $.25 per each issue of Bonds in
Offering Price per Unit excess of 50 issues (treating
and Principal Amount per separate maturities as separate
Unit Premium/(Discount) ...$151.40 issues).
Evaluation Time: 4:00 p.m. Sponsors: Bear, Stearns & Co.
New York Time. Inc.
& Gruntal & Co., Incorporated.
Sponsors' Annual Fee: Maximum of
$.25 per $1,000 principal
amount of Bonds (see "Trust
Expenses and Charges" in Part B
of this Prospectus).

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# .........$65.80 $65.80 $65.80
Less estimated annual fees and
expenses ............................ 2.35 1.97 1.69
Estimated net annual interest ______ ______ ______
income (cash)# ......................$63.45 $63.83 $64.11
Estimated interest distribution# ...... 5.28 31.91 64.11
Estimated daily interest accrual# ..... .1762 .1773 .1780
Estimated current return#++ ........... 5.48% 5.52% 5.54%
Estimated long term return++ .......... 4.27% 4.30% 4.33%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15

<PAGE>
* The Date of Deposit is the date on which the Trust Agreement was
signed and the deposit of the Bonds with the Trustee made.

** For information regarding offering price per Unit and applicable
sales charge under the Total Reinvestment Plan, see "Total
Reinvestment Plan" in Part B of this Prospectus.

+ Plus accrued interest to the expected date of settlement
(approximately five business days after purchase) of $11.28 monthly,
$16.47 semi-annually and $16.50 annually.

++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.

# Does not include income accrual from original issue discount bonds,
if any.

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1993

DESCRIPTION OF PORTFOLIO

The portfolio of the Trust consists of 9 issues representing
obligations of issuers located in 6 states. The Sponsors have not
participated as a sole underwriter or manager, co-manager or member of an
underwriting syndicate from which any of the initial aggregate principal
amount of the Bonds were acquired. None of the Bonds are obligations of
state and local housing authorities; approximately 29.4% are hospital
revenue bonds; none were issued in connection with the financing of
nuclear generating facilities; and none are "mortgage subsidy" bonds. All
of the Bonds in the Trust are subject to redemption prior to their stated
maturity dates pursuant to sinking fund or optional 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 $400,000 of the principal
amount of the Bonds is a general obligation bond. All 8 of the remaining
issues representing $2,495,000 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, Convention Center 1,
Hospital 3, Pollution Control 1, School Building 1 and Sewer 1. For an
explanation of the significance of these factors see "The Trust--
Portfolio" in Part B of this Prospectus.

As of December 31, 1993, $500,000 (approximately 17.3% of the
aggregate principal amount of the Bonds) were original issue discount
bonds. Of these original issue discount bonds, $175,000 (approximately 6%
of the aggregate principal amount of the Bonds) were Zero Coupon Bonds.
Zero Coupon Bonds do not provide for the payment of any current interest
and provide for payment at maturity at par value unless sooner sold or
redeemed. The market value of Zero Coupon Bonds is subject to greater
fluctuations than coupon bonds in response to changes in interest rates.
None of the aggregate principal amount of the Bonds in the Trust were
purchased at a "market" discount from par value at maturity, approximately
82.7% 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.

<PAGE>
FINANCIAL AND STATISTICAL INFORMATION

Selected data for each Unit outstanding for the periods listed below:

December 31, 1992 3,000 $1,045.20 $42.64 $48.23 $5.75 -0-
December 31, 1993 2,878 1,116.48 63.29 63.78 -0- -0-

<PAGE>

Independent Auditors' Report

The Sponsor, Trustee and Certificateholders
Insured Municipal Securities Trust, Series 28:

We have audited the accompanying statement of net assets, including
the portfolio, of Insured Municipal Securities Trust, Series 28 as of
December 31, 1993, and the related statements of operations, and
changes in net assets for the year then ended, and for the period
January 24, 1992 (date of deposit) to December 31, 1992. These
financial statements are the responsibility of the Trustee (see
note 2). Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Insured
Municipal Securities Trust, Series 28 as of December 31, 1993, and
the results of its operations and the changes in its net assets for
the year then ended, and for the period January 24, 1992 to December 31,
1992 in conformity with generally accepted accounting principles.

KPMG Peat Marwick

New York, New York
March 31, 1994
<PAGE>

INSURED SECURITIES MUNICIPAL TRUST SERIES 28

Statement of Net Assets

December 31, 1993

Investments in marketable securities,
at market value (cost $2,855,952) $ 3,176,442

Excess of other assets over total liabilities 36,781
-----------

Net assets (2,878 units of fractional undivided
interest outstanding, $1,116.48 per unit) $ 3,213,223
===========

See accompanying notes to financial statements.

<PAGE>

<TABLE>
Statements of Operations
<CAPTION>
For the For the Period
year ended January 24, 1992
December 31, (date of deposit)
1993 to December 31, 1992
---------- --------------------
<S> <C> <C>
Investment income - interest $ 195,068 $ 186,117
---------- ------------

Expenses:
Trustee's fees 4,185 2,645
Evaluator's fees 2,190 1,024
Sponsor's advisory fee 750 701
---------- ------------

Total expenses 7,125 4,370
---------- ------------

Investment income, net 187,943 181,747

Realized & unrealized gain on
investments:
Unrealized appreciation
for the period 198,198 122,292

Net realized gain on bonds
sold or called 9,757 -
---------- ------------

Net gain on investments 207,955 122,292
---------- ------------

Net increase in net
assets resulting
from operations 395,898 $ 304,039
========== ============

See accompanying notes to financial statements.
</TABLE>

<PAGE>

<TABLE>

Statements of Changes in Net Assets
<CAPTION>
For the For the Period
year ended January 24, 1992
December 31, (date of deposit)
1993 to December 31, 1992
------------ -- ----------- ----
<S> <C> <C>
Operations:
Investment income, net $ 187,943 $ 181,747
Realized gain on bonds
sold or called 9,757 -
Unrealized appreciation
of investments for the period 198,198 122,292
------------ -----------

Net increase in net
assets resulting
from operations 395,898 304,039
------------ -----------

Distributions:
To certificateholders of
investment income 186,510 128,215
To sponsor of accrued interest
to date of settlement - 3,830
Redemptions:
Interest 1,819 -
Principal 129,954 -
------------ -----------

Total distributions & redemptions 318,283 132,045
------------ -----------

Total increase 77,615 171,994

Net assets at beginning of period 3,135,608 2,963,614
------------ -----------

Net assets at end of period (including
undistributed net investment
income of $49,316 and $49,702
respectively) $ 3,213,223 $ 3,135,608
============ ===========

See accompanying notes to financial statements.
</TABLE>

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST, SERIES 28

Notes to Financial Statements

December 31, 1993 and 1992

(1) Organization

Insured Municipal Securities Trust, Series 28 (Trust) was organized on
January 24, 1992 by Bear Stearns & Co. Inc. and Gruntal & Co.,
Incorporated (Co-Sponsors) under the laws of the State of New York by
a Trust Indenture and Agreement, and is registered under the Investment
Company Act of 1940.

(2) Summary of Significant Accounting Policies

Unites States Trust Company of New York (Trustee) has custody of and
responsibility for the accounting records and financial statements of the
Trust and is responsible for establishing and maintaining a system of
internal control related thereto.

The Trustee is also responsible for all estimates of expenses and
accruals reflected in the Trust's financial statements. The accompanying
financial statements have been adjusted to record the unrealized
appreciation (depreciation) of investments and to record interest income
and expenses on the accrual basis.

The discount on the zero-coupon bonds is accreted by the interest method
over the respective lives of the bonds. The accretion of such discount
is included in interest income; however, it is not distributed until
realized in cash upon maturity or sale of the respective bonds.

Investments are carried at market value which is determined by either
Standard & Poor's Corporation or Moody's Investors Service, Inc.
(Evaluator) as discussed in Footnotes to Portfolio. The market value
of the investments is based upon the bid prices for the bonds at the
end of the year, except that the market value on the date of deposit
represents the cost to the Trust based on the offering prices for
investments at that date. The difference between cost (including
accumulated accretion of original issue discount on zero-coupon bonds)
and market value is reflected as unrealized appreciation (depreciation)
of investments. Securities transactions are recorded on the trade
date. Realized gains (losses) from securities transactions are
determined on the basis of average cost of the securities sold or
redeemed.

(3) Income Taxes

The Trust is not subject to Federal income taxes as provided for by
the Internal Revenue Code.

(4) Trust Administration

The fees and expenses of the Trust are incurred and paid on the basis
set forth under "Trust Expenses and Charges" in Part B of this
Prospectus.

The Trust Indenture and Agreement provides for interest distributions
as often as monthly (depending upon the distribution plan elected
by the Certificateholders).

See "Financial and Statistical Information" in Part A of this Prospectus
for the amounts of per unit distributions during the periods ended
December 31, 1993 and 1992.

The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. 122 units were redeemed by the Trust during the year
ended, December 31, 1993. No units were redeemed by the Trust during
the period ended December 31, 1992.

(5) Net Assets

At December 31, 1993, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $ 3,116,313
Less initial gross underwriting commission ( 152,699)
2,963,614

Accumulated cost of bonds sold or called (111,303)
Net unrealized appreciation 320,490
Undistributed net investment income 49,316
Distributions in excess of proceeds
from bonds sold or called (8,894)

Total $ 3,213,223

The original cost to Certificateholders, less the initial gross
underwriting commission, represents the aggregate initial public
offering price net of the applicable sales charge on 3,000 units of
fractional undivided interest of the Trust as of the date of deposit.

Undistributed net investment income includes accumulated accretion of
original issue discount of $ 3,641.

INSURED MUNICIPAL SECURITIES TRUST SERIES 28

Portfolio
December 31, 1993

Port- Aggregate Name of Issuer and Coupon/ Redemption Feature
folio Principal Title of Bonds Ratings Maturity S.F.--Sinking Fund Market
No. Amount Contracted for(4) (1) Date(2) Ref.-Refunding(2)(7) Value(3)
- ----- ----------- --------------------- -------- -------------- ------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 $ 100,000 N.J. Hlth. Care Facs. AAA 6.625% 7/01/12 @ 100 S.F. $ 111,576
Hackensack Med. Cntr. 7/01/2017 7/01/01 @ 102 Ref.
Fincg. Auth. Rev.
Bonds (Financial
Guaranty)

2 250,000 Beaver Cnty. Penn. AAA 7.000 No Sinking Fund 278,833
Ind. Dev. Auth. Poll. 6/01/2021 6/01/01 @ 102 Ref.
Cntrl. (Ohio Edison
Co. Manfield Prjt.)
Rev. Rfndg. Bonds
Series 1991A
(Financial Guaranty)

3 400,000 Berks Cnty. Penn. AAA 7.250 11/15/11 @ 100 S.F. 478,688
Gen. Oblig. Rev. 11/15/2020 11/15/00 @ 102 Ref.
Bonds Series 1990
(Financial Guaranty)
(5)

4 500,000 R.I. Convntn. Cntr. AAA 6.700 5/15/13 @ 100 S.F. 581,710
Auth. Rev. Bonds 5/15/2020 5/15/01 @ 102 Ref.
Series 1991A (MBIA
Corp.) (5)

5 325,000 S.C. Pub. Serv. Auth. AAA 6.500 7/01/15 @ 100 S.F. 374,446
Rev. Bonds Series 7/01/2024 7/01/02 @ 102 Ref.
1991D (AMBAC) (5)

6 395,000 W.V. Schl. Bldg. AAA 7.250 7/01/10 @ 100 S.F. 466,665
Auth. Cap. Imprvmnt. 7/01/2015 7/01/00 @ 102 Ref.
Rev. Bonds Series
1990A (MBIA Corp.)
(5)

7 250,000 Wisc. Hlth. & Ed. AAA 7.000 1/01/09 @ 100 S.F. 277,653
Facs. Auth. (Felician 1/01/2015 1/01/00 @ 102 Ref.
Hlth. Care, Inc.)
Rev. Rfndg. Bonds
Series 1989 A (AMBAC)

8 500,000 Wisc. Hlth. & Ed. AAA 7.100 8/15/12 @ 100 S.F. 566,908
Facs. Auth. (St. 8/15/2019 8/15/01 @ 102 Ref.
Luke's Med. Cntr.
Prjt.) Rev. Bonds
(MBIA Corp.)

9 175,000 Pottstown Borough AAA 0.000 No Sinking Fund 39,963
Auth. Montgomery 11/01/2020 None
Cnty. Penn. Grd. Swr.
Rev. Bonds Series
1991 (Financial
Guaranty)

----------- ---------
$ 2,895,000 $ 3,176,442
=========== =========

See accompanying footnotes to portfolio and notes to financial statements.
</TABLE>

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST, SERIES 28

Footnotes to Portfolio

December 31, 1993

(1) All ratings are by Standard & Poor's Corporation. A brief
description of the ratings symbols and their meanings is set forth
under "Description of Bond Ratings" in Part B of this Prospectus.

(2) See "The Trust - Portfolio" in Part B of this Prospectus for
an explanation of redemption features. See "Tax Status" in Part B
of this Prospectus for a statement of the Federal tax consequences
to a Certificateholder upon the sale, redemption or maturity of
a bond.

(3) At December 31, 1993, the net unrealized appreciation of all
the bonds was comprised of gross unrealized appreciation of $320,490.

(4) The annual interest income, based upon bonds held at December 31,
1993, (excluding accretion of original issue discount on zero-coupon
bonds) to the Trust is $189,388.

(5) The bonds have been prerefunded and will be redeemed at the next
refunding call date.

(6) Bonds sold or called after December 31, 1993 are noted in a
footnote "Changes in Trust Portfolio" under "Description of Portfolio"
in Part A of this Prospectus.

NOTE: Part A of This Prospectus May Not Be
Distributed Unless Accompanied by Part B.

INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED

SERIES 10

The Trust is a unit investment trust designated Series 10 ("New York
Navigator Trust") with an underlying portfolio of long-term insured 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 under
existing law and from New York State and City personal income tax.
Capital gains are subject to tax. (See "Tax Status" and "The Trust--
Portfolio" in Part B of this Prospectus.) The Sponsors are Bear, Stearns
& Co. Inc. 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.

Investors should retain both parts of this
Prospectus for future reference.

Prospectus Part A Dated April 29, 1994

<PAGE>

THE TRUST. The Trust is a unit investment trust and was formed to
preserve capital and to provide interest income (including 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 and from state and local taxes to
the extent indicated herein when received by persons subject to state and
local income taxation in a state in which the issuers of the Bonds are
located. The Trust seeks to achieve its investment objectives through
investment in a fixed, diversified portfolio of long-term insured bonds
(the "Bonds") issued by or on behalf of states, municipalities and public
authorities which, because of irrevocable insurance, are rated "AAA" by
Standard & Poor's Corporation. Although the Supreme Court has determined
that Congress has the authority to subject the 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 a specific preference item for purposes of the
federal individual and/or corporate alternative minimum tax. (See
"Description of Portfolio" in this Part A for a list of these 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
aggregate principal amount of the Bonds in the Trust may be "Zero Coupon
Bonds," which are original issue discount bonds that provide for payment
at maturity at par value, but do not provide for the payment of current
interest (for the amount of Zero Coupon Bonds in each Trust, and the cost
of such Bonds to that Trust, see "Description of Portfolio" in this
Part A). All of the Bonds in the Trust were rated "AAA" by Standard &
Poor's Corporation at the time originally deposited in the Trust (see
"Portfolio"). This rating results from insurance relating only to the
Bonds in the Trust and not to Units of the Trust. The insurance does not
remove market risk, as it does not guarantee the market value of the
Units. For a discussion of the significance of such ratings, see
"Description of Bond Ratings" in Part B of this Prospectus. The payment
of interest and preservation of capital are, of course, dependent upon the
continuing ability of the issuers of the Bonds or the insurer thereof to
meet their obligations. There can be no assurance that the Trust's
investment objectives will be achieved. Investment in the Trust should be
made with an understanding of the risks which an investment in long-term
fixed rate debt obligations may entail, including the risk that the value
of the underlying portfolio will decline with increases in interest rates,
and that the value of Zero Coupon Bonds is subject to greater fluctuation
than coupon bonds in response to such changes in interest rates. (See
"Portfolio" in Part B of this Prospectus.) Each Unit in the Trust
represents a 1/4465th undivided interest in the principal and net income
of the Trust. The principal amount of Bonds deposited in the Trust per
Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered
hereby are issued and outstanding Units which have been purchased by the
Sponsors in the secondary market.

Some of the Bonds in the New York Navigator Trust may additionally
be insured by a municipal bond guaranty insurance policy obtained by
issuers, underwriters or prior owners of the Bonds ("Pre-Insured Bonds")
and issued by one of the insurance companies described under "Insurance on
the Bonds" in Part B of this Prospectus (the "Insurance Companies"). Such
insurance covers the scheduled payment of principal thereof and interest
thereon when such amounts shall become due for payment but shall not have
been paid by the issuer or any other insurer thereof. The insurance,
unless obtained by MBIA Corp., will also cover any accelerated payments of
principal and any increase in interest payments or premiums, if any,
payable upon mandatory redemption of the Bonds if interest on any such
Bond is ultimately deemed to be subject to federal income tax. Insurance
obtained from MBIA Corp. only guarantees the full and complete payments
required to be made by or on behalf of an issuer of small industrial
revenue bonds and pollution control revenue bonds if there occurs an event
which results in the loss of tax-exempt status of the interest on such
Bonds, including principal, interest or premium payments, if any, as and
when required. To the extent, therefore, that Bonds are only covered by
insurance obtained from MBIA Corp., such Bonds will not be covered for the
full and complete payments required to be made by or on behalf of an
issuer of other than small industrial revenue bonds or pollution control
revenue bonds if there occurs an event which results in the loss of tax-
exempt status of the interest on such Bonds. None of the insurance will
cover accelerated payments of principal or penalty interest or premiums
unrelated to taxability of interest on the Bonds. The insurance relates
only to the prompt payment of principal of and interest on the securities
in the portfolios, and does not remove market risks nor does it guarantee
the market value of Units in the Trusts. The terms of he insurance are
more fully described herein. No representation is made herein as to any
Bond insurer's ability to meet its obligations under a policy of insurance
relating to any of the Pre-Insured Bonds. In addition, investors should
be aware that subsequent to the Date of Deposit the rating of the claims-
paying ability of the insurer of an underlying Pre-Insured Bond may be
downgraded.

PUBLIC OFFERING PRICE. The secondary market Public Offering Price
of each Unit is equal to the aggregate offering price of the Bonds in such
Trust divided by the number of Units outstanding, plus a sales charge of
4.9% of the Public Offering Price, or 5.152% of the net amount invested in
Bonds per Unit. In addition, accrued interest to the expected date of
settlement is added to the Public Offering Price. If Units had been
available for sale on the Evaluation Date, the Public Offering Price per
Unit would have been $1,104.70 plus accrued interest of $10.80 under the
monthly distribution plan, $15.97 under the semi-annual distribution plan
and $15.97 under the annual distribution plan, for a total of $1,115.50,
$1,120.67 and $1,120.67, respectively. The Public Offering Price per Unit
can vary on a daily basis in accordance with fluctuations in the aggregate
bid price of the Bonds. (See "Public Offering--Offering Price" in Part B
of this Prospectus.)

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. The rate
of return on an investment in Units of the Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".

The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the
Evaluator applicable to the Trust and with the redemption, maturity, sale
or other disposition of the Bonds in the Trust. The Public Offering Price
will vary with changes in the bid prices of the Bonds. Therefore, there
is no assurance that the present Estimated Current Return or Estimated
Long Term Return will be realized in the future. (For the Estimated
Current Return to Certificateholders under the monthly, semi-annual and
annual distribution plans, see "Summary of Essential Information". See
"Estimated Long Term Return and Estimated Current Return" in Part B of
this Prospectus.)

A schedule of cash flow projections is available from the Sponsors
upon request.

TOTAL REINVESTMENT PLAN. Certificateholders under the semi-annual
and annual plans of distribution have the opportunity to have all their
regular interest distributions, and principal distributions, if any,
reinvested in available series of "Insured Municipal Securities Trust" or
"Municipal Securities Trust." (See "Total Reinvestment Plan" in Part B of
this Prospectus. Residents of Texas see "Total Reinvestment Plan for
Texas Residents" in Part B of this Prospectus.) The Plan is not designed
to be a complete investment program.

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED
SERIES 10

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1993

Date of Deposit: January 24, 1992 Weighted Average Life to
Principal Amount of Bonds ...$4,460,000 Maturity: 21.3 Years.
Number of Units .............4,465 Minimum Value of Trust:
Fractional Undivided Inter- Trust may be terminated if
est in Trust per Unit .....1/4465 value of Trust is less than
Principal Amount of $1,800,000 in principal amount
Bonds per Unit ............$988.88 of Bonds.
Secondary Market Public Mandatory Termination Date:
Offering Price** The earlier of December 31,
Aggregate Bid Price 2041 or the disposition of the
of Bonds in Trust .......$4,690,808+++ last Bond in the Trust.
Divided by 4,465 Units ....$1,050.57 Trustee***: United States Trust
Plus Sales Charge of 4.9% Company of New York.
of Public Offering Price $54.13 Trustee's Annual Fee: Monthly
Public Offering Price plan $1.09 per $1,000; semi-
per Unit ................$1,104.70+ annual plan $.64 per $1,000;
Redemption and Sponsors' and annual plan is $.39 per
Repurchase Price $1,000.
per Unit ..................$1,050.57+ Evaluator: Kenny S&P Evaluation
+++ Services.
++++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $8 plus
Public Offering Price $.25 per each issue of Bonds in
over Redemption and excess of 50 issues (treating
Sponsors' Repurchase separate maturities as separate
Price per Unit ............$54.13++++ issues).
Difference between Public Sponsors: Bear, Stearns & Co.
Offering Price per Unit Inc. and Gruntal & Co.,
and Principal Amount per Incorporated.
Unit Premium/(Discount) ...$105.82 Sponsors' Annual Fee: Maximum of
Evaluation Time: 4:00 p.m. $.25 per $1,000 principal
New York Time. amount of Bonds (see "Trust
Minimum Principal Distribution: Expenses and Charges" in Part B
$1.00 per Unit. of this Prospectus).

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# .........$65.01 $65.01 $65.01
Less estimated annual fees and
expenses ............................ 2.12 1.63 1.37
Estimated net annual interest ______ ______ ______
income (cash)# ......................$62.89 $63.38 $63.64
Estimated interest distribution# ...... 5.24 31.69 63.64
Estimated daily interest accrual# ..... .1746 .1760 .1767
Estimated current return#++ ........... 5.69% 5.74% 5.76%
Estimated long term return++ .......... 4.65% 4.70% 4.72%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15

<PAGE>
* The Date of Deposit is the date on which the Trust Agreement was
signed and the deposit of the Bonds with the Trustee made.

** For information regarding offering price per Unit and applicable
sales charge under the Total Reinvestment Plan, see "Total
Reinvestment Plan" in Part B of this Prospectus.

+ Plus accrued interest to the expected date of settlement
(approximately five business days after purchase) of $10.80 monthly,
$15.97 semi-annually and $15.97 annually.

++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.

# Does not include income accrual from original issue discount bonds,
if any.
<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1993

DESCRIPTION OF PORTFOLIO

The portfolio of the Trust consists of 11 issues representing
obligations of 10 issuers located in the state of New York. The Sponsors
have not participated as a sole underwriter or manager, co-manager or
member of an underwriting syndicate from which any of the initial
aggregate principal amount of the Bonds were acquired. None of the Bonds
are obligations of state and local housing authorities; none are hospital
revenue bonds; none were issued in connection with the financing of
nuclear generating facilities; and approximately 5.8% 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 optional
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 $635,000 of the
principal amount of the Bonds is a general obligation bond. All 10 of the
remaining issues representing $3,825,000 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: Assistance Corporation 1, Bridge
and Tunnel 1, Correctional Facilities 1, Port Authority 2, Power 1, Single
Family Mortgage Revenue 1, University 2 and Water 1. For an explanation
of the significance of these factors see "The Trust--Portfolio" in Part B
of this Prospectus.

As of December 31, 1993, $460,000 (approximately 10.3% of the
aggregate principal amount of the Bonds) were original issue discount
bonds. Of these original issue discount bonds, $260,000 (approximately
5.8% of the aggregate principal amount of the Bonds) were Zero Coupon
Bonds. Zero Coupon Bonds do not provide for the payment of any current
interest and provide for payment at maturity at par value unless sooner
sold or redeemed. The market value of Zero Coupon Bonds is subject to
greater fluctuations than coupon bonds in response to changes in interest
rates. None of the aggregate principal amount of the Bonds in the Trust
were purchased at a "market" discount from par value at maturity,
approximately 75.1% were purchased at a premium and approximately 14.6%
were purchased at par. For an explanation of the significance of these
factors see "Discount and Zero Coupon Bonds" in Part B of this Prospectus.

None of the Bonds in the Trust are subject to the federal individual
alternative minimum tax under the Tax Reform Act of 1986. See "Tax
Status" in Part B of this Prospectus.

<PAGE>
FINANCIAL AND STATISTICAL INFORMATION

Selected data for each Unit outstanding for the periods listed below:

December 31, 1992 4,500 $1,009.55 $42.33 $42.65 $42.81 -0-
December 31, 1993 4,465 1,065.89 62.37 62.91 63.19 -0-

<PAGE>

Independent Auditors' Report

The Sponsor, Trustee and Certificateholders
Insured Municipal Securities Trust,
New York Navigator Insured Series 10:

We have audited the accompanying statement of net assets, including
the portfolio, of Insured Municipal Securities Trust, New York Navigator
Insured Series 10 as of December 31, 1993, and the related statements of
operations, and changes in net assets for the year then ended, and for
the period January 24, 1992 (date of deposit) to December 31, 1992.
These financial statements are the responsibility of the Trustee
(see note 2). Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities
owned as of December 31, 1993, by correspondence with the Trustee. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Insured Municipal
Securities Trust, New York Navigator Insured Series 10 as of December 31,
1993, and the results of its operations and the changes in its net assets
for the year then ended, and for the period January 24, 1992 to
December 31, 1992 in conformity with generally accepted accounting
principles.

KPMG Peat Marwick

New York, New York
March 31, 1994
<PAGE>

INSURED MUNICIPAL SECURITIES TRUST,
NEW YORK NAVIGATOR INSURED SERIES 10

Statement of Net Assets

December 31, 1993

Investments in marketable securities,
at market value (cost $4,378,599) $ 4,723,140

Excess of other assets over total liabilities
36,061
-----------

Net assets 4,465 units of fractional undivided
interest outstanding, $1,065.89 per unit) $ 4,759,201
===========

See accompanying notes to financial statements.
<PAGE>

INSURED MUNICIPAL SECURITIES TRUST,
NEW YORK NAVIGATOR INSURED SERIES 10

Statements of Operations

For the For the Period
year ended January 24, 1992
December 31, (date of deposit)
1993 to December 31, 1992
---------- --------------------

Investment income - interest $ 292,985 274,273
---------- ---------

Expenses:
Trustee's fees 5,655 3,546
Evaluator's fees 2,372 1,109
Sponsor's advisory fee 1,123 1,053
---------- ---------

Total expenses 9,150 5,708
---------- ---------

Investment income, net 283,835 268,565
---------- ---------

Realized and unrealized gain
(loss) on investments:
Net realized loss on
bonds sold or called (172) (59)
Unrealized appreciation
for the period 251,541 93,000
---------- ---------

Net gain on investments 251,369 92,941
---------- ---------

Net increase in net
assets resulting
from operations $ 535,204 361,506
========== =========

See accompanying notes to financial statements.
<PAGE>
<TABLE>

INSURED MUNICIPAL SECURITIES TRUST,
NEW YORK NAVIGATOR INSURED SERIES 10

Statements of Changes in Net Assets
<CAPTION>
For the For the Period
year ended January 24, 1992
December 31, (date of deposit)
1993 to December 31, 1992
----------- --------------------
<S> <C> <C>
Operations:
Investment income, net $ 283,835 268,565
Net realized loss on
bonds sold or called (172) (59)
Unrealized appreciation
of investments for the period 251,541 93,000
----------- -----------

Net increase in net
assets resulting
from operations 535,204 361,506
----------- -----------

Distributions:
To Certificateholders:
Investment income 281,428 191,214
To sponsor of accrued interest
to date of settlement - 5,645
Redemptions:
Interest 515 -
Principal 37,039 -
----------- -----------

Total distributions & redemptions 318,982 196,859
----------- -----------

Total increase 216,222 164,647

Net assets at beginning of period 4,542,979 4,378,332
----------- -----------

Net assets at end of period (including
undistributed net investment
income of $73,120 and $71,643) $ 4,759,201 4,542,979
=========== ===========

See accompanying notes to financial statements.
</TABLE>

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST,
NEW YORK NAVIGATOR INSURED SERIES 10

Notes to Financial Statements

December 31, 1993 and 1992

(1) Organization

Insured Municipal Securities Trust, New York Navigator Insured Series 10
(Trust) was organized on January 24, 1992 by Bear Stearns & Co. Inc. and
Gruntal & Co., Incorporated (Co-Sponsors) under the laws of the State of
New York by a Trust Indenture and Agreement, and is registered under the
Investment Company Act of 1940.

(2) Summary of Significant Accounting Policies

The Trustee is also responsible for all estimates of expenses and
accruals reflected in the Trust's financial statements. The
accompanying financial statements have been adjusted to record the
unrealized appreciation (depreciation) of investments and to record
interest income and expenses on the accrual basis.

The discount on the zero-coupon bonds is accreted by the interest
method over the respective lives of the bonds. The accretion of such
discount is included in interest income; however, it is not distributed
until realized in cash upon maturity or sale of the respective bonds.

Investments are carried at market value which is determined by either
Standard & Poor's Corporation or Moody's Investors Service, Inc.
(Evaluator) as discussed in Footnotes to Portfolio. The market value
of the investments is based upon the bid prices for the bonds at the
end of the year, except that the market value on the date of deposit
represents the cost to the Trust based on the offering prices for
investments at that date. The difference between cost (including
accumulated accretion of original issue discount on zero-coupon
bonds) and market value is reflected as unrealized appreciation
(depreciation) of investments. Securities transactions are recorded
on the trade date. Realized gains (losses) from securities
transactions are determined on the basis of average cost of the
securities sold or redeemed.

(3) Income Taxes

The Trust is not subject to Federal income taxes as provided for
by the Internal Revenue Code.

(4) Trust Administration

The fees and expenses of the Trust are incurred and paid on the basis set
forth under "Trust Expenses and Charges" in Part B of this Prospectus.

The Trust Indenture and Agreement provides for interest distributions as
often as monthly (depending upon the distribution plan elected by the
Certificateholders).

See "Financial and Statistical Information" in Part A of this
Prospectus for the amounts of per unit distributions during the
periods ended December 31, 1993 and 1992.

The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. 35 units were redeemed by the Trust during the year
ended, December 31, 1993. No units were redeemed during the period
ended December 31, 1992.

(5) Net Assets

At December 31, 1993, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $ 4,603,924
Less initial gross underwriting commission (225,592)
4,378,332

Cost of securities sold or called (4,460)
Net unrealized appreciation 344,541
Undistributed net investment income 73,120
Distributions in excess of proceeds
from bonds sold or called (32,332)

Total $ 4,759,201

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 4,500 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 $4,727.

<PAGE>

<TABLE>

INSURED MUNICIPAL SECURITIES TRUST

NEW YORK NAVIGATOR INSURED SERIES 10

Portfolio

December 31, 1993

Port- Aggregate Name of Issuer and Coupon/ Redemption Feature
folio Principal Title of Bonds Ratings Maturity S.F.--Sinking Fund Market
No. Amount Contracted for(4) (1) Date(2) Ref.--Refunding (2) (7) Value(3)
------- ---------- --------------------- ------ -------- ---------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 $ 150,000 N.Y. State Dorm. AAA 6.500% No Sinking Fund $ 158,439
Auth. City Univ. Rev. 7/01/2016 7/01/96 @ 100 Ref.
Rfndg. Bonds 1986
Issue (MBIA Corp.)

2 200,000 Dorm. Auth. of the AAA 6.000 5/15/16 @ 100 S.F. 209,290
State of N.Y. State 5/15/2017 5/15/00 @ 100 Ref.
Univ. Ed. Facs. Rev.
Bonds Series 1989B
(MBIA Corp.)

3 500,000 N.Y. Local Gov. AAA 6.500 4/01/19 @ 100 S.F. 547,160
Assis. Corp. (A Pub. 4/01/2020 4/01/01 @ 102 Ref.
Benefit Corp. of the
State of N.Y.) Rev.
Bonds Series 1991A
(MBIA Corp.)

4 500,000 N.Y. State Pwr. Auth. AAA 6.500 1/01/13 @ 100 S.F. 550,335
Gen. Purp. Rev. 1/01/2019 1/01/02 @ 102 Ref.
Rfndg. Bonds Series Z
(MBIA Corp.)

5 440,000 N.Y. State Urb. Dev. AAA 7.750 1/01/03 @ 100 S.F. 518,104
Corp. Correc. Capital 1/01/2014 1/01/00 @ 102 Ref.
Facs. Rev. Bonds
Series 1 (MBIA Corp.)
(5)

6 635,000 N.Y. City Gen. Oblig. AAA 7.000 No Sinking Fund 682,689
Rev. Bonds Fiscal 8/01/2018 8/01/02 @ 101.5 Ref.
1992 Series C (MBIA
Corp.)

7 500,000 N.Y. City Muni. Wtr. AAA 7.500 6/15/16 @ 100 S.F. 598,450
Finc. Auth. Wtr. & 6/15/2019 6/15/00 @ 101.5 Ref.
Swr. Sys. Rev. Bonds
Series A (MBIA Corp.)
(5)

8 500,000 N.Y. & N.J. Port AAA 6.875 7/01/12 @ 100 S.F. 556,415
Auth. Cnsldtd. Rev. 1/01/2025 1/01/00 @ 101 Ref.
Bonds Sixty-Seventh
Series (MBIA Corp.)

9 125,000 Port Auth. N.Y. & AAA 6.750 8/01/15 @ 100 S.F. 138,948
N.J. Cnsldtd. Rev. 8/01/2026 8/01/01 @ 101 Ref.
Bonds Seventy-Fouth
Series (MBIA Corp.)

10 650,000 Triborough Bridge & AAA 6.875 1/01/11 @ 100 S.F. 728,818
Tunnel Auth. Spec. 1/01/2015 1/01/01 @ 102 Ref.
Oblig. Rfndg. Rev.
Bonds Series 1991B
(MBIA Corp.)

11 260,000 N.Y. State Mtg. AAA 0.000 4/01/12 @ 52.88 S.F. 34,492
Agncy. Hmownr. Mtg. 4/01/2020 4/01/02 @ 23.845 Ref.
Rev. Bonds Series II
(MBIA Corp.)
---------- ---------
$ 4,460,000 $ 4,723,140
========== =========

See accompanying footnotes to portfolio and notes to financial statements.
</TABLE>

<PAGE>

Footnotes to Portfolio

December 31, 1993

(1) All ratings are by Standard & Poor's Corporation. A brief
description of the ratings symbols and their meanings is set forth
under "Description of Bond Ratings" in Part B of this Prospectus.

(2) See "The Trust - Portfolio" in Part B of this Prospectus for
an explanation of redemption features. See "Tax Status" in Part B
of this Prospectus for a statement of the Federal tax consequences
to a Certificateholder upon the sale, redemption or maturity of
a bond.

(3) At December 31, 1993, the net unrealized appreciation of all
the bonds was comprised of the gross unrealized appreciation of
344,541.

(4) The annual interest income, based upon bonds held at
December 31, 1993, (excluding accretion of original issue discount
on zero-coupon bonds) to the Trust is $290,300.

(5) The bonds have been prerefunded and will be redeemed at
the next refunding call date.

(6) Bonds sold or called after December 31, 1993 are noted in
a footnote "Changes in Trust Portfolio" under "Description of
Portfolio" in Part A of this Prospectus.

NOTE: Part A of This Prospectus May Not Be
Distributed Unless Accompanied by Part B.

INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED

SERIES 7

The Trust is a unit investment trust designated Series 7 ("New
Jersey Navigator Trust") with an underlying portfolio of long-term insured
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 under existing law and from New Jersey gross income
tax. Capital gains are subject to tax. (See "Tax Status" and "The
Trust--Portfolio" in Part B of this Prospectus.) The Sponsors are Bear,
Stearns & Co. Inc. 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.

Investors should retain both parts of this
Prospectus for future reference.

Prospectus Part A Dated April 29, 1994

<PAGE>

THE TRUST. The Trust is a unit investment trust and was formed to
preserve capital and to provide interest income (including 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 and from state and local taxes to
the extent indicated herein when received by persons subject to state and
local income taxation in a state in which the issuers of the Bonds are
located. The Trust seeks to achieve its investment objectives through
investment in a fixed, diversified portfolio of long-term insured bonds
(the "Bonds") issued by or on behalf of states, municipalities and public
authorities which, because of irrevocable insurance, are rated "AAA" by
Standard & Poor's Corporation. Although the Supreme Court has determined
that Congress has the authority to subject the 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 a specific preference item for purposes of the
federal individual and/or corporate alternative minimum tax. (See
"Description of Portfolio" in this Part A for a list of these 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
aggregate principal amount of the Bonds in the Trust may be "Zero Coupon
Bonds," which are original issue discount bonds that provide for payment
at maturity at par value, but do not provide for the payment of current
interest (for the amount of Zero Coupon Bonds in the Trust, and the cost
of such Bonds to the Trust, see "Description of Portfolio" in this
Part A). All of the Bonds in the Trust were rated "AAA" by Standard &
Poor's Corporation at the time originally deposited in the Trust (see
"Portfolio"). This rating results from insurance relating only to the
Bonds in the Trust and not to Units of the Trust. The insurance does not
remove market risk, as it does not guarantee the market value of the
Units. For a discussion of the significance of such ratings, see
"Description of Bond Ratings" in Part B of this Prospectus. The payment
of interest and preservation of capital are, of course, dependent upon the
continuing ability of the issuers of the Bonds or the insurer thereof to
meet their obligations. There can be no assurance that the Trust's
investment objectives will be achieved. Investment in the Trust should be
made with an understanding of the risks which an investment in long-term
fixed rate debt obligations may entail, including the risk that the value
of the underlying portfolio will decline with increases in interest rates,
and that the value of Zero Coupon Bonds is subject to greater fluctuation
than coupon bonds in response to such changes in interest rates. (See
"Portfolio" in Part B of this Prospectus.) Each Unit in the Trust
represents a 1/3464th undivided interest in the principal and net income
of the Trust. The principal amount of Bonds deposited in the Trust per
Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered
hereby are issued and outstanding Units which have been purchased by the
Sponsors in the secondary market.

INSURANCE. Each of the Bonds in the New Jersey Navigator Trust is
insured by a municipal bond guaranty insurance policy obtained by the
Sponsors (the "Navigator Sponsor-Insured Bonds") from Municipal Bond
Investors Assurance Corporation ("MBIA Corp.") covering regularly
scheduled payments of principal thereof and interest thereon when such
amounts become due for payment but shall not have been paid. Such amounts
shall be reduced by any amounts received by the holders or the owners of
the Bonds from any trustee for the Bond issuers, any other Bond insurers
or any other source other than MBIA Corp. MBIA Corp. has issued such
policy or policies covering each of the Bonds in the New Jersey Navigator
Trust and each such policy will remain in force until the payment in full
of such Bonds, whether or not such Bonds continue to be held in the New
Jersey Navigator Trust. The insurer's policies relating to small
industrial development bonds and pollution control revenue bonds also
guarantee the accelerated payments required to be made by or on behalf of
an issuer of Bonds pursuant to the terms of the Bonds if there occurs an
event which results in the loss of the tax-exempt status of the interest
on such Bonds, including principal, interest or premium payments, if any,
as and when required. Such insurance does not cover accelerated payments
required to be made by or on behalf of an issuer of other than small
industrial revenue bonds or pollution control revenue bonds if there
occurs an event which results in the loss of the tax exempt status of the
interest on such Bonds nor does the insurance cover accelerated payments
of principal or penalty interest or premiums unrelated to taxability of
interest on any of the Bonds, including pollution control revenue bonds or
small industrial development bonds. In the event of accelerated payments
on any Bonds unrelated to the taxability of interest on any such Bonds,
the payments guaranteed by MBIA Corp. shall be made in such amounts and at
such times such payment would have been made absent such an acceleration.
The insurance relates only to the prompt payment of principal of and
interest on the securities in the New Jersey Navigator Trust and does not
remove market risk nor does it guarantee the market value of Units in the
New Jersey Navigator Trust. The terms of the insurance are more fully
described under "Insurance of the Bonds" in Part B of this Prospectus.
For discussion of the effect of an occurrence of non-payment of principal
or interest on any Bonds in the New Jersey Navigator Trust see "Portfolio
Supervision" in Part B of this Prospectus. No representation is made
herein as to any bond insurer's ability to meet its obligations under a
policy of insurance relating to any of the Bonds in the New Jersey
Navigator Trust. In addition, investors should be aware that subsequent
to the Date of Deposit the rating of the claims-paying ability of MBIA
Corp. may be downgraded, which may result in a downgrading of the rating
of the Units in the New Jersey Navigator Trust. The premiums for the
Navigator Sponsor-Insured Bonds are obligations of the Sponsors.
Additionally, some of the Bonds in the New Jersey Navigator Trust may be
Pre-Insured Bonds (as described below). The premium for the Pre-Insured
Bonds is an obligation of the issuers, underwriters or prior owners of
those Bonds. The insurance policy or policies relating to the Navigator
Sponsor-Insured Bonds provides that, to the extent that Bonds are both
Pre-Insured Bonds and Navigator Sponsor-Insured Bonds, coverage is
effective after a claim has been made upon the insurer of the Pre-Insured
Bonds.

Some of the Bonds in the New Jersey Navigator Trust may additionally
be insured by a municipal bond guaranty insurance policy obtained by
issuers, underwriters or prior owners of the Bonds ("Pre-Insured Bonds")
and issued by one of the insurance companies described under "Insurance on
the Bonds" in Part B of this Prospectus (the "Insurance Companies"). Such
insurance covers the scheduled payment of principal thereof and interest
thereon when such amounts shall become due for payment but shall not have
been paid by the issuer or any other insurer thereof. The insurance,
unless obtained by MBIA Corp., will also cover any accelerated payments of
principal and any increase in interest payments or premiums, if any,
payable upon mandatory redemption of the Bonds if interest on any such
Bond is ultimately deemed to be subject to federal income tax. Insurance
obtained from MBIA Corp. only guarantees the full and complete payments
required to be made by or on behalf of an issuer of small industrial
revenue bonds and pollution control revenue bonds if there occurs an event
which results in the loss of tax-exempt status of the interest on such
Bonds, including principal, interest or premium payments, if any, as and
when required. To the extent, therefore, that Bonds are only covered by
insurance obtained from MBIA Corp., such Bonds will not be covered for the
full and complete payments required to be made by or on behalf of an
issuer of other than small industrial revenue bonds or pollution control
revenue bonds if there occurs an event which results in the loss of tax-
exempt status of the interest on such Bonds. None of the insurance will
cover accelerated payments of principal or penalty interest or premiums
unrelated to taxability of interest on the Bonds. The insurance relates
only to the prompt payment of principal of and interest on the securities
in the portfolios, and does not remove market risks nor does it guarantee
the market value of Units in the Trusts. The terms of the insurance are
more fully described under "Insurance on the Bonds" in Part B of this
Prospectus. No representation is made herein as to any Bond insurer's
ability to meet its obligations under a policy of insurance relating to
any of the Pre-Insured Bonds. In addition, investors should be aware that
subsequent to the Date of Deposit the rating of the claims-paying ability
of the insurer of an underlying Pre-Insured Bond may be downgraded.

All of the Bonds in the New Jersey Navigator Trust are covered by
insurance obtained by the Sponsors from MBIA Corp. and 69.5% of the Bonds
in the New Jersey Navigator Trust are Pre-Insured Bonds. The approximate
percentage of the aggregate principal amount of the Trust that is insured
by each Insurance Company with respect to Pre-Insured Bonds is as follows:
Financial Guaranty Insurance Company ("Financial Guaranty"), 35.1%;
Financial Security Assurance Inc. ("Financial Security"), 17.3%; and MBIA
Corp., 17.1%.

PUBLIC OFFERING PRICE. The secondary market Public Offering Price
of each Unit is equal to the aggregate offering price of the Bonds in such
Trust divided by the number of Units outstanding, plus a sales charge of
4.9% of the Public Offering Price, or 5.152% of the net amount invested in
Bonds per Unit. In addition, accrued interest to the expected date of
settlement is added to the Public Offering Price. If Units had been
available for sale on the Evaluation Date, the Public Offering Price per
Unit would have been $1,052.15 plus accrued interest of $10.80 under the
monthly distribution plan, $15.51 under the semi-annual distribution plan
and $15.51 under the annual distribution plan, for a total of $1,062.95,
$1,067.66 and $1,067.66, respectively. The Public Offering Price per Unit
can vary on a daily basis in accordance with fluctuations in the aggregate
bid price of the Bonds. (See "Public Offering--Offering Price" in Part B
of this Prospectus.)

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. The rate
of return on an investment in Units of the Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".

The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the
Evaluator applicable to the Trust and with the redemption, maturity, sale
or other disposition of the Bonds in the Trust. The Public Offering Price
will vary with changes in the bid prices of the Bonds. Therefore, there
is no assurance that the present Estimated Current Return or Estimated
Long Term Return will be realized in the future. (For the Estimated
Current Return to Certificateholders under the monthly, semi-annual and
annual distribution plans, see "Summary of Essential Information". See
"Estimated Long Term Return and Estimated Current Return" in Part B of
this Prospectus.)

A schedule of cash flow projections is available from the Sponsors
upon request.

TOTAL REINVESTMENT PLAN. Certificateholders under the semi-annual
and annual plans of distribution have the opportunity to have all their
regular interest distributions, and principal distributions, if any,
reinvested in available series of "Insured Municipal Securities Trust" or
"Municipal Securities Trust." (See "Total Reinvestment Plan" in Part B of
this Prospectus. Residents of Texas see "Total Reinvestment Plan for
Texas Residents" in Part B of this Prospectus.) The Plan is not designed
to be a complete investment program.

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED
SERIES 7

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1993

Date of Deposit: January 24, 1992 Weighted Average Life to
Principal Amount of Bonds ...$3,275,000 Maturity:
Number of Units .............3,464 20.3 Years.
Fractional Undivided Inter- Minimum Value of Trust:
est in Trust per Unit .....1/3464 Trust may be terminated if
Principal Amount of value of Trust is less than
Bonds per Unit ............$945.44 $1,400,000 in principal amount
Secondary Market Public of Bonds.
Offering Price** Mandatory Termination Date:
Aggregate Bid Price The earlier of December 31,
of Bonds in Trust .......$3,466,052+++ 2041 or the disposition of the
Divided by 3,464 Units ....$1,000.59 last Bond in the Trust.
Plus Sales Charge of 4.9% Trustee***: United States Trust
of Public Offering Price $51.56 Company of New York.
Public Offering Price Trustee's Annual Fee: Monthly
per Unit ................$1,052.15+ plan $1.09 per $1,000; semi-
Redemption and Sponsors' annual plan $.64 per $1,000;
Repurchase Price and annual plan is $.39 per
per Unit ..................$1,000.59+ $1,000.
+++ Evaluator: Kenny S&P Evaluation
++++ Services.
Excess of Secondary Market Evaluator's Fee for Each
Public Offering Price Evaluation: Minimum of $8 plus
over Redemption and $.25 per each issue of Bonds in
Sponsors' Repurchase excess of 50 issues (treating
Price per Unit ............$51.56++++ separate maturities as separate
Difference between Public issues).
Offering Price per Unit Sponsors: Bear, Stearns & Co.
and Principal Amount per Inc.
Unit Premium/(Discount) ...$106.71 Gruntal & Co., Incorporated
Evaluation Time: 4:00 p.m. Sponsors' Annual Fee: Maximum of
New York Time. $.25 per $1,000 principal
Minimum Principal Distribution: amount of Bonds (see "Trust
$1.00 per Unit. Expenses and Charges" in Part B
of this Prospectus).

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# .........$58.86 $58.86 $58.86
Less estimated annual fees and
expenses ............................ 2.25 1.67 1.55
Estimated net annual interest ______ ______ ______
income (cash)# ......................$56.61 $57.19 $57.31
Estimated interest distribution# ...... 4.72 28.59 57.31
Estimated daily interest accrual# ..... .1573 .1588 .1591
Estimated current return#++ ........... 5.38% 5.44% 5.45%
Estimated long term return++ .......... 4.51% 4.57% 4.58%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15

<PAGE>
* The Date of Deposit is the date on which the Trust Agreement was
signed and the deposit of the Bonds with the Trustee made.

** For information regarding offering price per Unit and applicable
sales charge under the Total Reinvestment Plan, see "Total
Reinvestment Plan" in Part B of this Prospectus.

+ Plus accrued interest to the expected date of settlement
(approximately five business days after purchase) of $10.80 onthly,
$15.51 semi-annually and $15.51 annually.

++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.

# Does not include income accrual from original issue discount bonds,
if any.

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1993

DESCRIPTION OF PORTFOLIO

The portfolio of the Trust consists of 8 issues representing
obligations of 8 issuers located in the state of New Jersey. The Sponsors
have not participated as a sole underwriter or manager, co-manager or
member of an underwriting syndicate from which any of the initial
aggregate principal amount of the Bonds were acquired. None of the Bonds
are obligations of state and local housing authorities; approximately
30.5% are hospital revenue bonds; none were issued in connection with the
financing of nuclear generating facilities; and none are "mortgage
subsidy" bonds. All of the Bonds in the Trust are subject to redemption
prior to their stated maturity dates pursuant to sinking fund or optional
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 $500,000 of the
principal amount of the Bonds is a general obligation bond. All 7 of the
remaining issues representing $2,775,000 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: Education 2, Hospital 2, Port
Authority 1 and Sewer 2. For an explanation of the significance of these
factors see "The Trust--Portfolio" in Part B of this Prospectus.

As of December 31, 1993, $1,150,000 (approximately 35.1% of the
aggregate principal amount of the Bonds) were original issue discount
bonds. Of these original issue discount bonds, $150,000 (approximately
4.6% of the aggregate principal amount of the Bonds) were Zero Coupon
Bonds. Zero Coupon Bonds do not provide for the payment of any current
interest and provide for payment at maturity at par value unless sooner
sold or redeemed. The market value of Zero Coupon Bonds is subject to
greater fluctuations than coupon bonds in response to changes in interest
rates. None of the Bonds in the Trust were purchased at a "market"
discount from par value at maturity, approximately 64.9% 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.

<PAGE>

FINANCIAL AND STATISTICAL INFORMATION

Selected data for each Unit outstanding for the periods listed below:

December 31, 1992 3,464 $ 981.91 $40.48 $40.86 $40.93 $24.59
December 31, 1993 3,464 1,015.36 57.63 58.27 58.39 30.31

<PAGE>

Independent Auditors' Report

The Sponsor, Trustee and Certificateholders
Insured Municipal Securities Trust,
New Jersey Navigator Insured Series 7:

We have audited the accompanying statement of net assets, including the
portfolio, of Insured Municipal Securities Trust, New Jersey Navigator
Insured Series 7 as of December 31, 1993, and the related statements of
operations, and changes in net assets for the year then ended, and for
the period January 24, 1992 (date of deposit) to December 31, 1992.
These financial statements are the responsibility of the Trustee
(see note 2). Our responsibility is to
express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Insured
Municipal Securities Trust, New Jersey Navigator Insured Series 7 as
of December 31, 1993, and the results of its operations and the
changes in its net assets for the year then ended, and for the period
January 24, 1992 to December 31, 1992 in conformity with generally
accepted accounting principles.

KPMG Peat Marwick

New York, New York
March 31, 1994

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST,

NEW JERSEY NAVIGATOR INSURED SERIES 7

Statement of Net Assets

December 31, 1993

Investments in marketable securities,
at market value (cost $3,184,614) $ 3,466,040

Excess of other assets over total liabilities 51,165
----------

Net assets (3,464 units of fractional undivided
interest outstanding, $1,015.36 per unit) $ 3,517,205
----------

See accompanying notes to financial statements.

<PAGE>

NEW JERSEY NAVIGATOR INSURED SERIES 7

Statements of Operations

For the period
January 24, 1992
Year ended (date of deposit)
December 31, 1993 to December 31, 1992
----------------------------------------

Investment income - interest $ 208,518 204,669
------------- --------

Expenses:
Trustee's fees 4,539 2,762
Evaluator's fees 2,372 1,152
Sponsor's advisory fee 845 819
------------- --------

Total expenses 7,756 4,733
------------- --------

Investment income, net 200,762 199,936
------------- --------

Realized and unrealized gain
(loss) on investments:
Net realized loss on
bonds sold or called (7,404) (8,461)
Unrealized appreciation
for the period 228,453 52,973
------------- --------

Net gain on investments 221,049 44,512
------------- --------

Net increase in net
assets resulting
from operations $ 421,811 244,448
============= ========

See accompanying notes to financial statements.
<PAGE>

<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the period
January 24, 1992
Year ended (date of deposit)
December 31, 1993 to December 31, 1992
-------------------- --------------------
<S> <C> <C>
Operations:
Investment income, net $ 200,762 199,936
Net realized loss on
bonds sold or called (7,404) (8,461)
Unrealized appreciation
of investments for the period 228,453 52,973
----------- -----------

Net increase in net
assets resulting
from operations 421,811 244,448
----------- -----------

Distributions:
To Certificateholders:
Investment income 200,947 141,011
Principal 104,994 85,180
To Sponsor of accrued interest
to date of settlement - 4,313
Redemptions:
Interest - 494
Principal - 34,814
----------- -----------

Total distributions
and redemptions 305,941 265,812
----------- -----------

Total increase (decrease) 115,870 (21,364)

Net assets at beginning of period 3,401,335 3,422,699
----------- -----------

Net assets at end of period (including
undistributed net investment
income of $53,931 , and $54,117) $ 3,517,205 3,401,335
=========== ===========

See accompanying notes to financial statements.
</TABLE>

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST,

NEW JERSEY NAVIGATOR INSURED SERIES 7

Notes to Financial Statements

December 31, 1993 and 1992

(1) Organization

Insured Municipal Securities Trust, New Jersey Navigator Insured Series 7
(Trust) was organized on January 24, 1992 by Bear, Stearns & Co. Inc. and
Gruntal & Co., Incorporated (Co-Sponsors) under the laws of the State of
New York by a Trust Indenture and Agreement, and is registered under the
Investment Company Act of 1940.

(2) Summary of Significant Accounting Policies

The Trustee is also responsible for all estimates of expenses and accruals
reflected in the Trust's financial statements. The accompanying financial
statements have been adjusted to record the unrealized appreciation
(depreciation) of investments and to record interest income and expenses on
the accrual basis.

The discount on the zero-coupon bonds is accreted by the interest method
over the respective lives of the bonds. The accretion of such discount is
included in interest income; however, it is not distributed until realized
in cash upon maturity or sale of the respective bonds.

Investments are carried at market value which is determined by either
Standard & Poor's Corporation or Moody's Investors Service, Inc.
(Evaluator) as discussed in Footnotes to Portfolio. The market value
of the investments is based upon the bid prices for the bonds at the
end of the period, except that the market value on the date of deposit
represents the cost to the Trust based on the offering prices for
investments at that date. The difference between cost (including
accumulated accretion of original issue discount on zero-coupon bonds)
and market value is reflected as unrealized appreciation (depreciation)
of investments. Securities transactions are recorded on the trade
date. Realized gains (losses) from securities transactions are
determined on the basis of average cost of the securities sold or
redeemed.

(3) Income Taxes

The Trust is not subject to Federal income taxes as provided for by
the Internal Revenue Code.

(4) Trust Administration

The fees and expenses of the Trust are incurred and paid on the basis
set forth under "Trust Expenses and Charges" in Part B of this
Prospectus.

The Trust Indenture and Agreement provides for interest distributions
as often as monthly (depending upon the distribution plan elected
by the Certificateholders).

See "Financial and Statistical Information" in Part A of this Prospectus
for the amounts of per unit distributions during the periods ended
December 31, 1993 and 1992.

The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. 36 units were redeemed during the period ended December 31,
1992. No units were redeemed during the year ended December 31, 1993.

(5) Net Assets

At December 31, 1993, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $ 3,599,053
Less initial gross underwriting commission (176,354)
3,422,699

Cost of bonds sold or called (240,863)
Net unrealized appreciation 281,426
Undistributed net investment income 53,931
Undistributed proceeds from bonds
sold or called 12

Total $ 3,517,205

The original cost to Certificateholders, less the initial gross
underwriting commission, represents the aggregate initial public
offering price net of the applicable sales charge on 3,500 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 $2,778.

INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED SERIES 7

Portfolio

December 31, 1993

<CAPTION>
Port- Aggregate Coupon/ Redemption Feature
folio Principal Name of Issuer and Ratings Maturity S.F.--Sinking Fund Market
No. Amount Title of Bonds (1) Date(2) Ref.--Refunding (2)(7) Value(3)
------ --------- --------------------- ----- ---------- ---------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 $ 500,000 N.J. Ed. Facs. Auth. AAA 6.250% 7/01/07 @ 100 S.F. $ 547,115
Seton Hall Univ. 7/01/2010 7/01/01 @ 102 Ref.
Prjt. Rev. Rfndg.
Bonds Series A (MBIA
Corp.)

2 500,000 N.J. Hlth. Care Facs. AAA 6.625 7/01/12 @ 100 S.F. 555,260
Hackensack Med. Cntr. 7/01/2017 7/01/01 @ 102 Ref.
Fincg. Auth. Rev.
Bonds (MBIA Corp.)

3 500,000 N.J. Hlth. Care Facs. AAA 6.300 7/01/14 @ 100 S.F. 542,820
Fincg. Auth. Rev. 7/01/2018 7/01/97 @ 100 Ref.
Bonds St. Peter's
Med. Cntr. Issue
Series D (MBIA Corp.)
(5)

4 60,000 Absecon Atlantic AAA 7.625 6/15/04 @ 100 S.F. 70,269
Cnty. N.J. Bd. of Ed. 12/15/2008 12/15/98 @ 101 Ref.
Certs. of Part. Rev.
Bonds (MBIA Corp.)
(5)

5 565,000 Glouster Cnty. N.J. AAA 6.500 1/01/07 @ 100 S.F. 610,754
Utils. Auth. Swr. 1/01/2021 1/01/01 @ 101 Ref.
Rev. Bonds (MBIA
Corp.)

6 500,000 Jersey City (Hudson AAA 6.600 5/15/06 @ 100 S.F. 552,505
Cnty. N.J.) Fiscal 5/15/2011 5/15/01 @ 102 Ref.
Year Adj. Genl.
Oblig. Rev. Bonds
Series 1991A (MBIA
Corp.)

7 500,000 N.Y. & N.J. Port. AAA 6.750 8/01/15 @ 100 S.F. 555,790
Auth. Cnsldtd. Rev. 8/01/2026 8/01/01 @ 101 Ref.
Bonds Seventy-Fourth
Series (MBIA Corp.)

8 150,000 Town of West N.Y. AAA 0.000 No Sinking Fund 31,527
(Hudson Cnty. N.J.) 12/15/2022 None
Muni. Utils. Auth.
Swr. Rev. & Rfndg.
Cap. Apprec. Bonds
Series 1991 (MBIA
Corp.)

--------- ----------
$ 3,275,000 $ 3,466,040
========= ==========

See accompanying footnotes to portfolio and notes to financial statements.
</TABLE>

<PAGE>
Footnotes to Portfolio

December 31, 1993

(1) All ratings are by Standard & Poor's Corporation. A brief
description of the ratings symbols and their meanings is set forth
under "Description of Bond Ratings" in Part B of this Prospectus.

(2) See "The Trust - Portfolio" in Part B of this Prospectus for an
explanation of redemption features. See "Tax Status" in Part B of
this Prospectus for a statement of the Federal tax consequences to a
Certificateholder upon the sale, redemption or maturity of a bond.

(3) At December 31, 1993, the net unrealized appreciation of all the
bonds was comprised of gross unrealized appreciation of $281,426.

(4) The annual interest income, based upon bonds held at December 31,
1993, (excluding accretion of original issue discount on zero-coupon
bonds) to the Trust is $203,925.

(5) The bonds have been prerefunded and will be redeemed at the next
refunding call date.

(6) Bonds sold or called after December 31, 1993 are noted in a footnote
"Changes in Trust Portfolio" under "Description of Portfolio" in Part A
of this Prospectus.

(7) The Bonds may also be subject to other calls, which may be permitted
or required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or
unanticipated revenues).
<PAGE>

Note: Part B of This Prospectus May Not Be Distributed
Unless Accompanied by Part A.

Please Read and Retain Both Parts
of This Prospectus For Future Reference.

INSURED MUNICIPAL SECURITIES TRUST

Prospectus Part B

Dated: April 29, 1994

THE TRUST

Organization

"Insured Municipal Securities Trust" (the "Trust") consists of
the "unit investment trust" designated as set forth in Part A.* The
Trust was created under the laws of the State of New York pursuant to a
Trust Indenture and Agreement** (collectively, the "Trust Agreement"),
dated the Date of Deposit, among Bear, Stearns & Co. Inc. and Gruntal &
Co., Incorporated, as Sponsors, Kenny S&P Evaluation Services, a division
of Kenny Information Systems, Inc., as Evaluator and The United States
Trust Company of New York, as Trustee.

* This Part B relates to the outstanding series of Insured Municipal
Securities Trust, Insured Municipal Securities Discount Trust,
Insured Municipal Securities New York Navigator Insured Trust and/or
Insured Municipal Securities New Jersey Navigator Insured Trust as
reflected in Part A attached hereto.

** References in this Prospectus to the Trust Agreement are qualified
in their entirety by the Trust Indenture and Agreement which is
incorporated herein.

<PAGE>
On the Date of Deposit, the Sponsors deposited with the Trustee
long-term insured 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 Sponsors the Certificates
evidencing the ownership of all Units of the Trust. The Trust consists of
the Bonds described under "The Trust" in Part A, the interest (including,
where applicable, earned original issue 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 ratio of one Unit to the principal amount of Bonds in the
Trust on such date as specified in Part A of this Prospectus. To the
extent that any Units are redeemed by the Trustee, the fractional
undivided interest or pro rata share in the Trust represented by each
unredeemed Unit will increase, although the actual interest in the Trust
represented by such fraction will remain unchanged. Units will remain
outstanding until redeemed upon tender to the Trustee by Certificate-
holders, which may include the Sponsors or the Underwriters, 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 Sponsors, offers investors the opportunity
to participate in a portfolio of long-term insured 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 given at the time of
original delivery of the Bonds, is exempt from regular federal income tax
under existing law and exempt from state and local income tax to the
extent indicated herein when received by persons subject to state and
local taxation in a state in which the issuers of the Bonds are located.
Such interest income may, however, be subject to the federal corporate
alternative minimum taxes and to state and local taxes. (See "Description
of Portfolio" in Part A for a list of those Bonds which pay interest
income subject to federal individual alternative minimum tax. See also
"Tax Status".) Consistent with such objectives, the Sponsors have
obtained bond insurance guaranteeing the scheduled payment of principal
and interest on certain of the Bonds and have purchased, as to the
remainder of each Trust Portfolio, Bonds which are already covered by
insurance. (See "Insurance on the Bonds".) 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 abilities of the Insurance Companies to meet their
obligations under the policies of insurance issued on the Bonds, 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 each
Trust may result in an investor receiving less than the amount paid for
such Units (see "Comparison of Public Offering Price, Sponsors' 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 are designed to be complete investment programs.

Portfolio

All of the Bonds in the Trust were rated "AAA" by Standard &
Poor's Corporation at the time originally deposited in the Trust. (See
"Insurance on the Bonds.") The "AAA" rating was assigned to the Bonds by
Standard & Poor's because each Bond was insured by a municipal bond
guaranty insurance policy issued by a company whose claims-paying ability
was rated "AAA" by Standard & Poor's at that time. Due to a downgrading
of the claims-paying ability of one of the insurers, as of the Evaluation
Date, the Bonds in the Trust which are insured by that company are no
longer rated "AAA" by Standard & Poor's. Therefore, the Units of those
Trust containing the downgraded bonds are no longer rated.

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 "Information Regarding the Trust" and "Portfolio" in Part A of
this Prospectus.

When selecting Bonds for a Trust, the following factors, among
others, were considered by the Sponsors: (a) the quality of the Bonds and
whether such Bonds, whether Sponsor-Insured or Pre-Insured, were rated
"AAA" by Standard & Poor's Corporation, (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, (d) whether a
bond was insured, or insurance was available for the Bonds at a reasonable
cost, (e) in connection with Bonds for which bond insurance was obtained
by the Sponsors, the quality of the Bonds and whether they were rated,
without regard to such bond insurance, "A" or better by either Standard &
Poor's Corporation or Moody's Investors Service, and (f) 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 Date of Deposit, a Bond may cease to be rated or its
rating may be reduced below that specified above. Neither event requires
an elimination of such Bond from a Trust but may be considered in the
Sponsors' determination to direct the Trustee to dispose of the Bond.
(See "Portfolio Supervision".) For an interpretation of the bond ratings
see "Description of Bond Ratings".

Housing Bonds. Some of the aggregate principal amount of the
Bonds may consist of obligations of state and local housing authorities
whose revenues are primarily derived from mortgage loans to rental housing
projects for low to moderate income families. Since such obligations are
usually not general obligations of a particular state or municipality and
are generally payable primarily or solely from rents and other fees,
adverse economic developments including failure or inability to increase
rentals, fluctuations of interest rates and increasing construction and
operating costs may reduce revenues available to pay existing obligations.
See "Description of Portfolio" in Part A for the amount of rental housing
bonds contained therein.

Hospital Revenue Bonds. Some of the aggregate principal amount
of the Bonds may consist of hospital revenue bonds. Ratings of hospital
bonds are often initially based on feasibility studies which contain
projections of occupancy levels, revenues and expenses. Actual experience
may vary considerably from such projections. A hospital's gross receipts
and net income will be affected by future events and conditions including,
among other things, demand for hospital services and the ability of the
hospital to provide them, physicians' confidence in hospital management
capability, economic developments in the service area, competition,
actions by insurers and governmental agencies and the increased cost and
possible unavailability of malpractice insurance. Additionally, a major
portion of hospital revenue typically is derived from federal or state
programs such as Medicare and Medicaid which have been revised
substantially in recent years and which are undergoing further review at
the state and federal level.

Proposals for significant changes in the health care system and
the present programs for third party payment of health care costs are
under consideration in Congress and many states. Future legislation or
changes in the areas noted above, among other things, would affect all
hospitals to varying degrees and, accordingly, any adverse change in these
areas may affect the ability of such issuers to make payment of principal
and interest on such bonds. See "Description of Portfolio" in Part A for
the amount of hospital revenue bonds contained therein.

Nuclear Power Facility Bonds. Certain Bonds may have been
issued in connection with the financing of nuclear generating facilities.
In view of recent developments in connection with such facilities,
legislative and administrative actions have been taken and proposed
relating to the development and operation of nuclear generating
facilities. The Sponsors are unable to predict whether any such actions
or whether any such proposals or litigation, if enacted or instituted,
will have an adverse impact on the revenues available to pay the debt
service on the Bonds in the portfolio issued to finance such nuclear
projects. See "Description of Portfolio" in Part A for the amount of
bonds issued to finance nuclear generating facilities contained therein.

Mortgage Subsidy Bonds. Certain Bonds may be "mortgage subsidy
bonds" which are obligations of which all or a significant portion of the
proceeds are to be used directly or indirectly for mortgages on owner-
occupied residences. Section 103A of the Internal Revenue Code of 1954,
as amended, provided as a general rule that interest on "mortgage subsidy
bonds" will not be exempt from Federal income tax. An exception is
provided for certain "qualified mortgage bonds." Qualified mortgage bonds
are bonds that are used to finance owner-occupied residences and that meet
numerous statutory requirements. These requirements include certain
residency, ownership, purchase price and target area requirements, ceiling
amount 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 Bond proceeds are not committed for the purpose of the issue, Bonds
in such amount could be subject to earlier mandatory redemption at par,
including issues of Zero Coupon Bonds (see "Discount and Zero Coupon
Bonds"). See "Description of Portfolio" in Part A for the amount of
mortgage revenue bonds contained therein.

Private Activity Bonds. The portfolio of the Trust may contain
other Bonds which are "private activity bonds" (often called Industrial
Revenue Bonds ("IRBs") if issued prior to 1987) which would be primarily
of two types: (1) Bonds for a publicly owned facility which a private
entity may have a right to use or manage to some degree, such as an
airport, seaport facility or water system and (2) facilities deemed owned
or beneficially owned by a private entity but which were financed with
tax-exempt bonds of a public issuer, such as a manufacturing facility or a
pollution control facility. In the case of the first type, bonds are
generally payable from a designated source of revenues derived from the
facility and may further receive the benefit of the legal or moral
obligation of one or more political subdivisions or taxing jurisdictions.
In most cases of project financing of the first type, receipts or revenues
of the Issuer are derived from the project or the operator or from the
unexpended proceeds of the bonds. Such revenues include user fees,
service charges, rental and lease payments, and mortgage and other loan
payments.

The second type of issue will generally finance projects which
are owned by or for the benefit of, and are operated by, corporate
entities. Ordinarily, such private activity bonds are not general
obligations of governmental entities and are not backed by the taxing
power of such entities, and are solely dependent upon the creditworthiness
of the corporate user of the project or corporate guarantor.

The private activity bonds in the Trust have generally been
issued under bond resolutions, agreements or trust indentures pursuant to
which the revenues and receipts payable under the issuer's arrangements
with the users or the corporate operator of a particular project have been
assigned and pledged to the holders of the private activity bonds. In
certain cases a mortgage on the underlying project has been assigned to
the holders of the private activity bonds or a trustee as additional
security. In addition, private activity bonds are frequently directly
guaranteed by the corporate operator of the project or by another
affiliated company. See "Description of Portfolio" in Part A for the
amount of private activity bonds contained therein.

Litigation. Litigation challenging the validity under state
constitutions of present systems of financing public education has been
initiated in a number of states. Decisions in some states have been
reached holding such school financing in violation of state constitutions.
In addition, legislation to effect changes in public school financing has
been introduced in a number of states. The Sponsors are 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.

To the Sponsors' knowledge, there was no litigation pending as
of the initial Date of Deposit with respect to any Bonds which might
reasonably be expected to have a material adverse effect on a Trust.
Subsequent to the Date of Deposit, litigation may be initiated on a
variety of grounds with respect to Bonds in 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.
The Sponsors are 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 of declining interest rates there have
been increased redemptions of bonds, particularly housing bonds, pursuant
to such redemption provisions. In addition, the Bonds in the Trusts are
also subject to mandatory redemption in whole or in part at par at any
time that voluntary or involuntary prepayments of principal on the
underlying collateral are made to the trustee for such bonds or that the
collateral is sold by the bond issuer. Prepayments of principal tend to
be greater in periods of declining interest rates; it is possible that
such prepayments could be sufficient to cause a bond to be redeemed
substantially prior to its stated maturity date, earliest call date or
sinking fund redemption date.

The Bonds may also be subject to other calls, which may be
permitted or required by events which cannot be predicted (such as
destruction, condemnation, or termination of a contract).

In 1976 the federal bankruptcy laws were amended so that an
authorized municipal debtor could more easily seek federal court
protection to assist in reorganizing its debts so long as certain
requirements were met. Historically, very few financially troubled
municipalities have sought court assistance for reorganizing their debts;
notwithstanding, the Sponsors are unable to predict to what extent
financially troubled municipalities may seek court assistance in
reorganizing their debts in the future and, therefore, what effect, if
any, the applicable federal bankruptcy law provisions will have on the
Trusts.

The Trust may also include "moral obligation" bonds. Under
statutes applicable to such bonds, if any 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" in Part A of this Prospectus for the amount of
moral obligation bonds contained therein.

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". 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 Sponsors 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".)

Puerto Rico Bonds. Certain of the Bonds in the portfolio may
be general obligations and/or revenue bonds of issuers located in Puerto
Rico which will be affected by general economic conditions in Puerto Rico.
The economy of Puerto Rico is closely integrated with that of the mainland
United States. During fiscal year 1991, approximately 87% of Puerto
Rico's exports were to the United States mainland, which was also the
source of 67% of Puerto Rico's imports. In fiscal 1991, Puerto Rico
experienced a $2,325.5 million positive adjusted trade balance. The
economy of Puerto Rico is dominated by the manufacturing and service
sectors. The manufacturing sector has experienced a basic change over the
years as a result of increased emphasis on higher wage, high technology
industries such as pharmaceuticals, electronics, computers,
microprocessors, professional and scientific instruments, and certain high
technology machinery and equipment. The service sector, including
finance, insurance and real estate, also plays a major role in the
economy. It ranks second only to manufacturing in contribution to the
gross domestic product and leads all sectors in providing employment. In
recent years, the service sector has experienced significant growth in
response to and paralleling the expansion of the manufacturing sector.
Since fiscal 1987, personal income has increased consistently in each
fiscal year. In fiscal 1991, aggregate personal income was $21.4 billion
($18.7 billion in 1987 prices) and personal income per capita was $6.038
($5.287 in 1987 prices). Real personal income showed a small decrease in
fiscal 1991 principally as a result of a decline in real transfer
payments. Real transfer payments grew at an above normal rate in fiscal
1990 due to the receipt of non-recurrent relief of federal funds for
hurricane Hugo victims. Personal income includes transfer payments to
individuals in Puerto Rico under various social programs. Total federal
payments to Puerto Rico, which include many types in addition to federal
transfer payments, are lower on a per capita basis in Puerto Rico than in
any state. Transfer payments to individuals in fiscal 1991 were $4.6
billion, of which $3.0 billion, or 65.4%, represent entitlement to
individuals who had previously performed services or made contributions
under programs such as social security, veterans benefits and medicare.
The number of persons employed in Puerto Rico rose to a record level
during fiscal 1991. Unemployment, although at the lowest level since the
late 1970s, remains above the average for the United States. In fiscal
1991, the unemployment rate in Puerto Rico was 15.2%. From fiscal 1987
through fiscal 1990, Puerto Rico experienced an economic expansion that
affected almost every sector of its economy and resulted in record levels
of employment. Factors behind this expansion include Commonwealth
sponsored economic development programs, the relatively stable prices of
oil imports, the continued growth of the United States economy, periodic
declines in exchange value of the United States dollar and the relatively
low cost borrowing during the period. Real gross product amounted to
approximately $19.2 billion in fiscal 1991, or .9% above the fiscal 1990
level. The economy continued its growth during fiscal 1991 but at a
slower rate. The Puerto Rico Planning Board's economic activity index, a
composite index for thirteen economic indicators, increased .4% for the
first eleven months of fiscal 1992 compared to the same period in fiscal
1991, which period showed a decrease of .5% over the same period in fiscal
1990. Growth in the Puerto Rico economy in fiscal 1993 depends on several
factors, including the state of the United States economy and the relative
stability in the price of oil imports, the exchange value of the U.S.
dollar and the cost of borrowing.

Discount And Zero Coupon Bonds

Some of the Bonds in a Trust may be original issue discount
bonds. 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, some of
the aggregate principal amount of the Bonds in the Trust may be Zero
Coupon Bonds. (See "Description of Portfolio" in Part A.) 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 fluctuations 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, although
certain zero coupon housing bonds may be subject to mandatory call
provisions.

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 each 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 yields (coupon interest income as a
percentage of market price) of discount bonds will be lower than the
current yields 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. 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. 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. Discount Bonds with a large term to
maturity tend to have a higher current yield and a lower current market
value than otherwise comparable bonds with a shorter term to 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.

Insurance On The Bonds

Each of the Bonds in the Trust is insured by a municipal bond
guaranty insurance policy obtained by either the Sponsors ("Sponsor-
Insured Bonds") or the issuers of the Bonds ("Pre-Insured Bonds") and
issued by one of the insurance companies described under "Insurance on the
Bonds" in Part B (the "Insurance Companies"). Such insurance covers the
scheduled payment of principal thereof and interest thereon when such
amounts shall become due for payment but shall not have been paid by the
issuer or any other insurer thereof. The insurance, unless obtained by
Municipal Bond Investors Assurance Corporation ("MBIA Corp."), will also
cover any accelerated payments of principal and any increase in interest
payments or premiums, if any, payable upon mandatory redemption of the
Bonds if interest on any Bonds is ultimately deemed to be subject to
regular federal income tax. Insurance obtained from MBIA Corp. only
guarantees the full and complete payments required to be made by or on
behalf of an issuer of small industrial revenue bonds and pollution
control revenue bonds if there occurs an event which results in the loss
of tax-exempt status of the interest on such Bonds, including principal,
interest or premiums payments, if any, as and when required. To the
extent, therefore, that Bonds are only covered by insurance obtained from
MBIA Corp., such Bonds will not be covered for the full and complete
payments required to be made by or on behalf of an issuer of other than
small industrial revenue bonds or pollution control revenue bonds if there
occurs an event which results in the loss of tax-exempt status of the
interest on such Bonds. None of the insurance will cover accelerated
payments of principal or penalty interest or premiums unrelated to
taxability of interest on the Bonds. The insurance policies are non-
cancelable and will continue in force so long as the Bonds are outstanding
and the insurers remain in business. The insurance policies guarantee the
timely payment of principal and interest on the Bonds but do not guarantee
the market value of the Bonds or the value of Units. No representation is
made herein as to any Bond insurer's ability to meet its obligations under
a policy of insurance relating to any of the Bonds. An insurance company
that is required to pay interest and/or principal in respect of any Bond
will succeed and be subrogated to the Trustee's right to collect such
interest and/or principal from the issuer and to other related rights of
the Trustee with respect to any such Bond.

Navigator Insured Trusts

Sponsor-Insured Bonds. Each of the Bonds in the Navigator
Trusts is insured by a financial guaranty insurance policy obtained by the
Sponsors (the "Navigator Sponsor-Insured Bonds") from MBIA Corp. covering
regularly scheduled payments of principal thereof and interest thereon
when such amounts become due for payment but shall not have been paid.
Such amounts shall be reduced by any amounts received by the holders or
the owners of the Bonds from any trustee for the Bond issuers, any other
Bond insurers or any other source other than MBIA Corp. MBIA Corp. has
issued such policy or policies covering each of the Bonds in the Navigator
Trusts and each such policy will remain in force until the payment in full
of such Bonds, whether or not such Bonds continue to be held in the
Navigator Trusts. The insurer's policies relating to small industrial
development bonds and pollution control revenue bonds also guarantee any
accelerated payments required to be made by or on behalf of an issuer of
Bonds pursuant to the terms of the Bonds if there occurs an event which
results in the loss of the tax-exempt status of the interest on such
Bonds, including principal, interest or premium payments, if any, as and
when required. Such insurance does not cover for any accelerated payments
required to be made by or on behalf of an issuer of other than small
industrial revenue bonds or pollution control revenue bonds if there
occurs an event which results in the loss of the tax exempt status of the
interest on such Bonds nor will the insurance cover accelerated payments
of principal or penalty interest or premiums unrelated to taxability of
interest on any of the Bonds, including pollution control revenue bonds or
small industrial development bonds. In the event of such an acceleration,
the payments guaranteed by MBIA Corp. shall be made in such amounts and at
such times as such payments would have been made absent any such
acceleration. The insurance relates only to the prompt payment of
principal of and interest on the securities in the Navigator Portfolios
and does not remove market risk nor does it guarantee the market value of
Units in the Navigator Trusts. The terms of the insurance are more fully
described herein. For discussion of the effect of an occurrence of non-
payment of principal or interest on any Bonds in the Navigator Trusts see
"Portfolio Supervision" in Part B. No representation is made herein as to
any bond insurer's ability to meet its obligations under a policy of
insurance relating to any of the Bonds in the Navigator Trusts. In
addition, investors should be aware that subsequent to the Date of Deposit
the rating of the claims-paying ability of MBIA Corp. may be downgraded,
which may result in a downgrading of the rating of the Units in the
Navigator Trusts. The premiums for the Navigator Sponsor-Insured Bonds
are obligations of the Sponsors. Additionally, some of the Bonds in the
Navigator Trusts may be Pre-Insured Bonds (as described below). The
premium for the Pre-Insured Bonds is an obligation of the issuers,
underwriters or prior owners of those Bonds. The insurance policy or
policies relating to the Navigator Sponsor-Insured Bonds provides that, to
the extent that Bonds are both Pre-Insured Bonds and Navigator Sponsor-
Insured Bonds, coverage is effective after a claim has been made upon the
insurer of the Pre-Insured Bonds.

Upon notification from the trustee for any bond issuer or any
holder or owner of the Bonds that such trustee or paying agent has
insufficient funds to pay any principal or interest in full when due, MBIA
Corp. will be obligated to deposit funds promptly with Citibank, N.A., New
York, New York, as fiscal agent for MBIA Corp., sufficient to fully cover
the deficit. If notice of nonpayment is received on or after the due
date, MBIA Corp. will provide for payment within one business day
following receipt of the notice. Upon payment by MBIA Corp. of any Bonds,
coupons, or interest payments, MBIA Corp. shall succeed to the rights of
the owner of such Bonds, coupons or interest payments with respect
thereto.

Pre-Insured Bonds. Some of the Bonds in the Trusts which are
insured under policies obtained by the Bond issuers, underwriters or prior
owners of the Bonds ("Pre-Insured Bonds") are insured by AMBAC Indemnity
Corporation ("AMBAC"), Bond Investors Guaranty ("BIG"), Capital Guaranty
Insurance Company ("Capital Guaranty"), Financial Guaranty Insurance
Company ("Financial Guaranty"), Financial Security Assurance Inc.
("Financial Security"), Firemen's Insurance Co. ("Firemen's"), Municipal
Bond Insurance Association ("MBIA"), or Municipal Bond Investors Assurance
Corporation ("MBIA Corp."). The cost of this insurance is borne by the
respective issuers, underwriters or prior owners of the Pre-Insured Bonds.
The percentage of each Portfolio insured by each insurance company, if
any, is set forth under "Insurance" in Part A of this Prospectus.

Such insurance covers the scheduled payment of principal
thereof and interest thereon when such amounts shall become due for
payment but shall not have been paid by the issuer or any other insurer
thereof. The insurance, unless obtained by MBIA Corp., will also cover
any accelerated payments of principal and any increase in interest
payments or premiums, if any, payable upon mandatory redemption of the
Bonds if interest on any such Bond is ultimately deemed to be subject to
federal income tax. Insurance obtained from MBIA Corp. only guarantees
the accelerated payments required to be made by or on behalf of an issuer
of small industrial revenue bonds and pollution control revenue bonds if
there occurs an event which results in the loss of tax-exempt status of
the interest on such Bonds, including principal, interest or premium
payments, if any, as and when required. To the extent, therefore, that
Bonds are only covered by insurance obtained from MBIA Corp., such Bonds
will not be covered for the accelerated payments required to be made by or
on behalf of an issuer of other than small industrial revenue bonds or
pollution control revenue bonds if there occurs an event which results in
the loss of tax-exempt status of the interest on such Bonds. None of the
insurance will cover accelerated payments of principal or penalty interest
or premiums unrelated to taxability of interest on the Bonds (although the
insurance, including insurance obtained by MBIA Corp., does guarantee
payment of principal and interest in such amounts and at such times as
such amounts would have been due absent such acceleration). The insurance
relates only to the prompt payment of principal of and interest on the
securities in the portfolios, and does not remove market risks nor does it
guarantee the market value of Units in the Trusts. The terms of the
insurance are more fully described herein. No representation is made
herein as to any Bond insurer's ability to meet its obligations under a
policy of insurance relating to any of the Pre-Insured Bonds. In
addition, investors should be aware that subsequent to the Date of Deposit
the rating of the claims-paying ability of the insurer of an underlying
Pre-Insured Bond may be down-graded.

AMBAC is a Wisconsin-domiciled stock insurance company,
regulated by the Insurance Department of the State of Wisconsin, and
licensed to do business in 50 states, the District of Columbia and the
Commonwealth of Puerto Rico, with admitted assets (unaudited) of
approximately $1,936,000,000, and statutory capital (unaudited) of
approximately $1,096,000,000 as of September 30, 1993. Statutory capital
consists of the statutory contingency reserve and policyholders' surplus
of the insurance company. AMBAC is a wholly owned subsidiary of AMBAC
Inc., a 100% publicly-held company.

As of the Evaluation Date the claims-paying ability of AMBAC
has been rated "AAA" by Standard & Poor's.

Financial Guaranty is a wholly-owned subsidiary of FGIC
Corporation ("FGIC"), a Delaware holding company. FGIC is a wholly-owned
subsidiary of General Electric Capital Corporation ("GECC"). Neither FGIC
nor GECC is obligated to pay the debts of or the claims against Financial
Guaranty. Financial Guaranty is domiciled in the State of New York and is
subject to regulation by the State of New York Insurance Department. As
of December 31, 1993, the total capital and surplus of Financial Guaranty
was approximately $777,000,000. In addition, Financial Guaranty is
currently authorized to write insurance in all 50 states and the District
of Columbia.

As of the Evaluation Date, the claims-paying ability of
Financial Guaranty has been rated "AAA" by Standard & Poor's.

Firemen's, which was incorporated in New Jersey in 1855, is a
wholly-owned subsidiary of The Continental Corporation and a member of The
Continental Insurance Companies ("Continental"), Fireman's parent, a group
of property and casualty insurance companies. It provides unconditional
and non-cancelable insurance on industrial development revenue bonds. As
of September 30, 1993, the total net admitted assets (unaudited) of
Firemen's were $2,226,579,000 and its statutory surplus (unaudited) was
$495,752,845.

As of the Evaluation Date, the claims-paying ability of
Continental has been rated "AA-" by Standard & Poor's. As a result of
this rating, the ratings of all Bonds insured by Firemen's, except pre-
refunded bonds, are rated AA-. Consequently, the Units of the Trusts
containing Bonds insured by Firemen's are no longer rated.

Financial Security is a monoline insurance company incorporated
under the laws of the State of New York and is licensed, along with its
two subsidiaries, to engage in the financial guaranty insurance business
in 49 states, the District of Columbia and Puerto Rico. Financial
Security is an indirect wholly-owned subsidiary of Financial Security
Assurance Holdings Ltd., which is in turn approximately 92.5% owned by
U.S. WEST Capital Corporation ("U.S. WEST"). U.S. WEST is a subsidiary of
U.S. WEST, Inc., which operates businesses involved in communications,
data solutions, marketing services and capital assets.

Pursuant to an intercompany agreement, liabilities on financial
guaranty insurance written by Financial Security or either of its two
subsidiaries are reinsured among such companies on an agreed upon
percentage substantially proportional to their respective capital surplus
and reserves, subject to applicable statutory risk limitations. In
addition, Financial Security reinsures a portion of its liabilities under
certain of its financial guaranty insurance policies with other reinsurers
under various quota-share treaties and on a transaction-by-transaction
basis. Such reinsurance does not alter or limit Financial Security's
obligations under any financial guaranty insurance policy. As of
September 30, 1993, total shareholder equity of Financial Security and its
wholly-owned subsidiaries was (unaudited) $585,935,000 and total unearned
premium reserves was (unaudited) $216,434,000.

As of the Evaluation Date, Financial Security's claims-paying
ability has been rated "AAA" by Standard & Poor's.

Each insurance company comprising Municipal Bond Insurance
Association ("MBIA", also known as the "Association") will be severally
and not jointly obligated under the MBIA policy in the following
respective percentages: The Aetna Casualty and Surety Company, 33%;
Fireman's Fund Insurance Company, 30%; The Travelers Indemnity Company,
15%; Aetna Insurance Company*, 12%; and The Continental Insurance
Company, 10%. As a several obligor, each such insurance company will be
obligated only to the extent of its percentage of any claim under the MBIA
policy and will not be obligated to pay any unpaid obligation of any other
member of MBIA. Each insurance company's participation is backed by all
of its assets. However, each insurance company is a multiline insurer
involved in several lines of insurance other than municipal bond
insurance, and the assets of each insurance company also secure all of its
other insurance policy and surety bond obligations.

* now known as Cigna Property and Casualty Company

<PAGE>

The following table sets forth certain financial information
with respect to the five insurance companies comprising MBIA. The
statistics, which have been furnished by MBIA, are as reported by the
insurance companies to the New York State Insurance Department and are
determined in accordance with statutory accounting principals. No
representation is made herein as to the accuracy or adequacy of such
information or as to the absence of material adverse changes in such
information subsequent to the date thereof. In addition, these numbers
are subject to revision by the New York State Insurance Department which,
if revised, could either increase or decrease the amounts.

MUNICIPAL BOND INSURANCE ASSOCIATION
FIVE MEMBER COMPANIES' ASSETS, LIABILITIES
AND POLICYHOLDERS' SURPLUS
AS OF JUNE 30, 1993
(000's omitted)

New York New York New York
Statutory Statutory Policyholders'
Assets Liabilities Surplus

The Aetna Casualty & Surety Company $9,670,645 $ 8,278,113 $1,392,532
Fireman's Fund Insurance Company 6,571,313 4,880,776 1,690,537
The Travelers Indemnity Company 10,194,126 8,280,211 1,913,915
Cigna Property and Casualty Company 6,198,088 5,634,331 563,757
(Formerly Aetna Insurance Company)
The Continental Insurance Company 2,574,504 2,223,194 351,310

TOTAL $35,208,676 $29,296,625 $5,912,051

Some of the members of the Association are among the
shareholders of MBIA, Inc., a New York Stock Exchange listed company.
MBIA, Inc. is the parent of the Municipal Bond Investors Assurance
Corporation (the "MBIA Corp."). MBIA Corp. commenced municipal bond
insurance operations on January 5, 1987. MBIA Corp. is a separate and
distinct entity from the Association. MBIA Corp. has no liability to the
bondholders for the obligations of the Association under the Policy.

MBIA Corp. is the principal operating subsidiary of MBIA Inc.
MBIA Inc. is not obligated to pay the debts of or claims against the
Insurer. MBIA Corp. is a limited liability corporation rather than a
several liability association. MBIA Corp. is domiciled in the State of
New York and licensed to do business in all 50 states, the District of
Columbia and the Commonwealth of Puerto Rico.

As of December 31, 1992, MBIA Corp. had admitted assets of $2.6
billion (audited), total liabilities of $1.7 billion (audited), and total
capital and surplus of $896 million (audited) determined in accordance
with statutory accounting practices prescribed or permitted by insurance
regulatory authorities. As of December 31, 1993, MBIA Corp. had admitted
assets of $3.1 billion (audited), total liabilities of $2.1 billion
(audited), and total capital and surplus of $978 million (unaudited)
determined in accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities. The address of MBIA Corp.
is 113 King Street, Armonk, New York 10504.

As of the Evaluation Date, the claims-paying ability of MBIA
and MBIA Corp. have been rated "AAA" by Standard & Poor's.

Effective December 31, 1989, MBIA Inc. acquired Bond Investors
Group, Inc. On January 5, 1990, MBIA acquired all of the outstanding
stock of Bond Investors Group, Inc., the parent corporation of Bond
Investors Guaranty Insurance Co. ("BIG"). Through a Reinsurance
Agreement, BIG has ceded all of its net insured risks, as well as its
unearned premium and contingency reserves, to MBIA and MBIA has reinsured
BIG's net outstanding exposure.

Capital Guaranty is a monoline stock insurance company
incorporated in Maryland, and is a wholly owned subsidiary of Capital
Guaranty Corporation, a Maryland insurance holding company. Capital
Guaranty Corporation is publicly owned, whose shares are traded on the New
York Stock Exchange. Other than their capital commitment to Capital
Guaranty Corporation, the shareholders of Capital Guaranty Corporation are
not obligated to pay the debts of, or the claims against, Capital Guaranty
Insurance Company. Capital Guaranty is authorized to provide insurance in
49 States, the District of Columbia and three U.S. territories. As of
December 31, 1993, the total statutory policyholders' surplus and
contingency reserves of Capital Guaranty Insurance Company was
approximately $190,986,527 (unaudited) and total admitted assets were
approximately $284,503,855 (unaudited) as reported to the Insurance
Department of the State of Maryland.

As of the Evaluation Date, the claims-paying ability of Capital
Guaranty has been rated "AAA" by Standard & Poor's.

Connie Lee, a stock insurance company incorporated in
Wisconsin, is a wholly-owned subsidiary of College Construction Loan
Insurance Association, a stockholder-owned District of Columbia insurance
holding company whose creation was authorized by the 1986 amendments to
the Higher Education Act. The United States Department of Education and
Student Loan Marketing Association are founding shareholders of College
Construction Loan Insurance Association. As a federally authorized
company, Connie Lee's structure and operational authorities are subject to
revision by amendments to the Higher Education Act or other federal
enactments. CONNIE LEE IS NOT AN AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES GOVERNMENT, ALTHOUGH THE UNITED STATES GOVERNMENT IS A STOCKHOLDER
OF COLLEGE CONSTRUCTION LOAN INSURANCE ASSOCIATION. THE OBLIGATIONS OF
CONNIE LEE ARE NOT OBLIGATIONS OF THE UNITED STATES GOVERNMENT.

As of December 31, 1993, the total policyholders' surplus of
Connie Lee was $104,688,561 (audited) and total admitted assets were
$181,697,824 (audited), as reported to the Commissioner of Insurance of
the State of Wisconsin.

Standard & Poor's has rated the claims-paying ability of Connie
Lee "AAA".

As of the Date of Deposit, Standard & Poor's had rated the
claims-paying ability of each of the above insurance companies "AAA" and
had rated each of the Bonds in the Portfolio "AAA" because the insurance
companies had insured the Bonds. The assignment of such "AAA" ratings was
due to Standard & Poor's assessment of the creditworthiness of the
insurance companies and their ability to pay claims on their policies of
insurance. Subsequently, the rating of the claims-paying ability of the
insurer of an underlying Bond may cease to be rated or may be downgraded
which may result in a downgrading of the rating of the Units in the Trust.
For a discussion of the rating of the claims-paying ability of each of the
Bond insurers see "Insurance On The Bonds". For a list of Bond Ratings as
of the Evaluation Date see the "Portfolio" in Part A of this Prospectus.
For a discussion of the rating assigned to the Units of the Trusts, see
"the Trust" in Part A of this Prospectus. The percentage of each Trust
portfolio insured by each Insurance Company, if any, is set forth under
"Insurance" in Part A.

The foregoing information relating to the above insurance
companies is from published documents and other public sources and/or
information provided by such insurance companies. No representation is
made herein as to the accuracy or adequacy of such information or as to
the absence of material adverse changes in such information subsequent to
the dates thereof, but the Sponsors are not aware that the information
herein is inaccurate or incomplete.

Insured Municipal Securities Trust

Sponsor-Insured Bonds. For those Bonds which are not covered
by an insurance policy obtained by the issuers of such Bonds, the Sponsors
have obtained bond insurance from either Financial Guaranty, MBIA or MBIA
Corp. in an effort to protect Certificateholders against nonpayment of
principal and interest in respect of such Bonds (the "Sponsor-Insured
Bonds"). The bond insurance on the Sponsor-Insured Bonds covers the
Sponsor-Insured Bonds deposited in a Trust at the time that they are
physically delivered to the Trustee (in the case of bearer bonds) or
registered in the name of the Trustee or its nominee or delivered along
with an assignment (in the case of registered bonds) or registered in the
name of the Trustee or its nominee (in the case of bonds held in book-
entry form). Accordingly, although contracts to purchase Sponsor-Insured
Bonds are not covered by the bond insurance obtained by the Sponsors, such
Bonds will be insured when they are deposited in the Trust. When
selecting Bonds for a Trust prior to obtaining insurance thereon, the
Sponsors consider the factors listed under "Portfolio", among others. The
insurers of the Sponsor-Insured Bonds apply their own standards in
determining whether to insure the Sponsor-Insured Bonds. To the extent
that the standards of such insurers are more restrictive than those of the
Sponsors, the Sponsors' investment criteria have been limited to the more
restrictive standards.

Pre-Insured Bonds. The Bonds which are insured under policies
obtained by the Bond issuers are insured by AMBAC, BIG, Financial
Guaranty, Firemen's, Industrial Indemnity Company ("IIC") (which operates
the Health Industry Bond Insurance ("HIBI") Program), MBIA, MBIA Corp., or
United States Fidelity and Guaranty Company ("USF&G") (collectively, the
"Insurance Companies"). The cost of this insurance is borne by the
respective issuers of the Pre-Insured Bonds. The percentage of the
Portfolio insured by each Insurance Company, if any, is set forth under
"Insurance" in Part A.

IIC is a wholly-owned subsidiary of Individual Indemnity
Holdings, Inc. Industrial Indemnity Holdings, Inc. is a wholly owned
subsidiary of Talegen Holdings, Inc. (formerly Crum and Forster, Inc.).
The address of the Insurer is 255 California Street, San Francisco,
California 94111. The following table sets forth summary statutory
financial information with respect to Industrial Indemnity Company for the
nine months ending September 1993, and for the years 1991 and 1992. For
the fiscal years ending December 31, 1991 and December 31, 1992,
Industrial Indemnity Company participated in a Reinsurance Participation
Agreement with certain other Crum and Forster, Inc. companies. For 1991
and 1992 the statutory financial information set forth is that of
Industrial Indemnity Company only, as reported to the California
Department of Insurance, and is not the combined financial information of
the companies participating in the Reinsurance Participation Agreement.
As of January 1, 1993, Industrial Indemnity Company was not a participant
in the Reinsurance Participation Agreement. Additional information
regarding the Industrial Indemnity Company can be obtained from the
California Department of Insurance.

Nine Months
Ended Year Ended Year Ended
September 30, 1993 December 31, 1992 December 31, 1991

Net Income (Loss) 102,986,582 <60,580,522> 27,489,374
Total assets 1,996,780,555 1,732,927,506 1,602,412,749
Total liabilities 1,748,037,431 1,517,825,778 1,379,857,700
Policyholders' surplus 248,743,124 215,101,728 222,555,049

As of the Evaluation Date, the claims-paying ability of IIC has
been rated "A" by Standard & Poor's. As a result of this rating, the
ratings of all Bonds in the Trusts insured by IIC, except pre-refunded
bonds, are rated A. Consequently, the Units of the Trusts containing
Bonds insured by IIC are no longer rated.

Special Factors Affecting the Navigator Trusts

New York Navigator Trust

The information set forth below is derived from official
statements released by the City of New York in connection with the
preparation of the State's Executive Budget and official statements and/or
preliminary drafts of official statements prepared in connection with the
issuance of New York State and City municipal bonds. The Sponsors have
not independently verified this information.

New York City. New York City (the "City"), with a population
of approximately 7.3 million, is an international center of business and
culture. Its non-manufacturing economy is broadly based, with the banking
and securities, life insurance, communications, publishing, fashion
design, retailing and construction industries accounting for a significant
portion of the City's total employment earnings. Additionally, the City
is the nation's leading tourist destination. The City's manufacturing
activity is conducted primarily in apparel and publishing.

The national economic recession which began in July 1990 has
adversely impacted the City harder than almost any other political
jurisdiction in the nation. As a result, the City, with approximately 3
percent of national employment, has lost approximately 20 percent of all
U.S. jobs during the recent economic downturn and, consequently, has
suffered erosion of its local tax base. In total, the City private sector
employment has plummeted by approximately 360,000 jobs since 1987. But,
after nearly five years of decline, the City appears to be on the verge of
a broad-based recovery which will lift many sectors of the local economy.
Most of the nascent local recovery can be attributed to the continued
improvement in the U.S. economy, but a great deal of the strength expected
in the City economy will be due to local factors, such as the heavy
concentration of the securities and banking industries in the City. The
current forecast calls for modest employment growth of about 20,000 a year
(0.6 percent) on average through 1998 with some slowing but still positive
growth in employment in 1995-96 as U.S. growth slows (local job gains slow
from 25,000 to around 10,000 per year).

During the most recent economic downturn, the City has faced
recurring extraordinary budget gaps that have been addressed by
undertaking one-time, one-shot budgetary initiatives to close then
projected budget gaps in order to achieve a balanced budget as required by
the laws of the State of New York (the "State"). For example, in order to
achieve a balanced budget for the 1992 fiscal year, the City increased
taxes and reduced services during the 1991 fiscal year to close a then
projected gap of $3.3 billion in the 1992 fiscal year which resulted from,
among other things, lower than expected tax revenue of approximately $1.4
billion, reduced State aid for the City of approximately $564 million and
greater than projected increases in legally mandated expenditures of
approximately $400 million, including public assistance and Medicare
expenditures. The gap closing measures for fiscal year 1992 included
receipt of $605 million from tax increases, approximately $1.5 billion of
proposed service reductions and proposed productivity savings of $545
million.

Notwithstanding its recurring projected budgets gaps, for
fiscal years 1981 through 1993 the City achieved balanced operating
results (the City's General Fund revenues and transfers reduced by
expenditures and transfers), as reported in accordance with Generally
Accepted Accounting Principles ("GAAP"), and the City's 1994 fiscal year
results are projected to be balanced in accordance with GAAP.

The City's ability to maintain balanced budgets in the future
is subject to numerous contingencies; therefore, even though the City has
managed to close substantial budget gaps in recent years in order to
maintain balanced operating results, there can be no assurance that the
City will continue to maintain a balanced budget as required by State law
without additional tax or other revenue increases or reduction in City
services, which could adversely affect the City's economic base.

Pursuant to the laws of the State, the City prepares an annual
four-year financial plan, which is reviewed and revised on a quarterly
basis and which includes the City's capital, revenue and expense
projections. The City is required to submit its financial plans to review
bodies, including the New York State Financial Control Board ("Control
Board"). If the City were to experience certain adverse financial
circumstances, including the occurrence or the substantial likelihood and
imminence of the occurrence of an annual operating deficit of more than
$100 million or the loss of access to the public credit markets to satisfy
the City's capital and seasonal financing requirements, the Control Board
would be required by State law to exercise powers, among others, of prior
approval of City financial plans, proposed borrowings and certain
contracts.

On November 23, 1993, the City submitted to the Control Board
the Financial Plan for the 1994 through 1997 fiscal years, which is a
modification to a financial plan submitted to the Control Board on
August 30, 1993 and which relates to the City, the Board of Education
("BOE") and the City University of New York ("CUNY"). The 1994-1997
Financial Plan projects revenues and expenditures for the 1994 fiscal year
balanced in accordance with GAAP. The 1994-1997 Financial Plan sets forth
actions to close a previously projected gap of approximately $2.0 billion
in the 1994 fiscal year. The gap-closing actions for the 1994 fiscal year
included agency actions aggregating $666 million, including productivity
savings and savings from restructuring the delivery of City services;
service reductions aggregating $274 million; the sale of delinquent real
property tax receivables for $215 million; discretionary transfers from
the 1993 fiscal year of $110 million; reduced debt service costs
aggregating $187 million, resulting from refinancings and other actions;
$150 million in proposed increased Federal assistance; a continuation of
the personal income tax surcharge, resulting in revenues of $143 million;
$80 million in proposed increased State aid, which is subject to approval
by the Governor; and revenue actions aggregating $173 million.

The Financial Plan also sets forth projections for the 1995
through 1997 fiscal years and outlines a proposed gap-closing program to
close projected budget gaps of $1.7 billion, $2.5 billion and $2.7 billion
for the 1995 through 1997 fiscal years, respectively. City gap-closing
actions total $640 million in the 1995 fiscal year, $814 million in the
1996 fiscal year and $870 million in the 1997 fiscal year. These actions
include increased revenues and reduced expenditures from agency actions
aggregating $165 million, $439 million and $470 million in the 1995
through 1997 fiscal years, respectively, including productivity savings
and savings from restructuring the delivery of City services and service
reductions; possible BOE expenditure reductions aggregating $125 million
in each of the 1995 through 1997 fiscal years; and reduced other than
personal service costs aggregating $50 million in each of the 1995 through
1997 fiscal years.

State actions proposed in the gap-program total $306 million,
$616 million and $766 million in each of the 1995, 1996 and 1997 fiscal
years, respectively. These actions include savings from various proposed
mandate relief measures and the proposed reallocation of State education
aid among various localities totaling $175 million, $325 million and $475
million in each of the 1995, 1996 and 1997 fiscal years, respectively.
These actions also include $131 million in 1995 and $291 million in each
of 1996 and 1997 in anticipated State actions which could include savings
from the proposed State assumption of certain Medicaid costs or various
proposed mandate relief measures.

The Federal actions proposed in the gap-closing program are
$100 million and $200 million in increased Federal assistance in fiscal
years 1996 and 1997, respectively.

Other Actions proposed in the gap-closing program represent
Federal, State or City actions to be specified in the future.

Various actions proposed in the Financial Plan, including the
proposed continuation of the personal income tax surcharge beyond December
31, 1995 and the proposed increase in State aid, are subject to approval
by the Governor and the State Legislature, and the proposed increase in
Federal aid is subject to approval by Congress and the President. The
State Legislature has in previous legislative sessions failed to approve
proposals for the State assumption of certain Medicaid costs, mandate
relief and reallocation of State education aid, thereby increasing the
uncertainty as to the receipt of the State assistance included in the
Financial Plan. If these actions cannot be implemented, the City will be
required to take other actions to decrease expenditures or increase
revenues to maintain a balanced financial plan. The state Legislature has
approved the continuation of the personal income tax surcharge through
December 31, 1995, and the Governor is expected to approve this
continuation. The Financial Plan has been the subject of extensive public
comment and criticism particularly regarding the sale of delinquent
property tax receivables, the sale of the New York City Off-Track Betting
Corporation ("OTB"), the amount of State and Federal aid included in the
Financial Plan and the inclusion of non-recurring actions.

Notwithstanding the proposed city, federal and state actions in
the gap-closing programs, the City Comptroller has warned in past
published reports that State and local tax increases in an economic
downturn or period of slow economic growth can have adverse effects on the
local economy and can slow down an economic recovery. The City
Comptroller has also previously expressed concerns about the effects on
the City's economy and budgets of rapidly increasing water and sewer
rates, decreasing rental payments in future years from the Port Authority
under leases for LaGuardia and Kennedy airports, the dependence on
increased aid from the State and Federal Governments for gap-closing
programs, the escalation cost of judgements and claims, federal deficit
reduction measures and the increasing percentage of future years' revenues
projected to be consumed by debt service, even after reductions in the
capital program.

Although the City has maintained balanced budgets in each of
its last thirteen fiscal years, and is projected to achieve balanced
operating results for the 1993 fiscal year, there can be no assurance that
the gap-closing actions proposed in the Financial Plan can be successfully
implemented or that the City will maintain a balanced budget in future
years without additional State aid, revenue increases or expenditure
reductions. Additional tax increases and reductions in essential City
services could adversely affect the City's economic base.

In November 1993, Rudolph W. Giuliani was elected mayor of the
City, replacing the previous administration on January 1, 1994. Mayor
Giuliani's Modification No. 94-2 to the Financial Plan for the City and
Covered Organizations for fiscal years 1994-1998 (the "Modification"),
issued February 10, 1994, reports that for 1995 fiscal year, the budget
gap is estimated at $2.26 billion, or nearly a 12 percent shortfall of
existing tax revenues over baseline expenditures. Absent gap closing
initiatives, the Modification reports that the projected budget gap will
grow to nearly $3.4 billion by 1998 fiscal year. According to the
Modification, the 1995 fiscal year budget gap is the largest that the City
has faced since 1981, when the City converted to GAAP. The Modification
attributes the projected budget gaps to the lingering national recession,
to a sharp growth in expenditures during the boom years of the 1980s and
the failure of the City to reduce the City's municipal workforce. The
Modification reports that at the same time that City employment has
declined as a percentage of U.S. employment, local government employment
in the City, which exceeds the state government employment of the five
largest states, is on the verge of an historic high. According to the
Modification, at the end of December 1993, the City's full-time municipal
workforce stood at more than 362,000 employees, and absent reductions,
will reach an all-time high at the end of fiscal year 1994.

The Modification states that in order to strengthen the City's
long-term fiscal position the City's gap closing initiatives must be
accomplished without resorting to one-shot gap-closing measures, such as
tax increases; instead, it must balance its budgets by reducing City
spending, reducing the size of the City's municipal workforce and reducing
certain City taxes to encourage economic growth. Under the Modification,
fiscal year 1995 spending declines by $516 million over the current fiscal
year, the lowest projected spending rate since 1975. The Modification
plans to reduce the City's municipal workforce by 15,000 positions, as
compared to the current actual headcount, by the end of fiscal year 1995.
The workforce reduction will be achieved through an aggressive severance
package, and, if necessary, layoffs. It is anticipated that these
workforce reduction initiatives will save $117 million, $144 million, $311
million, $415 million and $539 million in fiscal years 1994 through 1998,
respectively, after taking into account an estimated $200 million in costs
related to instituting the proposed severance programs which are
anticipated to be financed with surplus Municipal Assistance Corporation
funds (see below for a discussion of the Municipal Assistance
Corporation). The Modification also contemplates the loss of $35 million,
$186 million, $534 million and $783 million in tax revenues in 1995
through 1998, respectively, as a result of the reduction in certain City
taxes, such as the reduction of the hotel tax from 6 percent to 5 percent,
commercial rent tax reductions and the elimination of the 12.5 percent
personal income tax surcharge.

The 1994-97 Financial Plan is based on numerous assumptions,
including the recovery of the City's and the region's economy early in the
calendar year 1993 and the concomitant receipt of economically sensitive
tax revenues in the amounts projected. The 1994-97 Financial Plan is
subject to various other uncertainties and contingencies relating to,
among other factors, the extent, if any, to which wage increases for City
employees exceed the annual increases assumed for the 1994 through 1997
fiscal years; continuation of the 9% interest earnings assumptions for
pension fund assets affecting the City's required pension fund
contributions; the willingness and ability of the State to provide the aid
contemplated by the Financial Plan and to take various other actions to
assist the City, including the proposed State takeover of certain Medicaid
costs and State mandate relief, the ability of the New York City Health
and Hospitals Corporation ("HHC"), BOE and other agencies to maintain
budget balance; the willingness of the Federal government to provide
Federal aid; approval of the proposed continuation of the personal income
tax surcharge and the State budgets; adoption of the City's budgets by the
City Council; the ability of the City to implement contemplated
productivity and service and personnel reduction programs and the success
with which the City controls expenditures; additional expenditures that
may be incurred due to the requirements of certain legislation requiring
minimum levels of funding for education; the City's ability to market its
securities successfully in the public credit markets; the level of funding
required to comply with the Americans with Disabilities Act of 1990; and
additional expenditures that may be incurred as a result of deterioration
in the condition of the City's infrastructure. Certain of these
assumptions have been questioned by the City Comptroller and other public
officials.

Estimates of the City's revenues and expenditures are based on
numerous assumptions and subject to various uncertainties. If expected
Federal or State aid is not forthcoming, if unforeseen developments in the
economy significantly reduce revenues derived from economically sensitive
taxes or necessitate increased expenditures for public assistance, if the
City should negotiate wage increases for its employees greater than the
amounts provided for in the City's Financial Plan or if other
uncertainties materialize that reduce expected revenues or increase
projected expenditures, then, to avoid operating deficits, the City may be
required to implement additional actions, including increases in taxes and
reductions in essential City services. The City might also seek
additional assistance from the State.

The City depends on the State for State aid both to enable the
City to balance its budget and to meet its cash requirements. For its
1993 fiscal year, the State, before taking any remedial action, reported a
potential budget deficit of $4.8 billion (before providing for repayment
of the deficit notes as described below). If the State experiences
revenue shortfalls or spending increases beyond its projections during its
1993 fiscal year or subsequent years, such developments could result in
reductions in projected State aid to the City. In addition, there can be
no assurance that State budgets in future fiscal years will be adopted by
the April 1 statutory deadline and that there will not be adverse effects
on the City's cash flow and additional City expenditures as a result of
such delays.

Implementation of the Financial Plan is also dependent upon the
City's ability to market its securities successfully in the public credit
markets. The City's financing program for fiscal years 1994-1997
contemplates issuance of $11.7 billion of general obligation bonds
primarily to reconstruct and rehabilitate the City's infrastructure and
physical assets and to make capital investments. A significant portion of
such bond financing is used to reimburse the City's general fund for
capital expenditures already incurred. In addition, the City issues
revenue and tax anticipation notes to finance its seasonal working capital
requirements. The success of projected public sales of City bonds and
notes will be subject to prevailing market conditions at the time of the
sale, and no assurance can be given that such sales will be completed. If
the City were unable to sell its general obligation bonds and notes, it
would be prevented from meeting its planned operating and capital
expenditures.

Substantially all of the City's full-time employees are members
of labor unions. The Financial Emergency Act requires that all collective
bargaining agreements entered into by the City and the Covered
Organizations be consistent with the City's current financial plan, except
under certain circumstances, such as awards arrived at through impasse
procedures.

On January 11, 1993, the City announced a settlement with a
coalition of municipal unions, including Local 237 of the International
Brotherhood of Teamsters ("Local 237"), District Council 37 of the
American Federation of State, County and Municipal Employees ("District
Council 37") and other unions covering approximately 44% of the City's
work force. The settlement, which has been ratified by the unions,
includes a total net expenditure increase of 8.25% over a 39-month period,
ending March 31, 1995 for most of these employees. On April 9, 1993 the
City announced an agreement with the Uniformed Fire Officers Association
(the "UFOA") which is consistent with the coalition agreement. The
agreement has been ratified. The Financial Plan reflects the costs
associated with these settlements and provides for similar increases for
all other City-funded employees.

The Financial Plan provides no additional wage increases for
City employees after their contracts expire in the 1995 fiscal year. Each
1% wage increase for all employees commencing in the 1995 fiscal year
would cost the City an additional $30 million for the 1995 fiscal year and
$135 million for the 1996 fiscal year and $150 million for each year
thereafter above the amounts provided for in the Financial Plan.

A substantial portion of the capital improvements in the City
are financed by indebtedness issued by the Municipal Assistance
Corporation for the City of New York ("MAC"). MAC was organized in 1975
to provide financing assistance for the City and also to exercise certain
review functions with respect to the City's finances. MAC bonds are
payable out of certain State sales and compensating use taxes imposed
within the City, State stock transfer taxes and per capita State aid to
the City. Any balance from these sources after meeting MAC debt service
and reserve fund requirements and paying MAC's operating expenses is
remitted to the City or, in the case of the stock transfer taxes, rebated
to the taxpayers. The State is not, however, obligated to continue the
imposition of such taxes or to continue appropriation of the revenues
therefrom to MAC, nor is the State obligated to continue to appropriate
the State per capita aid to the City which would be required to pay the
debt service on certain MAC obligations. MAC has no taxing power and MAC
bonds do not create an enforceable obligation of either the State or the
City. As of September 30, 1993, MAC had outstanding an aggregate of
approximately $5.304 billion of its bonds.

Standard & Poor's has rated City Bonds A-. Moody's Investors
Service, Inc. ("Moody's") has rated City Bonds Baal. Such ratings reflect
only the views of Standard & Poor's and Moody's from which an explanation
of the significance of such ratings may be obtained. There is no
assurance that either or both of such ratings will continue for any given
period of time or that either or both will not be revised downward or
withdrawn entirely. Any such downward revision or withdrawal could have
an adverse effect on the market prices of the Bonds.

In 1975, Standard & Poor's suspended its A rating of City
Bonds. This suspension remained in effect until March 1981, at which time
the City received an investment grade rating of BBB from Standard &
Poor's. On July 2, 1985, Standard & Poor's revised its rating of City
Bonds upward to BBB+ and on November 19, 1987, to A-. On July 2, 1993,
Standard & Poor's reconfirmed its A- rating of City Bonds, continued its
negative rating outlook assessment and stated that maintenance of such
ratings depended upon the City's making further progress towards reducing
budget gaps in the outlying years. Moody's ratings of City bonds were
revised in November 1981 from B (in effect since 1977) to Ba1, in November
1983 to Baa, in December 1985 to Baal, in May 1988 to A and again in
February 1991 to Baal.

New York State and Its Authorities. The national recession
which commenced in mid-1990 has had a more adverse impact on the State's
economy than on other parts of the nation, owing to a significant
retrenchment in the financial services industry, cutbacks in defense
spending, and an overbuilt real estate market in the State and City. As a
result of the national and regional economic recession, the State's tax
revenues for its 1991 and 1992 fiscal years were substantially lower than
projected. Consequently, the State took various actions for its 1992
fiscal year, which included increases in certain State taxes and fees,
substantial decreases in certain expenditures from previously projected
levels, including cuts in State operations and reductions in State aid to
localities, and the sale of $531 million of short-term deficit notes prior
to the end of the State's 1992 fiscal year. The State's 1992-93 budget
was passed on time, closing an estimated $4.8 billion imbalance resulting
primarily from the national and regional economic recession. Major
budgetary actions included a freeze in the scheduled reduction in the
personal income tax and business tax surcharge, adoption of significant
Medicaid cost containment or revenue initiatives, and reductions in both
agency operations and grants to local governments from previously
anticipated levels. The State completed its 1993 fiscal year with a
positive margin of $671 million in the General Fund which was deposited
into a tax refund reserve account.

The Governor released the recommended Governor's Executive
Budget for the 1993-1994 fiscal year on January 19, 1993. The recommended
1993-1994 State Financial Plan projected a balanced General Fund. General
Fund receipts and transfers from other funds were projected at $31.6
billion, including $184 million carried over from the State's 1993 fiscal
year. Disbursements and transfers from other funds were projected at
$31.5 billion, not including a $67 million repayment to the State's Tax
Stabilization Reserve Fund. To achieve General Fund budgetary balance in
the 1994 State fiscal year, the Governor recommended various actions.These
included proposed spending reductions and other actions that would reduce
General Fund spending ($1.6 billion); continuing the freeze on personal
income and corporate tax reductions and on hospital assessments ($1.3
billion); retaining moneys in the General Fund that would otherwise have
been deposited in dedicated highway and transportation funds ($516
million); a 21-cent increase in the cigarette tax ($180 million); and new
revenues from miscellaneous sources ($91 million). The recommended
Governor's 1993-94 Executive Budget included reductions in anticipated aid
to all levels of local government.

In comparison to the recommended 1993-94 Executive Budget, the
1993-94 State budget, as enacted, reflects increases in both receipts and
disbursements in the general Fund of $811 million.

The $811 million increase in projected receipts reflects (i) an
increase of $487 million, from $184 million to $671 million, in the
positive year-end margin at March 31, 1993, which resulted primarily from
improving economic conditions and higher-than-expected tax collections,
(ii) an increase of $269 million in projected receipts, $211 million
resulting from the improved 1992-93 results and the expectation of an
improving economy and the balance from improved auditing and enforcement
measures and other miscellaneous items, (iii) additional payments of $200
million from the Federal government to reimburse the State for the cost of
providing indigent medical care, and (iv) the payment of an additional $50
million of personal income tax refunds in the 1992-93 fiscal year which
would otherwise have been paid in fiscal year 1993-94; offset by (v) $195
million of revenue raising recommendations in the Executive Budget that
were not enacted in the budget and thus are not included in the 1993-94
State Financial Plan.

The $811 million increase in projected disbursements reflects
(i) an increase of $252 million in projected school-aid payments, after
applying estimated receipts from the State Lottery allocated to school
aid, (ii) a increase of $194 million in projected payments for Medicaid
assistance and other social service programs, (iii) additional spending on
the judiciary ($56 million) and criminal justice ($48 million), (iv) a net
capital projects, of $162 million, after reflecting certain re-estimates
in spending, and (v) the transfer of $100 million to a newly-established
contingency reserve.

The 1993-94 State budget, as enacted, included $400 million
less in State actions that the City had anticipated. Reform of education
aid formulas was achieved which brought an additional $145 million
education dollars to New York City. However, the State Legislature failed
to enact a takeover of local Medicaid costs, other significant mandate
relief items and certain Medicaid cost containment items proposed by the
Governor, which would have provided the City with savings. The adopted
State budget cut aid for probation services, increased sanctions on social
service programs, eliminated the pass-through of a State surcharge on
parking tickets, cut reimbursement for CHIPS transportation operating
dollars, and required a large contribution in City funds to hold the MTA
fare at the current level. In the event of any significant reduction in
projected State revenues or increases in projected State expenditures from
the amounts currently projected by the State, there could be an adverse
impact on the timing and amounts of State aid payments to the City in the
future.

On October 29, 1993, the State released a revised financial
plan for the State's 1993-94 fiscal year (the "Revised State Financial
Plan") which includes increased taxes and other revenues, deferral of
scheduled personal income and corporation tax reductions, reductions from
previously projected levels in aid to localities and State operations and
other budgetary actions that further limit the growth of General Fund
disbursements as compared to the initial financial plan for the State's
1993-94 fiscal year. The Revised State Financial Plan is based on
economic projections that the State will perform more poorly than the
nation as a whole. The State's economy, as measured by employment, was
expected to commence growth late in the 1993 calendar year. Many
uncertainties exist in forecasts of both the national and State economies,
including consumer attitudes toward spending. There can be no assurance
that the State economy will not experience worse-than-predicted results in
the 1993-94 fiscal year, with corresponding material and adverse effects
on the State's projections of receipts and disbursements.

In certain prior fiscal years, the State has failed to enact a
budget prior to the beginning of the State's fiscal year. A delay in the
adoption of the State's budget beyond the statutory April 1 deadline and
the resultant delay in the State's Spring borrowing has in certain prior
years delayed the projected receipt by the City of State aid, and there
can be no assurance that State budgets in future fiscal years will be
adopted by the April 1 statutory deadline.

The State has noted that its forecasts of tax receipts have
been subject to variance in recent fiscal years. As a result of these
uncertainties and other factors, actual results could differ materially
and adversely from the State's current projections and the State's
projections could be materially and adversely changed from time to time.

On January 14, 1992, Standard & Poor's downgraded the State's
general obligation bonds from A to A-. Also downgraded was certain of the
State's variously rated moral obligation, lease purchase, guaranteed and
contractual obligation debt, including debt issued by certain State
agencies. On June 6, 1990, Moody's changed its rating of the State's
outstanding general obligation bonds from AA- to A. The State's tax and
revenue anticipation notes issued in February 1991 were rated MIG-2 by
Moody's and SP-1 by Standard & Poor's. On January 6, 1992, Moody's
changed its rating of certain appropriations-backed debt of the State from
A to Baal. Moody's also placed the State's general obligation, State
guaranteed and New York State Local Government Assistance Corporation
bonds under review for possible downgrading in coming months. Any action
taken by Standard & Poor's or Moody's to lower the credit rating on
outstanding indebtedness and obligations of the State may have an adverse
impact on the marketability of the State's notes and bonds.

As of March 31, 1993, the State had approximately $5.132
billion in general obligation bonds excluding refunding bonds and $293
million in bond anticipation notes outstanding. On May 24, 1993 the State
issued $850 million in tax and revenue anticipation notes all of which
will mature on December 31, 1993. Principal and interest due on general
obligation bonds and interest due on bond anticipation notes and on tax
and revenue anticipation notes were $890 million and $818.8 million for
the 1991-92 and 1992-93 fiscal years, respectively, and are estimated to
be $789 million for the State's 1993-94 fiscal year, not including
interest on refunding bonds, issued in July 1992, to the extent that such
interest is to be paid from escrowed funds.

The fiscal stability of the State is related to the fiscal
stability of its authorities, which generally have responsibility for
financing, constructing and operating revenue-producing public benefit
facilities. The authorities are not subject to the constitutional
restrictions on the incurrence of debt which apply to the State itself and
may issue bonds and notes within the amounts of, and as otherwise
restricted by, their legislative authorization. As of September 30, 1992
there were 18 authorities that had outstanding debt of $100 million or
more. The aggregate outstanding debt, including refunding bonds, of these
18 authorities was $62.2 billion as of September 30, 1992, of which
approximately $8.2 billion was moral obligation debt and approximately
$17.1 billion was financed under lease-purchase or contractual-obligation
financing arrangements.

The authorities are generally supported by revenues generated
by the projects financed or operated, such as fares, user fees on bridges,
highway tolls and rentals for dormitory rooms and housing. In recent
years, however, the State has provided financial assistance through
appropriations, in some cases of a recurring nature, to certain of the 18
authorities for operating and other expenses and, in fulfillment of its
commitments on moral obligation indebtedness or otherwise for debt
service. This assistance is expected to continue to be required in future
years.

The Metropolitan Transit Authority ("MTA"), a State agency,
oversees the operation of the City's subway and bus system (the "Transit
Authority" or "TA") and commuter rail lines serving the New York
metropolitan area. Fare revenues from such operations have been
insufficient to meet expenditures, and the MTA depends heavily upon a
system of State, local, Triborough Bridge and Tunnel Authority ("TBTA")
and, to the extent available, Federal support. Over the past several
years, the State has enacted several taxes, including a surcharge on the
profits of banks, insurance corporations and general business corporations
doing business in the 12-county region served by the MTA (the
"Metropolitan Transportation Region") and a special one-quarter of 1%
regional sales and use tax, that provide additional revenues for mass
transit purposes including assistance to the MTA. The surcharge, which
expires in November 1995, yielded $507 million in calendar year 1992, of
which the MTA was entitled to receive approximately 90 percent, or
approximately $456 million.

For 1993, TA has projected a budget gap of about $266 million.
The MTA Board approved an increase in TBTA tools which took effect January
31, 1993. Since the TBTA operating surplus helps subsidize TA operations,
the January toll increase on TBTA facilities, and other developments,
reduced the projected gap to approximately $241 million. Legislation
passed in April 1993 relating to the MTA's 1992-1996 Capital Program
reflected a plan for closing this gap without raising fares. A major
element of the plan provides that the TA receive a significant share of
the petroleum business tax which will be paid directly to MTA for its
agencies. The plan also relies on certain City actions that have not yet
been taken. The plan also relies on MTA and TA resources projected to be
available to help close the gap. If any of the assumptions used in making
these projections prove incorrect, the TA's gap could grow, and the TA
would be required to seek additional State assistance, raise fares or take
other actions.

Two serious accidents in December 1990 and August 1992, which
caused fatalities and many injuries, have given rise to substantial claims
for damages against both the TA and the City.

The State's experience has been that if an Authority suffers
serious financial difficulties, both the ability of the State and the
Authorities to obtain financing in the public credit markets and the
market price of the State's outstanding bonds and notes may be adversely
affected. The Housing Finance Agency ("HFA") and the Urban Development
Corporation ("UDC") have in the past required substantial amounts of
assistance from the State to meet debt service costs or to pay operating
expenses. Further assistance, possibly in increasing amounts, may be
required for these, or other, Authorities in the future. In addition,
certain statutory arrangements provide for State local assistance payments
otherwise payable to localities to be made under certain circumstances to
certain Authorities. The State has no obligation to provide additional
assistance to localities whose local assistance payments have been paid to
Authorities under these arrangements. However, in the event that such
local assistance payments are so diverted, the affected localities could
seek additional State funds.

Litigation. A number of court actions have been brought
involving State finances. The court actions in which the State is a
defendant generally involve state programs and miscellaneous tort, real
property, employment discrimination and contract claims and the monetary
damages sought are substantial. The outcome of these proceedings could
affect the ability of the State to maintain a balanced State Financial
Plan in the 1994-97 fiscal year or thereafter.

In particular, for the State's 1993-1994 fiscal year, the State
may be required to make payments as a result of the United States Supreme
Court decision in the case of State of Delaware v. State of New York,
which involved a challenge to the State's possession of certain funds
taken pursuant to the State's Abandoned Property Law. Although it is not
possible to predict the amounts of the payments that may be required to be
made in the State's 1993-94 fiscal year, the amount may be significant.
The Division of the Budget expects, however, that the State will have the
resources to meet reasonably anticipated payment requirements for the
1993-94 fiscal year resulting from the litigation.

In addition, on November 23, 1993, the New York Court of
Appeals, the State's highest court, affirmed the decisions of the State's
Supreme Court in several actions challenging the constitutionality of
legislation enacted in 1990 which changed the actuarial funding methods
for determining contributions by the State and local governments to the
State and local retirement systems. As a result of this decision, the
State Comptroller has developed a plan to return to the previous actuarial
funding method and to restore previous funding levels of the retirement
system. The Comptroller expects to achieve this objective in a manner
that, consistent with its fiduciary duties, will neither require the State
to make additional contributions in its 1993-1994 fiscal year nor
materially and adversely affect the financial condition of the State
thereafter.

Among the more significant of these claims still pending
against the State at various procedural stages, are those that challenge:
(1) the validity of agreements and treaties by which various Indian tribes
transferred title to the State of certain land in central New York; (2)
certain aspects of the State's Medicaid rates and regulations, including
reimbursements to providers of mandatory and optional Medicaid services;
(3) contamination in the Love Canal area of Niagara Falls; (4) an action
against State and New York City officials alleging that the present level
of shelter allowance for public assistance recipients is inadequate under
statutory standards to maintain proper housing; (5) challenges to the
practice of reimbursing certain Office of Mental Health patient care
expenses from the client's Social Security benefits; (6) a challenge to
the methods by which the State reimburses localities for the
administrative costs of food stamp programs; (7) alleged responsibility of
State officials to assist in remedying racial segregation in the City of
Yonkers; (8) an action in which the State is a third party defendant, for
injunctive or other appropriate relief, concerning liability for the
maintenance of stone groins constructed along certain areas of Long
Island's shoreline; (9) an action challenging legislation enacted in 1990
which had the effect of deferring certain employer contributions to the
State Teachers' Retirement System and reducing State aid to school
districts by a like amount; (10) a challenge to the constitutionality of
financing programs of the Thruway Authority authorized by Chapters 166 and
410 of the Laws of 19; (11) a challenge to the constitutionality of
financing programs of the Metropolitan Transportation Authority and the
Thruway Authority authorized by Chapter 56 of the Law of 1993; (12)
challenges to the delay by the State Department of Social Services in
making two one-week Medicaid payments to the service providers; (13)
challenges to provisions of Section 2807-C of the Public Health Law, which
impose a 13% surcharge on impatient hospital bills paid by commercial
insurers and employee welfare benefit plans and portions of Chapter 55 of
The Laws of 1992 which require hospitals to impose and remit to the state
an 11% surcharge on hospital bills paid by commercial insurers; (14)
challenges to the promulgation of the State's proposed procedure to
determine the eligibility for and nature of home care services for
Medicaid recipients; (15) a challenge to State implementation of a program
which reduces Medicaid benefits to certain home-relief recipients; and
(16) challenges to the rationality and retroactive application of State
regulations recalibrating nursing home Medicaid rates.

State Economic Trends. Over the long term, the State and the
City also face serious potential economic problems. The City accounts for
approximately 41% of the State's population and personal income, and the
City's financial health affects the State in numerous ways. The State
historically has been one of the wealthiest states in the nation. For
decades, however, the State has grown more slowly than the nation as a
whole, gradually eroding its relative economic affluence. Statewide,
urban centers have experienced significant changes involving migration of
the more affluent to the suburbs and an influx of generally less affluent
residents. Regionally, the older Northeast cities have suffered because
of the relative success that the South and the West have had in attracting
people and business. The City has also had to face greater competition as
other major cities have developed financial and business capabilities
which make them less dependent on the specialized services traditionally
available almost exclusively in the City. In recent years the State's
economic position has improved in a manner consistent with that for the
Northeast as a whole.

The State has for many years had a very high State and local
tax burden relative to other states. The State and its localities have
used these taxes to develop and maintain their transportation networks,
public schools and colleges, public health systems, other social services
and recreational facilities. Despite these benefits, the burden of State
and local taxation, in combination with the many other causes of regional
economic dislocation, has contributed to the decisions of some businesses
and individuals to relocate outside, or not locate within, the State.

Notwithstanding the numerous initiatives that the State and its
localities may take to encourage economic growth and achieve balanced
budgets, reductions in Federal spending could materially and adversely
affect the financial condition and budget projections of the State and its
localities.

New Jersey Navigator Trust

State Finance. New Jersey is the ninth largest state in
population and the fifth smallest in land area. With an average of 1,050
people per square mile, it is the most densely populated of all the
states. The State's economic base is diversified, consisting of a variety
of manufacturing, construction and service industries, supplemented by
rural areas with selective commercial agriculture. Historically, New
Jersey's average per capita income has been well above the national
average, and in 1992 the State ranked second among the states in per
capita personal income ($26,457).

The Trust is susceptible to political, economic or regulatory
factors affecting issuers of the New Jersey securities. The following
information provides only a brief summary of some of the complex factors
affecting the financial situation in New Jersey (the "State") and is
derived from sources that are generally available to investors and is
believed to be accurate. It is based in part on information obtained from
various State and local agencies in New Jersey. No independent
verification has been made of any of the following information.

The New Jersey Economic Policy Council, a statutory arm of the
New Jersey Department of Commerce and Economic Development, has reported
in New Jersey Economic Indicators, a monthly publication of the New Jersey
Department of Labor, Division of Labor Market and Demographic Research,
that in 1988 and 1989 employment in New Jersey's manufacturing sector
failed to benefit from the export boom experienced by many Midwest states
and the State's service sectors, which had fueled the State's prosperity
since 1982, lost momentum. In the meantime, the prolonged fast growth in
the State in the mid 1980s resulted in a tight labor market situation,
which has led to relatively high wages and housing prices. This means
that, while the incomes of New Jersey residents are relatively high, the
State's business sector has become more vulnerable to competitive
pressures. New Jersey is currently experiencing a recession and, as a
result of the factors described above, such recession could last longer
than the national recession, although signs of a slow recovery both on the
national and state levels have been reported.

The onset of the national recession (which officially began in
July 1990 according to the National Bureau of Economic Research) caused an
acceleration of New Jersey's job losses in construction and manufacturing.
In addition, the national recession caused an employment downturn in such
previously growing sectors as wholesale trade, retail trade, finance,
utilities and trucking and warehousing. Reflecting the downturn, the rate
of unemployment in the State rose from a low of 3.6% during the first
quarter of 1989 to an estimated 7.1% in December 1993, which is above the
national average of 6.4% in December 1993. Economic recovery is likely to
be slow and uneven in New Jersey, with unemployment receding at a
correspondingly slow pace, due to the fact that some sectors may lag as a
result of continued excess capacity. In addition, employers even in
rebounding sectors can be expected to remain cautious about hiring until
they become convinced that improved business will be sustained. Also,
certain firms will continue to merge or downsize to increase
profitability.

Debt Service.

The primary method for State financing of capital projects is
through the sale of the general obligation bonds of the State. These
bonds are backed by the full faith and credit of the State tax revenues
and certain other fees are pledged to meet the principal and interest
payments and, if provided, redemption premium payments, if any, required
to repay the bonds. As of June 30, 1993, there was a total authorized
bond indebtedness of approximately $8.98 billion, of which $3.6 billion
was issued and outstanding, $4.0 billion was retired (including bonds for
which provision for payment has been made through the sale and issuance of
refunding bonds) and $1.38 billion was unissued. The debt service
obligation for such outstanding indebtedness is $119.9 million for Fiscal
Year 1994.

New Jersey's Budget and Appropriation System.

The State operates on a fiscal year beginning July 1 and ending
June 30. At the end of Fiscal Year 1989, there was a surplus in the
State's general fund (the fund into which all State revenues not otherwise
restricted by statute are deposited and from which appropriations are
made) of 411.2 million. At the end of Fiscal Year 1990, there was a
surplus in the general funds of $1 million. At the end of Fiscal Year
1991, there was a surplus in the general fund of $1.4 million. New Jersey
closed its Fiscal Year 1992 with a surplus of $760.8 million. It is
estimated that New Jersey closed its Fiscal Year 1993 with a surplus of
$361.3 million.

In order to provide additional revenues to balance future
budgets, to redistribute school aid and to contain real property taxes, on
June 27, 1990, and July 12, 1990, Governor Florio signed into law
legislation which was estimated to raise approximately $2.8 billion in
additional taxes (consisting of $1.5 billion in sales and use taxes and
$1.3 billion in income taxes), the biggest tax hike in New Jersey history.
There can be no assurance that receipts and collections of such taxes will
meet such estimates.

The first part of the tax hike took effect on July 1, 1990,
with the increase in the State's sales and use tax rate from 6% to 7% and
the elimination of exemptions for certain products and services not
previously subject to the tax, such as telephone calls, paper products
(which has since been reinstated), soaps and detergents, janitorial
services, alcoholic beverages and cigarettes. At the time of enactment,
it was projected that these taxes would raise approximately $1.5 billion
in additional revenue. Projections and estimates and receipts from sales
and use taxes, however, have been subject to variance in recent fiscal
years.

The second part of the tax hike took effect on January 1, 1991,
in the form of an increased state income tax on individuals. At the time
of enactment, it was projected that this increase would raise
approximately $1.3 billion in additional income taxes to fund a new school
aid formula, a new homestead rebate program and state assumption of
welfare and social services costs. Projections and estimates of receipts
from income taxes, however, have also been subject to variance in recent
fiscal years. Under the legislation, income tax rates increased from
their previous range of 2% to 3.5% to a new range of 2% to 7%, with the
higher rates applying to married couples with incomes exceeding $70,000
who file joint returns, and to individuals filing single returns with
incomes of more than $35,000.

The Florio administration has contended that the income tax
package will help reduce local property tax increases by providing more
state aid to municipalities. Under the income tax legislation, the State
will assume approximately $289 million in social services costs that
previously were paid by counties and municipalities and funded by property
taxes. In addition, under the new formula for funding school aid, an
extra $1.1 billion is proposed to be sent by the State to school districts
beginning in 1991, thus reducing the need for property tax increases to
support education programs.

Effective July 1, 1992, the State's sales and use tax rate
decreased from 7% to 6%.

On June 29, 1993, Governor Florio signed the New Jersey
Legislature's $15.9 billion budget for Fiscal Year 1994. The balanced
budget does not rely on any new taxes, college tuition increases or any
commuter fare increases, while providing a surplus of more than
$400 million. Whether the State can achieve a balanced budget depends on
its ability to enact the implement expenditure reductions and to collect
estimated tax revenues. The Fiscal Year 1994 Appropriations Act forecasts
sales and use tax collections of $3.920 billion, a 7.5% increase from
receipts estimated in the Revised Revenue Estimates for Fiscal Year 1993.
It also forecasts gross income tax collections of $4.748 billion, a 10.6%
increase from receipts estimated for Fiscal Year 1993, and corporation
business tax collections of $1.1 billion, a 15.4% increase from receipts
estimated for Fiscal Year 1993. However, projections and estimates of
receipts from taxes have been subject to variance in recent years as a
result of several factors, most recently a significant slowdown in the
national, regional and State economies, sluggish employment and
uncertainties in taxpayer behavior as a result of actual and proposed
changes in Federal tax laws.

On November 2, 1993, Governor Florio lost his bid for re-
election to Christine Todd Whitman, who was sworn into office on
January 18, 1994. Governor Whitman, a Republican, enjoys the benefit of
having a Republican majority in both the New Jersey Senate and Assembly.
On March 7, 1994, Governor Whitman signed a bill into law reducing the New
Jersey State Income Tax by 5% retroactive to January 1, 1994.

Debt Ratings.

For many years, both Moody's Investors Service, Inc., and
Standard and Poor's Corporation have rated New Jersey general obligation
bonds Aaa and "AAA", respectively. Currently, Moody's Investors Service,
Inc., rates New Jersey general obligation bonds Aa1. On July 3, 1991,
however, Standard and Poor's Corporation downgraded New Jersey general
obligation bonds to "AA+." On June 4, 1992 Standard & Poor's Corporation
placed New Jersey general obligation bonds on Credit Watch with negative
implications, citing as principal reason for its caution the unexpected
denial by the Federal Government of New Jersey's request for $450 million
in retroactive Medicaid payments for psychiatric hospitals. These funds
were critical to closing a $1 billion gap in the State's $15 billion
budget for fiscal year 1992 which ended on June 30, 1992. Under New
Jersey state law, the gap in the current budget must be closed before the
new budget year begins on July 1, 1992. Standard and Poor's Corporation
suggested the State could close fiscal 1992's budget gap and help fill
fiscal 1993's hole by a reversion of $700 million of pension contributions
to its general fund under a proposal to change the way the State
calculates its pension liability. On July 6, 1992, Standard and Poor's
Corporation reaffirmed its "AA+" rating for New Jersey general obligation
bonds and removed the debt from its Credit Watch list, although it stated
that New Jersey's long-term financial outlook is negative. Standard and
Poor's Corporation is concerned that the State is entering the 1993 fiscal
year that began July 1, 1992, with a slim $26 million surplus and remains
concerned about whether the sagging State economy will recover quickly
enough to meet lawmakers' revenue projections. It also remains concerned
about the recent federal ruling leaving in doubt how much the State is due
in retroactive Medicaid reimbursements and a ruling by a federal judge,
now on appeal, of the State's method for paying for uninsured hospital
patients. There can be no assurance that these ratings will continue or
that particular bond issues may not be adversely affected by changes in
the State or local economic and political conditions.

On August 24, 1992, Moody's Investors Service, Inc. downgraded
New Jersey general obligation bonds to "Aa1", stating that the reduction
reflected a developing pattern of reliance on nonrecurring measures to
achieve budgetary balance, four years of financial operations marked by
revenue shortfalls and operating deficits, and the likelihood that serious
financial pressures would persist.

Although New Jersey recently received $412 million in
settlement of its $450 million dispute with the federal government for
retroactive medicaid reimbursements, neither Moody's Investors Service,
Inc., nor Standard and Poor's Corporation has revised its rating for New
Jersey general obligation bonds.

Capital Construction.

In addition to payment from bond proceeds, capital construction
can also be funded by appropriation of current revenues on a pay-as-you-go
basis. This amount represents 2.2% of the total Fiscal Year 1993 Budget.
In Fiscal Year 1993, the amount is $331.0 million and is for
transportation projects. This appropriation is being credited to the
Transportation Trust Fund Account of the State General Fund.

All appropriations for capital projects and all proposals for
State bond authorizations are subject to the review and recommendation of
the New Jersey Commission on Capital Budgeting and Planning. This
permanent Commission was established in November, 1975, and is charged
with the preparation of the State Capital Improvement Plan, which contains
proposals for State spending for capital projects.

Lease Financing.

The State has entered into a number of leases relating to the
financing of certain real property and equipment. The State leases the
State Tax Processing Building and the Richard J. Hughes Justice Complex in
Trenton, both from the Mercer County Improvement Authority (the
"Authority"). On August 8, 1991 the Authority defeased outstanding bonds
originally issued to finance construction of the Richard J. Hughes Justice
Complex through the issuance of custody receipts (tile "Custody Receipts")
in the aggregate principal amount of $95,760,000. The rental is
sufficient to cover the debt service on the Authority's Custody Receipts.
Maximum annual rental payments on these leases, including debt service,
maintenance and payments in lieu of taxes, will be approximately $11
million. The State's obligation to pay the rentals is subject to
appropriations being made by the State Legislature. The Custody Receipts
will mature in the years 1992 through 2018.

The State has also entered into a lease agreement, as lessee,
with the New Jersey Economic Development Authority, as lessor (the "EDA")
to lease (i) office buildings that are presently under construction and,
when finished, are expected to house the New Jersey Division of Motor
Vehicles, New Jersey Network (the State's public television station) and a
branch of the United States Postal Service and (ii) a parking facility
that is also under construction, all of which were financed by the EDA's
$114,391,434.70 initial aggregate principal amount of Trenton Office
Complex Revenue Bonds, 1980 Series dated December 1, 1989. The State has
also entered into a lease agreement, as lessee, with the EDA to lease
approximately 13 acres of real property and certain infrastructure
improvements thereon located in the City of Newark. This property is in a
geographical area generally bounded by McCarter Highway, Mulberry Street
and Saybrook Place and its purchase was financed by $21,510,000 aggregate
principal amount of New Jersey Economic Development Authority Revenue
Bonds, New Jersey Performing Arts Center Site Acquisition Project, 1991
Series, issued on August 20, 1991. The rental payments required to be
made by the State under such lease agreements are sufficient to cover debt
service on such bonds and other amounts payable to the EDA, including
certain administrative expenses of the EDA, and such rental payments are
subject to annual appropriation by the State Legislature. Maximum annual
debt service on such bonds is approximately $12,200,000. All of such
bonds are still outstanding and mature in the years 1992 through 2012.

The State has also entered into a sublease with the EDA to
lease two parking lots, certain infrastructure improvements and related
elements located at Liberty State Park in the City of Jersey City. These
parking lots and improvements have been financed by $13,683,767.50
aggregate principal amount of New Jersey Economic Development Authority
Lease Rental Bonds, 1992 Series (Liberty State Park Project) dated
March 15, 1992. The rental payments that will be required to be made by
the State under such sublease agreement will be sufficient to cover debt
service on such bonds and other amounts payable to the EDA, and such
rental payments will be subject to appropriation by the State Legislature.

In 1981, the Governor signed into law a bill creating the New
Jersey Building Authority (the "Building Authority") having the power to
construct facilities for leasing to the State (P.L. 1981, c. 120). The
law provides for leasing to the State on a basis similar to that described
above. The Building Authority is authorized to have not more than $250
million of its notes and bonds outstanding exclusive of refunded bonds and
notes, provided that if the Building Authority issues bonds or notes to
finance the total cost of a project based on estimates prepared by an
independent consultant and the consultant determines later that the costs
of the project as initially approved have increased, the Building
Authority may issue additional bonds or notes to finance the increased
cost notwithstanding the $250 million limitation. In 1985 the Building
Authority issued $129,635,000 of 1985 Series Bonds for five office
building projects in the Trenton area. During April 1987 the Building
Authority issued $103,760,000 of 1987 Series Bonds to refund the
outstanding term bonds of the 1985 issue. On April 6, 1989 the Building
Authority issued $49,752,390.30 of 1989 Series Bonds for the renovation
and historical restoration of portions of the State Capitol Complex in
Trenton. On October 9, 1991 the Building Authority issued $74,999,815.75
of State Building Revenue Bonds, 1991 Series (Garden State Savings Bonds,
1991A), as capital appreciation bonds, under the Garden State Savings Act
of 1991, for the continued renovation and historical restoration of
portions of the State Capital Complex in Trenton and for the construction
of a structured parking facility. As of December 31, 1991 the total
amount of Building Authority Bonds outstanding was $238,687,206.05.
Outstanding Building Authority bonds are secured by annual rentals from
the State which are subject to annual appropriations by the State
Legislature. The State's combined annual rental payment for all leases
with the Building Authority will be (i) approximately $17.5 million per
year for the years ending June 15, 1992 through 1998, 2012 and 2013 and
(ii) approximately $31.0 million per year for the years ending June 15,
1999 through 2011.

Beginning in April 1984, the State, acting through the Director
of the Division of Purchase and Property, entered into a series of lease
purchase agreements which provide for the acquisition of equipment and
real property to be used by various departments and agencies of the State.
To date, the State has completed nine lease purchase agreements which have
resulted in the issuance of Certificates of Participation totaling
$541,085,000. A Certificate of Participation evidences a proportionate
interest of the owner thereof in the lease payments to be made by the
State under the terms of the agreement. As of December 31, 1991,
$305,400,000 Certificates of Participation remain outstanding. The
agreements relating to these transactions provide for semiannual rental
payments. The State's obligation to pay rentals due under these leases is
subject to annual appropriations being made by the State Legislature. The
final maturity of the outstanding Certificates of Participation is
December 15, 2013. The majority of proceeds from these transactions have
been or will be used to acquire equipment for the State and its agencies.
The rentals payable by the State will be made from monies appropriated by
the State Legislature. The State intends to continue to use this
financing technique for a substantial portion of its future equipment
requirements.

"Moral Obligation" Financing.

Aside from its general obligation bonds, the State's "moral
obligation" backs certain obligations issued by the New Jersey Housing and
Mortgage Finance Agency, the South Jersey Port Corporation and the Higher
Education Assistance Authority.

New Jersey Housing and Mortgage Finance Agency.

Neither the New Jersey Housing and Mortgage Finance Agency nor
its predecessors, the New Jersey Housing Finance Agency and the New Jersey
Mortgage Finance Agency, have had a deficiency in a debt service reserve
fund which required the State to appropriate funds to meet its "moral
obligation". It is anticipated that this agency's revenues will continue
to be sufficient to cover debt service on its bonds.

South Jersey Port Corporation.

The State provides the South Jersey Port Corporation (the
"Corporation") with funds to cover all debt service and property tax
requirements, when earned revenues are anticipated to be insufficient to
cover these obligations.

Higher Education Assistance Authority.

The Higher Education Assistance Authority has issued
$24,996,064 aggregate principal amount of revenue bonds, the interest on
which has been capitalized to but not including January 1, 1993. After
the period of capitalized interest has ended, it is anticipated that the
authority's revenues will be sufficient to cover debt service on its
bonds.

Below are listed State appropriations made since 1986 which
covered deficiencies in revenues of the Corporation, for debt service and
property tax payments.

Appropriation for Appropriation for
Calendar Year Debt Service Property Tax

1986 . . . . . . . . . . . . $0 $1,647,216.00
1987 . . . . . . . . . . . . 0 1,647,216.00
1988 . . . . . . . . . . . . 0 1,647,216.00
1989 . . . . . . . . . . . . 1,281,793.58 1,745,917.00
1990 . . . . . . . . . . . . 2,362,850.67 1,850,000.00
1991 . . . . . . . . . . . . 2,770,851.00 1,850,000.00

On April 2, 1987, the Corporation issued $31,580,000 aggregate
principal amount of Revenue Bonds, 1987 Series C (the "Series C Bonds"), a
portion of the proceeds of which will be used (i) on January 1, 1995, to
refund all of the Corporation's Marine Terminal Revenue Bonds, 1985
Refunding Series and (ii) to pay interest on the Series C Bonds until
January 1, 1995. Because of the funded escrow, it is expected that there
will not be any need for the State to provide funds to pay debt service on
the Series C Bonds through January 1, 1995. Also, in addition to the
bonded indebtedness of the Corporation set forth above, on April 2, 1987,
the Corporation issued $10,295,000 Marine Terminal Revenue Bonds, 1987
Series D to provide funds for financing a portion of the costs of various
capital improvements. On February 10, 1989, the Corporation issued
$4,085,000 Marine Terminal Revenue Bonds, 1989 Series E to provide funds
for financing a portion of the costs of various capital improvements and
additions to the Corporation's marine terminal facilities. On November
21, 1989, the Corporation issued $3,655,000 Marine Terminal Revenue Bonds,
1989 Series F, to provide for the costs of acquiring land in the City of
Camden, for the purpose of expanding the Corporation's marine terminal
facilities.

MUNICIPAL FINANCE

New Jersey's local finance system is regulated by various
statutes designed to assure that all local governments and their issuing
authorities remain on a sound financial basis. Regulatory and remedial
statutes are enforced by the Division of Local Government Services (the
"Division") in the State Department of Community Affairs.

Counties and Municipalities.

The Local Budget Law (N.J.S.A. 4OA: 4-1 et seq.) imposes
specific budgetary procedures upon counties and municipalities ("local
units"). Every local unit must adopt an operating budget which is
balanced on a cash basis, and items of revenue and appropriation must be
examined by the Director of the Division (the "Director") . The accounts
of each local unit must be independently audited by a registered municipal
accountant. State law provides that budgets must be submitted in a form
promulgated by the Division and further provides for limitations on
estimates of tax collection and for reserves in the event of any
shortfalls in collections by the local unit. The Division reviews all
municipal and county annual budgets prior to adoption for compliance with
the Local Budget Law. The Director is empowered to require changes for
compliance with law as a condition of approval; to disapprove budgets not
in accordance with law; and to prepare the budget of a local unit, within
the limits of the adopted budget of the previous year with suitable
adjustments for legal compliance, if the local unit is unwilling to
prepare a budget in accordance with law. This process insures that every
municipality and county annually adopts a budget balanced on a cash basis,
within limitations on appropriations or tax levies, respectively, and
making adequate provision for principal of and interest on indebtedness
falling due in the fiscal year, deferred charges and other statutory
expenditure requirements. The Director also oversees changes to local
budgets after adoption as permitted by law, and enforces regulations
pertaining to execution of adopted budgets and financial administration.
In addition to the exercise of regulatory and oversight functions, the
Division offers expert technical assistance to local units in all aspects
of financial administration, including revenue collection and cash
management procedures, contracting procedures, debt management and
administrative analysis.

The local Government Cap Law (N.J.S.A. 4OA: 4-45.1 et seq.) (the
"Cap Law") generally limits the year-to-year increase of the total
appropriations of any municipality and the tax levy of any county to
either 5 percent or an index rate determined annually by the Director,
whichever is less. However, where the index percentage rate exceeds 5
percent, the Cap Law permits the governing body of any municipality or
county to approve the use of a higher percentage rate up to the index
rate. Further, where the index percentage rate is less than 5 percent,
the Cap Law also permits the governing body of any municipality or county
to approve the use of a higher percentage rate up to 5 percent.
Regardless of the rate utilized, certain exceptions exist to the Cap Law's
limitation on increases in appropriations. The principal exceptions to
these limitations are municipal and county appropriations to pay debt
service requirements; to comply with certain other State or federal
mandates; amounts approved by referendum; and, in the case of
municipalities only, to fund the preceding year's cash deficit or to
reserve for shortfalls in tax collections. The Cap Law, scheduled to
expire on December 31, 1990, was re-enacted with amendments and made a
permanent part of the Municipal Finance System.

State law also regulates the issuance of debt by local units.
The Local Budget Law limits the amount of tax anticipation notes that may
be issued by local units and requires the repayment of such notes within
three months of the end of the fiscal year (six months in the case of the
counties) in which issued. The local Bond Law (N.J.S.A. 4OA: 2-1 et seq.)
governs the issuance of bonds and notes by the local units. No local unit
is permitted to issue bonds for the payment of current expenses (other
than Fiscal Year Adjustment Bonds described more fully below). Local
units may not issue bonds to pay outstanding bonds, except for refunding
purposes, and then only with the approval of the Local Finance Board.
Local units may issue bond anticipation notes for temporary periods not
exceeding in the aggregate approximately ten years from the date of first
issue. The debt that any local unit may authorize is limited to a
percentage of its equalized valuation basis, which is the average of the
equalized value of all taxable real property and improvements within the
geographic boundaries of the local unit, as annually determined by the
Director of the Division of Taxation, for each of the three most recent
years. In the calculation of debt capacity, the local Bond Law and
certain other statutes permit the deduction of certain classes of debt
("statutory deductions") from all authorized debt of the local unit
("gross capital debt") in computing whether a local unit has exceeded its
statutory debt limit. Statutory deductions from gross capital debt
consist of bonds or notes (i) authorized for school purposes by a regional
school district or by a municipality or a school district with boundaries
coextensive with such municipality to tile extent permitted under certain
percentage limitations set forth in the School Bond Law (as hereinafter
defined); (ii) authorized for purposes which are self liquidating, but
only to the extent permitted by the Local Bond Law; (iii) authorized by a
public body other than local unit the principal of and interest on which
is guaranteed by the local unit, but only to the extent permitted by law;
(iv) that are bond anticipation notes; (v) for which provision for payment
has been made; or (vi) authorized for any other purpose for which a
deduction is permitted by law. Authorized net capital debt (gross capital
debt minus statutory deductions) is limited to 3.5 percent of the
equalized valuation basis in the case of municipalities and 2 percent of
the equalized valuation basis in the case of counties. The debt limit of
a county or municipality, with certain exceptions, may be exceeded only
with the approval of the local Finance Board.

Chapter 75 of the Pamphlet Laws of 1991 signed into law on March
28, 1991 requires certain municipalities and permits all other
municipalities to adopt the State fiscal year in place of the existing
calendar fiscal year. Municipalities that change fiscal years must adopt
a six month transition budget for January to June. Since expenditures
would be expected to exceed revenues primarily because state aid for the
calendar year would not be received by the municipality until after the
end of the transition year budget, the act authorizes the issuance of
Fiscal Year Adjustment Bonds to fund the one time deficit for the six
month transition budget. The act provides that the deficit in the six
month transition budget may be funded initially with bond anticipation
notes based on the estimated deficit in the six month transition budget.
Notes issued in anticipation of Fiscal Year Adjustment Bonds, including
renewals, can only be issued for up to one year unless the local Finance
Board permits the municipality to renew them for a further period of time.
The local Finance Board must confirm the actual deficit experienced by the
municipality. The municipality then may issue Fiscal Year Adjustment
Bonds to finance the deficit on a permanent basis. The purpose of the Act
is to assist municipalities that are heavily dependent on state aid and
that have had to issue tax anticipation notes to fund operating cash flow
deficits each year. While the act does not authorize counties to change
their fiscal years, it does provide that counties with cash flow deficits
may issue Fiscal Year Adjustment Bonds as well.

State law authorizes State officials to supervise fiscal
administration in any municipality which is in default on its obligations;
which experiences severe tax collection problems for two successive years;
which has a deficit greater than 4 percent of its tax levy for two
successive years; which has failed to make payments due and owing to the
State, county, school district or special district for two consecutive
years; which has an appropriation in its annual budget for the liquidation
of debt which exceeds 25 percent of its total operating appropriations
(except dedicated revenue appropriations) for the previous budget year; or
which has been subject to a judicial determination of gross failure to
comply with the local Bond Law, the local Budget Law or the local Fiscal
Affairs Law which substantially jeopardizes its fiscal integrity. State
officials are authorized to continue such supervision for as long as any
of the conditions exist and until the municipality operates for a fiscal
year without incurring a cash deficit.

There are 567 municipalities and 21 counties in New Jersey.
During 1987, 1988, and 1989 no county exceeded its statutory debt
limitations or incurred a cash deficit in excess of 4 percent of its tax
levy. The number of municipalities which have a cash deficit greater than
4 percent of their tax levies was five for 1987, zero for 1988, and six
for 1989. The number of municipalities which exceeded statutory debt
limits was six, five, and one as of December 31, 1987, 1988, and 1989,
respectively. No New Jersey municipality or county has defaulted on the
payment of interest or principal on any outstanding debt obligation since
the 1930's.

School Districts.

All New Jersey school districts are coterminous with the
boundaries of one or more municipalities. They are characterized by the
manner in which the board of education, the governing body of the school
district, takes office. Type I school districts, most commonly found in
cities, have a board of education appointed by the mayor or the chief
executive officer of the municipality constituting the school district.
In a Type II school district, the board of education is elected by the
voters of the district. Nearly all regional and consolidated school
districts are Type II school districts.

School Budgets.

In every school district having a board of school estimate, the
board of school estimate examines the budget request and fixes the
appropriation amounts for the next year's operating budget after a public
hearing at which the taxpayers and other interested persons shall have an
opportunity to raise objections and to be heard with respect to the
budget. This board, whose composition is fixed by statute, certifies the
budget to the municipal governing bodies and to the local board of
education. If either disagrees, they must appeal to the State
Commissioner of Education (the "Commissioner") to request changes.

The Quality Education Act of 1990 (N.J.S.A. 18A: 7D-l et seq.)
limits the annual increase of a school district's net current expense
budget. The Commissioner certifies the allowable amount of increase for
each school district but may grant a higher level of increase in certain
limited instances. A school district may also submit a proposal to the
voters to raise amounts above the allowable amount of increase. If
defeated, such a proposal is subject to further review or appeal only if
the Commissioner determines that additional funds are required to provide
a thorough and efficient education.

In Type I or Type II school districts which have failed
monitoring over a period of time by the State because of continued
educational deficiencies, and are implementing an approved corrective
action plan, the Commissioner is required to determine the cost to the
school district of the implementation of those portions of the corrective
action plan which are directly responsive to the district's deficiencies
as identified in the monitoring process. Where appropriate, the
Commissioner is required to reallocate funds within the district's budget
to support the corrective action plan. The Commissioner is also required
to determine the amount of additional revenue needed to implement the
corrective action plan, and to recertify the budget for the district.

In State operated school districts the State District
Superintendent has the responsibility for the development of the budget
subject to appeal by the governing body of the municipality to the
Commissioner and the Director of the Division of local Government Services
in the State Department of Community Affairs. Based upon his review, the
Director is required to certify the amount of revenues which can be raised
locally to support the budget of the State operated district. Any
difference between the amount which the Director certifies, and the total
amount of local revenues required by the budget approved by the
Commissioner, is to be paid by the State in the fiscal year in which the
expenditures are made subject to the availability of appropriations.

School District Bonds.

School district bonds and temporary notes are issued in
conformity with N.J.S.A 18A: 24-1 et seq. (the "School Bond Law") which
closely parallels the Local Bond Law. Although school districts are
exempted from the 5 percent down payment provision generally applied to
bonds issued by municipalities and counties, they are subject to debt
limits (which vary depending on the type of school system provided) and to
State regulation of their borrowing. The debt limitation on school
district bonds depends upon the classification of the school district but
may be as high as 4 percent of the average equalized valuation basis of
the constituent municipality. In certain cases involving school districts
in cities with populations exceeding 100,000, the debt limit is 8 percent
of the average equalized valuation basis of the constituent municipality,
and in cities with population in excess of 80,000 the debt limit is 6
percent of the aforesaid average equalized valuation.

School bonds are authorized by (i) an ordinance adopted by the
governing body of a municipality within a Type I school district;
(ii) adoption of a proposal by resolution by the board of education of a
Type II school district having a board of school estimate; or (iii)
adoption of a proposal by resolution by the board of education and
approval of the proposal by the legal voters of any other Type II school
district. If school bonds will exceed the school district borrowing
capacity, a school district (other than a regional school district) may
use the balance of the municipal borrowing capacity. If the total amount
of debt exceeds the school district's borrowing capacity and any available
remaining municipal borrowing capacity, the Commissioner and the Local
Finance Board must approve the proposed authorization before it is
submitted to the voters. All authorizations of debt in a Type II school
district without a board of school estimate require an approving
referendum, except where, after hearing, the Commissioner and the State
Board of Education determine that the issuance of such debt is necessary
to meet the constitutional obligation to provide a thorough and efficient
system of public schools. When such obligations are issued, they are
issued by, and in the name of, the school district.

In Type I and II school districts with a board of school
estimate, that board examines the capital proposal of the board of
education and certifies the amount of bonds to be authorized. When it is
necessary to exceed the borrowing capacity of the municipality, the
approval of a majority of the legally qualified voters of the municipality
is required, together with the approval of the Commissioner and the local
Finance Board. When such bonds are issued for a Type I school district,
they are issued by the municipality and identified as school bonds. When
bonds are issued by a Type II school district having a board of school
estimate, they are issued by, and in the name of, the school district.

All authorizations of debt must be reported to the Division of
local Government Services by a supplemental debt statement prior to final
approval.

School District Lease Purchase Financings.

In 1982, school districts were given an alternative to the
traditional method of bond financing capital improvements pursuant to
N.J.S.A. 18A: 20-4.2(f) (the "Lease Purchase Law"). The Lease Purchase
Law permits school districts to acquire a site and school building through
a lease purchase agreement with a private lessor corporation. For Type II
school districts, the lease purchase agreement does not require voter
approval. The rent payments attributable to the lease purchase agreement
are subject to annual appropriation by the school district and are
required, pursuant to N.J.A.C. 6: 22A-1.2(h), to be included in the annual
current expense budget of the school district. Furthermore, the rent
payments attributable to the lease purchase agreement do not constitute
debt of the school district and therefore do not impact on the school
district's debt limitation. Lease purchase agreements in excess of five
years require the approval of the Commissioner and the local Finance
Board.

Qualified Bonds.

In 1976, legislation was enacted (F.L. 1976, c. 38 and c. 39)
which provides for the issuance by municipalities and school districts of
"qualified bonds." Whenever a local board of education or the governing
body of a municipality determines to issue bonds, it may file an
application with the local Finance Board, and, in the case of a local
board of education, the Commissioner, to qualify bonds pursuant to F.L.
1976, c. 38 or c. 39. Upon approval of such an application and after
receipt of a certificate stating the name and address of the paying agent
for such bonds, the maturity schedule, interest rates and payment dates,
the State Treasurer shall, in the case of qualified bonds for school
districts, withhold from the school aid payable to such municipality or
school district and in the case of qualified bonds for municipalities,
withhold from the amount of business personal property tax replacement
revenues, gross receipts tax revenues, municipal purposes tax assistance
fund distributions, State urban aid, State revenue sharing, and any other
funds appropriated as State aid and not otherwise dedicated to specific
municipal programs, payable to such municipalities, an amount sufficient
to cover debt service on such bonds. These "qualified bonds" are not
direct, guaranteed or moral obligations of the State, and debt service on
such bonds will be provided by the State only if the above mentioned
appropriations are made by the State. Total outstanding indebtedness for
"qualified bonds" consisted of $103,720,500 by various school districts as
of June 30, 1992 and $830,037,105 by various municipalities as of June 30,
1992.

New Jersey School Bond Reserve Act.

The New Jersey School Bond Reserve Act (N.J.S.A. 18A: 56-17 et
seq.) establishes a school bond reserve within the constitutionally
dedicated Fund for the Support of Free Public Schools. Under this law the
reserve is maintained at an amount equal to 1.5 percent of the aggregate
outstanding bonded indebtedness of counties, municipalities or school
districts for school purposes (exclusive of bonds whose debt service is
provided by State appropriations), but not in excess of monies available
in such Fund. If a municipality, county or school district is unable to
meet payment of the principal of or interest on any of its school bonds,
the trustee of the school bond reserve will purchase such bonds at the
face amount thereof or pay the holders thereof the interest due or to
become due. At June 30,1991, the book value of the Fund's assets
aggregated $59,352,429 and the reserve, computed as of June 30, 1991,
amounted to $19,668,349. There has never been an occasion to call upon
this Fund.

Local Financing Authorities.

The local Authorities Fiscal Control Law (N.J.S.A. 4OA: 5A-1 et
seq.) provides for State supervision of the fiscal operations and debt
issuance practices of independent local authorities and special taxing
districts by the State Department of Community Affairs. The local
Authorities Fiscal Control Law applies to all autonomous public bodies
created by counties or municipalities, which are empowered to issue bonds,
to impose facility or service charges, or to levy taxes in their
districts. This encompasses most autonomous local authorities (sewerage,
municipal utilities, parking, pollution control, improvement, etc.) and
special taxing districts (fire, water, etc.). Authorities which are
subject to differing state or federal financial restrictions are exempted,
but only to the extent of that difference.

Financial control responsibilities over local authorities and
special districts are assigned to the local Finance Board and the Director
of the Division of Local Government Services. The local Finance Board
exercises approval power over the creation of new authorities and special
districts as well as their dissolution. The Local Finance Board also
reviews, conducts public hearings and issues findings and recommendations
on any proposed project financing of an authority or district, and on any
proposed financing agreement between a municipality or county and an
authority or special district. The local Finance Board prescribes minimum
audit requirements to be followed by authorities and special districts in
the conduct of their annual audits. The Director reviews and approves
annual budgets of authorities and special districts.

LITIGATION

The following are cases presently pending or threatened in which
the State has the potential for either a significant loss of revenue or a
significant unanticipated expenditure.

Abbott v. Burke. This case concerned a challenge to the
constitutionality of the Public Education Act of 1975 (N.J.S.A. 18A: 7A-1
et seq.) (the "Act"). On June 5, 1990, the State Supreme Court rendered
its decision in this case and held that the Act is unconstitutional as
applied to 28 "poorer urban school districts" described in the decision.
The Court ruled that a funding mechanism that is not dependent upon
budgeting and tax decisions of the local school boards must be in place
for the 1991-1992 school year either through an amendment to the Act or
new legislation. The Quality Education Act of 1990 ("QEA") was enacted
into law on July 3, 1990 and establishes a new system for distributing
state aid to school districts. On June 12, 1991, the plaintiffs filed a
motion with the State Supreme Court to assure implementation of its decree
in Abbott. They have maintained that the QEA is invalid, arguing that it
does not comply with the Court's mandates in Abbott, and have requested
that the Legislature be ordered to enact a constitutional funding system
or be required to implement a court ordered plan. On September 23, 1991
the Court remanded the matter to the Superior Court, Chancery Division -
Mercer County, for consideration of plaintiffs' claims.

In September 1993, the Superior Court ruled that the funding
formula in the QEA as amended violated the N.J. constitution "because it
fails to comply with the directives of [Abbott] requiring substantial
timely parity of regular education and adequate timely provision for the
special educational needs for pupils." It is probable that this decision
will again be appealed to the New Jersey Supreme Court.

County/State Disputes Concerning Social Security Recoveries.

There are presently several cases pending in the State courts
challenging the methods by which the State Department of Human Services
shares with county governments the maintenance recoveries and costs for
residents in State psychiatric hospitals and residential facilities for
the developmentally disabled. In County of Essex v. Waldman, et al.,
Essex County challenged the State's policy of sharing federal Social
Security recoveries on a 50%-50% basis with the County. Essex County
maintains that State law has, since 1980, required that 100% of the
recoveries be paid to the County. On December 6, 1990, the Appellate
Division upheld the trial court's ruling allowing the County to receive
100% of recoveries, but refused to allow recovery retroactive to 1980,
instead fixing January 25, 1989 as the effective date of the ruling as to
Essex County. A petition for certification by the County of Essex, and a
cross-petition by the State, were denied by the New Jersey Supreme Court
on May 28, 1991. The Counties of Morris, Passaic, Middlesex, Hudson,
Bergen, Union, Cumberland, Monmouth, Mercer, Hunterdon and Camden all
filed similar actions which were stayed (except in the cases of Hudson and
Camden) pending the outcome in the County of Essex case, and all actions
(except in the case of Mercer) are now on appeal. Retroactive recoveries
in those cases may also be limited, as in the County of Essex matter. By
administrative order dated July 22, 1991, the Commissioner determined that
State liability to all counties (with the exception of Essex County) would
run as of December 6, 1990. The Counties of Bergen, Burlington, Camden,
Cumberland, Hunterdon, Hudson, Middlesex, Monmouth, Morris, Passaic and
Union have appealed that administrative order in the Superior Court,
Appellate Division.

County of Essex v. Commissioner, Department of Human Services,
et al. In this case, Essex County has sought the return of moneys it has
paid since 1980 for maintenance of Medicaid or Medicare eligible residents
of institutions and facilities for the developmentally disabled, arguing
that State law relieved the County of maintenance responsibility for those
persons. The trial court ruled in Essex County's favor, but made its
ruling effective as of March 30, 1989. The Appellate Division affirmed
that decision on June 14, 1991. Petitions for certification by both
parties were denied by the New Jersey Supreme Court on November 12, 1991.
Hunterdon, Mercer, Passaic, Middlesex, Hudson, Bergen, Union, Cumberland,
Camden and Monmouth Counties filed similar actions, which were stayed
(except in the cases of Hudson and Camden) pending a decision in the Essex
County case, and all actions (except in the case of Mercer) are now on
appeal. By administrative order, dated July 22, 1991, the Commissioner
determined that, subject to action by the New Jersey Supreme Court, the
State's liability to all counties (with the exception of Essex County)
will run as of June 14, 1991. The Counties of Bergen, Burlington, Camden,
Cumberland, Hunterdon, Hudson, Middlesex, Monmouth, Morris, Passaic and
Union have appealed the administrative order to the Superior Court,
Appellate Division.

New Jersey Association of Health Care Facilities, Inc. et al. v.
Gibbs, et al. In this case, which was filed in the United States District
Court for the District of New Jersey on May 8, 1990, plaintiffs allege
that the Department of Human Services, Division of Medical Assistance and
Health Services, has implemented unreasonably low Medicaid payment rates
for long-term care facilities in New Jersey. Plaintiffs claim that the
rates are not sufficient to cover their actual costs of providing services
to Medicaid patients and that this has had an adverse impact on the
quality of services they are able to provide to Medicaid patients.
Plaintiffs are attempting to have their lawsuit certified as a class
action on behalf of all New Jersey long-term care facilities which provide
services to Medicaid services. They seek a declaration that the
Department of Human Services has violated federal law in the setting and
paying of Fiscal Year 1990 long-term care facility Medicaid payment rates
and an injunction against the department requiring it to comply with
federal law in the setting of such rates. Plaintiffs also seek costs and
attorneys' fees. A final decision in favor of the plaintiffs could
require the State to make substantial expenditures. Plaintiffs have filed
a motion for a preliminary injunction. The hearing on plaintiffs' motion
has been held, and briefs have been filed by all parties. The matter is
presently pending before the Third Circuit Court of Appeals.

Spill Compensation Fund Cases. In Exxon v. Hunt, a number of
taxpayers are seeking refunds of taxes paid to the Spill Compensation Fund
pursuant to N.J.S.A. 58: 10-23.11. On March, 10, 1986, the Supreme Court
of the United States decided that several uses of the Spill Compensation
Fund were preempted by federal law. Several issues in the case, including
the issue of the refund of what has been collected in taxes to date, were
remanded to the State courts for decision. On December 2, 1987, the
Supreme Court of New Jersey held that preemption began when a site was
listed in the National Contingency Plan or was placed on the National
Priorities List and ended when Congress amended the "Superfund"
legislation to eliminate the preemption language. The Court further held
that the plaintiffs would receive refunds only in the event that the State
Legislature refused to reimburse the Spill Compensation Fund for
expenditures for preempted purposes, and remanded the matter to the Tax
Court for an accounting. The plaintiffs filed with the Supreme Court of
the United States a petition for a writ of mandamus alleging that the
Supreme Court of New Jersey misinterpreted the decision of the United
States Supreme Court. That petition was denied without comment on March
28, 1988. Remand proceedings have resumed in the Tax Court. $87 million
was collected in taxes for the Spill Compensation Fund from December 1980
through April 1987. The Tax Court recently rejected Exxon's argument that
it was entitled to refunds on the grounds of due process, which decision
has now been appealed by Exxon. In addition, the Tax Court ruled that
preempted expenditures totaled approximately eight million dollars.
However, although the appeal is still pending, the New Jersey Supreme
Court has advised that the six-month period within which the Legislature
may determine whether to reimburse the Spill Compensation Fund in lieu of
tax refund has begun to run, and will expire on or about December 3, 1992.
If the Legislature fails to make reimbursement by that date, the Spill
Compensation Fund will be liable for refunds to all taxpayers who filed
timely claims. This includes the claims of taxpayers whose complaints
were placed on the inactive list pending resolution of the Exxon matter.
On December 1, 1992, the Legislature's Joint Budget Oversight Committee
approved DEPE's request to transfer $8,142,094 from the Hazardous Site
Cleanup Fund to the New Jersey Spill Compensation Fund to fulfill the
obligation set out by the Supreme Court in Exxon v. Hunt.

Fair Automobile Insurance Reform Act Litigation. On March 12,
1990, the Fair Automobile Insurance Reform Act of 1990 ("FAIR Act") was
enacted into law. The FAIR Act substantially alters New Jersey's
statutory scheme governing private passenger automobile insurance. The
New Jersey Automobile Full Insurance Underwriting Association ("JUA"), an
unincorporated non-profit association created in 1983 to provide
automobile insurance to those unable to secure such coverage in the
voluntary market, was precluded from issuing or renewing automobile
insurance policies after October 1, 1990. The FAIR Act includes
provisions governing the transition of drivers insured by the JUA to the
voluntary market and, to the extent such coverage is not available, to an
Assigned Risk Plan. The FAIR Act also provides for the imposition of
taxes and assessments to meet the financial obligations of the JUA, which
are not debts, liabilities or obligations of the State. The FAIR Act's
revenue raising measures include a premium tax surcharge imposed upon
insurers doing business in New Jersey that is intended to yield a total of
$300 million dollars over a three year period commencing in 1990. The
fiscal year 1993 budget does not reflect the anticipated revenues from the
premium tax surcharge because the revenues are to be applied by statute to
the JUA financial obligations. The FAIR Act also provides for the making
of assessments by the New Jersey Property Liability Insurance Guaranty
Association upon property and casualty liability insurers in order to
raise $160 million dollars per year for the period 1990 to 1997.

Litigation challenging various portions of the FAIR Act remains
pending. On May 16, 1991, the Supreme Court of New Jersey decided State
Farm Mutual Automobile Insurance Company v. Fortunato upholding the facial
constitutionality of the surtax and assessment provisions of the FAIR Act.
In the Matter of American Reliance, the Appellate Division held that
insurers who did not write private passenger automobile insurance could be
assessed pursuant to the FAIR Act. Although successful in that case,
certain "as applied" challenges have been brought. Recently, litigation
was filed in the Mercer County Superior Court-Chancery Division, by
Allstate and State Farm alleging that their constitutional rights have
been violated and that they are entitled to refunds of FAIR Act surtaxes
and assessments.

An additional provision of the FAIR Act, N.J.S.A. 17: 33B-10,
provides funding for the State's costs, including attorney's fees, in
maintaining any action against the servicing carriers of the New Jersey
Automobile Full Insurance Underwriting Association ("JUA") from the JUA or
the New Jersey Automobile Insurance Guaranty Fund ("Automobile Fund").
Currently, the administrative restitution action, Jackson v. Aetna, et
al., seeks restitution from the JUA's servicing carriers for losses
incurred by the JUA due to the carriers alleged mishandling of
underwriting and claims adjustment on behalf of the JUA. The State's
funding for this action and the supplemental financial, claim, underwrit-
ing and operational examinations of the servicing carriers which are
needed are currently being paid by the JUA through funds supplied in whole
or in part by the Automobile Fund. The servicing carriers have challenged
this funding mechanism on appeals pending before the Appellate Division In
the Matter of The Commissioner of Insurance's Certification of Amendment
to the New Jersey Automobile Full Insurance Underwriting Association Plan
of Operation, A-5514-89T1. This challenge was rejected by the Court and
there has been no subsequent litigation on this issue.

Tort, Contract and Other Claims. At any given time, there are
various numbers of claims and cases pending against the State, State
agencies and employees, seeking recovery of monetary damages that are
primarily paid out of the fund created pursuant to the New Jersey Tort
Claims Act (N.J.S.A. 59: 1-1, et seq.). The State does not formally
estimate its reserve representing potential exposure for these claims and
cases. The State is unable to estimate its exposure for these claims and
cases. An independent study estimated an aggregate potential exposure of
$50 million for tort claims pending as of January 1, 1982. It is
estimated that were a similar study made of claims currently pending, the
amount of such estimated exposure would be somewhat higher. In addition,
at any given time, there are various numbers of contract and other claims
against the State and State agencies, seeking recovery of monetary damages
or other relief which, if granted, would require the expenditure of funds.
The State is unable to estimate its exposure for these claims.

Parlavecchio v. Florio. In this case, which was filed in
Superior Court on June 17, 1991, Essex County seeks to invalidate the
State's method of funding the judicial system. Under the current funding
procedures most costs associated with the judicial system are borne by the
counties, and are allocated on a county-by-county basis. The complaint
alleges that this funding system discriminates against urban counties and
violates the provision in the State Constitution establishing a "unified"
court system. Plaintiffs also raise equal protection, substantive due
process and takings claims, and seek to require the State to assume sole
responsibility for funding the judicial system. The trial court has
granted the State summary judgment, and the matter is now on appeal.

United Wire, Metal and Machine Health and Welfare Fund, et al.
v. Morristown Memorial Hospital, et al. Several Union welfare benefit
plans brought this action in Federal District Court challenging some
provisions of New Jersey's hospital rate-setting system. The Plaintiffs
claimed that the provisions in the State rate scheme for a hospital bill
uncompensated care add-on, a Medicare cost shift, payer discounts and
payer appeals violated their federal and State constitutional and
statutory rights. The Plaintiffs also asked the Court to order
restitution for any illegal payments made under protest. On May 27, 1992,
the District Court ruled that the four challenged provisions of the rate-
setting system were preempted by the federal Employee Retirement Income
Security Act ("ERISA") and, therefore, are unenforceable against
participants in ERISA benefit plans. However, the Court dismissed the
Plaintiffs' constitutional attacks on the rate scheme and declined for
jurisdictional reasons to rule on restitution claim on the ground it
should be heard, if at all, by a State court. State officials responsible
for administering the rate system and the New Jersey Hospital Association
appealed to the federal Third Circuit Court of Appeals from the ERISA-
based aspects of the decision and obtained a stay of the District Court's
ruling pending the outcome of the appeal. The Plaintiffs filed cross-
appeals from the dismissal of their federal constitutional claimed that
the rate scheme constitutes a taking of property without just compensation
and the claim for restitution. The appeals remain pending. A decision
from the Third Circuit on the appeals that upholds the District Court's
ERISA preemption decision would raise serious doubts about the continued
viability of New Jersey's rate-setting system. The District Court's
decision, if upheld, may result in reduced payments to disproportionate
share hospitals and thus, potentially, the loss of matching federal funds.
The Third Circuit Court of Appeals rendered its decision and a petition
for certiorari is presently pending before the United States Supreme
Court. The New Jersey Hospital Association has also filed a related
action in State court that seeks to enjoin certain Plaintiffs, plan
participants and other payors from paying less than the charges mandated
by the challenged rate system.

Communications Workers of America, AFL-CIO ("CSA"), et al. v.
Jim Florio, et al. This case is pending in the Supreme Court of New
Jersey. The Fiscal Year 1993 Appropriations Act includes provisions
relating to certain reductions in personnel by various State agencies.
Subsequent to its enactment, the Attorney General advised the Governor
that these provisions were to be read so as to permit the exercise of
certain discretion by the State agencies in making such personnel
decisions. CWA has filed suit, alleging, among other things, that the
Appropriations Act provisions in questions were intended by the
Legislature as mandatory and that they require that the reductions be
accomplished through cuts in unclassified personnel earning in excess of
$50,000 per year. CWA alleges further that proposed agency reductions in
personnel fail to comply with this requirement, and makes certain other
claims, including an alleged failure by the agencies to notify the Joint
Budget Oversight Committee of the reductions. CWA seeks relief enjoining
defendants from actions which it alleges are in violation of the
Appropriations Act and directing the rescission of all layoff notices
allegedly served in violation of the Act. The CWA case was consolidated
with two similar cases brought by several State legislators and the
plaintiffs sought a stay of the layoffs scheduled to take effect on
October 2, 1992. The Appellate Division denied the stay, but a single
Justice of the Supreme Court granted a stay of the layoffs pending all
Court action on October 5. On October 5, 1992, the Supreme Court entered
an order denying the stay and the layoffs took effect as of 5:00 p.m. on
October 5. The appeals were argued on their merits before the Supreme
Court and in January 1993, the Supreme Court upheld the Governor's
position.

Adverse judgments in these and other matters could have the
potential for either a significant loss of revenue or a significant
unanticipated expenditure by the State.

At any given time, there are various numbers of claims and cases
pending against the State, State agencies and employees seeking recovery
of monetary damages that are primarily paid out of the fund created
pursuant to the New Jersey Tort Claims Act. In addition, at any given
time, there are various numbers of contract claims against the State and
State agencies seeking recovery of monetary damages. The State is unable
to estimate its exposure for these claims.

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 the Trust divided by
the number of Units outstanding, an amount based on the applicable sales
charge times the aggregate offering price of the Bonds (see "Public
Offering Price" in Part A for the applicable sales charge for the Trust).
A proportionate share of accrued interest on the Bonds to the expected
date of settlement for the Units is added to the Public Offering Price.
Accrued interest is the accumulated and unpaid interest on a Bond from the
last day on which interest was paid and is accounted for daily by the
Trust at the initial daily rate set forth under "Summary of Essential
Information" in Part A of this Prospectus. This daily rate is net of
estimated fees and expenses. The 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 and the price to be paid by each
investor will be computed as of the date 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 bid or offering prices for the
Bonds from investment dealers or brokers (including the Sponsors) that
customarily deal in tax-exempt obligations or from any other reporting
service or source of information which the Evaluator deems appropriate.

Accrued Interest

An amount of accrued interest which represents accumulated
unpaid or uncollected interest on a Bond from the last day on which
interest was paid thereon will be added to the Public Offering Price and
paid by the Certificateholder at the time 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 (net of
estimated fees and expenses), the Trust will always have an amount of
interest accrued but not actually received and distributed to Certificate-
holders. 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 Bear, Stearns & Co.
Inc., 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 offering side evaluation of the underlying
securities in a Trust during the initial offering period and at the bid
side thereafter, divided by the number of Units outstanding plus a reduced
charge of $10.00 per Unit. Such arrangements result in less selling
effort and selling expenses than sales to employee groups of other
companies. Resales or transfers of Units purchased under the employee
benefit arrangements may only be made through the Sponsors' 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 Sponsors intend to qualify the Units for sale in substantially
all States through the Underwriters and 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 Insured Municipal Securities Trust Series,
(b) $25.00 per unit for the Insured Municipal Securities Trust Discount
Series or (c) $33.00 per Unit, for the Insured Municipal Securities
Navigator Trust, subject to the Sponsors' right to change the dealers'
concession from time to time. 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. Such
Units may then be distributed to the public by the dealers at the Public
Offering Price then in effect. The Sponsors reserve 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.

Sponsors' Profits

The Sponsors 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 "Sponsors Repurchase") the Sponsors will realize
profits or sustain losses in the amount of any difference between the
price at which they buy Units and the price at which they resell 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, Sponsors'
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 the Bonds without any sales charge. On the
Evaluation Date, the Public Offering Price and the Sponsors' initial
Repurchase Price per Unit (each based on the bid side evaluation of the
Bonds in the Trust) each exceeded the Redemption Price and the Sponsors'
secondary market Repurchase Price per Unit (based upon the current bid
side evaluation of the Bonds in the Trust) by the amounts shown under
"Summary of Essential Information" in Part A of this Prospectus. For this
reason, among others (including fluctuations in the market prices of such
Bonds and the fact that the Public Offering Price includes the applicable
sales charge), the amount realized by a Certificateholder upon any
redemption of Sponsors 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 the 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 Unitholders. The resulting Estimated
Long Term Return represents a measure of the return to Unitholders earned
over the estimated life of each Trust. The Estimated Long Term Return as
of the day prior to the Evaluation Date is stated for the 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 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. 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 the Trust under
"Summary of Essential Information" in Part A.

A schedule of cash flow projections is available from the
Sponsor upon request.

RIGHTS OF CERTIFICATEHOLDERS

Certificates

Ownership of Units of the Trust is evidenced by registered
Certificates executed by the Trustee and the Sponsors. 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 such 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 (other than amounts representing failed contracts,
as previously discussed) will be computed as of each semi-annual Record
Date, and will be made to the Certificateholders on or shortly after the
next semi-annual Payment Date. Proceeds representing principal received
from the disposition of any of the Bonds between a Record Date and a
Payment Date which are not used for redemptions of Units will be held in
the Principal Account and not distributed until the second succeeding
semi-annual Payment Date. No distributions will be made to Certificate-
holders electing to participate in the Total Reinvestment Plan. 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 purchases of Replacement Bonds and redemptions of Units
by the Trustee.

The estimated monthly, semi-annual or annual interest
distribution per Unit will initially be in the amount shown under Summary
of Essential Information and will change and may be reduced as Bonds
mature or are redeemed, exchanged or sold, or as expenses of the Trust
fluctuate. No distribution need be made from the Principal Account until
the balance therein is an amount sufficient to distribute $1.00 per Unit.

Distribution Elections

Interest is distributed monthly, semi-annually or annually,
depending upon the distribution plan applicable to the Unit purchased.
Record Dates are the first day of each month for monthly distributions,
the first day of each June and December for semi-annual distributions and
the first day of each December for annual distributions. Payment Dates
will be the fifteenth day of each month following the respective Record
Dates.

Certificateholders purchasing Units in the secondary market will
initially receive distributions in accordance with the election of the
prior owner. Every October each Certificateholder may change his
distribution election by notifying the Trustee in writing of such change
between October 1 and November 1 of each year. (Certificateholders
deciding to change their election should contact the Trustee by calling
the number listed on the back cover hereof for information regarding the
procedures that must be followed in connection with this written
notification of the change of election.) Failure to notify the Trustee on
or before November 1 of each year will result in a continuation of the
plan for the following 12 months.

Records

The Trustee shall furnish Certificateholders in connection with
each distribution a statement of the amount of interest, if any, and the
amount of other receipts, if any, which are being distributed, expressed
in each case as a dollar amount per Unit. Within a reasonable time after
the end of each calendar year 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 amounts representing interest received upon any disposition of
Bonds and earned original issue discount, if any), amounts paid for
purchases of Replacement Bonds and 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 purchases of Replacement Bonds
and 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 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 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 each 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. Such interest may,
however, be subject to the federal corporate alternative minimum tax and
to state and local taxes. Neither the Sponsors 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 opinion and express no opinion
as to these matters, and neither the Trustee nor the Sponsors nor their
respective counsel 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.

The Revenue Reconciliation Act of 1993 ("P.L. 103-66") was
recently enacted. P.L. 103-66 increases maximum marginal income tax rates
for individuals and corporations (generally effective for taxable years
beginning after December 31, 1992), extends the authority to issue certain
categories of tax-exempt bonds (qualified small issue bonds and qualified
mortgage bonds), limits the availability of capital gain treatment for
tax-exempt bonds purchased at a market discount, increases the amount of
Social Security benefits subject to tax (effective for taxable years
beginning after December 31, 1993) and makes a variety of other changes.
Prospective investors are urged to consult their own tax advisors as to
the effect of P.L. 103-66 on an investment in Units.

In rendering the opinion set forth below, counsel has examined
the Agreement, the final form of Prospectus dated the date hereof (the
"Prospectus") and the documents referred to therein, among others, and has
relied on the validity of said documents and the accuracy and completeness
of the facts set forth therein.

In the opinion of Battle Fowler, counsel for the Sponsors, under
existing law:

The Trusts are not associations taxable as corporations for federal
income tax purposes under the Internal Revenue Code of 1986 (the "Code"),
and income received by the Trusts that consists of interest excludable
from federal gross income under the Code will be excludable from the
federal gross income of the Certificateholders of such Trusts.

Each Certificateholder will be considered the owner of a pro rata
portion of the Trust under Section 676(a) of the Code. Thus, each Cer-
tificateholder will be considered to have received his pro rata share of
Bond interest when it is received by that 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 Certificateholders.

Gain (other than any earned original issue discount) realized on a
sale or redemption of the Bonds or on a sale of a Unit is, however,
includable in gross income for federal income tax purposes, generally as
capital gain, although gain on the disposition of a Bond or a Unit
purchased at a market discount generally will be treated as ordinary
income, rather than capital gain, to the extent of accrued market
discount. (It should be noted in this connection that such gain does not
include any amounts received in respect of accrued interest.) Such gain
may be long or short-term depending on the facts and circumstances.
Capital losses are deductible to the extent of capital gains; in addition,
up to $3,000 of capital losses of non-corporate Certificateholders may be
deducted against ordinary income. Capital assets acquired on or after
January 1, 1988 must be held for more than one year to qualify for long-
term capital gain treatment.

Each Certificateholder will realize taxable income 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 per Unit tax
cost for each Bond is determined by allocating the total tax cost of each
Unit among all 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 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). Gain on the disposition
of a Bond purchased at a market discount generally will be treated as
ordinary income, rather than capital gain, to the extent of accrued market
discount. No deduction is allowed for the amortization of bond premium on
tax-exempt bonds such as the Bonds in computing regular federal income
tax.

Discount generally accrues based on the principle of compounding of
accrued interest, not on a straight-line or ratable method, with the
result that the amount of earned original issue discount is less in the
earlier years and more in the later years of a bond term. The tax basis
of a discount bond is increased by the amount of accrued, tax-exempt
original issue discount thus determined. This method of calculation will
produce higher capital gains (or lower losses) to a Certificateholder, as
compared to the results produced by the straight-line method of accounting
for original issue discount, upon an early disposition of a Bond by the
Trust or of a Unit by a Certificateholder.

A Certificateholder may also realize taxable income or loss when a
Unit is sold or redeemed. The amount received is allocated among all the
Bonds in a particular Trust in the same manner as when that 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 Social Security benefits that are includable in
gross income and determining whether an individual's income exceeds the
base amount above which a portion of the benefits would be subject to tax.
For taxable years beginning after December 31, 1993, the amount of Social
Security benefits subject to tax will be increased.

Corporate Certificateholders are required to include in federal
corporate alternative minimum taxable income 75 percent of the amount by
which the adjusted current earnings (which will include tax-exempt
interest) of the corporation exceeds alternative minimum taxable income
(determined without regard to this item). Further, interest on the Bonds
is includable in a 0.12% additional corporate minimum tax imposed by the
Superfund Amendments and Reauthorization Act of 1986 for taxable years
beginning before January 1, 1996. In addition, in certain cases, Subchap-
ter S corporations with accumulated earnings and profits from Subchapter C
years will be subject to a minimum tax on excess "passive investment
income" which includes tax-exempt interest.

Under federal law, interest on New York Navigator Insured Series
Trust-held Bonds issued by authority of the Government of Puerto Rico is
exempt from regular federal income tax, and state and local income tax in
the United States and Puerto Rico. The New York Navigator Insured Trust
is not subject to the New York State Franchise Tax on Business
Corporations or the New York City General Corporation Tax. Under the
personal income tax laws of the State and City of New York, the income of
the New York Navigator Insured Trust will be treated as the income of the
Certificateholders. Interest on the Bonds of the New York Navigator
Insured Trust that is exempt from tax under the laws of the State and City
of New York when received by the Trust will retain its status as tax-
exempt interest to its Certificateholders. In addition, non-residents of
New York City will not be subject to the New York City personal income tax
on gains derived with respect to their Units of the New York Navigator
Insured Trust. Non-residents of New York State will not be subject to New
York State personal income tax on such gains unless the Units are employed
in a business, trade or occupation carried on in New York State. A New
York State or New York City resident should determine his basis and
holding periods for his Units in the same manner for New York State and
New York City tax purposes as for federal tax purposes. 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 calculating New York State and New York City
franchise (income) tax.

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 local government. The laws of such states and local
governments vary with respect to the taxation of such obligations. See
"Rights of Certificateholders" in this Part B.

The Insured Municipal Securities 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 calculating 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 Certifi-
cateholder is advised to consult his own tax advisor as to the tax
consequences of his Certificates under state and local tax laws.

Any proceeds received pursuant to the terms of the insurance on the
Bonds that represent maturing interest on defaulted obligations will be
excludable from federal gross income if, and to the same extent that, such
interest would have been so excludable if paid by the issuers of such
defaulted obligations.

In the opinion of Freeman, Zeller & Bryant, special counsel to
the Sponsors on New Jersey tax matters, which opinion is made in reliance
upon certain information and based on certain assumptions respecting the
New Jersey Navigator Trust, under existing New Jersey law applicable to
individuals who are New Jersey residents and New Jersey estates and
trusts:

1) The New Jersey Navigator Trust will be recognized as a trust
and not as an association taxable as a corporation. The New Jersey
Navigator Trust will not be subject to the New Jersey Corporation
Business Tax or the New Jersey Corporation Income Tax.

2) The income of the New Jersey Navigator Trust will be treated
as income of the Certificateholders who are individuals, estates or
trusts under the New Jersey Gross Income Tax Act, N.J.S.A. 54A:1-1 et
seq. (the "Act"). Interest on the Bonds that is exempt from tax
under the Act when received by the New Jersey Navigator Trust will
retain its status as tax-exempt interest under the Act when
distributed to Certificateholders who are individuals, estate or
trusts.

3) Certificateholders who are individuals, estates or trusts
will not be subject to the Act on any gain realized when the New
Jersey Navigator Trust disposes of a Bond (whether by sale, exchange,
redemption, or payment at maturity). Any loss realized on such
disposition may not be utilized to offset gains realized by such
Certificateholders on the disposition of assets the gain on which is
subject to the New Jersey Gross Income Tax.

4) The sale, exchange or redemption of a Unit by a
Certificateholder shall be treated as a sale or exchange of a
Certificateholder's pro rata interest in the assets in the New Jersey
Navigator Trust at the time of the transaction and any gain will be
exempt from tax under the Act to the extent that the price received
by the selling Certificateholder who is an individual, estate or
trust does not exceed the Redemption Price. To the extent that the
amount received by the Certificateholder exceeds the Redemption
Price, any such gain will not be exempt from tax under the Act.

5) All proceeds representing interest on defaulted obligations
derived by Certificateholders who are individuals, estates or trusts
from an insurance policy, either paid directly to the
Certificateholders or through the New Jersey Navigator Trust, are
exempt from tax under the Act.

6) The Units of the New Jersey Navigator Trust may be taxable,
in the estates of New Jersey residents under the New Jersey Transfer
Inheritance Tax Law or the New Jersey Estate Tax Laws.

7) If a Certificateholder is a corporation subject to the New
Jersey Corporation Business Tax or New Jersey Corporation Income Tax,
interest from the Bonds in the New Jersey Navigator Trust which is
allocable to such corporation will be includable in its entire net
income for purposes of the New Jersey Corporation Business Tax or New
Jersey Corporation Income Tax, less any interest expense incurred to
carry such investment to the extent such interest expense has not
been deducted in computing Federal taxable income. Net gains derived
by such corporation on the disposition of the Bonds by the New Jersey
Navigator Trust or on the disposition of its Units will be included
in its entire net income for purposes of the New Jersey Corporation
Business Tax or New Jersey Corporation Income Tax. Any proceeds paid
under the insurance policy issued to the Trustee of the New Jersey
Navigator Trust with respect to the Bonds or under individual
policies obtained by issuers of Bonds which represent maturing
interest or maturing principal on defaulted obligations held by the
Trustee will be included in its entire net income for purposes of the
New Jersey Corporation Business Tax or New Jersey Corporation Income
Tax if, and to the same extent as, such interest or proceeds would
have been so included if paid by the issuer of the defaulted
obligations.

We express no opinion as to the effect of any other state or
local statute or ordinance on income received by a Certificateholder
other than as expressly set forth herein.

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 IRBs that qualify for the "small issue" exemption, the "small issue"
exemption will not be available or will be lost if, at any time during the
three-year period beginning on the later of the date the facilities are
placed in service or the date of issue, all outstanding tax-exempt IRBs,
together with a proportionate share of any present issue, of an owner or
principal user (or related person) of the facilities exceeds $40,000,000.
In the case of IRBs issued under the $10,000,000 "small issue" exemption,
interest on such IRBs will become taxable if the face amount of the IRBs
plus certain capital expenditures exceeds $10,000,000.

In addition, a Bond can lose its tax-exempt status as a result
of other subsequent but unforeseeable events such as prohibited
"arbitrage" activities by the issuer of the Bond or the failure of the
Bond to continue to satisfy the conditions required for the exemption of
interest thereon from regular federal income tax. No investigation has
been made as to the current or future owners or users of the facilities
financed by the Bonds, the amount of such persons' outstanding tax-exempt
IRBs, or the facilities themselves, and no assurance can be given that
future events will not affect the tax-exempt status of the Bonds.
Investors should consult their tax advisors for advice with respect to the
effect of these provisions on their particular tax situation.

Interest on indebtedness incurred or continued to purchase or
carry the Units is not deductible for regular federal income tax purposes.
However, such interest is deductible for New York State and New York City
income tax purposes by corporations that are required to include interest
on the Bonds in New York State and New York City entire net income for
purposes of calculating New York State and City franchise (income) taxes.
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.

From time to time proposals have been introduced before Congress
to restrict or eliminate the federal income tax exemption for interest on
debt obligations similar to the Bonds in the Trust, and it can be expected
that similar proposals may be introduced in the future.

In a 1988 decision (South Carolina v. Baker), the U.S. Supreme
Court held that the federal government may constitutionally require states
to register bonds they issue and subject the interest on such bonds to
federal income tax if not registered, and that there is no constitutional
prohibition against the federal government's taxing the interest earned on
state or other municipal bonds. The Supreme Court decision affirms the
authority of the federal government to regulate and control bonds such as
the Bonds in the Trust and to tax interest on such bonds in the future.
The decision does not, however, affect the current exemption from taxation
of the interest earned on the Bonds in the Trust in accordance with Sec-
tion 103 of the Code.

The opinions of bond counsel or special tax counsel to the
issuing governmental authorities to the effect that interest on the Bonds
is exempt from regular federal income tax may be limited to law existing
at the time the Bonds were issued, and may not apply to the extent that
future changes in law, regulations or interpretations affect such Bonds.
Investors are advised to consult their own tax advisors for advice with
respect to the effect of any legislative changes.

LIQUIDITY

Sponsors Repurchase

The Sponsors, although not obligated to do so, intend to
maintain a secondary market for the Units and continuously to offer to
repurchase the Units. The Sponsors' secondary market repurchase price,
after the initial public offering is completed, 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.
The aggregated bid price is determined by the Evaluation on a daily basis
and computed on the basis set forth under "Trustee Redemption". Certifi-
cateholders who wish to dispose of their Units should inquire of the
Sponsors as to current market prices prior to making a tender for
redemption. The Sponsors may discontinue repurchase 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 Bear, Stearns & Co. Inc.,
245 Park Avenue, New York, NY 10167 on behalf of the Sponsors. Units
received after 4 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 trusts. 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
Sponsors 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 Sponsors in the secondary market may be
re-offered for sale by the Sponsors 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 Sponsors in the secondary market also may be
redeemed by the Sponsors if it determines such redemption to be in its
best interest.

The Sponsors may, under certain circumstances, as a service to
Certificateholders, elect to purchase any Units tendered to the Trustee
for redemption (see "Trustee Redemption"). Factors which the Sponsors
will consider in making a determination will include the number of Units
of all Trust which it has in inventory, its estimate of the salability and
the time required to sell such Units and general market conditions. 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 Sponsors may elect to purchase
such Units. Such purchase shall be made by payment to the Certificate-
holder 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 may also 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
Sponsors or the Trustee. Units redeemed by the Trustee will be cancelled.

Certificates representing Units to be redeemed must be delivered
to the Trustee and must be properly endorsed or accompanied by proper
instruments of transfer with signature guaranteed (or by providing
satisfactory indemnity, as in the case of lost, stolen or mutilated
Certificates). Thus, redemptions of Units cannot be effected until
Certificates representing such Units have been delivered by the person
seeking redemption. (See "Certificates".) Certificateholders must sign
exactly as their names appear on the faces of their Certificates. In
certain instances the Trustee may require additional documents such as,
but not limited to, trust instruments, certificates of death, appointments
as executor or administrator or certificates of corporate authority.

Within seven calendar days following a tender for redemption,
or, if such seventh day is not a business day, on the first business day
prior thereto, the Certificateholder will be entitled to receive in cash
an amount for each Unit tendered equal to the Redemption Price per Unit
computed as of the Evaluation Time set forth under "Summary of Essential
Information" in Part A on the date of tender. The "date of tender" is
deemed to be the date on which Units are received by the Trustee, except
that with respect to Units received after the close of trading on the New
York Stock Exchange, the date of tender is the next day on which such
Exchange is open for trading, and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the Redemption Price
computed on that day.

Accrued interest paid on redemption shall be withdrawn from the
Interest Account, or, if the balance therein is insufficient, from the
Principal Account. All other amounts paid on redemption shall be
withdrawn from the Principal Account. The Trustee is empowered to sell
Bonds in order to make funds available for redemptions. Such sales, if
required, could result in a sale of Bonds by the Trustee at a loss. To
the extent Bonds are sold, the size and diversity of the Trust will be
reduced.

The Redemption Price per Unit is the pro rata share of each Unit
in the Trust determined by the Trustee on the basis of (i) the cash on
hand in the Trust or moneys in the process of being collected, (ii) the
value of the Bonds in the Trust based on the bid prices of such Bonds and
(iii) interest accrued thereon, less (a) amounts representing taxes or
other governmental charges payable out of the Trust, (b) the accrued
expenses of the Trust and (c) cash allocated for the distribution to Cer-
tificateholders of record as of the business day prior to the evaluation
being made. The Evaluator may determine the value of the Bonds in the
Trust (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
Evaluator will determine the aggregate current bid price evaluation of the
Bonds in the Trust, taking into account the market value of the Bonds
insured under the Bond Insurance Policy, in the manner described as set
forth under "Public Offering--Offering Price". Insurance does not
guarantee the market value of the Bonds or the Units, and while Bond
insurance represents an element of market value in regard to insured
Bonds, its exact effect, if any, on market value cannot be predicted.

The Trustee is irrevocably authorized in its discretion, if the
Sponsors do not elect to purchase a Unit tendered for redemption or if the
Sponsors tender a Unit for redemption, in lieu of redeeming such Unit, to
sell such Unit in the over-the-counter market for the account of the
tendering Certificateholder at prices which will return to the Certifi-
cateholder an amount in cash, net after deducting brokerage commissions,
transfer taxes and other charges, equal to or in excess of the Redemption
Price for such Unit. The Trustee will pay the net proceeds of any such
sale to the Certificateholder on the day he would otherwise be entitled to
receive payment of the Redemption Price.

The Trustee reserves the right to suspend the right of
redemption and to postpone the date of payment of the Redemption Price per
Unit for any period during which the New York Stock Exchange is closed,
other than customary weekend and holiday closings, or trading on that
Exchange is restricted or during which (as determined by the Securities
and Exchange Commission) an emergency exists as a result of which disposal
or evaluation of the Bonds is not reasonably practicable, or for such
other periods as the Securities and Exchange Commission may by order
permit. The Trustee and the Sponsors are not liable to any person or in
any way for any loss or damage which may result from any such suspension
or postponement.

A Certificateholder who wishes to dispose of his Units should
inquire of his bank or broker in order to determine if there is a current
secondary market price in excess of the Redemption Price.

TOTAL REINVESTMENT PLAN

Under the Total Reinvestment Plan (the "Plan"), semi-annual and
annual Certificateholders (except Texas residents*) may elect to have all
interest and principal distributions, if any, with respect to their Units
reinvested either in units of various series of "Insured Municipal
Securities Trust" or "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
Sponsors in the secondary market or which constitute a portion of the
Units of the Trust not sold by the Sponsors prior to such Payment Date (a
"Secondary Series") (Primary Series and Secondary Series are hereafter
collectively referred to as "Available Series"). Series of "Municipal
Securities Trustee" do not have insurance. The first interest
distribution to Certificateholders cannot be reinvested unless such
distribution is scheduled for June 15 or December 15 in the case of semi-
annual Certificateholders or December 15 in the case of annual Certifi-
cateholders (each such date being referred to herein as the "Plan
Reinvestment Date").

* Texas residents may elect to participate in the "Total Reinvestment
Plan for Texas Residents" hereinafter described.

<PAGE>

Under the Plan (subject to compliance with applicable blue sky
laws), fractional units ("Plan Units") will be purchased from the Sponsors
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 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 Sponsors will allocate a sales commission of
1-1/2% of the Reinvestment Price per Plan Unit, payable out of the 3-1/2%
sales charge. If no such designation is made, the Sponsors will retain
the sales commission.

Under the Plan, the entire amount of a participant's income and
principal distributions will be reinvested. For example, a Certificate-
holder who is entitled to receive $130.50 interest income from the Trust
would acquire 13.05 Plan Units assuming that the Reinvestment Price per
Plan Unit, plus accrued interest, approximated $10 (Ten Dollars).

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, any Underwriter of the Units or the Sponsors. 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 program at any time by notifying the
Trustee (see below). However, if written confirmation of withdrawal is
not given to the Trustee prior to a particular distribution, the
participant will be deemed to have elected to participate in the Plan with
respect to that particular distribution and his withdrawal would become
effective for the next succeeding distribution.

Once delivered to the Trustee, an Authorization Form will
constitute a valid election to participate in the Plan with respect to
Units purchased in the Trust (and with respect to Plan Units purchased
with the distributions from the Units purchased in the Trust) for each
subsequent distribution so 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 Sponsors, 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 Sponsors anticipate 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 all federal
income tax, or the inclusion of bonds which were not rated "A" or better
by Standard & Poor's Corporation or Moody's Investors Service, Inc. on the
date such bonds were initially deposited in the Available Series
portfolio.

The Sponsors have 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 Sponsors' intention that Plan Units will be offered on
or about each semi-annual and annual Record Date for determining who is
eligible to receive distributions on the related Payment Date. Such
Record Dates are June 1 and December 1 of each year for semi-annual Cer-
tificateholders, and December 1 of each year for annual Certificate-
holders. On each Record Date the Sponsors 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 Sponsors'
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 "Summary of Essential Information" in Part A) 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" or
"Insured Municipal Securities Trust" which he might then own (and
specifically identifies which series are to continue in the Plan), he will
be deemed to have withdrawn completely from the Plan in all respects.
Once a participant withdraws completely, he will only be allowed to again
participate in the Plan by submitting a new Authorization Form. A sale or
redemption of a portion of a participant's Plan Units will not constitute
a withdrawal from the Plan with respect to the remaining Plan Units owned
by such participant.

Unless a Certificateholder notifies the Trustee in writing to
the contrary, each semi-annual and annual Certificateholder who has
acquired Plan Units will be deemed to have elected the semi-annual and
annual plan of distribution, respectively, and to participate in the Plan
with respect to distributions made in connection with such Plan Units.
(Should the Available Series from which Plan Units are purchased for the
account of an annual Certificateholder fail to have an annual distribution
plan, such Certificateholder will be deemed to have elected the semi-
annual plan of distribution, and to participate in the Plan with respect
to distributions made, in connection with such Plan Units.) A participant
who subsequently desires to have distributions made with respect to Plan
Units delivered to him in cash may withdraw from the Plan with respect to
such Plan Units and remain in the Plan with respect to units acquired
other than through the Plan. Assuming a participant has his distributions
made with respect to Plan Units reinvested, all such distributions will be
accumulated with distributions generated from the Units of the Trust used
to purchase such additional Plan Units. However, distributions related to
units in other series of "Municipal Securities Trust" will not be
accumulated with the foregoing distributions for Plan purchases. Thus, if
a person owns units in more than one series of "Municipal Securities
Trust" (which are not the result of purchases under the Plan),
distributions with respect thereto will not be aggregated for purchases
under the Plan.

Although not obligated to do so, the Sponsors intend to maintain
a market for the Plan Units and continuously to offer to purchase Plan
Units at prices based upon the aggregate offering 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 of the
Available Series after its initial offering has been completed. The
Sponsors 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 price. 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 the 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 "Insured 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
Sponsors 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 Trust. 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 "Insured 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
Sponsors of any tender of Plan Units for redemption. So long as the
Sponsors are maintaining a bid in the secondary market, the Sponsors 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 otherwise would have been redeemed by the
Trustee.

Participants in the Plan will not receive individual
certificates for their Plan Units unless the amount of Plan Units
accumulated represents $1,000 principal amount of bonds underlying such
Units 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 statements should be directed to the Trustee by calling the
Trustee at the number set forth under "Summary of Essential Information"
in Part A of this Prospectus.

All expenses relating to the operation of the Plan will be borne
by the Sponsors. The Sponsors 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 Sponsors are 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 affirmatively elect to reinvest that distribution,
including both interest and principal, if any, in an Available Series.

A resident of Texas who is a semi-annual or annual Certificate-
holder 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,
according to the Trustee's records, is a resident of Texas. In the event
that the Sponsors suspend 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 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
Sponsors will send a current Prospectus relating to the Available Series
being offered on the next Plan Reinvestment Date along with a letter
incorporating a Texas Authorization Form which specifies the funds
available for reinvestment, reminds each participant that no Plan Units
will be purchased for him unless the Texas Authorization Form is received
by the Trustee on or before that particular Plan Reinvestment Date, and
states that the Texas Authorization Form is valid only for that particular
semi-annual or annual distribution. If the Available Series should
materially differ from the Trust, the participant will be provided with a
notice of the material change and a new Texas Authorization Form which
would have to be returned to the Trustee before the Certificateholder
would again be able to participate in the Plan.

Each semi-annual and annual Certificateholder who has acquired
Plan Units will be deemed to have elected the semi-annual and annual plan
of distribution, respectively, with respect to such Units, but such Cer-
tificateholder will not be deemed to participate in the Plan for any
particular distribution unless and until he delivers to the Trustee a
Texas Authorization Form pertaining to those Plan Units. (Should the
Available Series from which Plan Units are purchased for the account of an
annual Certificateholder fail to have an annual distribution plan, such
Certificateholder will be deemed to have elected the semi-annual plan of
distribution, and to participate in the Plan with respect to distributions
made in connection with such Plan Units.)

TRUST ADMINISTRATION

Portfolio Supervision

Except for the purchase of Replacement Bonds or as discussed
herein, the acquisition of any Bonds for the Trust other than Bonds
initially deposited by the Sponsors is prohibited. Although it is the
Sponsors' and Trustee's intention not to dispose of Bonds insured pursuant
to the Bond Insurance in the event of default, nevertheless, the Sponsors
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 that in the opinion of the
Sponsors 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 Sponsors
fail to instruct the Trustee to sell or hold such Bonds, the Trust
Agreement provides that the Trustee may sell such Bonds. The Trustee
shall not be liable for any depreciation or loss by reason of any sale of
bonds or by reason of the failure of the Sponsors to give directions to
the Trustee.

The Sponsors are 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.

Trust Agreement, Amendment And Termination

The Trust Agreement may be amended by the Trustee, the Sponsors
and the Evaluator without the consent of any of the Certificateholders:
(1) to cure any ambiguity or to correct or supplement any provision which
may be defective or inconsistent; (2) to change any provision thereof as
may be required by the Securities and Exchange Commission or any successor
governmental agency; or (3) to make such other provisions in regard to
matters arising thereunder as shall not adversely affect the interests of
the Certificateholders.

The Trust Agreement may also be amended in any respect, or
performance of any of the provisions thereof may be waived, with the
consent of the holders of Certificates evidencing 66-2/3% of the Units
then outstanding for the purpose of modifying the rights of Certificate-
holders; provided that no such amendment or waiver shall reduce any Cer-
tificateholder's interest in the Trust without his consent or reduce the
percentage of Units required to consent to any such amendment or waiver
without the consent of the holders of all Certificates. The Trust
Agreement may not be amended, without the consent of the holders of all
Certificates then outstanding, to increase the number of Units issuable or
to permit the acquisition of any bonds in addition to or in substitution
for those initially deposited in the Trust, except in accordance with the
provisions of the Trust Agreement. The Trustee shall promptly notify Cer-
tificateholders, in writing, of the substance of any such amendment.

The Trust Agreement provides that the Trust shall terminate upon
the maturity, redemption or other disposition, as the case may be, of the
last of the Bonds held in the Trust but in no event is it to continue
beyond the end of the calendar year preceding the fiftieth anniversary of
the execution of the Trust Agreement. If the value of the Trust shall be
less than the minimum amount set forth under "Summary of Essential
Information" in Part A, the Trustee may, in its discretion, and shall when
so directed by the Sponsors, 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 Bond remaining in the Trust, and, after paying all
expenses and charges incurred by the Trust, distribute to each Certifi-
cateholder, upon surrender for cancellation of his Certificate for Units,
his pro rata share of the Interest and Principal Accounts.

The Sponsors

The Sponsors, Bear, Stearns & Co. Inc. and Gruntal & Co.,
Incorporated have entered into an Agreement Among Co-Sponsors pursuant to
which both parties have agreed to act as Co-Sponsors for the Trust. Bear,
Stearns & Co. Inc. 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 Bear, Stearns & Co. Inc. 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 Sponsor may be discharged under the Trust
Agreement and a new Sponsor may be appointed or the remaining Sponsors may
continue to act as Sponsors. Bear, Stearns & Co. Inc., a Delaware
corporation, is engaged in the underwriting, investment banking and
brokerage business and is a member of the National Association of
Securities Dealers, Inc. and all principal securities and commodities
exchanges, including the New York Stock Exchange, the American Stock
Exchange, the Midwest Stock Exchange and the Pacific Stock Exchange. Bear
Stearns maintains its principal business offices at 245 Park Avenue, New
York, New York 10167 and, since its reorganization from a partnership to a
corporation in October, 1985 has been a wholly-owned subsidiary of The
Bear Stearns Companies Inc. Bear Stearns, through its predecessor
entities, has been engaged in the investment banking and brokerage
business since 1923. Bear Stearns is the sponsor for numerous series of
unit investment trusts, including: A Corporate Trust, Series 1 (and
Subsequent Series); New York Municipal Trust, Series 1 (and Subsequent
Series); New York Municipal Trust, Discount and Zero Coupon Fund, 1st
Series (and Subsequent Series); Municipal Securities Trust, Series 1 (and
Subsequent Series), 1st Discount Series (and Subsequent Series), High
Income Series 1 (and Subsequent Series), Multi-State Series 1 (and
Subsequent Series); Insured Municipal Securities Trust, Series 1-4
(Multiplier Portfolio), Series 1 (and Subsequent Series), 5th Discount
Series (and Subsequent Series), Navigator Series (and Subsequent Series);
Mortgage Securities Trust, CMO Series 1 (and Subsequent Series); and
Equity Securities Trust, Series 1, Signature Series, Gabelli
Communications Income Trust (and Subsequent Series). The information
included herein is only for the purpose of informing investors as to the
financial responsibility of the Sponsors and their ability to carry out
their contractual obligations.

Gruntal & Co., Incorporated, a Delaware corporation, operates a
regional securities broker/dealer from its main office in New York City
and branch offices in nine states and the District of Columbia. The firm
is very active in the marketing of investment companies and has signed
dealer agreements with every mutual fund group, as well as being the
managing distributor for The Home Group Money Market and Mutual Funds.
Further, through its Syndicate Department, Gruntal & Co. Incorporated has
underwritten a large number of Closed-End Funds and has been Co-Manager on
the following offerings: Cigna High Income Shares; Dreyfus New York
Municipal Income, Inc.; Franklin Principal Maturity Trust and Van Kampen
Merritt Limited Term High Income Trust. The Sponsors are 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 Sponsors may resign at any time by delivering to the Trustee
an instrument of resignation executed by the Sponsors.

If at any time the Sponsors shall resign or fail to perform any
of its duties under the Trust Agreement or becomes incapable of acting or
becomes bankrupt or its affairs are taken over by public authorities, then
the Trustee may either (a) appoint a successor Sponsor; (b) terminate the
Trust Agreement and liquidate the Trust; or (c) continue to act as Trustee
without terminating the Trust Agreement. Any successor Sponsor appointed
by the Trustee shall be satisfactory to the Trustee and, at the time of
appointment, shall have a net worth of at least $1,000,000.

The Trustee

For certain of the Trusts as set forth in the "Summary of
Essential Information" in Part A, the Trustee is United States Trust
Company of New York, with its principal place of business at 45 Wall
Street, New York, New York 10005 and a corporate trust office at 770
Broadway, New York, New York 10003. United States Trust Company of New
York has, since its establishment in 1853, engaged primarily in the
management of trust and agency accounts for individuals and corporations.
The Trustee is a member of the New York Clearing House Association and is
subject to supervision and examination by the Superintendent of Banks of
the State of New York, the Federal Deposit Insurance Corporation and the
Board of Governors of the Federal Reserve System.

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, reference is made to the material set
forth under "Rights of Certificateholders".

The Trustee may resign by executing an instrument in writing and
filing the same with the Sponsors, and mailing a copy of a notice of
resignation to all Certificateholders. In such an event the Sponsors are
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 Sponsors 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 Sponsors. If upon resignation of the Trustee no
successor has been appointed and has accepted the appointment within
thirty days after notification, the retiring Trustee may apply to a court
of competent jurisdiction for the appointment of a successor. The
resignation or removal of the Trustee becomes effective only when the
successor Trustee accepts its appointment as such or when a court of
competent jurisdiction appoints a successor Trustee. Upon execution of a
written acceptance of such appointment by such successor Trustee, all the
rights, powers, duties and obligations of the original Trustee shall vest
in the successor.

Any corporation into which the Trustee may be merged or with
which it may be consolidated, or any corporation resulting from any merger
or consolidation to which the Trustee shall be a party, shall be the
successor Trustee. The Trustee must always be a banking corporation
organized under the laws of the United States or any State and have at all
times an aggregate capital, surplus and undivided profits of not less than
$2,500,000.

The Evaluator

The Evaluator is Kenny S&P Evaluation Services, a division of
Kenny Information Systems, Inc. with main offices located at 65 Broadway,
New York, New York 10006. The Evaluator is a wholly-owned subsidiary of
McGraw Hill, Inc. The Evaluator is a registered investment advisor and
also provides financial information services.

The Trustee, the Sponsors and the 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 Sponsors 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 Sponsors and
Trustee, and the Sponsors 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 Sponsors have borne all the
expenses of creating and establishing the Trust, including the cost of
initial preparation and execution of the Trust Agreement, registration of
the Trust and the Units under the Investment Company Act of 1940 and the
Securities Act of 1933, the premiums on the Sponsor-Insured Bonds, initial
preparation and printing of the Certificates, the fees of the Evaluator
during the initial public offering, legal expenses, advertising and
selling expenses, expenses of the Trustee including, but not limited to,
an amount equal to interest accrued on certain "when issued" bonds since
the date of settlement for the Units, initial fees and other out-of-pocket
expenses.

The Sponsors will not charge the Trust a fee for its services as
such. (See "Sponsor's Profits".)

The Sponsors will receive for portfolio supervisory services to
the Trust an Annual Fee in the amount set forth under "Summary of
Essential Information" in Part A of this Prospectus. The Sponsors' fee
may exceed the actual cost of providing portfolio supervisory services for
this Trust, but at no time will the total amount received for portfolio
supervisory services rendered to all series of the Municipal Securities
Trust in any calendar year exceed the aggregate cost to the Sponsors of
supplying such services in such year. (See "Portfolio Supervision".)

The Trustee will receive for its ordinary recurring services to
the Trust an annual fee in the amount set forth under "Summary of
Essential Information" in Part A of this Prospectus. For a discussion of
the services performed by the Trustee pursuant to its obligations under
the Trust Agreement, see "Trust Administration" and "Rights of Certifi-
cateholders".

The Evaluator will receive, for each daily evaluation of the
Bonds in the Trust after the initial public offering is completed, 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 fees) of the Trustee incurred and
advances made in connection with its activities under the Trust Agreement,
including the expenses and costs of any action undertaken by the Trustee
to protect the Trust and the rights and interests of the Certificate-
holders; fees of the Trustee for any extraordinary services performed
under the Trust Agreement; indemnification of the Trustee for any loss or
liability accruing to it without gross negligence, bad faith or willful
misconduct on its part, arising out of or in connection with its
acceptance or administration of the Trust; indemnification of the Sponsors
for any losses, liabilities and expenses incurred in acting as Sponsors 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 Sponsors, 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.

The accounts of the Trust shall be audited not less than
annually by independent public accountants selected by the Sponsors. So
long as the Sponsors maintain a secondary market, the Sponsors will bear
any audit expense which exceeds 50 cents per Unit. Certificateholders
covered by the audit during the year may receive a copy of the audited
financials upon request.

EXCHANGE PRIVILEGE AND CONVERSION OFFER

Exchange Privilege

Certificateholders may elect to exchange any or all of their
Units of this Trust for Units of one or more of any available series of
Insured Municipal Securities Trust, Municipal Securities Trust, New York
Municipal Trust, Mortgage Securities Trust, A Corporate Trust or Equity
Securities Trust (upon receipt by the Equity Securities Trust of an
appropriate exemptive order from the Securities and Exchange Commission)
(the "Exchange Trusts") at a reduced sales charge as set forth below.
Under the Exchange Privilege, the Sponsor's repurchase price for units of
the Exchange Trust will be based on the aggregate bid price of the Bonds
in the 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 (or for Units of Equity Securities
Trust, based on the market value of the underlying securities in the Trust
Equity portfolio) during the initial public offering period of the
Exchange Trust; or based on the aggregate bid price of the Bonds in the
Exchange Trust portfolio if its initial public offering has been
completed, plus accrued interest (or for Units of Equity Securities Trust,
based on the market value of the underlying securities in the Trust Equity
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 a
Trust, the sales charge applicable to the purchase of units of an Exchange
Trust shall be $15 per unit (or per 1,000 Units for the Mortgage
Securities Trust or per 100 Units for the Equity Securities Trust)
(approximately 1.5% of the price of each Exchange Trust unit (or 1,000
Units for the Mortgage Securities Trust or per 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 a
Trust, the sales charge applicable to the purchase of units of an Exchange
Trust shall be the greater of (i) $15 per unit (or per 1,000 Units for the
Mortgage Securities Trust or per 100 Units for the Equity Securities
Trust), or (ii) an amount which when coupled with the sales charge paid by
the unitholder upon his original purchase of Units of the Trust at least
equals the sales charge applicable in the direct purchase of units of an
Exchange Trust. The Exchange Privilege is subject to the following
conditions:

(1) The Sponsor must be maintaining a secondary market in both the
Units of the Trust held by the Certificateholder and the Units of the
available Exchange Trust. While the Sponsor has indicated their intention
to maintain a market in the Units of all Trusts sponsored by it, the
Sponsor is under no obligation to continue to maintain a secondary market
and therefore there is no assurance that the Exchange Privilege will be
available to a Certificateholder at any specific time in the future. At
the time of the Certificateholder's election to participate in the
Exchange Privilege, there also must be Units of the Exchange Trust
available for sale, either under the initial primary distribution or in
the Sponsor's secondary market.

(2) Exchanges will be effected in whole units only. Any excess
proceeds from the Units surrendered for exchange will be remitted and the
selling Certificateholder will not be permitted to advance any new funds
in order to complete an exchange. Units of the Mortgage Securities Trust
may only be acquired in blocks of 1,000 Units. Units of the Equity
Securities Trust may only be acquired in blocks of 100 Units.

(3) The Sponsor reserves the right to modify, suspend or terminate
the Exchange Privilege. The Sponsors 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 Sponsors 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 Cer-
tificateholder 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 sell his Units and apply the proceeds
from the sale to purchase Units of one or more of the Exchange Trusts. If
Units of a designated, outstanding series of an Exchange Trust are at the
time available for sale and such Units may lawfully be sold in the state
in which the Certificateholder is a resident, the Certificateholder will
be provided with a current prospectus or prospectuses relating to each
Exchange Trust in which he indicates an interest. He may then select the
Trust or Trusts into which he desires to invest the proceeds from his sale
of Units. The exchange transaction will operate in a manner essentially
identical to a secondary market transaction except that units may be
purchased at a reduced sales charge.

Example: Assume that after the initial public offering has been
completed, a Certificateholder has five units of a Trust with a current
value of $700 per unit which he has held for more than 5 months and the
Certificateholder wishes to exchange the proceeds for units of a secondary
market Exchange Trust with a current price of $725 per unit. The proceeds
from the Certificateholder's original units will aggregate $3,500. Since
only whole units of an Exchange Trust may be purchased under the Exchange
Privilege, the Certificateholder would be able to acquire four units (or
4,000 Units of the Mortgage Securities Trust or 400 Units of the Equity
Securities Trust) for a total cost of $2,960 ($2,900 for units and $60 for
the sales charge). The remaining $540 would be remitted to the Certifi-
cateholder in cash. If the Certificateholder acquired the same number of
units at the same time in a regular secondary market transaction, the
price would have been $3,068.78 ($2,900 for units and $168.78 for the
sales charge, assuming a 5-1/2% sales charge times the public offering
price).

The Conversion Offer

Unit owners of any registered unit investment trust for which
there is no active secondary market in the units of such trust (a
"Redemption Trust") may elect to redeem such units and apply the proceeds
of the redemption to the purchase of available Units of one or more series
of A Corporate Trust, Municipal Securities Trust, Insured Municipal
Securities Trust, Mortgage Securities Trust, New York Municipal Trust or
Equity Securities Trust (upon receipt by the Equity Securities Trust of an
appropriate exemptive order from the Securities and Exchange Commission)
sponsored by Bear, Stearns & Co. Inc. (the "Conversion Trusts") at the
Public Offering Price for units of the Conversion Trust based on a reduced
sales charge as set forth below. Under the Conversion Offer, units of the
Redemption Trust must be tendered to the trustee of such trust for
redemption at the redemption price, which is based upon the aggregate bid
side evaluation of the underlying bonds in such trust and is generally
about 1-1/2% to 2% lower than the offering price for such bonds (or for
Units of Equity Securities Trust, based on the market value of the
underlying securities in the Equity Trust portfolio). The purchase price
of the units will be based on the aggregate offer price of the underlying
bonds in the Conversion Trust portfolio during its initial offering period
(or for Units of Equity Securities Trust, based on the market value of the
underlying securities in the Equity Trust portfolio), or at a price based
on the aggregate bid price of the underlying bonds if the initial public
offering of the Conversion Trust has been completed, plus accrued interest
(or for Units of Equity Securities Trust, based on the market value of the
underlying securities in the Equity Trust portfolio) and a sales charge as
set forth below.

Except for unitholders who wish to exercise the Conversion Offer
within the first five months of their purchase of units of a Redemption
Trust, the sales charge applicable to the purchase of Units of the
Conversion Trust shall be $15 per Unit (or per 1,000 Units for the
Mortgage Securities Trust or per 100 Units for the Equity Securities
Trust). For unitholders who wish to exercise the Conversion Offer within
the first five months of their purchase of units of a Redemption Trust,
the sales charge applicable to the purchase of Units of a Conversion Trust
shall be the greater of (i) $15 per Unit (or per 1,000 Units for the
Mortgage Securities Trust or per 100 Units for the Equity Securities
Trust) or (ii) an amount which when coupled with the sales charge paid by
the unitholder upon his original purchase of units of the Redemption Trust
at least equals the sales charge applicable in the direct purchase of
Units of a Conversion Trust. The Conversion Offer is subject to the
following limitations:

(1) The Conversion Offer is limited only to unit owners of any
Redemption Trust, defined as a unit investment trust for which there is no
active secondary market at the time the Certificateholder elects to
participate in the Conversion Offer. At the time of the unit owner's
election to participate in the Conversion Offer, there also must be
available units of a Conversion Trust, either under a primary distribution
or in the Sponsor's secondary market.

(2) Exchanges under the Conversion Offer will be effected in whole
units only. Unit owners will not be permitted to advance any new funds in
order to complete an exchange under the Conversion Offer. Any excess
proceeds from units being redeemed will be returned to the unit owner.
Units of the Mortgage Securities Trust may only be acquired in blocks of
1,000 units. Units of the Mortgage Securities Trust may only be acquired
in blocks of 100 Units.

(3) The Sponsor reserves the right to modify, suspend or terminate
the Conversion Offer at any time without notice to unit owners of
Redemption Trusts. In the event the Conversion Offer is not available to
a unit owner at the time he wishes to exercise it, the unit owner will be
notified immediately and no action will be taken with respect to his units
without further instruction from the unit owner. The Sponsor also
reserves the right to raise the sales charge based on actual increases in
the Sponsor's costs and expenses in connection with administering the
program, up to a maximum sales charge of $20 per unit (or per 1,000 units
for the Mortgage Securities Trust or per 100 Units for the Equity
Securities Trust).

To exercise the Conversion Offer, a unit owner of a Redemption
Trust should notify his retail broker of his desire to redeem his
Redemption Trust Units and use the proceeds from the redemption to
purchase Units of one or more of the Conversion Trusts. If Units of a
designated, outstanding series of a Conversion Trust are at that time
available for sale and if such Units may lawfully be sold in the state in
which the unit owner is a resident, the unit owner will be provided with a
current prospectus or prospectuses relating to each Conversion Trust in
which he indicates an interest. He then may select the Trust or Trusts
into which he decides to invest the proceeds from the sale of his Units.
The transaction will be handled entirely through the unit owner's retail
broker. The retail broker must tender the units to the trustee of the
Redemption Trust for redemption and then apply the proceeds of 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
he 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 $700 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 of the Equity Securities Trust) for
a total cost of $2,860 ($2,800 for units and $60 for the sales charge).
The remaining $515 would be remitted to the unit owner in cash. If the
unit owner acquired the same number of Conversion Trust units at the same
time in a regular secondary market transaction, the price would have been
$2,962.96 ($2,800 for units and $162.96 sales charge, assuming a 5-1/2%
sales charge times the public offering price).

Description of the Exchange Trusts and the Conversion Trusts

A Corporate Trust may be an appropriate investment vehicle for
an investor who is more interested in a higher current return on his
investment (although taxable) than a tax-exempt return (resulting from the
fact that the current return from taxable fixed income securities is
normally higher than that available from tax-exempt fixed income
securities). Municipal Securities Trust and New York Municipal Trust may
be appropriate investment vehicles for an investor who is more interested
in tax-exempt income. The interest income from New York Municipal Trust
is, in general, also exempt from New York State and local New York income
taxes, while the interest income from Municipal Securities Trust is
subject to applicable New York State and local New York taxes, except for
that portion of the income which is attributable to New York obligations
in the Trust portfolio, if any. The interest income from each State Trust
of the Municipal Securities Trust, Multi-State Series is, in general,
exempt from state and local taxes when held by residents of the state
where the issuers of bonds in such State Trusts are located. The Insured
Municipal Securities Trust combines the advantages of providing interest
income free from regular federal income tax under existing law with the
added safety of irrevocable insurance. Insured Navigator Series further
combines the advantages of providing interest income free from regular
federal income tax and state and local taxes when held by residents of the
state where issuers of bonds in such State Trusts are located with the
added safety of irrevocable insurance. Mortgage Securities Trust offers
an investment vehicle for investors who are interested in obtaining safety
of capital and a high level of current distribution of interest income
through investment in a fixed portfolio of collateralized mortgage
obligations. Equity Securities Trust offers investors an opportunity to
achieve capital appreciation together with a high level of current income.

Tax Consequences of the Exchange Privilege and the Conversion Offer

A surrender of units pursuant to the Exchange Privilege or the
Conversion Offer will constitute a "taxable event" to the Certificate-
holder under the Code. The Certificateholder will realize 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 offered hereby and certain matters
relating to federal tax law have been passed upon by Messrs. Battle
Fowler, 280 Park Avenue, New York, New York 10017 as counsel for the
Sponsors. Messrs. Carter, Ledyard & Milburn, Two Wall Street, New York,
New York 10005 have acted as counsel for United States Trust Company of
New York. Certain matters relating to New Jersey tax law have been passed
upon by Freeman, Zeller & Bryant, as special New Jersey counsel to the
Sponsors.

Independent Auditors

The financial statements of the Trust included in Part A of this
Prospectus as of the dates set forth in Part A, have been examined by KPMG
Peat Marwick, independent certified public accountants, for the periods
indicated in its reports appearing herein. The financial statements
examined by KPMG Peat Marwick have been so included in reliance on its
report given upon the authority of said firm as experts in accounting
and auditing.

DESCRIPTION OF BOND RATINGS*

Standard & Poor's Corporation

A brief description of the applicable Standard & Poor's
Corporation rating symbols and their meanings is as follows:
* As described by the rating agencies.

<PAGE>

A Standard & Poor's corporate or municipal bond rating is a
current assessment of the creditworthiness of an obligor with respect to a
specific debt obligation. This assessment of creditworthiness may take
into consideration obligors such as guarantors, insurers, or lessees.

The bond rating is not a recommendation to purchase or sell a
security, inasmuch as it does not comment as to market price.

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:

I. 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.

II. Nature of and provisions of the obligation.

III. 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. rating symbols and their meanings are as follows:

Aaa -- Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge". Interest payments are protected by
a large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.

Aa -- Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they comprise what
are generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than in Aaa securities.

A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to impairment
sometime in the future.

Baa -- Bonds which are rated Baa are considered as medium
grade obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well. The market value of the Baa-rated bonds is more
sensitive to changes in economic circumstances. Aside from occasional
speculative factors and the aforementioned economic circumstances applying
to some bonds of this Class, Baa market valuations move in parallel with
Aaa, Aa and A obligations during periods of economic normalcy, except in
instances of oversupply.

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 marketplace.

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.

DESCRIPTION OF RATING*

A Standard & Poor's Corporation's rating on the units of an
investment trust (hereinafter referred to collectively as "units" and
"fund") is a current assessment of creditworthiness with respect to the
investments held by such fund. This assessment takes into consideration
the financial capacity of the issuers and of any guarantors, insurers,
lessees, or mortgagors with respect to such investments. The assessment,
however, does not take into account the extent to which fund expenses or
portfolio asset sales for less than the fund's purchase price will reduce
payment to the unit holder of the interest and principal required to be
paid on the portfolio assets. In addition, the rating is not a
recommendation to purchase, sell, or hold units, inasmuch as the rating
does not comment as to market price of the units or suitability for a
particular investor.
* As described by Standard & Poor's Corporation.

<PAGE>

Funds rated "AAA" are composed exclusively of assets that are
rated "AAA" by Standard & Poor's or have, in the opinion of Standard &
Poor's, credit characteristics comparable to assets that are rated "AAA",
or certain short-term investments. Standard & Poor's defines its AAA
rating for such assets as the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is
very strong.

<PAGE>

FOR USE WITH INSURED MUNICIPAL SECURITIES TRUST
47TH - 50TH DISCOUNT SERIES
SERIES 20 - 30
NEW YORK NAVIGATOR INSURED SERIES 1 - 12
NEW JERSEY NAVIGATOR INSURED SERIES 1 - 8

==========================================================================

AUTHORIZATION FOR INVESTMENT IN INSURED MUNICIPAL SECURITIES TRUST
-- DISCOUNT SERIES/SERIES --
TRP PLAN - TOTAL REINVESTMENT PLAN

I hereby elect to participate in the TRP Plan and am the owner of _____
units ___ Discount Series/Series _______.

I hereby authorize the United States Trust Company of New York, Trustee,
to pay all semi-annual or annual distributions of interest and principal
(if any) with respect to such units to the United States Trust Company of
New York, as TRP Plan Agent, who shall immediately invest the
distributions in units of the available series of Insured Municipal
Securities Trust above or, if unavailable, of other 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 and Zip Code

Salesman's Name ___________________________ Salesman's No.

UNIT HOLDERS NEED ONLY SIGN AND DATE THIS FORM.

==========================================================================

MAIL TO YOUR BROKER
OR
UNITED STATES TRUST COMPANY OF NEW YORK
ATTN: THE UNIT INVESTMENT DEPARTMENT, UNIT A
770 BROADWAY
NEW YORK, NEW YORK 10003

<PAGE>

INDEX INSURED
MUNICIPAL SECURITIES TRUST
Title Page (Unit Investment Trust)

Summary of Essential Information . . . A-5 Prospectus
Information Regarding the Trust . . . . A-7
Financial and Statistical Information . A-8
Audit and Financial Information Dated: April 29, 1994
Report of Independent Accountants . . F-1
Statement of Net Assets . . . . . . . F-2
Statement of Operations . . . . . . . F-3 Sponsors:
Statement of Changes in Net Assets . F-4 Bear, Stearns & Co. Inc.
Notes to Financial Statements . . . . F-5 245 Park Avenue
Portfolio . . . . . . . . . . . . . . F-6 New York, New York 10167
The Trust . . . . . . . . . . . . . . . 1 212-272-2500
Public Offering . . . . . . . . . . . . 42
Estimated Long Term Return and Estimated Gruntal & Co., Incorporated
Current Return . . . . . . . . . . . 44 14 Wall Street
Rights of Certificateholders . . . . . 44 New York, New York 10005
Tax Status . . . . . . . . . . . . . . 47 212-267-8800
Liquidity . . . . . . . . . . . . . . . 52
Total Reinvestment Plan . . . . . . . . 54 Trustee:
Trust Administration . . . . . . . . . 59
Trust Expenses and Charges . . . . . . 62 United States Trust Company
Exchange Privilege and Conversion Offer 63 of New York
Other Matters . . . . . . . . . . . . . 68 770 Broadway
Description of Bond Ratings . . . . . . 68 New York, New York 10003
Description of Rating . . . . . . . . . 70 1-800-428-8890

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
relating thereto, filed with the Securities Services
and Exchange Commission, Washington, D.C., 65 Broadway
under the Securities Act of 1933, and to New York, New York 10006
which reference is made.

* * *

This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in any state to any person to
whom it is not lawful to make such offer in such state.

* * *

No person is authorized to give any information or to make any
representations not contained in Parts A and B of this Prospectus; and any
information or representation not contained herein must not be relied upon
as having been authorized by the Trust, the Trustee, the Evaluator, or the
Sponsors. 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.

<PAGE>

PART II

ADDITIONAL INFORMATION NOT REQUIRED
IN PROSPECTUS

CONTENTS OF REGISTRATION STATEMENT

This Post-Effective Amendment to the Registration Statement on Form S-6
comprises the following papers and documents:
The facing sheet on Form S-6.
The Cross-Reference Sheet.
The Prospectus consisting of pages.
Signatures.
Consent of Independent Auditors.
Consent of Counsel (included in Exhibit 99.3.1).
Consent of Special New Jersey Counsel (included in Exhibit 99.3.2).
Consents of the Evaluator and Confirmation of Ratings (included in
Exhibit 99.5.1).

The following exhibits:

99.1.1 -- Form of Reference Trust Agreement, as amended (filed as
Exhibit 1.1.1 to Amendments No. 1 to Form S-6 Registration
Statements Nos. 33-37849, 33-38847 and 33-44912 of Insured
Municipal Securities Trust, Series 26, New York Navigator
Insured Series 6 & New Jersey Navigator Insured Series 3,
and New York Navigator Insured Series 7 & New Jersey
Navigator Insured Series 4 and Series 28, New York
Navigator Insured Series 10 and New Jersey Insured
Navigator Insured Series 7, respectively, on January 31,
1991, May 2, 1991 and January 24, 1992, respectively, and
incorporated herein by reference).

99.1.1.1 -- Trust Indenture and Agreement for Insured Municipal
Securities Trust, 47th Discount Series and Series 20 (and
Subsequent Series) (filed as Exhibit 1.1.1 to Amendment
No. 1 to Form S-6 Registration Statement No. 33-28384 of
Insured Municipal Securities Trust, 47th Discount Series
and Series 20 on June 16, 1989 and incorporated herein by
reference).

99.1.3.4 -- Certificate of Incorporation of Bear, Stearns & Co. Inc.,
as amended (filed as Exhibit 99.1.3.4 to Form S-6
Registration Statement Nos. 33-50891 and 33-50901 of
Insured Municipal Securities Trust, New York Navigator
Insured Series 15 and New Jersey Navigator Insured Series
11; and Municipal Securities Trust, Multi-State Series 44,
respectively, on December 9, 1993 and incorporated herein
by reference).

99.1.3.5 -- By-Laws of Bear, Stearns & Co. Inc., as amended (filed as
Exhibit 99.1.3.5 to Form S-6 Registration Statement Nos.
33-50891 and 33-50901 of Insured Municipal Securities
Trust, New York Navigator Insured Series 15 and New Jersey
Navigator Insured Series 11; and Municipal Securities
Trust, Multi-State Series 44, respectively, on December 9,
1993 and incorporated herein by reference).

99.1.3.6 -- Certificate of Incorporation of Gruntal & Co.,
Incorporated, as amended (filed as Exhibit 1.3.6 to
Form S-6 Registration Statement No. 33-36316 of Mortgage
Securities Trust, CMO Series 1 on August 10, 1990 and
incorporated herein by reference).

99.1.3.7 -- By-Laws of Gruntal & Co., Incorporated, as amended (filed
as Exhibit 1.3.7 to Form S-6 Registration Statement
No. 33-36316 of Mortgage Securities Trust, CMO Series 1 on
August 10, 1990 and incorporated herein by reference).

99.1.4 -- Form of Agreement Among Underwriters (filed as Exhibit 1.4
to Amendment No. 1 to Form S-6 Registration Statement
No. 33-28384 of Insured Municipal Securities Trust, 47th
Discount Series and Series 20 on June 16, 1989 and
incorporated herein by reference).

99.1.5 -- Form of Insurance Policy of Financial Guaranty Insurance
Company for Sponsor-Insured Bonds (filed as Exhibit 1.5 to
Amendment No. 1 to Form S-6 Registration Statement
No. 2-95261 of Insured Municipal Securities Trust, 7th
Discount Series on February 19, 1985 and incorporated
herein by reference).

99.1.5.1 -- Form of Insurance Policy of Bond Investors Guaranty for
Sponsor-Insured Bonds (filed as Exhibit 1.5.1 to Amendment
No. 2 to Form S-6 Registration Statement No. 33-08700 of
Insured Municipal Securities Trust, 24th Discount Series on
October 2, 1986 and incorporated herein by reference).

99.1.5.2 -- Form of Insurance Policy of Municipal Bond Investors
Assurance Corporation (filed as Exhibit 1.5.2 to Amendment
No. 2 to Form S-6 Registration Statement No. 33-29467 of
Insured Municipal Securities Trust, Series 22 and New York
Navigator Insured Series 1 on January 18, 1990 and
incorporated herein by reference).

99.2.1 -- Form of Certificate (filed as Exhibit 2.1 to Amendment
No. 1 to Form S-6 Registration Statement No. 33-28384 of
Insured Municipal Securities Trust, 47th Discount Series
and Series 20 on June 16, 1989 and incorporated herein by
reference).

99.3.1 -- Opinion of Battle Fowler as to the legality of the
securities being registered, including their consent to the
delivery thereof and to the use of their name under the
headings "Tax Status" and "Legal Opinions" in the
Prospectus, and to the filing of their opinion regarding
the tax status (filed as Exhibit 3.1 to Amendments No. 1 to
Form S-6 Registration Statements Nos. 33-37849, 33-38847
and 33-44912 of Insured Municipal Securities Trust, Series
26, New York Navigator Insured Series 6 & New Jersey
Navigator Insured Series 3, and New York Navigator Insured
Series 7 & New Jersey Navigator Insured Series 4 and
Series 28, New York Navigator Insured Series 10 and New
Jersey Navigator Insured Series 7, respectively, on January
31, 1991, May 2, 1991 and January 24, 1992, respectively,
and incorporated herein by reference).

99.3.2 -- Opinion of Freeman, Zeller & Bryant, Special New Jersey
Counsel (filed as Exhibit 3.2 to Post-Effective Amendment
No. 1 to Form S-6 Registration Statements Nos. 33-37849 and
33-38847 of Insured Municipal Securities Trust, Series 26,
New York Navigator Insured Series 6 & New Jersey Navigator
Insured Series 3, and New York Navigator Insured Series 7 &
New Jersey Navigator Insured Series 4, respectively, on
May 1, 1992 and filed as Exhibit 3.2 to Amendment No. 1 to
Form S-6 Registration Statement No. 33-44912 of Insured
Municipal Securities Trust, Series 28, New York Navigator
Insured Series 10 and New Jersey Navigator Insured Series 7
filed on January 24, 1992 and incorporated herein by
reference).

99.4.1 -- Form of Custody Agreement (filed as Exhibit 4.1 to
Amendment No. 1 to Form S-6 Registration Statement
No. 33-36215 of Insured Municipal Securities Trust,
Series 25 and New York Navigator Insured Series 4 and
incorporated herein by reference).

99.4.2 -- Form of First Amendment to Custody Agreement (filed as Ex-
hibit 4.2 to Amendment No. 1 to Form S-6 Registration
Statement No. 33-36215 of Insured Municipal Securities
Trust, Series 25 and New York Navigator Series 4 and
incorporated herein by reference).

*99.5.1 -- Consents of the Evaluator and Confirmation of Ratings of
Standard & Poor's Corporation.

99.6.0 -- Power of Attorney of Bear, Stearns & Co. Inc., the
Depositor, by its Officers and a majority of its Directors
(filed as Exhibit 6.0 to Post-Effective Amendment No. 8 to
Form S-6 Registration Statements Nos. 2-92113, 2-92660,
2-93073, 2-93884 and 2-94545 of Municipal Securities Trust,
Multi-State Series 4, 5, 6, 7 and 8, respectively, on
October 30, 1992 and incorporated herein by reference).

99.6.1 -- Power of Attorney of Gruntal & Co., Incorporated, by its
officers and a majority of its Directors (filed as
Exhibit 6.1 to Form S-6 Registration Statement No. 33-36316
of Mortgage Securities Trust, CMO Series 1 on August 10,
1990 and incorporated herein by reference).

99.7.0 -- Form of Agreement Among Co-Sponsors (filed as Exhibit 7.0
to Amendment No. 1 to Form S-6 Registration Statement
No. 33-28384 of Insured Municipal Securities Trust, 47th
Discount Series and Series 20 on June 16, 1989 and
incorporated herein by reference).
* Being filed by this Amendment.
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrants, Insured Municipal Securities Trust, Series 26, New York
Navigator Insured Series 6 & New Jersey Navigator Insured Series 3, and
New York Navigator Insured Series 7 & New Jersey Navigator Insured
Series 4 and Series 28, New York Navigator Insured Series 10 and New
Jersey Navigator Insured Series 7, certifies 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 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 21st day of April, 1994.

INSURED MUNICIPAL SECURITIES TRUST, SERIES 26, NEW
YORK NAVIGATOR INSURED SERIES 6 & NEW JERSEY NAVIGATOR
INSURED SERIES 3 AND NEW YORK NAVIGATOR INSURED
SERIES 7 & NEW JERSEY NAVIGATOR INSURED SERIES 4 AND
SERIES 28, NEW YORK NAVIGATOR INSURED SERIES 10 AND
NEW JERSEY NAVIGATOR INSURED SERIES 7
(Registrants)

BEAR, STEARNS & CO. INC.
(Depositor)

By: Peter J. DeMarco
(Authorized Signator)

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 Bear, Stearns & Co. Inc., the Depositor, in
the capacities and on the dates indicated.

Name Title Date

ALAN C. GREENBERG Chairman of the Board, Chief )
Executive Officer, Director and )
Senior Managing Director )
JAMES E. CAYNE President, Director and Senior )
Managing Director )April 21, 1994
ALVIN H. EINBENDER Chief Operating Officer, Executive)
Vice President, Director and )
Senior Managing Director )
JOHN C. SITES, JR. Executive Vice President, Director)
and Senior Managing Director )By:PETER J. DeMARCO
MICHAEL L. TARNOPOL Executive Vice President, Director)
and Senior Managing Director )
VINCENT J. MATTONE Executive Vice President, Director)Attorney-in-Fact*
and Senior Managing Director )
ALAN D. SCHWARTZ Executive Vice President, Director)
and Senior Managing Director )
DOUGLAS P.C. NATION Director and Senior Managing )
Director )
WILLIAM J. MONTGORIS Chief Financial Officer, Senior )
Vice President-Finance and Senior )
Managing Director )
KENNETH L. EDLOW Secretary and Senior Managing )
Director )
MICHAEL MINIKES Treasurer and Senior Managing )
Director )
MICHAEL J. ABATEMARCO Controller, Assistant Secretary )
and Senior Managing Director )
MARK E. LEHMAN Senior Vice President - General )
Counsel and Senior Managing )
Director )
FREDERICK B. CASEY Assistant Treasurer and Senior )
Managing Director )

_______________

* An executed power of attorney was filed as Exhibit 6.0 to Post-
Effective Amendment No. 8 to Registration Statements Nos. 2-92113,
2-92660, 2-93073, 2-93884 and 2-94545 on October 30, 1992.

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrants, Insured Municipal Securities Trust, Series 26, New York
Navigator Insured Series 6 & New Jersey Navigator Insured Series 3, and
New York Navigator Insured Series 7 & New Jersey Navigator Insured
Series 4 and Series 28, New York Navigator Insured Series 10 and New
Jersey Navigator Insured Series 7, certifies 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 21st day of April, 1994.

GRUNTAL & CO., INCORPORATED
(Depositor)

By: Robert Sablowsky
(Authorized Signator)

Pursuant to the requirements of the Securities Act of 1933, this
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.

Name Title Date

HOWARD SILVERMAN Chief Executive Officer and )
Director )
EDWARD E. BAO Executive Vice President and )April 21, 1994
Director )
BARRY RICHTER Executive Vice President and )
Director )By:Robert Sablowsky
ROBERT SABLOWSKY Executive Vice President and )
Director )Attorney-in-Fact*
LIONEL G. HEST Senior Executive and Director )

_______________

* An executed copy of the power of attorney was filed as Exhibit 6.1 to
Registration Statement No. 33-36316 on August 10, 1990.

<PAGE>
CONSENT OF INDEPENDENT AUDITORS

We consent to the use in these Post-Effective Amendments to the Registration
Statements of our reports on the financial statements of Insured Municipal
Securities Trust, Series 26; Insured Municipal Securities Trust, New York
Navigator Insured Series 6; Insured Municipal Securities Trust, New Jersey
Navigator Insured Series 3; Insured Municipal Securities Trust, New York
Navigator Insured Series 7; Insured Municipal Securities Trust, New Jersey
Navigator Insured Series 4; Insured Municipal Securities Trust, Series 28;
Insured Municipal Securities Trust, New York Navigator Insured Series 10 and
Insured Municipal Securities Trust, New Jersey Navigator Insured Series 7
included herein and to the reference to our firm under the heading
"Independent Auditors" in the Prospectus which is part of this Registration
Statement.

KPMG PEAT MARWICK

New York, New York
April 15, 1994

<PAGE>
EXHIBIT INDEX

Exhibit Description Page No.

99.1.1 Form of Reference Trust Agreement, as
amended (filed as Exhibit 1.1.1 to
Amendments No. 1 to Form S-6 Registration
Statements Nos. 33-37849, 33-38847 and
33-44912 of Insured Municipal Securities
Trust, Series 26, New York Navigator
Insured Series 6 & New Jersey Navigator
Insured Series 3, and New York Navigator
Insured Series 7 & New Jersey Navigator
Insured Series 4 and Series 28, New York
Navigator Insured Series 10 and New Jersey
Navigator Insured Series 7, respectively,
on January 31, 1991, May 2, 1991 and
January 24, 1992, respectively, and
incorporated herein by reference).

99.1.1.1 Trust Indenture and Agreement for Insured
Municipal Securities Trust, 47th Discount
Series and Series 20 (and Subsequent
Series) (filed as Exhibit 1.1.1 to
Amendment No. 1 to Form S-6 Registration
Statement No. 33-28384 of Insured
Municipal Securities Trust, 47th Discount
Series and Series 20 on June 16, 1989 and
incorporated herein by reference).

99.1.3.4 Certificate of Incorporation of Bear,
Stearns & Co. Inc., as amended (filed as
Exhibit 99.1.3.4 to Form S-6 Registration
Statement Nos. 33-50891 and 33-50901 of
Insured Municipal Securities Trust, New
York Navigator Insured Series 15 and New
Jersey Navigator Insured Series 11; and
Municipal Securities Trust, Multi-State
Series 44, respectively, on December 9,
1993 and incorporated herein by
reference).

99.1.3.5 By-Laws of Bear, Stearns & Co. Inc., as
amended (filed as Exhibit 99.1.3.5 to Form
S-6 Registration Statement Nos. 33-50891
and 33-50901 of Insured Municipal
Securities Trust, New York Navigator
Insured Series 15 and New Jersey Navigator
Insured Series 11; and Municipal
Securities Trust, Multi-State Series 44,
respectively, on December 9, 1993 and
incorporated herein by reference).

99.1.3.6 Certificate of Incorporation of Gruntal &
Co., Incorporated, as amended (filed as
Exhibit 1.3.6 to Form S-6 Registration
Statement No. 33-36316 of Mortgage
Securities Trust, CMO Series 1 on
August 10, 1990 and incorporated herein by
reference).

99.1.3.7 By-Laws of Gruntal & Co., Incorporated, as
amended (filed as Exhibit 1.3.7 to
Form S-6 Registration Statement
No. 33-36316 of Mortgage Securities Trust,
CMO Series 1 on August 10, 1990 and
incorporated herein by reference).

99.1.4 Form of Agreement Among Underwriters
(filed as Exhibit 1.4 to Amendment No. 1
to Form S-6 Registration Statement
No. 33-28384 of Insured Municipal
Securities Trust, 47th Discount Series and
Series 20 on June 16, 1989 and
incorporated herein by reference).

99.1.5 Form of Insurance Policy of Financial
Guaranty Insurance Company for Sponsor-
Insured Bonds (filed as Exhibit 1.5 to
Amendment No. 1 to Form S-6 Registration
Statement No. 2-95261 of Insured Municipal
Securities Trust, 7th Discount Series on
February 19, 1985 and incorporated herein
by reference).

99.1.5.1 Form of Insurance Policy of Bond Investors
Guaranty for Sponsor-Insured Bonds (filed
as Exhibit 1.5.1 to Amendment No. 1 to
Form S-6 Registration Statement
No. 33-08700 of Insured Municipal
Securities Trust, 24th Discount Series on
October 2, 1986 and incorporated herein by
reference).

99.1.5.2 Form of Insurance Policy of Municipal Bond
Investors Assurance Corporation (filed as
Exhibit 1.5.2 to Amendment No. 2 to
Form S-6 Registration Statement
No. 33-29467 on Insured Municipal
Securities Trust, Series 22 and New York
Navigator Insured Series 1 on January 18,
1990 and incorporated herein by
reference).

99.2.1 Form of Certificate (filed as Exhibit 2.1
to Amendment No. 1 to Form S-6
Registration Statement No. 33-11784 of
Insured Municipal Securities Trust, 28th
Discount Series on February 19, 1987 and
incorporated herein by reference).

99.3.1 Opinion of Battle Fowler as to the
legality of the securities being
registered, including their consent to the
delivery thereof and to the use of their
name under the headings "Tax Status" and
"Legal Opinions" in the Prospectus, and to
the filing of their opinion regarding the
tax status (filed as Exhibit 3.1 to
Amendments No. 1 to Form S-6 Registration
Statements Nos. 33-37849, 33-38847 and
33-44912 of Insured Municipal Securities
Trust, Series 26, New York Navigator
Insured Series 6 & New Jersey Navigator
Insured Series 3, and New York Navigator
Insured Series 7 & New Jersey Navigator
Insured Series 4 and Series 28, New York
Navigator Insured Series 10 and New Jersey
Navigator Insured Series 7, respectively,
on January 31, 1991, May 2, 1991 and
January 24, 1992, respectively, and
incorporated herein by reference).

99.3.2 Opinion of Freeman, Zeller & Bryant,
Special New Jersey Counsel (filed as
Exhibit 3.2 to Post-Effective Amendment
No. 1 to Form S-6 Registration Statements
Nos. 33-37849 and 33-38847 of Insured
Municipal Securities Trust, Series 26, New
York Navigator Insured Series 6 & New
Jersey Navigator Insured Series 3, and New
York Navigator Insured Series 7 & New
Jersey Navigator Insured Series 4,
respectively, on May 1, 1992 and filed as
Exhibit 3.2 to Amendment No. 1 to Form S-6
Registration Statement No. 33-44912 of
Insured Municipal Securities Trust,
Series 28, New York Navigator Insured
Series 10 and New Jersey Navigator Insured
Series 7 filed on January 24, 1992 and
incorporated herein by reference).

99.4.1 Form of Custody Agreement (filed as
Exhibit 4.1 to Amendment No. 1 to Form S-6
Registration Statement No. 33-36215 of
Insured Municipal Securities Trust,
Series 25 and New York Navigator Insured
Series 4 and incorporated herein by
reference).

99.4.2 Form of First Amendment to Custody
Agreement (filed as Exhibit 4.2 to
Amendment No. 1 to Form S-6 Registration
Statement No. 33-36215 of Insured
Municipal Securities Trust, Series 25 and
New York Navigator Series 4 and
incorporated herein by reference).

99.5.1 Consents of the Evaluator and Confirmation
of Ratings of Standard & Poor's
Corporation...............................

99.6.0 Power of Attorney of Bear, Stearns & Co.
Inc., the Depositor, by its Officers and a
majority of its Directors (filed as
Exhibit 6.0 to Post-Effective Amendment
No. 8 to Form S-6 Registration Statements
Nos. 2-92113, 2-92660, 2-93073, 2-93884
and 2-94545 of Municipal Securities Trust,
Multi-State Series 4, 5, 6, 7 and 8,
respectively, on October 30, 1992 and
incorporated herein by reference).

99.6.1 Power of Attorney of Gruntal & Co.,
Incorporated, by its officers and a
majority of its Directors (filed as
Exhibit 6.1 to Form S-6 Registration
Statement No. 33-36316 of Mortgage
Securities Trust, CMO Series 1 on
August 10, 1990 and incorporated herein by
reference).

99.7.0 Form of Agreement Among Co-Sponsors (filed
as Exhibit 7.0 to Amendment No. 1 to
Form S-6 Registration Statement
No. 33-28384 of Insured Municipal
Securities Trust, 47th Discount Series and
Series 20 on June 16, 1989 and
incorporated herein by reference).

KENNY S&P EVALUATION SERVICES
A Division of Kenny Information Systems, Inc.

65 Broadway
New York, New York 10006-2511
Telephone 212/770-4990

F.A. Shinal
Senior Vice President
Chief Financial Officer

April 29, 1994

Bear, Stearns & Co., Inc.
245 Park Avenue
New York, NY 10167

Gruntal & Co., Inc.
14 Wall Street
New York, NY 10005

RE: Insured Municipal Securities Trust
Series 26, New York Navigator
Insured Series 6 and New Jersey
Navigator Insured Series 3

Gentlemen:

We have examined the post-effective Amendment to the
Registration Statement File No. 33-37849 for the above-captioned trust.
We hereby acknowledge that Kenny S&P Evaluation Services, a division of
Kenny Information Systems, Inc. is currently acting as the evaluator for
the trust. We hereby consent to the use in the Amendment of the reference
to Kenny S&P Evaluation Services, a division of Kenny Information Systems,
Inc. as evaluator.

In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the
respective bonds comprising the trust portfolio are the ratings currently
indicated in our KENNYBASE database.

You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commission.

Sincerely,

F. A. Shinal
Senior Vice President
FAS/cns
<PAGE>

Standard & Poor's Corporation
Bond Insurance Administration
25 Broadway
New York, New York 10004-1064
Telephone 212/208-1740
FAX 212/208-8262

April 29, 1994

Bear Stearns & Co., Inc. Gruntal & Co., Incorporated
245 Park Avenue 14 Wall Street
New York, New York 10167 New York, New York 10005

Re: Insured Municipal Securities Trust, Series 26, New York Navigator
Insured Series 6 and New Jersey Navigator Insured Series 3

We have received the post-effective amendment to the registration
statement SEC file number 33-37849 for the above captioned trust.

Since the portfolio is composed solely of securities covered by bond
insurance policies that insure against default in the payment of principal
and interest on the securities for so long as they remain outstanding and
such policies have been issued by one or more insurance companies which
have been assigned 'AAA' claims paying ability ratings by S&P, we reaffirm
the assignment of a 'AAA' rating to the units of the trust and a 'AAA'
rating to the securities contained in the trust.

You have permission to use the name of Standard & Poor's Corporation
and the above-assigned ratings in connection with your dissemination of
information relating to these units, provided that it is understood that
the ratings are not "market" ratings nor recommendations to buy, hold, or
sell the units of the trust or the securities in the trust. Further, it
should be understood that the rating on the units does not take into
account the extent to which fund expenses or portfolio asset sales for
less than the fund's purchase price will reduce payment to the unit
holders of the interest and principal required to be paid on the portfolio
assets. S&P reserves the right to advise its own clients, subscribers,
and the public of the ratings. S&P relies on the sponsor and its counsel,
accountants, and other experts for the accuracy and completeness of the
information submitted in connection with the ratings. S&P does not
independently verify the truth or accuracy of any such information.

This letter evidences our consent to the use of the name of Standard
& Poor's Corporation in connection with the rating assigned to the units
in the amendment referred to above. However, this letter should not be
construed as a consent by us, within the meaning of Section 7 of the
Securities Act of 1933, to the use of the name of Standard & Poor's
Corporation in connection with the ratings assigned to the securities
contained in the trust. You are hereby authorized to file a copy this
letter with the Securities and Exchange Commission.

We are pleased to have had the opportunity to be of service to you.
If we can be of further help, please do not hesitate to call upon us.

Sincerely,

Vincent S. Orgo
/mc

<PAGE>

KENNY S&P EVALUATION SERVICES
A Division of Kenny Information Systems, Inc.

65 Broadway
New York, New York 10006-2511
Telephone 212/770-4990

F.A. Shinal
Senior Vice President
Chief Financial Officer

April 29, 1994

Bear, Stearns & Co., Inc.
245 Park Avenue
New York, NY 10167

Gruntal & Co., Inc.
14 Wall Street
New York, NY 10005

RE: Insured Municipal Securities Trust
New York Navigator Insured Series 7
and New Jersey Navigator Insured Series 4

Gentlemen:

We have examined the post-effective Amendment to the
Registration Statement File No. 33-38847 for the above-captioned trust.
We hereby acknowledge that Kenny S&P Evaluation Services, a division of
Kenny Information Systems, Inc. is currently acting as the evaluator for
the trust. We hereby consent to the use in the Amendment of the reference
to Kenny S&P Evaluation Services, a division of Kenny Information Systems,
Inc. as evaluator.

You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commission.

Sincerely,

F. A. Shinal
Senior Vice President

FAS/cns
<PAGE>

Standard & Poor's Corporation
Bond Insurance Administration
25 Broadway
New York, New York 10004-1064
Telephone 212/208-1740
FAX 212/208-8262

April 29, 1994

Bear Stearns & Co., Inc. Gruntal & Co., Incorporated
245 Park Avenue 14 Wall Street
New York, New York 10167 New York, New York 10005

Re: Insured Municipal Securities Trust, New York Navigator Insured Series
7 and New Jersey Navigator Insured Series 4

We have received the post-effective amendment to the registration
statement SEC file number 33-38847 for the above captioned trust.

We are pleased to have had the opportunity to be of service to you.
If we can be of further help, please do not hesitate to call upon us.

Sincerely,

Vincent S. Orgo
/mc
<PAGE>

KENNY S&P EVALUATION SERVICES
A Division of Kenny Information Systems, Inc.

65 Broadway
New York, New York 10006-2511
Telephone 212/770-4990

F.A. Shinal
Senior Vice President
Chief Financial Officer

April 29, 1994

Bear, Stearns & Co., Inc.
245 Park Avenue
New York, NY 10167

Gruntal & Co., Inc.
14 Wall Street
New York, NY 10005

RE: Insured Municipal Securities Trust
Series 28, New York Navigator Insured Series 10
and New Jersey Navigator Insured Series 7

Gentlemen:

We have examined the post-effective Amendment to the
Registration Statement File No. 33-44912 for the above-captioned trust.
We hereby acknowledge that Kenny S&P Evaluation Services, a division of
Kenny Information Systems, Inc. is currently acting as the evaluator for
the trust. We hereby consent to the use in the Amendment of the reference
to Kenny S&P Evaluation Services, a division of Kenny Information Systems,
Inc. as evaluator.

You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commission.

Sincerely,

F. A. Shinal
Senior Vice President
FAS/cns
<PAGE>
Standard & Poor's Corporation
Bond Insurance Administration
25 Broadway
New York, New York 10004-1064
Telephone 212/208-1740
FAX 212/208-8262

April 29, 1994

Bear Stearns & Co., Inc. Gruntal & Co., Incorporated
245 Park Avenue 14 Wall Street
New York, New York 10167 New York, New York 10005

Re: Insured Municipal Securities Trust, Series 28, New York Navigator
Insured Series 10 and New Jersey Navigator Insured Series 7

We have received the post-effective amendment to the registration
statement SEC file number 33-44912 for the above captioned trust.

We are pleased to have had the opportunity to be of service to you.
If we can be of further help, please do not hesitate to call upon us.

Sincerely,

Vincent S. Orgo
/mc