INSURED MUN SEC TR NY NAV INS SER 8 NJ NAV INS SER 5, 485BPOS, 1994-10-26

INSURED MUN SEC TR NY NAV INS SER 8 NJ NAV INS SER 5
485BPOS, 1994-10-26

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As filed with the Securities and Exchange Commission on October 26, 1994
Registration No. 33-41110 *

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________

POST-EFFECTIVE AMENDMENT NO. 3
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,
NEW YORK NAVIGATOR INSURED SERIES 8 &
NEW JERSEY NAVIGATOR INSURED SERIES 5 AND INSURED
MUNICIPAL SECURITIES TRUST, SERIES 27,
NEW YORK NAVIGATOR INSURED SERIES 9
& NEW JERSEY NAVIGATOR INSURED SERIES 6

B. Name of depositors:

BEAR, STEARNS & CO. INC.
GRUNTAL & CO., INCORPORATED

C. Complete address of depositor's principal executive office:

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

D. Name and complete address of agent for service:

PETER J. DeMARCO ROBERT SABLOWSKY to:

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

Copy of comments to:
MICHAEL R. ROSELLA, ESQ.
Battle Fowler
75 East 55th Street
New York, NY 10022
(212) 856-6858

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

/ / immediately upon filing pursuant to paragraph (b) of Rule 485.
/x/ on (October 28, 1994) pursuant to paragraph (b) of Rule 485.
/ / 60 days after filing pursuant to paragraph (a) of Rule 485.
/ / on ( date ) pursuant to paragraph (a) of Rule 485.

* The Prospectus included in this Registration Statement constitutes a
combined Prospectus as permitted by the provisions of Rule 429 of
the General Rules and Regulations under the Securities Act of 1933.
Said Prospectus covers units of undivided interest in Insured
Municipal Securities Trust, New York Navigator Insured Series 8 &
New Jersey Navigator Insured Series 5 and Insured Municipal
Securities Trust, Series 27, New York Navigator Insured Series 9 &
New Jersey Navigator Insured Series 6, covered by prospectuses
heretofore filed as part of separate registration statements on
Form S-6 (Registration Nos. 33-41110 and 33-41923, respectively)
under the Securities Act. This filing constitutes Post-Effective
Amendment No. 3 for all of the aforementioned Series.

Each of the Registrants has registered an indefinite number of
securities under the Securities Act of 1933 pursuant to Section
24(f) under the Investment Company Act of 1940, as amended, and Rule
24f-2 thereunder, and each of the Registrants filed a Rule 24f-4
Notice for its fiscal year ended June 30, 1994 on August 26, 1994.

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST,
NEW YORK NAVIGATOR SERIES 8
AND NEW JERSEY NAVIGATOR SERIES 5,
SERIES 27, NEW YORK NAVIGATOR SERIES 9
AND NEW JERSEY NAVIGATOR SERIES 6

CROSS-REFERENCE SHEET

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

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

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

I. Organization and General Information

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

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

10. (a) Registered or bearer
securities...................... Certificates
(b) Cumulative or distributive
securities...................... Interest and Principal
Distributions
(c) Redemption...................... Trustee Redemption
(d) Conversion, transfer, etc....... Certificates, Sponsor
Repurchase,
Trustee Redemption, Exchange
Privilege and Conversion Offer
(e) Periodic payment plan........... Not Applicable
(f) Voting rights................... Trust Agreement, Amendment and
Termination
(g) Notice to certificateholders.... Records, Portfolio, Trust
Agreement,
Amendment and Termination, The
Sponsor, The Trustee
(h) Consents required............... Trust Agreement, Amendment and
Termination
(i) Other provisions................ Tax Status
11. Type of securities
comprising units.................. Objectives, Portfolio,
Description
of Portfolio
12. Certain information regarding
periodic payment certificates..... Not Applicable
13. (a) Load, fees, expenses, etc....... Summary of Essential
Information,
Offering Price, Volume and
Other
Discounts, Sponsor's and
Underwriters' Profits, Total
Reinvestment Plan, Trust
Expenses
and Charges
(b) Certain information regarding
periodic payment certificates... Not Applicable
(c) Certain percentages............. Summary of Essential
Information,
Offering Price, Total
Reinvestment
Plan
(d) Price differences............... Volume and Other Discounts
(e) Other loads, fees, expenses..... Certificates
(f) Certain profits receivable
by depositors, principal
underwriters, trustee or
affiliated persons.............. Sponsor's and Underwriters'
Profits
(g) Ratio of annual charges
to income....................... Not Applicable
14. Issuance of trust's securities...... Organization, Certificates
15. Receipt and handling of payments
from purchasers................... Organization
16. Acquisition and disposition of
underlying securities............. Organization, Objectives,
Portfolio,
Portfolio Supervision
17. Withdrawal or redemption............ Comparison of Public Offering
Price,
Sponsor's Repurchase Price and
Redemption Price, Sponsor
Repurchase, Trustee Redemption
18. (a) Receipt, custody and
disposition of income........... Distribution Elections, Interest
and
Principal Distributions,
Records,
Total Reinvestment Plan
(b) Reinvestment of distributions... Total Reinvestment Plan
(c) Reserves or special funds....... Interest and Principal
Distributions
(d) Schedule of distributions....... Not Applicable
19. Records, accounts and reports....... Records, Total Reinvestment Plan
20. Certain miscellaneous provisions
of trust agreement................ Trust Agreement, Amendment and
Termination
(a) Amendment....................... "
(b) Termination..................... "
(c) and (d) Trustee, removal and
successor....................... The Trustee
(e) and (f) Depositor, removal
and successor................... The Sponsor
21. Loans to security holders........... Not Applicable
22. Limitations on liability............ The Sponsor, The Trustee,
The Evaluator
23. Bonding arrangements................ Part II--Item A
24. Other material provisions
of trust agreement................ Not Applicable

III. Organization, Personnel and Affiliated Persons of Depositor

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

IV. Distribution and Redemption of Securities

35. Distribution of trust's
securities by states.............. Distribution of Units
36. Suspension of sales of
trust's securities................ Not Applicable
37. Revocation of authority
to distribute..................... "
38. (a) Method of distribution.......... Distribution of Units, Total
Reinvestment Plan
(b) Underwriting agreements......... "
(c) Selling agreements.............. "
39. (a) Organization of principal
underwriters.................... The Sponsor
(b) N.A.S.D. membership of
principal underwriters.......... "
40. Certain fees received by
principal underwriters............ Not Applicable
41. (a) Business of principal
underwriters.................... The Sponsor
(b) Branch offices of principal
underwriters.................... Not Applicable
(c) Salesmen of principal
underwriters.................... "
42. Ownership of trust's
securities by certain persons..... "
43. Certain brokerage commissions
received by principal
underwriters...................... "
44. (a) Method of valuation............. Summary of Essential
Information,
Offering Price, Accrued
Interest,
Volume and Other Discounts,
Total Reinvestment Plan,
Distribution of Units
(b) Schedule as to offering price... Not Applicable
(c) Variation in offering price
to certain persons.............. Distribution of Units, Total
Reinvestment Plan, Volume and
Other Discounts
45. Suspension of redemption rights..... Trustee Redemption

46. (a) Redemption valuation............ Comparison of Public Offering
Price,
Sponsor's Repurchase Price and
Redemption Price, Trustee
Redemption
(b) Schedule as to
redemption price................ Not Applicable
47. Maintenance of position in
underlying securities............. Comparison of Public Offering
Price,
Sponsor's Repurchase Price and
Redemption Price, Sponsor
Repurchase, Trustee Redemption

V. Information Concerning the Trustee or Custodian

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

VI. Information Concerning Insurance of Holders of Securities

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

VII. Policy of Registrant

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

VIII. Financial and Statistical Information

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

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

INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED

SERIES 8

The Trust is a unit investment trust designated Series 8 ("New York
Navigator Trust") with an underlying portfolio of long-term insured tax-
exempt bonds and was formed to preserve capital and to provide interest
income (including, where applicable, earned original issue discount)
which, in the opinions of bond counsel to the respective issuers, is, with
certain exceptions, currently exempt from regular federal income tax under
existing law 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.

This Prospectus consists of two parts. Part A contains the Summary
of Essential Information as of June 30, 1994 (the "Evaluation Date"), a
summary of certain specific information regarding the Trust and audited
financial statements of the Trust, including the related portfolio, as of
the Evaluation Date. Part B of this Prospectus contains a general summary
of the Trust.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Prospectus Part A Dated October 28, 1994

<PAGE>

THE TRUST. The Trust is a unit investment trust 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 1/6651st 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 York 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 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.

All of the Bonds in the New York Navigator Trust are covered by
insurance obtained by the Sponsors from MBIA Corp. and 10.3% 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"), 6.3%; and Financial Guaranty
Insurance Company ("Financial Guaranty"), 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
purchased for sale on the Evaluation Date, the Public Offering Price per
Unit would have been $1,104.78 plus accrued interest of $12.50 under the
monthly distribution plan, $18.07 under the semi-annual distribution plan
and $52.50 under the annual distribution plan, for a total of $1,117.28,
$1,122.85 and $1,157.28, respectively. The Public Offering Price per Unit
can vary on a daily basis in accordance with fluctuations in the aggregate
bid price of the Bonds. (See "Public Offering--Offering Price" in Part B
of this Prospectus.)

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of
each Trust are offered to investors on a "dollar price" basis (using the
computation method previously described under "Public Offering Price") as
distinguished from a "yield price" basis often used in offerings of tax
exempt bonds (involving the lesser of the yield as computed to maturity of
bonds or to an earlier redemption date). Since they are offered on a
dollar price basis, the rate of return on an investment in Units of each
Trust is measured in terms of "Estimated Current Return" and "Estimated
Long Term Return".

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

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

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

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

DISTRIBUTIONS. Distributions of interest income, less expenses,
will be made by the Trust either monthly, semi-annually or annually
depending upon the plan chosen by the Certificateholder.
Certificateholders purchasing Units in the secondary market will initially
receive distributions in accordance with the elections of the prior owner.
The first interest distributions will be made on the First Payment Date to
all Certificateholders of record on the First Record Date and thereafter
distributions will be made in accordance with the distribution plan chosen
by the Certificateholder. 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, the amount of the first interest distributions and the
specific dates representing the First Payment Date and the First Record
Date see "Summary of Essential Information.")

MARKET FOR UNITS. The Sponsors, although not obligated to do so,
intend to maintain a secondary market for the Units based on the aggregate
bid price of the Bonds in the Trust portfolio 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" 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 8

SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1994

Date of Deposit: July 11, 1991 Minimum Principal Distribution:
Principal Amount of Bonds ...$6,630,000 $1.00 per Unit.
Number of Units .............6,651 Weighted Average Life to
Fractional Undivided Inter- Maturity:
est in Trust per Unit .....1/6651 13.1 Years.
Principal Amount of Minimum Value of Trust:
Bonds per Unit ............$996.84 Trust may be terminated if
Secondary Market Public value of Trust is less than
Offering Price** $2,800,000 in principal
Aggregate Bid Price amount of Bonds.
of Bonds in Trust .......$6,987,843+++ Mandatory Termination Date:
Divided by 6,651 Units ....$1,050.65 The earlier of December 31,
Plus Sales Charge of 4.9% 2040 or the disposition of
of Public Offering Price $54.13 the last Bond in the Trust.
Public Offering Price Trustee***: United States
per Unit ................$1,104.78+ Trust Company of New York.
Redemption and Sponsors' Trustee's Annual Fee: Monthly
Repurchase Price plan $1.00 per $1,000; semi-
per Unit ..................$1,050.65+ annual plan $.54 per $1,000;
+++ and annual plan is $.36 per
$1,000.
++++ Evaluator: Kenny S&P Evaluation
Excess of Secondary Market Services.
Public Offering Price Evaluator's Fee for Each
over Redemption and Evaluation: Minimum of $8
Sponsors' Repurchase plus $.25 per each issue of
Price per Unit ............$54.13++++ Bonds in excess of 50 issues
Difference between Public (treating separate maturities
Offering Price per Unit as separate issues).
and Principal Amount per Sponsors: Bear, Stearns & Co.
Unit Premium/(Discount) ...$107.94 Inc. and Gruntal & Co.,
Evaluation Time: 4:00 p.m. Incorporated
New York Time. 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# ......... $69.61 $69.61 $69.61
Less estimated annual fees and
expenses ............................ 1.96 1.34 1.13
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $67.65 $68.27 $68.48
Estimated interest distribution# ...... 5.63 34.13 68.48
Estimated daily interest accrual# ..... .1879 .1896 .1902
Estimated current return#++ ........... 6.12% 6.18% 6.20%
Estimated long term return++ .......... 5.33% 5.38% 5.40%
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 $12.50 monthly,
$18.07 semi-annually and $52.50 annually.

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

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

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

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

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF JUNE 30, 1994

DESCRIPTION OF PORTFOLIO

The portfolio of the Trust consists of 12 issues representing
obligations of 11 issuers located in the state of New York and 1 in Puerto
Rico. The Sponsors have not participated as a sole underwriter or
manager, co-manager or member of an underwriting syndicates from which any
of the initial aggregate principal amount of the Bonds were acquired.
Approximately 10.6% of the Bonds are obligations of state and local
housing authorities; approximately 11.3% are hospital revenue bonds; none
were issued in connection with the financing of nuclear generating
facilities; and none are "mortgage subsidy" bonds. All of the Bonds in
the Trust are subject to redemption prior to their stated maturity dates
pursuant to sinking fund or call provisions. The Bonds may also be
subject to other calls, which may be permitted or required by events which
cannot be predicted (such as destruction, condemnation, termination of a
contract, or receipt of excess or unanticipated revenues). Three of the
issues representing $1,100,000 of the principal amount of the Bonds are
general obligation bonds. All 9 of the remaining issues representing
$5,530,000 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,
Development Corporation 1, Hospital 1, Multi-Family Housing 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 June 30, 1994, $1,280,000 (approximately 19.3% of the
aggregate principal amount of the Bonds) were original issue discount
bonds. Of these original issue discount bonds, $280,000 (approximately
4.2% of the aggregate principal amount of the Bonds) were Zero Coupon
Bonds. Zero Coupon Bonds do not provide for the payment of any current
interest and provide for payment at maturity at par value unless sooner
sold or redeemed. The market value of Zero Coupon Bonds is subject to
greater fluctuations than coupon bonds in response to changes in interest
rates. None of the aggregate principal amount of the Bonds in the Trust
were purchased at a "market" discount from par value at maturity,
approximately 76.6% were purchased at a premium and approximately 4.1%
were purchased at par. For an explanation of the significance of these
factors see "Discount and Zero Coupon Bonds" in Part B of this Prospectus.

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

<PAGE>
FINANCIAL AND STATISTICAL INFORMATION

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

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

June 30, 1992 7,000 $1,049.52 $47.89 $48.32 $14.17 -0-
June 30, 1993 6,718 1,118.66 67.69 68.34 68.54 -0-
June 30, 1994 6,651 1,068.59 67.90 68.56 68.64 -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, New York Navigator Insured Series 8:

We have audited the accompanying statement of net assets, including the
portfolio, of Insured Municipal Securities Trust, New York Navigator
Insured Series 8 as of June 30, 1994, and the related statements of
operations, and changes in net assets for the two year period then ended
and for the period July 11, 1991 to June 30, 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 June 30, 1994, by correspondence with the Trustee. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Insured
Municipal Securities Trust, New York Navigator Insured Series 8 as of
June 30, 1994 and the results of its operations and the changes in its
net assets for the two year period then ended and for the period July
11, 1991 to June 30, 1992 in conformity with generally accepted
accounting principles.

KPMG Peat Marwick LLP

New York, New York
September 15, 1994
<PAGE>
<TABLE>
NEW YORK NAVIGATOR INSURED SERIES 8

Statement of Net Assets

June 30, 1994
<S> <C>
Investments in marketable securities,
at market value (cost $6,512,030) $ 6,989,763

Excess of other assets over total liabilities 117,439
------------

Net assets 6,718 units of fractional undivided
interest outstanding,$1,118.66 per unit) $ 7,107,202
============

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED SERIES 8

Statements of Operations
<CAPTION>
For the Period
Year ended June 30, July 11, 1991
1994 1993 to June 30, 1992
-------------------------------- -----------------
<S> <C> <C> <C>
Investment income - interest $ 471,748 $ 490,777 $ 475,575
---------- ---------- --------------

Expenses:
Trustee's fees 6,901 6,687 3,651
Evaluator's fees 2,386 2,275 1,432
Sponsor's advisory fee 1,746 1,750 826
---------- ---------- ----------

Total expenses 11,033 10,712 5,909
---------- ---------- -----------

Investment income, net 460,715 480,065 469,666
---------- ---------- -----------

Realized and unrealized gain (loss)
on investments:
Net realized gain on bonds
sold or called 7,437 36,087 -
Unrealized appreciation (345,620) 441,096 460,519
---------- ---------- ----------

Net gain on investments (338,183) 477,183 460,519
---------- ---------- ----------

Net increase in net
assets resulting
from operations $ 122,532 957,248 930,185
========== ========== ===========

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

INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED SERIES 8

Statements of Changes in Net Assets

<CAPTION>
For the Period
Year ended June 30, July 11, 1991
1994 1993 to June 30, 1992
-------------------------------- -----------------
<S> <C> <C> <C>

Operations:
Investment income, net $460,715 $ 480,065 $ 469,666
Net realized loss on bonds
sold or called 7,437 36,087 -
Unrealized appreciation
of investments for the period (345,620) 441,096 460,519
---------- ---------- -----------

Net increase in net
assets resulting
from operations 122,532 957,248 930,185
----------- ---------- -----------

Distributions:
To Certificateholders:
Investment income 457,383 475,659 331,725
To sponsor of accrued interest
to date of settlement - - 11,298

Redemptions:
Interest 1,086 4,813 -
Principal 72,012 308,263 -
------------- ---------- ------------

Total distributions and redemptions 530,481 788,735 343,023
------------- ---------- ------------

Total increase (407,949) 168,513 587,162

Net assets at begining of period 7,515,151 7,346,638 6,759,476
---------- -------------- ------------

Net assets at end of period (including
undistributed net investment
income o$125,844,
and $126,643, respectively) $ 7,107,202 7,515,151 7,346,638
========== ============== ==============

See accompanying notes to financial statements.
</TABLE>
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED SERIES 8

Notes to Financial Statements

June 30, 1994, 1993 and 1992

(1) Organization and Financial and Statistical Information
Insured Municipal Securities Trust, New York Navigator Insured Series 8
(Trust) was organized on July 11, 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 the footnotes to the portfolio. The market
value of the investments is based upon the bid prices for the bonds at
the end of the 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.

The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. 67 units were redeemed in the year ended June 30, 1994. 282
units were redeemed during the year ended June 30, 1993. No other units
have been redeemed since the inception of the Trust.

See "Financial and Statistical Information" in Part A of this Prospectus
for the amounts of per unit distributions during the year ended June 30,
1994, 1993 and the period July 11, 1991 (date of deposit) to June 30,
1992.

(5) Net Asset

At June 30, 1994, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $ 7,107,756
Less initial gross underwriting commission (348,280)

6,759,476

Cost of bonds sold or called (333,548)
Net unrealized appreciation 555,995
Undistributed net investment income 127,198
Undistributed proceeds from bonds sold or called (1,919)

Total $ 7,107,202

The original cost to Certificateholders, less the initial gross
underwriting commission, represents the aggregate initial public offering
price net of the applicable sales charge on 7,000 units of fractional
undivided interest of the Trust as of the date of deposit.

Undistributed net investment income includes accumulated
accretion of original issue discount of $7,840.
<PAGE>
<TABLE>
INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED SERIES 8

Portfolio
June 30, 1994
<CAPTION>
Port- Aggregate Coupon Redemption
Rate/ Feature
folio Principal Name of Issuer Ratings Date(s) S.F.--Sinking Market
of Fund
No. Amount and Title of Bonds (1) Maturity(2)Ref.--Refunding(2)Value(3)
- -- --------- --------------------- ---- ------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 $ 335,000 N.Y. State Dorm. AAA 7.125% 5/15/10 @ 100 $ 370,088
Auth. State Univ. Ed. 5/15/2017 S.F.
Facs. Rev. Bonds 5/15/99 @ 102
Series 1989A (MBIA Ref.
Corp.) (5)

1A 165,000 N.Y. State Dorm. AAA 7.125% 5/15/10 @ 100 182,130
Auth. State Univ. Ed. 5/15/2017 S.F.
Facs. Rev. Bonds 5/15/99 @ 102
Series 1989A (MBIA Ref.
Corp.)

2 630,000 N.Y. State Dorm. AAA 7.625 7/01/06 @ 100 717,224
Auth. City Univ. Sys. 7/01/2020 S.F.
Consldtd. Rev. Bonds 7/01/00 @ 102
Series 1990A (MBIA Ref.
Corp.)

3 420,000 N.Y. State Hsg. Finc. AAA 7.450 11/01/92 @ 100 444,704
Agncy. Multi. Fam. 11/01/2028 S.F.
Hsg. Rev. Bonds 11/01/99 @ 102
Series A (MBIA Corp.) Ref.

4 700,000 N.Y. Local Gov. AAA 7.500 4/01/13 @ 100 797,069
Assis. Corp. (A Pub. 4/01/2020 S.F.
Benefit Corp. of the 4/01/01 @ 102
State of N.Y.) Rev. Ref.
Bonds Series 1991B
(MBIA Corp.) (5)

5 750,000 N.Y. State Med. Care AAA 7.450 2/15/98 @ 100 844,913
Facs. Finc. Agncy. 2/15/2029 S.F.
St. Lukes Roosevelt 2/15/00 @ 102
Hosp. Cntr. FHA Ref.
Insrd. Mtg. Rev.
Bonds Series B (MBIA
Corp.)

6 750,000 N.Y. State Urb. Dev. AAA 7.500 4/01/12 @ 100 809,070
Corp. State Facs. 4/01/2020 S.F.
Rev. Bonds Series 4/01/01 @ 102
1991 (MBIA Corp.) (5) Ref.

7 270,000 Suffolk Cnty. N.Y. AAA 7.100 No Sinking 292,847
Pub. Imprvmt. Gen. 7/15/2010 Fund
Oblig. Rev. Bonds 7/15/97 @ 102
Series 1989 (MBIA Ref.
Corp.) (5)

8 435,000 N.Y. City Gen. Oblig. AAA 8.250 No Sinking 517,185
Rev. Bonds Fiscal 11/15/2016 Fund
1991 Series F (MBIA 11/15/01 @
Corp.) (5) 101.5 Ref.

8A 65,000 N.Y. City Gen. Oblig. AAA 8.250 No Sinking 74,487
Rev. Bonds Fiscal 11/15/2016 Fund
1991 Series F (MBIA 11/15/01 @
Corp.) 101.5 Ref.

9 800,000 N.Y. City Muni. Wtr. AAA 6.000 6/15/17 @ 100 759,384
Finc. Auth. Wtr. & 6/15/2019 S.F.
Swr. Sys. Rev. Bonds 6/15/99 @ 100
Fiscal 1990 Series A Ref.
(MBIA Corp.)

10 700,000 Triborough Bridge & AAA 7.000 1/01/12 @ 100 778,813
Tunnel Auth. of N.Y. 1/01/2020 S.F.
Gen. Purp. Rev. Bonds 1/01/01 @ 102
Series T (MBIA Corp.) Ref.
(5)

11 330,000 P.R. Pub. Bldg. Auth. AAA 7.875 7/01/03 @ 100 $ 364,568
Pub. Ed. & Hlth. 7/01/2016 S.F.
Facs. Rfndg. Rev. 7/01/97 @ 102
Bonds Series G (MBIA Ref.
Corp.) (5)

12 280,000 N.Y. State Mtg. AAA 0.000 4/01/12 @ 37,281
Agncy. Hmownr. Mtg. 4/01/2020 52.88 S.F.
Rev. Bonds Series II 4/01/02 @
(MBIA Corp.) 23.845 Ref.
$ 6,630,000 $ 6,989,763
========= ==========

See accompanying footnotes to financial statements and portfolio.
</TABLE>
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED SERIES 8

Footnotes to Portfolio

June 30, 1994

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

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

(3) At June 30, 1994, the net unrealized appreciation of all the bonds
was comprised of the following:

Grossed unrealized appreciation $ 556,864
Gross unrealized depreciation (869)

Net unrealized appreciation $ 555,995

(4) The annual interest income, (excluding accretion of
original issue discount on zero-coupon bonds), based upon bonds held
at June 30, 1994, to the Trust is $462,985.

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

(6) Bonds sold or called after June 30, 1994 are noted in a
footnote "Changes in Trust Portfolio" under "Description of Portfolio"
in Part A of this Prospectus.

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

<PAGE>

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

INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED

SERIES 5

The Trust is a unit investment trust designated Series 5 ("New
Jersey Navigator Trust") with an underlying portfolio of long-term insured
tax-exempt bonds and was formed to preserve capital and to provide
interest income (including, where applicable, earned original issue
discount) which, in the opinions of bond counsel to the respective
issuers, is, with certain exceptions, currently exempt from regular
federal income tax under existing law 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 October 28, 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 1/6000th 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 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 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 he 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 64.6% 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:
AMBAC Indemnity Corp. ("AMBAC"), 26.1%; Bond Investors Guaranty ("BIG"),
10.7%; Financial Guaranty Insurance Company ("Financial Guaranty"), 19.6%;
and MBIA Corp., 8.2%.

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
purchased on the Evaluation Date, the Public Offering Price per Unit would
have been $958.16 plus accrued interest of $11.73 under the monthly
distribution plan, $16.54 under the semi-annual distribution plan and
$46.02 under the annual distribution plan, for a total of $969.89, $974.70
and $1,004.18, 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.)

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

MARKET FOR UNITS. The Sponsors, although not obligated to do so,
intend to maintain a secondary market for the Units based on the aggregate
bid price of the Bonds in the Trust Portfolio 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" in Part B of
this Prospectus.)

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST

NEW JERSEY NAVIGATOR INSURED
SERIES 5

SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1994

Minimum Principal Distribution:
Date of Deposit: July 11, 1991 $1.00 per Unit.
Principal Amount of Bonds ...$5,355,000 Weighted Average Life to
Number of Units .............6,000 Maturity:
Fractional Undivided Inter- 17.1 Years.
est in Trust per Unit .....1/6000 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............$892.50 value of Trust is less than
Secondary Market Public $2,400,000 in principal
Offering Price** amount of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust .......$5,467,287+++ The earlier of December 31,
Divided by 6,000 Units ....$911.21 2040 or the disposition of
Plus Sales Charge of 4.9% the last Bond in the Trust.
of Public Offering Price $46.94 Trustee***: United States
Public Offering Price Trust Company of New York.
per Unit ................$958.16+ Trustee's Annual Fee: Monthly
Redemption and Sponsors' plan $.99 per $1,000; semi-
Repurchase Price annual plan $.53 per $1,000;
per Unit ..................$911.21+ and annual plan is $.35 per
+++ $1,000.
++++ Evaluator: Kenny S&P Evaluation
Excess of Secondary Market Services.
Public Offering Price Evaluator's Fee for Each
over Redemption and Evaluation: Minimum of $8
Sponsors' Repurchase plus $.25 per each issue of
Price per Unit ............$46.94++++ Bonds in excess of 50 issues
Difference between Public (treating separate maturities
Offering Price per Unit as separate issues).
and Principal Amount per Sponsors: Bear, Stearns & Co.
Unit Premium/(Discount) ...$65.66 Inc. and Gruntal & Co.,
Evaluation Time: 4:00 p.m. Incorporated.
New York Time. 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# ......... $60.04 $60.04 $60.04
Less estimated annual fees and
expenses ............................ 1.92 1.34 1.15
Estimated net annual interest ______ ______ ______
income (cash)# ..................... $58.12 $58.70 $58.89
Estimated interest distribution# ..... 4.84 29.35 58.89
Estimated daily interest accrual# .... .1614 .1630 .1635
Estimated current return#++ ........... 6.07% 6.13% 6.15%
Estimated long term return++ .......... 5.45% 5.52% 5.53%
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 $11.73 monthly,
$16.54 semi-annually and $46.02 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 JUNE 30, 1994

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 underwriting syndicates 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 14.9% are hospital revenue bonds; none were issued in
connection with the financing of nuclear generating facilities; and none
are "mortgage subsidy" bonds. All of the Bonds in the Trust are subject
to redemption prior to their stated maturity dates pursuant to sinking
fund or call provisions. The Bonds may also be subject to other calls,
which may be permitted or required by events which cannot be predicted
(such as destruction, condemnation, termination of a contract, or receipt
of excess or unanticipated revenues). Three of the issues representing
$1,740,000 of the principal amount of the Bonds are general obligation
bonds. All 7 of the remaining issues representing $3,615,000 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:
Correctional Facility 1, Educational Facility 1, Hospital 1, Mortgage
Revenue 1, Parking Facility 1, Port Authority 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 June 30, 1994, $1,100,000 (approximately 20.5% of the
aggregate principal amount of the Bonds) were original issue discount
bonds. Of these original issue discount bonds, $300,000 (approximately
5.6% 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 70.7% were purchased at a premium and approximately 8.8%
were purchased at par. For an explanation of the significance of these
factors see "Discount and Zero Coupon Bonds" in Part B of this Prospectus.

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

<PAGE>
FINANCIAL AND STATISTICAL INFORMATION

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

June 30, 1992 6,000 $1,018.79 $47.21 $47.64 $14.22 $13.33
June 30, 1993 6,000 1,011.24 66.17 63.77 66.02 59.17
June 30, 1994 6,000 927.16 58.92 59.53 61.75 35.00

Independent Auditors' Report

The Sponsor, Trustee and Certificateholders
Insured Municipal Securities Trust, New Jersey Navigator Insured Series
5:

We have audited the accompanying statement of net assets, including the
portfolio, of Insured Municipal Securities Trust, New Jersey Navigator
Insured Series 5 as of June 30, 1994, and the related statements of
operations, and changes in net assets for two year period then ended and
for the period July 11, 1991 (date of deposit) to June 30, 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 audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as
of June 30, 1994, by correspondence with the Trustee. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides 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 5 as of
June 30, 1994, and the results of its operations, and the changes in its
net assets for the two year period then ended and for the period July 11,
1991 to June 30, 1992, in conformity with generally accepted accounting
principles.

KPMG Peat Marwick LLP

New York, New York
September 15, 1994
<PAGE>
<TABLE>
NEW JERSEY NAVIGATOR INSURED SERIES 5

Statement of Net Assets

June 30, 1994
<S> <C>
Investments in marketable securities,
at market value (cost$5,234,256) $ 5,467,287

Excess of other assets over total liabilities 95,667
-----------

Net assets 6,000 units of fractional undivided
interest outstanding, $927.16 per unit) $ 5,562,954
===========

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
NEW JERSEY NAVIGATOR INSURED SERIES 5

Statements of Operations
<CAPTION>
For the Period
Years ended June 30, July 11, 1991
---------- ----------
1994 1993 to June 30, 1992
---------- ----------
<S> <C> <C> <C>
Investment income - interest $ 368,311 392,675 400,239
---------- ---------- -------------

Expenses:
Trustee's fees 5,708 5,913 3,017
Evaluator's fees 2,386 2,275 1,288
Sponsor's advisory fee 1,433 1,500 708
---------- ---------- -------------

Total expenses 9,527 9,688 5,013
---------- ---------- -------------

Investment income, net 358,784 382,987 395,226
---------- ---------- -------------

Realized and unrealized gain (loss)
on investments:
Net realized loss on bonds
sold or called (9,849) (20,124) (4,552)
Unrealized appreciation
(depreciation) (288,575) 327,915 193,691
---------- ---------- -------------

Net gain (loss) on investment(298,424) 307,791 189,139
---------- ---------- -------------

Net increase in net
assets resulting
from operations $ 60,360 690,778 584,365
========== ========== =============

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
NEW JERSEY NAVIGATOR INSURED SERIES 5

Statements of Changes in Net Assets

<CAPTION>
For the Period
YEARS ENDED JUNE 30 July 11, 1991
------------ ----------- ---------------
1994 1993 to June 30, 1992
------------ ----------- ----------------
<S> <C> <C> <C>
Operations:
Investment income, net $ 358,784 382,987 395,226
Net realized loss on bonds
sold or called (9,849) (20,124) (4,552)
Unrealized appreciation
(depreciation) for the period (288,575) 327,915 193,691
------------ ----------- ----------------

Net increase in net
assets resulting
from operations 60,360 690,778 584,365
------------ ----------- ----------------

Distributions:
To Certificateholders:
Investment income 354,868 381,044 284,172
Principal 210,000 355,020 79,980
To sponsor of accrued interest
to date of settlement - - 9,076
------------ ----------- ----------------

Total distributions 564,868 736,064 373,228
------------ ----------- ----------------

Total increase (decrease) (504,508) (45,286) 211,137

Net assets at date of deposit 6,067,462 6,112,748 5,901,611
------------ ----------- ----------------

Net assets at end of period (including
undistributed net investment
income o$107,837, $103,921 and
$101,978, respectively) $ 5,562,954 6,067,462 6,112,748
============ =========== ================

See accompanying notes to financial statements.
</TABLE>
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED SERIES 5

Notes to Financial Statements

June 30, 1994

(1) Oganization and Financial and Statistical Information

Insured Municipal Securities Trust, New Jersey Navigator Insured Series 5
(Trust) was organized on July 11, 1991 (date of deposit) 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 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 years
ended June 30, 1994, and 1993, and for the period July 11, 1991 to
June 30 1992.

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 June 30, 1994, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $ 6,205,689
Less initial gross underwriting commission (304,078)
5,901,611

Cost of securities sold or called (679,525)
Net unrealized appreciation 233,031
Undistributed net investment income 107,837

Total $ 5,562,954

The original cost to Certificateholders, less the initial gross
underwriting commission, represents the aggregate initial public
offering price net of the applicable sales charge on 6,000 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 $12,170.
<PAGE>
<TABLE>
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED SERIES 5

1 $ 800,000 N.J. Hlth. Care Facs. AAA 6.000% 7/01/05 @ 100 $ 772,040
Fincg. Auth. Rev. 7/01/2021 S.F.
Bonds Centrastate 7/01/01 @ 100
Med. Cntr. Issue Ref.
Series 1991 A (MBIA
Corp.)

2 40,000 N.J. Hsg. Mtg. Finc. AAA 7.650 4/01/09 @ 100 40,899
Agncy. Home Buyer 10/01/2016 S.F. 10/01/00
Rev. Bonds Series @ 102 Ref.
1990E (MBIA Corp.)

3 400,000 Hudson Cnty. N.J. AAA 7.250 12/01/02 @ 100 450,936
Correc. Facs. Certs. 12/01/2021 S.F.
of Part. Series 1990 12/01/00 @ 102
(MBIA Corp.) (5) Ref.

4 600,000 City of Newark, Essex AAA 7.375 No Sinking 656,070
Cnty. N.J. Gen. 10/01/2007 Fund
Imprvmnt. Bonds Gen. 10/01/99 @ 102
Oblig. Rev. Bonds Ref.
Unltd. Tax (MBIA
Corp.)

5 750,000 New Brunswick N.J. AAA 7.200 9/01/91 @ 100 784,755
Pkg. Auth. Rev. Bonds 9/01/2015 S.F.
Series 1985B (MBIA 9/01/99 @
Corp.) 101.5 Ref.

6 470,000 Passaic Cnty. N.J. AAA 6.700 No Sinking 512,789
Gen. Imprvmnt. Gen. 9/01/2016 Fund
Oblig. Rev. Bonds 9/01/99 @ 102
Unltd. Tax (MBIA Ref.
Corp.) (5)

7 575,000 Pennsauken Twnshp. AAA 7.700 7/15/04 @ 100 637,422
N.J. Bd. of Ed. 7/15/2009 S.F.
Camden Cnty. Certs. 7/15/99 @ 102
of Part. Rev. Bonds Ref.
(MBIA Corp.)

8 750,000 Port Auth. N.Y. & AAA 7.125 12/01/05 @ 100 798,285
N.J. Cnsldtd. Rev. 6/01/2025 S.F. 6/01/00
Bonds Sixty-ninth @ 101 Ref.
Series (MBIA Corp.)

9 670,000 P.R. Pub. Bldg. Auth. AAA 7.875 7/01/03 @ 100 740,183
Pub. Ed. & Hlth. 7/01/2016 S.F.
Facs. Rfndg. Rev. 7/01/97 @ 102
Bonds 1987 Series G Ref.
(MBIA Corp.) (5)

10 300,000 Camden Cnty. N.J. AAA 0.000 No Sinking 73,908
----------
-------------
Muni. Utils. Auth. 9/01/2016 Fund
Cnty. Agreement Swr. None
Rev. Cap. Apprec.
Bonds Series 1990A
(MBIA Corp.)

$ 5,355,000 $ 5,467,287
==========
=============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED SERIES 5

Footnotes to Portfolio

June 30, 1994

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

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

(3) At June 30, 1994, the net unrealized appreciation of all the bonds
was comprised of the following:

Gross unrealized appreciation $ 233,808
Gross unrealized depreciation (777)
Net unrealized appreciation $ 233,031

(4) The annual interest income, based upon bonds held at June 30, 1994,
(excluding accretion of original issue discount on zero-coupon bonds)
to the Trust is $360,275.

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

(6) Bonds sold or called after June 30, 1994 are noted in a footnote
"Changes in Trust Portfolio" under "Description of Portfolio" in Part A
of this Prospectus.

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

<PAGE>

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

INSURED MUNICIPAL SECURITIES TRUST

SERIES 27

The Trust is a unit investment trust designated Series 27 ("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" and
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 28, 1994

<PAGE>

THE TRUST. The Trust is a unit investment trust formed to preserve
capital and to provide interest income (including, where applicable,
earned original issue discount) which, in the opinions of bond counsel to
the respective issuers, is, with certain exceptions, currently exempt from
regular federal income tax under existing law through investment in a
fixed, diversified portfolio of long-term insured bonds (the "Bonds")
issued by or on behalf of states, municipalities and public authorities
which, because of irrevocable insurance, are rated "AAA" by Standard &
Poor's Corporation. Although the Supreme Court has determined that
Congress has the authority to subject interest on bonds such as the Bonds
in the Trust to regular federal income taxation, existing law excludes
such interest from regular federal income tax. Such interest income may,
however, be subject to the federal corporate alternative minimum tax and
to state and local taxes. (See "Tax Status" in Part B of this
Prospectus.) For a list of ratings on the Evaluation Date, see
"Portfolio." Some of the Bonds may be "Zero Coupon Bonds", which are
original issue discount bonds that provide for payment at maturity at par
value, but do not provide for the payment of any current interest. Some
of the Bonds in the Trust have been issued with optional refunding or
refinancing provisions ("Refunded Bonds") whereby the issuer of the Bond
has the right to call such Bond prior to its stated maturity date (and
other than pursuant to sinking fund provisions) and to issue new bonds
("Refunding Bonds") in order to finance the redemption. Issuers typically
utilize refunding calls in order to take advantage of lower interest rates
in the marketplace. Some of these Refunded Bonds may be called for
redemption pursuant to pre-refunding provisions ("Pre-Refunded Bonds")
whereby the proceeds from the issue of the Refunding Bonds are typically
invested in government securities in escrow for the benefit of the holders
of the Pre-Refunded Bonds until the refunding call date. Usually, Pre-
Refunded Bonds will bear a triple-A rating because of this escrow. The
issuers of Pre-Refunded Bonds must call such Bonds on their refunding call
date. Therefore, as of such date, the Trust will receive the call price
for such bonds but will cease receiving interest income with respect to
them. For a list of those Bonds which are Pre-Refunded Bonds, if any, as
of the Evaluation Date, see "Notes to Financial Statements" in this
Part A. Some of the Bonds in the portfolio may have been purchased at an
aggregate premium over par. All of the Bonds in the Trust were rated
"AAA" by Standard & Poor's Corporation at the time originally deposited in
the Trust. This rating results from insurance relating only to the Bonds
in the Trust and not to Units of the Trust. The insurance does not remove
market risk, as it does not guarantee the market value of the Units. For
a discussion of the significance of such ratings, see "Description of Bond
Ratings" in Part B of this Prospectus, and for a list of ratings on the
Evaluation Date see the "Portfolio." The payment of interest and
preservation of capital are, of course, dependent upon the continuing
ability of issuers of the Bonds or the insurers thereof to meet their
obligations. There can be no assurance that the Trust's investment
objectives will be achieved. Investment in the Trust should be made with
an understanding of the risks which an investment in long-term fixed rate
debt obligations may entail, including the risk that the value of the
underlying portfolio will decline with increases in interest rates, and
that the value of Zero Coupon Bonds is subject to greater fluctuation than
coupon bonds in response to changes in interest rates. Each Unit in the
Trust represents a 1/3000th 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 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"), 1.7%; Capital Guaranty
Insurance Company ("Capital Guaranty") 16.7%; Financial Guaranty Insurance
Company ("Financial Guaranty"), 13.3%; and MBIA Corp., 68.3%.

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
purchased on the Evaluation Date, the Public Offering Price per Unit would
have been $1,069.15 plus accrued interest of $11.94 under the monthly
distribution plan, $17.11 under the semi-annual distribution plan and
$49.32 under the annual distribution plan, for a total of $1,081.09,
$1,086.26 and $1,118.47, respectively. The Public Offering Price per Unit
can vary on a daily basis in accordance with fluctuations in the aggregate
bid price of the Bonds. (See "Public Offering--Offering Price" in Part B
of this Prospectus.)

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of
each Trust are offered to investors on a "dollar price" basis (using the
computation method previously described under the "Public Offering Price")
as distinguished from a "yield price" basis often used in offerings of tax
exempt bonds (involving the lesser of the yield as computed to maturity of
bonds or to an earlier redemption date). Since they are offered on a
dollar price basis, the rate of return on an investment in Units of each
Trust is measured in terms of "Estimated Current Return" and "Estimated
Long Term Return".

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 Sponsors, although not obligated to do so,
intend 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 27

SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1994

Date of Deposit: November 14, 1991 Minimum Principal Distribution:
Principal Amount of Bonds ...$3,000,000 $1.00 per Unit.
Number of Units .............3,000 Weighted Average Life to
Fractional Undivided Inter- Maturity:
est in Trust per Unit .....1/3000 21.2 Years.
Principal Amount of Minimum Value of Trust:
Bonds per Unit ............$1,000.00 Trust may be terminated if
Secondary Market Public value of Trust is less than
Offering Price** $1,200,000 in principal
Aggregate Bid Price amount of Bonds.
of Bonds in Trust .......$3,050,295+++ Mandatory Termination Date:
Divided by 3,000 Units ....$1,016.77 The earlier of December 31,
Plus Sales Charge of 4.9% 2040 or the disposition of
of Public Offering Price $52.39 the last Bond in the Trust.
Public Offering Price Trustee***: United States
per Unit ................$1,069.15+ Trust Company of New York.
Redemption and Sponsors' Trustee's Annual Fee: Monthly
Repurchase Price plan $1.05 per $1,000; semi-
per Unit ..................$1,016.77+ annual plan $.60 per $1,000;
+++ and annual plan is $.35 per
$1,000.
++++ Evaluator: Kenny S&P Evaluation
Excess of Secondary Market Services.
Public Offering Price Evaluator's Fee for Each
over Redemption and Evaluation: Minimum of $8
Sponsors' Repurchase plus $.25 per each issue of
Price per Unit ............$52.39++++ Bonds in excess of 50 issues
Difference between Public (treating separate maturities
Offering Price per Unit as separate issues).
and Principal Amount per Sponsors: Bear, Stearns & Co.
Unit Premium/(Discount) ...$69.15 Inc. and Gruntal & Co.,
Evaluation Time: 4:00 p.m. Incorporated
New York Time. 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# ......... $66.11 $66.11 $66.11
Less estimated annual fees and
expenses ............................ 2.33 1.81 1.69
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $63.78 $64.30 $64.42
Estimated interest distribution# ...... 5.31 32.15 64.42
Estimated daily interest accrual# ..... .1771 .1786 .1789
Estimated current return#++ ........... 5.97% 6.01% 6.03%
Estimated long term return++ .......... 5.54% 5.59% 5.60%
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,
$17.11 semi-annually and $49.32 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 JUNE 30, 1994

DESCRIPTION OF PORTFOLIO

The portfolio of the Trust consists of 9 issues representing
obligations of issuers located in 9 states. The Sponsors have not
participated as a sole underwriter or manager, co-manager or member of
underwriting syndicates 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 13.3% are hospital
revenue bonds; none were issued in connection with the financing of
nuclear generating facilities; and approximately 10.8% 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 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 of the issues representing $400,000 of
the principal amount of the Bonds are general obligation bonds. All 8 of
the remaining issues representing $2,600,000 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,
Courthouse 1, Electric 1, Electric and Gas 1, Hospital 1, Pollution
Control 1, Single Family Mortgage Revenue 1 and Water Development 1. For
an explanation of the significance of these factors see "The Trust--
Portfolio" in Part B of this Prospectus.

As of June 30, 1994, $575,000 (approximately 19.2% of the aggregate
principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, $175,000 (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
80.8% 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:

June 30, 1992 3,000 $1,011.61 $23.18 $23.33 $7.25 -0-
June 30, 1993 3,000 1,072.83 63.72 64.32 -0- -0-
June 30, 1994 3,000 1,032.49 63.72 64.31 -0- -0-

Independent Auditors' Report

The Sponsor, Trustee and Certificateholders
Insured Municipal Securities Trust, Series 27:

We have audited the accompanying statement of net assets, including the
portfolio, of Insured Municipal Securities Trust, Series 27 as of June
30, 1994, and the related statements of operations, and changes in net
assets for the two year period then ended and the period November 14,
1991 (date of deposit) to June 30, 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 June 30, 1994, by correspondence with the
Trustee. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Insured
Municipal Securities Trust, Series 27 as of June 30, 1994 and the results
of its operations and the changes in its net assets for the two year
period then ended and for the period November 14, 1991 to June 30, 1992
in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

New York, New York
September 15, 1994
<PAGE>
<TABLE>

Statement of Net Assets

June 30, 1994
<S> <C>
Investments in marketable securities,
at market value (cost $2,924,752) $ 3,050,295

Excess of other assets over total liabilities 47,169
-------------

Net assets 3,000 units of fractional undivided
interest outstanding, $1,032.49 per unit) $ 3,097,464
=============

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INSURED MUNICIPAL SECURITIES TRUST, SERIES 27

Statements of Operations

For the Period
Year ended November 14, 1991
June 30, 1994 June 30, 1993to June 30, 1992
---------- --------
<S> <C> <C> <C>
Investment income - interest $ 200,407 200,269 125,607
---------- -------- -------------

Expenses:
Trustee's fees 4,328 4,540 1,640
Evaluator's fees 2,385 2,258 792
Sponsor's advisory fee 750 750 98
---------- -------- -------------

Total expenses 7,463 7,548 2,530
---------- -------- -------------

Investment income, net 192,944 192,721 123,077

Unrealized appreciation (depreciati(122,433) 182,388 65,588
---------- -------- -------------

Net increase in net
assets resulting
from operations $ 70,511 375,109 188,665
---------- ======== -------------

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INSURED MUNICIPAL SECURITIES TRUST, SERIES 27

Statements of Changes in Net Assets
<CAPTION>
For the Period
Year ended Year ended November 14, 1991
June 30, 1994 June 30, 1993 to June 30, 1992
---------- ------------
<S> <C> <C> <C>
Operations:
Investment income, net $ 192,944 192,721 123,077
Unrealized appreciation
(depreciation) of
investments
for the period (122,433) 182,388 65,588
---------- ------------ -------------

Net increase in net
assets resulting
from operations 70,511 375,109 188,665
---------- ------------ -------------

Distributions:
To Certificateholders:
Investment income 191,522 191,471 69,628
To sponsor of accrued interest
to date of settlement - - 3,792
---------- ------------ -------------

Total distributions 191,522 191,471 73,420
---------- ------------ -------------

Total increase (decrease) (121,011) 183,638 115,245

Net assets at begining of period 3,218,475 3,034,837 2,919,592
---------- ------------ -------------

Net assets at end of period (including
undistributed net investment
income of$52,329, $50,907
and $49,657, respectively) $ 3,097,464 3,218,475 3,034,837
========== ============ =============

See accompanying notes to financial statements.
</TABLE>
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST, SERIES 27

Notes to Financial Statements

June 30, 1994, 1993 and 1992

(1) Organization and Financial and Statistical Information

Insured Municipal Securities Trust, Series 27 (Trust) was organized on
November 14, 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.

Investments are carried at market value which is determined by either
Standard & Poor's or Moody's Investors Service, Inc. (Evaluator) as
discussed in Footnotes to Portfolio. The market value of 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 years
ended June 30, 1994, and 1993 and for the period November 14, 1991
(date of deposit) to June 30, 1992.

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 June 30, 1994, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $3,070,023
Less initial gross underwriting commission (150,431)
2,919,592

Net unrealized appreciation 125,543
Undistributed net investment income 52,329

Total $ 3,097,464

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 $5,160.
<PAGE>
<TABLE>
MORTGAGE SECURITIES TRUST, SERIES 27

Portfolio
June 30, 1994
<CAPTION>
Port- Aggregate Coupon Redemption
Rate/ Feature
folio Principal Name of Issuer Ratings Date(s) S.F.--Sinking Market
of Fund
No. Amount and Title of Bonds (1) Maturity(2)Ref.--Refunding(2)Value(3)
- -- ------------ --------------------- ---- ------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 $ 400,000 Jasper Cnty. Ind. AAA 7.100% No Sinking $ 428,252
Colltzd. Pol. Cntrl. 7/01/2017 Fund
(No Ind. Pub. Serv. 7/01/01 @ 102
Co. Prjt.) Rfndg. Ref.
Rev. Bonds Series
1991 (MBIA Corp.)

2 400,000 Burlington Ks. Poll. AAA 7.000 No Sinking 430,260
Cntrl. Rfndg. Rev. 6/01/2031 Fund
Bonds (Kansas Gas & 6/01/01 @ 102
Elec. Co. Prjt.) Ref.
(MBIA Corp.)

3 325,000 Maine State Hsg. AAA 7.150 11/15/03 @ 100 330,194
Auth. Mtg. Purch. 11/15/2014 S.F.
Rev. Bonds Series 11/15/04 @ 100
1989A-2 (MBIA Corp.) Ref.

4 400,000 North Las Vegas Nev. AAA 7.125 4/01/06 @ 100 443,764
Gen. Oblig. (Ltd. 4/01/2011 S.F. 4/01/01
Tax) Pub. Safety @ 101 Ref.
Bldg. Bonds Series
1991 (Financial
Guaranty)(5)

5 400,000 R.I. Cnvntn. Cntr. AAA 6.700 5/15/13 @ 100 438,924
Auth. Rev. Bonds 5/15/2020 S.F. 5/15/01
Series 1991A (MBIA @ 102 Ref.
Corp.)(5)

6 500,000 W. Va. Wtr. Dev. AAA 7.000 11/01/12 @ 100 519,710
Auth. Wtr. Dev. Rev. 11/01/2025 S.F.
Rfndg. Bonds (Loan 11/01/01 @ 102
Prgm.) Series 1991A Ref.
(Capital Guaranty)

7 400,000 Wisc. Hlth. & Ed. AAA 7.100 8/15/12 @ 100 425,327
Facs. Auth. (St. 8/15/2019 S.F. 8/15/01
Luke's Med. Cntr. @ 102 Ref.
Prjt.) Rev. Bonds
(MBIA Corp.)

8 125,000 Redding Cal. Elec. AAA 0.000 7/01/15 @ 24,013
Sys. Rev. Certs. of 7/01/2019 75.356 S.F.
Part. Series 1989A 7/01/99 @
(MBIA Corp.)(5) 24.786 Ref.

9 50,000 Dade Cnty. Fla. Gtd. AAA 0.000 2/01/15 @ 9,851
Entitlement Rev. 8/01/2018 76.763 S.F.
Bonds Series 1990 2/01/06 @
(AMBAC) 40.444 Ref.
$ 3,000,000 $ 3,050,295
============ ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>

INSURED MUNICIPAL SECURITIES TRUST, SERIES 27

Footnotes to Portfolio

June 30, 1994

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

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

(3) At June 30, 1994, the net unrealized appreciation of all the bonds
was comprised of the following:

Gross unrealized appreciation $ 130,064
Gross unrealized depreciation (4,521)

Net unrealized appreciation $ 125,543

(4) The annual interest income (excluding accretion of original issue
discount on zero-coupon bonds), based upon bonds held at June 30, 1994,
to the Trust is $198,338.

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

(6) Bonds sold or called after June 30, 1994 are noted in a footnote
"Changes in Trust Portfolio" under "Description of Portfolio" in
Part A of this Prospectus.

<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 9

The Trust is a unit investment trust designated Series 9 ("New York
Navigator Trust") with an underlying portfolio of long-term insured tax-
exempt bonds and was formed to preserve capital and to provide interest
income (including, where applicable, earned original issue discount)
which, in the opinions of bond counsel to the respective issuers, is, with
certain exceptions, currently exempt from regular federal income tax under
existing law 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 28, 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 1/4489th 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 24.5% 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"), 8.4%; Municipal Bond Insurance
Association ("MBIA"), 6.1%; and MBIA Corp., 10%.

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
purchased on the Evaluation Date, the Public Offering Price per Unit would
have been $1,067.64 plus accrued interest of $11.80 under the monthly
distribution plan, $17.20 under the semi-annual distribution plan and
$49.98 under the annual distribution plan, for a total of $1,079.44,
$1,084.84 and $1,117.62, 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.)

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

MARKET FOR UNITS. The Sponsors, although not obligated to do so,
intend to maintain a secondary market for the Units at a price based on
the aggregate bid price of the Bonds in the trust portfolio 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" in Part B of this Prospectus.)

<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED

SERIES 9

SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1994

Date of Deposit: November 14, 1991 Weighted Average Life to
Principal Amount of Bonds ...$4,450,000 Maturity: 19.9 Years.
Number of Units .............4,489 Minimum Value of Trust:
Fractional Undivided Inter- Trust may be terminated if
est in Trust per Unit .....1/4489 value of Trust is less than
Principal Amount of $1,800,000 in principal
Bonds per Unit ............$991.31 amount of Bonds.
Secondary Market Public Mandatory Termination Date:
Offering Price** The earlier of December 31,
Aggregate Bid Price 2040 or the disposition of
of Bonds in Trust .......$4,557,812+++ the last Bond in the Trust.
Divided by 4,489 Units ....$1,015.33 Trustee***: United States
Plus Sales Charge of 4.9% Trust Company of New York.
of Public Offering Price $52.31 Trustee's Annual Fee: Monthly
Public Offering Price plan $1.09 per $1,000; semi-
per Unit ................$1,067.64+ annual plan $.64 per $1,000;
Redemption and Sponsors' and annual plan is $.39 per
Repurchase Price $1,000.
per Unit ..................$1,015.33+ Evaluator: Kenny S&P Evaluation
+++ Services.
Evaluator's Fee for Each
++++ Evaluation: Minimum of $8
Excess of Secondary Market plus $.25 per each issue of
Public Offering Price Bonds in excess of 50 issues
over Redemption and (treating separate maturities
Sponsors' Repurchase as separate issues).
Price per Unit ............$52.31++++ Sponsors: Bear, Stearns & Co.
Difference between Public Inc. and Gruntal & Co.,
Offering Price per Unit Incorporated.
and Principal Amount per Sponsors' Annual Fee: Maximum
Unit Premium/(Discount) ...$76.33 of $.25 per $1,000 principal
Evaluation Time: 4:00 p.m. amount of Bonds (see "Trust
New York Time. Expenses and Charges" in
Minimum Principal Distribution: Part B of this Prospectus).
$1.00 per Unit.

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# ......... $66.85 $66.85 $66.85
Less estimated annual fees and
expenses ............................ 2.11 1.55 1.38
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $64.74 $65.30 $65.47
Estimated interest distribution# ...... 5.39 32.65 65.47
Estimated daily interest accrual# ..... .1798 .1813 .1818
Estimated current return#++ ........... 6.06% 6.12% 6.13%
Estimated long term return++ .......... 5.52% 5.57% 5.59%
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 $11.80 monthly,
$17.20 semi-annually and $49.98 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 JUNE 30, 1994

DESCRIPTION OF PORTFOLIO

The portfolio of the Trust consists of 14 issues representing
obligations of 12 issuers located in the state of New York. The Sponsors
have not participated as a sole underwriter or manager, co-manager or
member of underwriting syndicates from which any of the initial aggregate
principal amount of the Bonds were acquired. Approximately 8.4% of the
Bonds are obligations of state and local housing authorities;
approximately 20.2% are hospital revenue bonds; none were issued in
connection with the financing of nuclear generating facilities; and
approximately 4% are "mortgage subsidy" bonds. All of the Bonds in the
Trust are subject to redemption prior to their stated maturity dates
pursuant to sinking fund or call provisions. The Bonds may also be
subject to other calls, which may be permitted or required by events which
cannot be predicted (such as destruction, condemnation, termination of a
contract, or receipt of excess or unanticipated revenues). Three of the
issues representing $675,000 of the principal amount of the Bonds are
general obligation bonds. All 11 of the remaining issues representing
$3,775,000 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: Assistance Corporation 1, Bridge and Tunnel 1,
Development Corporation 1, Hospital 3, Multi-Family Housing 1, Single
Family Mortgage Revenue 1, Solid Waste 1, Transit Facility 1 and Water 1.
For an explanation of the significance of these factors see "The Trust--
Portfolio" in Part B of this Prospectus.

As of June 30, 1994, $1,250,000 (approximately 28.1% of the
aggregate principal amount of the Bonds) were original issue discount
bonds. Of these original issue discount bonds, $180,000 (approximately 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 aggregate principal amount of the Bonds in the Trust were
purchased at a "market" discount from par value at maturity, approximately
71.9% 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:

June 30, 1992 4,500 $1,019.61 $23.67 $23.80 $ 7.50 -0-
June 30, 1993 4,489 1,083.73 64.69 65.24 49.03 -0-
June 30, 1994 4,489 1,031.28 64.79 65.37 65.48 -0-

Independent Auditors' Report

The Sponsor, Trustee and Certificateholders
Insured Municipal Securities Trust, New York Navigator Insured Series 9:

We have audited the accompanying statement of net assets, including the
portfolio, of Insured Municipal Securities Trust, New York Navigator
Insured Series 9 as of June 30, 1994, 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 November 14, 1991 (date of
deposit) to June 30, 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 June 30, 1994, by correspondence with the Trustee.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Municipal
Securities Trust, New York Navigator Insured Series 9 as of June 30,
1994, and the results of its operations and the changes in its net
assets for each of the years in the two year period then ended, and for
the period November 14, 1991 to June 30, 1992, in conformity with
generally accepted accounting principles.

KPMG Peat Marwick LLP

New York, New York
September 15, 1994
<PAGE>
<TABLE>
NEW YORK NAVIGATOR INSURED SERIES 9

Statement of Net Assets

June 30, 1994
<S> <C>
Investments in marketable securities,
at market value (cost $4,392,149) $ 4,559,020

Excess of other assets over total liabilities 70,395
-----------

Net assets (4,489 units of fractional undivided
interest outstanding, $1,031.28 per unit) $ 4,629,415
===========

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INSURED MUNICIPAL SECURITIES TRUST

Statements of Operations

For the Period
YEARS ENDED JUNE 30, November 14, 1991
1994 1993 to June 30, 1992
----------- --------- ----------------
<S> <C> <C> <C>
Investment income - interest $ 302,344 302,483 189,886
----------- --------- --------------

Expenses:
Trustee's fees 5,763 5,497 2,461
Evaluator's fees 2,387 2,264 856
Sponsor's advisory fee 1,123 1,125 84
----------- --------- --------------

Total expenses 9,273 8,886 3,401
----------- --------- --------------

Investment income, net 293,071 293,597 186,485
----------- --------- --------------

Realized and unrealized gain (loss)
on investments:
Net realized loss on bonds
sold or called (257) (121) -
Unrealized appreciation
(depreciation) for the period (236,530) 291,005 112,396
----------- --------- --------------

Net gain (loss)
on investments (236,787) 290,884 112,396
----------- --------- --------------
Net increase in net
assets resulting
from operations $ 56,284 584,481 298,881
=========== ========= ==============

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INSURED MUNICIPAL SECURITIES TRUST

STATEMENTS OF CHANGES IN NET ASSETS

<CAPTION>
For the Period
YEARS ENDED JUNE 30, November 14, 1991
1994 1993 to June 30, 1992
-------------------------- -----------------
<S> <C> <C> <C>
Operations:
Investment income, net $ 293,071 293,597 186,485
Net realized loss on bonds
sold or called (257) (121) -
Unrealized appreciation
(depreciation) for the period (236,530) 291,005 112,396
----------- ------------ ---------------

Net increase in net
assets resulting
from operations 56,284 584,481 298,881
----------- ------------ ---------------

Distributions:
To Certificateholders:
Investment income 291,743 295,876 102,495
To sponsor of accrued interest
to date of settlement - - 5,843
Redemptions:
Interest - 394 -
Principal - 11,570 -
----------- ------------ ---------------

Total distributions
and redemptions 291,743 307,840 108,338
----------- ------------ ---------------

Total increase (decrease) (235,459) 276,641 190,543

Net assets at begining of period 4,864,874 4,588,233 4,397,690
----------- ------------ ---------------

Net assets at end of period (including
undistributed net investment
income of $76,258 , $75,268 ,
$78,147, respectively) $ 4,629,415 4,864,874 4,588,233
=========== ============ ===============

See accompanying notes to financial statements.
</TABLE>
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED SERIES 9

Notes to Financial Statements

June 30, 1994, 1993 and 1992

(1) Organization and Financial and Statistical Information

Insured Municipal Securities Trust, New York Navigator Insured Series 9
(Trust) was organized on November 14, 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).

See "Financial and Statistical Information" in Part A of this
Prospectus for the amounts of per unit distributions during the two
years ended June 30, 1994 and the period November 14, 1991 (date
of deposit) to June 30, 1992.

The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. 11 units were redeemed during the year ended June 30, 1993.
No units were redeemed during the year ended June 30, 1994 or during the
period November 14, 1991 to June 30, 1992.

(5) Net Assets

At June 30, 1994, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $ 4,624,265
Less initial gross underwriting commission (226,575)

4,397,690

Cost of bonds sold or called (10,196)
Net unrealized appreciation 166,871
Undistributed net investment income 76,258
Distributions in excess of bonds sold or called (1,208)

Total $ 4,629,415

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 $4,655.
<PAGE>
<TABLE>
INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED SERIES 9

Portfolio
June 30, 1994
<CAPTION>
PorAggregate Coupon Rate/ Redemption Feature
folPrincipal 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 Dorm. Auth. of the AAA 6.750% 7/01/10 @ 100 S.F. $ 208,200
State of N.Y. Mt. 7/01/2015 7/01/01 @ 102 Ref.
Sinai Schl. of
Medicine Insrd. Rev.
Bonds Series 1991
(MBIA Corp.)

2 375,000 N.Y. State Hsg. Finc. AAA 7.450 11/01/92 @ 100 S.F. 397,058
Agncy. Multi. Fam. 11/01/2028 11/01/99 @ 102 Ref.
Hsg. Rev. Bonds
Series A (MBIA Corp.)

3 500,000 N.Y. Local Gov. AAA 6.500 4/01/11 @ 100 S.F. 506,460
Assis. Corp. (A Pub. 4/01/2015 4/01/01 @ 100 Ref.
Benefit Corp. of the
State of N.Y.) Rev.
Bonds Series 1991C
(MBIA Corp.)

4 500,000 N.Y. State Med. Care AAA 7.500 2/15/12 @ 100 S.F. 569,015
Facs. Finc. Agncy. 2/15/2021 2/15/01 @ 102 Ref.
Mental Hlth. Servs.
Facs. Imprvmnt. Rev.
Bonds Series 1991A
(MBIA Corp.) (5)

5 200,000 N.Y. State Med. Care AAA 7.125 11/01/06 @ 100 S.F. 213,352
Facs. Finc. Agncy. 11/01/2008 11/01/00 @ 102 Ref.
No. Shore Univ. Hosp.
Mtg. Prjt. Rev.
Bonds Series 1990A
(MBIA Corp.)

6 500,000 N.Y. State Urb. Dev. AAA 7.500 4/01/12 @ 100 S.F. 539,380
Corp. State Facs. 4/01/2020 4/01/01 @ 102 Ref.
Rev. Bonds Series
1991 (MBIA Corp.)

7 270,000 Metro. Trans. Auth. AAA 5.500 No Sinking Fund 243,868
of N.Y. Trans. Facs. 7/01/2015 7/01/96 @ 100 Ref.
Rev. Bonds Series G
(MBIA Corp.)

8 250,000 Montgomery, Otsego, AAA 7.250 1/01/04 @ 100 S.F. 280,678
Schoharie Cntys. N.Y. 1/01/2014 1/01/00 @ 103 Ref.
Solid Waste Mgmt.
Auth. Solid Waste
Sys. Rev. Bonds
Series 1990 (MBIA
Corp.) (5)

9 330,000 City of N.Y. Gen. AAA 7.750 No Sinking Fund 8/15/99 367,264
Oblig. Serial Rev. 8/15/2022 @ 101.5 Ref.
Bonds Fiscal 1990
Series I (MBIA Corp.)

10 215,000 City of N.Y. Gen. AAA 7.250 No Sinking Fund 229,346
Oblig. Rev. Bonds 3/15/2020 3/15/00 @ 101.5 Ref.
Fiscal 1991 Series A
(MBIA Corp.)

11 130,000 N.Y. City Gen. Oblig. AAA 8.000 No Sinking Fund 152,354
Rev. Bonds Fiscal 8/01/2019 8/01/01 @ 101.5 Ref.
1991 Series D (MBIA
Corp.) (5)

12 170,000 N.Y. City Muni. Wtr. AAA 6.000 No Sinking Fund 178,126
Finc. Auth. Wtr. & 6/15/2020 6/15/00 @ 100 Ref.
Swr. Sys. Rev. Bonds
Series A (MBIA Corp.)
(5)

12a 130,000 N.Y. City Muni. Wtr. AAA 6.000 No Sinking Fund 124,882
Finc. Auth. Wtr. & 6/15/2020 6/15/00 @ 100 Ref.
Swr. Sys. Rev. Bonds
Series A (MBIA Corp.)

13 $ 500,000 Triborough Bridge & AAA 6.875% 1/10/11 @ 100 S.F. $ 525,070
Tunnel Auth. Spec. 1/1/2015 1/01/01 @ 102 Ref.
Oblig. Rfndg. Rev.
Bonds Series 1991B
(MBIA Corp.)

14 180,000 N.Y. State Mtg. AAA 0.000 4/01/12 @ 52.88 S.F. 23,967
Agncy. Hmownr. Mtg. 4/01/2020 4/01/02 @ 23.845 Ref.
Rev. Bonds Series II
(MBIA Corp.)
$ 4,450,000 $ 4,559,020

See accompanying footnotes to portfolio and notes to financial statements
</TABLE>
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED SERIES 9

Footnotes to Portfolio

June 30, 1994

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

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

(3) At June 30, 1994, the net unrealized appreciation of all the bonds
was comprised of:

Gross unrealized appreciation $ 167,341
Gross unrealized depreciation (470)

Net unrealized appreciation $ 166,871

(4) The annual interest income based upon bonds held at June 30, 1994,
(excluding accretion of original issue discount on zero-coupon bonds)
to the Trust is $300,100.

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

(6) Bonds sold or called after June 30, 1994 are noted in a footnote
"Changes in Trust Portfolio" under "Description of Portfolio" in Part A
of this Prospectus.

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

INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED

SERIES 6

The Trust is a unit investment trust designated Series 6 ("New
Jersey Navigator Trust") with an underlying portfolio of long-term insured
tax-exempt bonds and was formed to preserve capital and to provide
interest income (including, where applicable, earned original issue
discount) which, in the opinions of bond counsel to the respective
issuers, is, with certain exceptions, currently exempt from regular
federal income tax under existing law 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 October 28, 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.

All of the Bonds in the New Jersey Navigator Trust are covered by
insurance obtained by the Sponsors from MBIA Corp. and 84.2% 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"), 9.1%; Financial Guaranty Insurance
Company ("Financial Guaranty"), 13.7%; and MBIA Corp., 61.4%.

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
purchased on the Evaluation Date, the Public Offering Price per Unit would
have been $913.87 plus accrued interest of $11.30 under the monthly
distribution plan, $15.67 under the semi-annual distribution plan and
$42.48 under the annual distribution plan, for a total of $925.17, $929.54
and $956.35, 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.)

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

MARKET FOR UNITS. The Sponsors, although not obligated to do so,
intend to maintain a secondary market for the Units will be based on the
aggregate bid price of the Bonds in the Trust portfolio 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" in Part B of this Prospectus.)

<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED
SERIES 6

SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1994

Date of Deposit: November 14, 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 19.1 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** $1,600,000 in principal
Aggregate Bid Price amount of Bonds.
of Bonds in Trust .......$3,476,369+++ Mandatory Termination Date:
Divided by 4,000 Units ....$869.09 The earlier of December 31,
Plus Sales Charge of 4.9% 2040 or the disposition of
of Public Offering Price $44.78 the last Bond in the Trust.
Public Offering Price Trustee***: United States
per Unit ................$913.87+ Trust Company of New York.
Redemption and Sponsors' Trustee's Annual Fee: Monthly
Repurchase Price plan $1.07 per $1,000; semi-
per Unit ..................$869.09+ annual plan $.62 per $1,000;
+++ and annual plan is $.37 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
Price per Unit ............$44.78++++ plus $.25 per each issue of
Difference between Public Bonds in excess of 50 issues
Offering Price per Unit (treating separate maturities
and Principal Amount per as separate issues).
Unit Premium/(Discount) ...$38.87 Sponsors: Bear, Stearns & Co.
Evaluation Time: 4:00 p.m. Inc. and Gruntal & Co.,
New York Time. 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# ......... $55.01 $55.01 $55.01
Less estimated annual fees and
expenses ............................ 2.17 1.65 1.40
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $52.84 $53.36 $53.61
Estimated interest distribution# ...... 4.40 26.68 53.61
Estimated daily interest accrual# ..... .1467 .1482 .1489
Estimated current return#++ ........... 5.78% 5.84% 5.87%
Estimated long term return++ .......... 5.46% 5.51% 5.54%
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 $11.30 monthly,
$15.67 semi-annually and $42.48 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 JUNE 30, 1994

DESCRIPTION OF PORTFOLIO

The portfolio of the Trust consists of 10 issues representing
obligations of 10 issuers located in the state of New Jersey. The
Sponsors have not participated as a sole underwriter or manager, co-
manager or member of underwriting syndicates 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
41.4% are hospital revenue bonds; none were issued in connection with the
financing of nuclear generating facilities; and none are "mortgage
subsidy" bonds. All of the Bonds in the Trust are subject to redemption
prior to their stated maturity dates pursuant to sinking fund or call
provisions. The Bonds may also be subject to other calls, which may be
permitted or required by events which cannot be predicted (such as
destruction, condemnation, termination of a contract, or receipt of excess
or unanticipated revenues). None of the Bonds are general obligation
bonds. Ten issues representing $3,500,000 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: Educational Facilities 3,
Hospital 4, Port Authority 1 and Utility Revenue 2. For an explanation of
the significance of these factors see "The Trust--Portfolio" in Part B of
this Prospectus.

As of June 30, 1994, $380,000 (approximately 10.9% of the aggregate
principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, $230,000 (approximately 6.6% 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.
Approximately 37.7% of the aggregate principal amount of the Bonds in the
Trust were purchased at a "market" discount from par value at maturity,
approximately 51.4% 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:

June 30, 1992 4,000 $981.20 $22.74 $22.88 $ 7.25 $20.00
June 30, 1993 4,000 942.82 57.67 58.22 45.68 86.25
June 30, 1994 4,000 884.50 53.24 53.82 55.76 18.75

Independent Auditors' Report

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

We have audited the accompanying statement of net assets, including the
portfolio, of Insured Municipal Securities Trust, New Jersey Navigator
Insured Series 6 as of June 30, 1994, and the related statements of
operations, and changes in net assets for the two year period then ended
and for the period November 14, 1991 to June 30, 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 June 30, 1994, by correspondence with the
Trustee. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Insured
Municipal Securities Trust, New Jersey Navigator Insured Series 6 as of
June 30, 1994, and the results of its operations and the changes in its
net assets for the two years then ended and for the period November 14,
1991 to June 30, 1992 in conformity with generally accepted accounting
principles.

KPMG Peat Marwick LLP

New York, New York
September 15, 1994
<PAGE>
<TABLE>
NEW JERSEY NAVIGATOR INSURED SERIES 6

Statement of Net Assets

June 30, 1994
<S> <C>
Investments in marketable securities,
at market value (cost $3,378,330) $ 3,476,369

Excess of other assets over total liabilities 61,640
----------

Net assets 4,000 units of fractional undivided
interest outstanding, $884.50 per unit) $ 3,538,009
----------

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INSURED MUNICIPAL SECURITIES TRUST
STATEMENTS OF OPERATIONS

For the Period
Years ended June 30, November 14, 1991
1994 1993 to June 30, 1992
---------- ---------- -----------------
<S> <C> <C> <C>
Investment income - interest $ 224,529 251,572 152,508
---------- ---------- ---------------

Expenses:
Trustee's fees 4,596 5,198 1,296
Evaluator's fees 2,386 2,251 704
Sponsor's advisory fee 933 1,000 131
---------- ---------- ---------------

Total expenses 7,915 8,449 2,131
---------- ---------- ---------------

Investment income, net 216,614 243,123 150,377
---------- ---------- ---------------

Realized and unrealized gain (loss)
on investments:
Net Realized loss on bonds
sold or called (5,355) (24,633) (5,712)
Unrealized appreciation
(depreciation) (155,577) 203,265 50,351
---------- ---------- ---------------

Net gain (loss) on
investments (160,932) 178,632 44,639
---------- ---------- ---------------

Net increase in net
assets resulting
from operations $ 55,682 421,755 195,016
========== ========== ===============

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS

<CAPTION>
For the Period
YEARS ENDED JUNE 30, November 14,1991
------------- ----------- -----------------
1994 1993 to June 30, 1992
------------- ----------- -----------------
<S> <C> <C> <C>
Operations:
Investment income, net $ 216,614 243,123 150,377
Net realized loss on bonds
sold or called (5,355) (24,633) (5,712)
Unrealized appreciation
(depreciation) for the period (155,577) 203,265 50,351
------------- ----------- --------------

Net increase in net
assets resulting
from operations 55,682 421,755 195,016
------------- ----------- --------------

Distributions:
To Certificateholders:
Investment income 213,970 230,261 90,609
Principal 75,000 345,000 80,000
To sponsor of accrued interest
to date of settlement - - 5,787
------------- ----------- --------------

Total distributions 288,970 575,261 176,396
------------- ----------- --------------

Total increase (decrease) (233,288) (153,506) 18,620

Net assets at beginning of period 3,771,297 3,924,803 3,906,183
------------- ----------- --------------

Net assets at end of period (including
undistributed net investment
income o$69,487, $66,843 $ 3,538,009 3,771,297 3,924,803
============= =========== ==============
and $53,981, respectively)

See accompanying notes to financial statements.
</TABLE>
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED SERIES 6

Notes to Financial Statements

June 30, 1994, 1993 and 1992

(1)
Organization and Financial and Statistical Information

Insured Municipal Securities Trust, New Jersey Navigator Insured Series
6 (Trust) was organized on November 14, 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.

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 two
years ended June 30, 1994 and 1993 and for the period November 14,
1991 to (date of deposit) to June 30, 1992.

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 June 30, 1994, the net assets of the Trust represented the interest
of Certificateholders as follows:

Original cost to Certificateholders $ 4,107,448
Less initial gross underwriting commission (201,265)

3,906,183

Cost of securities sold or called (535,700)
Net unrealized appreciation 98,039

Undistributed net investment income 69,487

Total $ 3,538,009

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 $7,847.
<PAGE>
<TABLE>
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED SERIES 6

Portfolio
June 30, 1994
<CAPTION>
PortAggregate Coupon Rate/ Redemption Feature
foliPrincipal Name of Issuer Ratings Date(s) of S.F.--Sinking Fund Market
No. Amount and Title of Bonds (1) Maturity(2) Ref.--Refunding(2)(7) Value(3)
- -- ---------- --------------------- ---- ------------- --------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 $ 320,000 N.J. Ed. Facs. Auth. AAA 6.400% 7/01/07 @ 100 S.F. $ 325,462
Rev. Bonds Montclair 7/01/2011 7/01/01 @ 101 Ref.
State Cllg. Issue
Series 1991E (AMBAC
Corp.)

2 500,000 N.J. Ed. Facs. Auth. AAA 6.375 7/01/07 @ 100 S.F. 505,275
The William Patterson 7/01/2021 7/01/01 @ 101 Ref.
Cllg. of N. Issue
Rev. Bonds Series
1991F (MBIA Corp.)

3 300,000 N.J. Hlth. Care Facs. AAA 7.250 2/15/08 @ 100 S.F. 313,236
Fincg. Auth. Rev. 2/15/2021 2/15/01 @ 102 Ref.
Bonds Cathedral Hlth.
Servs. Inc. Issue
(FHA Insrd. Mtg.)
1990 Series A (MBIA
Corp.)

4 500,000 N.J. Hlth. Care Facs. AAA 7.000 7/01/01 @ 100 S.F. 531,080
Fincg. Auth. Rev. 7/01/2020 7/01/00 @ 102 Ref.
Bonds Comm. Med.
Cntr./Kensington
Manor Care Center
Issue Series E (MBIA
Corp.)

5 150,000 N.J. Hlth. Care Facs. AAA 6.500 7/01/11 @ 100 S.F. 152,037
Fincg. Auth. Rev. 7/01/2021 7/01/01 @ 102 Ref.
Bonds Mercer Med.
Cntr. Issue Series
1991 (MBIA Corp.)

6 500,000 N.J. Hlth. Care Facs. AAA 6.300 7/01/14 @ 100 S.F. 522,445
Fincg. Auth. Rev. 7/01/2018 7/01/97 @ 100 Ref.
Bonds St. Peter's
Med. Cntr. Issue 1988
Series D (MBIA Corp.)
(5)

7 250,000 Ocean Cnty. N.J. AAA 6.600 1/01/12 @ 100 S.F. 256,365
Utils. Auth. Waste 1/01/2018 1/01/01 @ 101 Ref.
Wtr. Rfndg. Rev.
Bonds Series 1991A
(MBIA Corp.)

8 500,000 Oradell N.J. Bd. of AAA 7.200 4/01/03 @ 100 S.F. 556,940
Ed. in the Cnty. of 10/01/2009 10/01/99 @ 102 Ref.
Bergen N.J. Certs. of
Part. Rev. Bonds
(MBIA Corp.) (5)

9 250,000 N.Y. & N.J. Port. AAA 6.875 7/01/12 @ 100 S.F. 260,735
Auth. Consldtd. Rev. 1/01/2025 1/01/00 @ 101 Ref.
Bonds Sixty-Seventh
Series (MBIA Corp.)

10 100,000 Camden Cnty. N.J. AAA 0.000 No Sinking Fund 24,636
Muni. Utils. Auth. 9/01/2016 None
Cnty. Agreement Swr.
Rev. Cap. Apprec.
Bonds Series 1990A
(MBIA Corp.)

11 $ 130,000 Camden Cnty. N.J. AAA 0.000% No Sinking Fund $ 28,158
----------
----------
Muni. Utils. Auth. 9/01/2018 None
Cnty. Agreement Swr.
Rev. Cap. Apprec.
Bonds Series 1990A
(MBIA Corp.)

$ 3,500,000 $ 3,476,369
==========
==========

See accompanying footnotes to portfolio and notes to financial
statements.
</TABLE>
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED SERIES 6

Footnotes to Portfolio

June 30, 1994

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

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

(3) At June 30, 1994, the net unrealized appreciation of all the bonds
was comprised of the following:

Gross unrealized appreciation $ 103,757
Gross unrealized depreciation (5,718)

Net unrealized appreciation $ 98,039

(4) The annual interest income (excluding accretion of original issue
discount on zero-coupon bonds), based on bonds held at June 30, 1994,
to the Trust is $220,043.

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

(6) Bonds sold or called after June 30, 1994 are noted in a footnote
"Changes in Trust Portfolio" under "Description of Portfolio" in Part A
of this Prospectus.

<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: October 28, 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 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,
Insured Municipal Securities New Jersey Navigator Insured Trust
and/or Insured Pennsylvania Navigator 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.

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. In the event of 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
would no longer be rated "AAA" by Standard & Poor's. The Units of Trusts
containing the downgraded bonds are no longer rated "AAA."

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 1993, approximately 86% of Puerto
Rico's exports were to the United States mainland, which was also the
source of 69% of Puerto Rico's imports. In fiscal 1993, Puerto Rico
experienced a $2.5 billion 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 1993,
aggregate personal income was $24.1 billion ($20.6 billion in 1987 prices)
and personal income per capita was $6,760 ($5,767 in 1987 prices).
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 1993 were $5.3 billion, of which $3.6
billion, or 67.6%, 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 during fiscal 1994 averaged 1,011,000. Unemployment,
although at a low level compared to the late 1970s, remains above the
average for the United States. In fiscal 1994, the unemployment rate in
Puerto Rico was 15.9%. Puerto Rico's decade-long economic expansion
continued throughout the five-year period from fiscal 1989 through fiscal
1993. Almost every sector of its economy was affected and record levels
of employment were achieved. 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 (adjusted to reflect 1987 prices) amounted to approximately
$20.07 billion in fiscal 1993, or 3.1% above the fiscal 1992 level. The
Puerto Rico Planning Board's economic activity index, a composite index
for thirteen economic indicators, increased 1.6% in fiscal 1994 compared
to fiscal 1993, which period showed an increase of 1.4% over fiscal 1992.
Growth in the Puerto Rico economy in fiscal 1994 and 1995 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 either by AMBAC
Indemnity Corporation ("AMBAC"), Bond Investors Guaranty ("BIG"), Capital
Guaranty Insurance Company ("Capital Guaranty"), Connie Lee Insurance
Company ("Connie Lee"), Financial Guaranty Insurance Company ("Financial
Guaranty"), Financial Security Assurance, Inc. ("Financial Security"),
Firemen's Insurance Co. ("Firemen's"), Municipal Bond Insurance
Association ("MBIA"), or 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 $2,060,000,000, and statutory capital (unaudited) of
approximately $1,178,000,000 as of June 30, 1994. 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.

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
June 30, 1994, Capital Guaranty had more than $13.7 billion in net
exposure outstanding (excluding defeased issues). The total statutory
policyholders' surplus and contingency reserves of Capital Guaranty
Insurance Company was approximately $89,917,075 (unaudited) and total
admitted assets were approximately $286,825,253 (unaudited) as reported to
the Insurance Department of the State of Maryland as of June 30, 1994.

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 June 30, 1994, the total policyholders' surplus of Connie
Lee was $105,009,992 (unaudited) and total admitted assets were
$93,006,058 (unaudited), as reported to the Commissioner of Insurance of
the State of Wisconsin.

As of the Evaluation Date, the claims-paying ability of Connie
Lee 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 June 30, 1994, the total capital and surplus of Financial Guaranty was
approximately $850,000,000. In addition, Financial Guaranty is currently
authorized to write insurance in 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, a group of property and casualty
insurance companies. It provides unconditional and non-cancelable
insurance on industrial development revenue bonds. As of December 31,
1993, Firemen's statutory surplus (audited) was $502,800,000.

As of the Evaluation Date, the claims-paying ability of
Firemen's has been rated "AA-" by Standard & Poor's (see "Ratings" under
"Insurance on the Bonds" in this Part B).

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 a wholly owned subsidiary of Financial
Security Assurance Holdings Ltd. ("Holdings"), a New York Stock Exchange
listed company. Holdings is owned approximately 60.5% by US WEST Capital
Corporation ("US WEST"), 7.6% by Fund American Enterprises Holdings, Inc.
("Fund American"), and 7.4% by The Tokio Marine and Fire Insurance Co.,
Ltd. ("Tokio Marine"). US WEST is a subsidiary of US WEST, Inc., which
operates businesses involved in communications, data solutions, marketing
services and capital assets, including the provision of telephone services
in 14 states in the western and midwestern United States. Fund American
is a financial services holding company whose principal operating
subsidiary is one of the nation's largest mortgage servicers. Tokio
Marine is a major Japanese property and casualty insurance company. US
WEST has announced its intention to dispose of its remaining interest in
Holdings as part of its strategic plan to withdraw from businesses not
directly involved in telecommunications. Fund American has certain rights
to acquire additional shares of Holdings from US WEST and Holdings. No
shareholder of Holdings is obligated to pay any debt of Financial Security
or any claim under any insurance policy issued by Financial Security or to
make any additional contribution to the capital of Financial Security.

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 June 30,
1994, total shareholder equity of Financial Security and its wholly-owned
subsidiaries was (unaudited) $736,050,000 and total unearned premium
reserves was (unaudited) $206,026,000.

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

MBIA is an association of five insurance companies which joined
together to insure severally (and not jointly) new issues of municipal
bonds. 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.

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 ("MBIA")
FIVE MEMBER COMPANIES ASSETS, LIABILITIES
AND POLICYHOLDERS' SURPLUS
AS OF JUNE 30, 1994
(000's omitted)

New York New York New York
Statutory Statutory Policyholder's
Assets Liabilities Surplus

The Aetna Casualty & Surety Company $10,169,558 $ 8,299,548 $1,870,010
Fireman's Fund Insurance Company 6,751,350 4,893,824 1,857,526
The Travelers Indemnity Company 10,246,669 8,486,034 1,760,635
Cigna Property and Casualty Company 4,992,242 4,924,356 67,886
(Formerly Aetna Insurance Company)
The Continental Insurance Company 2,712,535 2,351,467 361,068

TOTAL $34,872,354 $28,955,229 $5,917,125

Municipal Bond Investors Assurance Corporation ("MBIA Corp.")
is the principal operating subsidiary of MBIA Inc., a New York Stock
Exchange listed company. MBIA Corp. commenced municipal bond insurance
operations on January 5, 1987. 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.
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.

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. As of March 31, 1994, MBIA Corp. had
admitted assets of $3.2 billion (unaudited), total liabilities of $2.2
billion (unaudited), and total capital and surplus of $998 million
(unaudited) prepared in accordance with statutory accounting practices
prescribed or permitted by insurance regulatory authorities.

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

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, MBIA, or MBIA Corp. (collectively, the "Insurance
Companies") on the date the Bonds were originally deposited in the Trust.
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.

Ratings. As of the Date of Deposit for each of the respective
Trusts, 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 Sponsor is not aware that the information
herein is inaccurate or incomplete.

<PAGE>
Special Factors Affecting the Navigator Trusts

The Sponsors believe the information summarized below describes
some of the more significant events relating to the Navigator Trusts.
Sources of such information are the official statements of issuers located
in the states of the Navigator Trusts which have been issued in connection
with the debt offerings of such states, as well as other publicly
available documents and information. While the Sponsors have not
independently verified such information, they have no reason to believe it
is not correct in all material respects.

New York Navigator Trust

State Economic Trends.

Over the long term, the State of New York (the "State") and the
City of New York (the "City") 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 York City.

General. 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 downturn which began in July 1990
adversely affected the local economy, which had been declining since late
1989. As a result, the City experienced job losses in 1990 and 1991 and
real Gross City Product (GCP) fell in those two years. In order to
achieve a balanced budget as required by the laws of the State 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 projected
tax revenue of approximately $1.4 billion, reduced State aid for the City
and greater than projected increases in legally mandated expenditures,
including public assistance and Medicaid expenditures. Beginning in
calendar year 1992, the improvement in the national economy helped
stabilize conditions in the City. Employment losses moderated toward
year-end and real GCP increased, boosted by strong wage gains. The City
now projects, and its current four-year financial plan assumes, that the
City's economy will continue to improve and that a modest employment
recovery will occur during calendar year 1994.

For each of the 1981 through 1993 fiscal years, the City
achieved balanced operating results 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 was required to close substantial budget gaps in recent years in
order to maintain balanced operating results. For fiscal year 1995, the
City has adopted a budget which has halted the trend in recent years of
substantial increases in City spending from one year to the next. 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 reductions 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.

Fiscal Years 1993 and 1994. The City achieved balanced
operating results for the 1993 fiscal year as reported in accordance with
GAAP.

On July 8, 1994, the City submitted to the Control Board a
fourth quarter modification to the City's Financial Plan for the 1994
fiscal year (the "1994 Modification") which projects a balanced budget in
accordance with GAAP for the 1994 fiscal year, after taking into account a
discretionary transfer of $171 million in resources to the 1995 fiscal
year.

1995-1998 Financial Plan. On July 8, 1994, the City submitted
to the Control Board the Financial Plan for the 1995-1998 fiscal years
(the "1995-1998 Financial Plan" or "Financial Plan"), which relates to the
City, the Board of Education ("BOE") and the City University of New York
("CUNY"). The Financial Plan is based on the City's expense and capital
budgets for the City's 1995 fiscal year, which were adopted on June 23,
1994.

The 1995-1998 Financial Plan projects revenues and expenditures
for the 1995 fiscal year balanced in accordance with GAAP. The
projections for the 1995 fiscal year reflect proposed actions to close a
previously projected gap of approximately $2.3 billion for the 1995 fiscal
year, which include City actions aggregating $1.9 billion, a $288 million
increase in State actions over the 1994 and 1995 fiscal years, and a $200
million increased in Federal assistance. The City actions include
proposed agency actions aggregating $1.1 billion, including productivity
savings; tax and fee enforcement initiatives; service reductions; and
savings from the restructuring of City services. City actions also
include savings of $45 million resulting from proposed tort reform, the
projected transfer to the 1995 fiscal year of $171 million of the
projected 1994 fiscal year surplus, savings of $200 million for employee
health care costs, $51 million in reduced pension costs, savings of $225
million from refinancing City bonds and $65 million from the proposed sale
of certain City assets. The proposed savings for employee health care
costs are subject to collective bargaining negotiation with the City's
unions; the proposed savings from tort reform will require the approval of
the State Legislature; and the $200 million increase in Federal assistance
is subject to approval by Congress and the President.

The Financial Plan also set forth projections for the 1996
through 1998 fiscal years and outlines a proposed gap-closing program to
close projected gaps of $1.5 billion, $2.0 billion and $2.4 billion for
the 1996 through 1998 fiscal years, respectively, after successful
implementation of the $2.3 billion gap-closing program for the 1995 fiscal
year.

The projections for the 1996 through 1998 fiscal years assume
the extension by the State Legislature of the 14% personal income tax
surcharge beyond calendar year 1995 and extension of the 12.5% personal
income tax surcharge beyond calendar year 1996, resulting in combined
revenues of $159 million, $633 million and $920 million in the 1996, 1997
and 1998 fiscal years, respectively. However, as part of the tax
reduction program reflected in the Financial Plan, the City is proposing
the elimination of the 12.5% personal income tax surcharge when it expires
at a cost of $184 million in fiscal year 1997 and $455 million in fiscal
year 1998. The proposed gap-closing actions include City actions
aggregating $1.2 billion, $1.5 billion and $1.7 billion in the 1996
through 1998 fiscal years, respectively; $275 million, $375 million and
$525 million in proposed additional State actions in the 1996 through 1998
fiscal years, respectively, primarily from the proposed State assumption
of certain Medicaid costs; and $100 million and $200 million in proposed
additional Federal assistance in the 1997 and 1998 fiscal years,
respectively. The proposed additional City actions, a substantial number
of which are unspecified, include additional spending reductions, the
reduction of City personnel through attrition, government efficiency
initiatives, procurement initiatives, labor productivity initiatives, and
the proposed privatization of City sewage treatment plants. Certain of
these initiatives may be subject to negotiation with the City's municipal
unions. Various actions proposed in the Financial Plan for the 1996-1998
fiscal years, including the proposed state actions, are subject to
approval by the Governor and the State Legislature, and the proposed
increase in Federal assistance is subject to approval by Congress and the
President. The State Legislature has in previous legislative sessions
failed to approve certain of the City's proposals for the State assumption
of certain Medicaid costs and mandate relief, thereby increasing the
uncertainty as to the receipt of the State assistance included in the
Financial Plan. In addition, the Financial Plan assumes the continuation
of the current assumption with respect to wages for City employees and the
assumed 9% earnings on pension fund assets affecting the City's pension
fund contributions. Actual earnings on pension fund assets for the 1994
fiscal year are expected to be substantially below the 9% assumed rate,
which will increase the City's future pension contributions. In addition,
a review of the pension fund earnings assumptions is currently being
conducted which could further increase the City's future pension
contributions by a substantial amount.

The City expects that tax revenue for the 1994 fiscal year will
be approximately $65 million less than forecast in the 1994 Modification,
primarily due to shortfalls in the personal income tax and sales tax, and
that expenditures will be approximately $25 million greater than forecast.
Accordingly, the $171 million of the projected surplus for the 1994 fiscal
year, which is currently projected in the 1994 Modification and the
Financial Plan to be transferred to the 1995 fiscal year, will decrease to
$81 million. As a result, the City will reduce expenditures for the 1995
fiscal year to offset this decrease, which is expected to be reflected in
the first quarter modification to the Financial Plan. In addition, the
Financial Plan assumes that a special session of the State Legislature,
which may take place in the near future, will enact, and the Governor will
sign, State legislation relating to the proposed tort reform, which would
save the City $45 million in payments for tort liability in fiscal year
1995, and certain anticipated improvements in fine and fee collections
forecast to earn $25 million in City revenue in fiscal year 1995, and that
the State Legislature will not enact proposed legislation mandating
additional pension benefits for City retirees costing the City
approximately $200 million annually. To address these and other possible
contingencies, on July 11, 1994, the Mayor stated that he will reserve
$100 million from authorized spending by City agencies in fiscal year 1995
in addition to the existing general reserves of $150 million. In
addition, the City has identified a $360 million contingency program for
the 1995 fiscal year, primarily consisting of layoffs and service
reductions.

Collective Bargaining Agreements. In January 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 workforce. 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.
Between April 1993 and May 1994 the City announced agreements with the
Uniformed Fire Officers Association (the "UFOA"), the United Federation of
Teachers ("UFT"), the Housing Authority Police Benevolent Association
("HAPBA") and the Uniformed Firefighters Association ("UFA"), and recently
announced tentative settlements with the Transit Police Benevolent
Association ("TPBA") and the Patrolmen's Benevolent Association ("PBA"),
all of which are generally consistent with the coalition agreement. The
TPBA's delegate body has rejected the tentative settlement and the PBA's
delegate body has ratified it. The Financial Plan reflects the costs for
all City-funded employees 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 and 1996 fiscal
years. Each 1% wage increase for all employees commencing in the 1995 and
1996 fiscal years would cost the City an additional $130 million for the
1995 fiscal year, $140 million for the 1996 fiscal year and $150 million
each year thereafter above the amounts provided for in the Financial Plan.

Actions to Close the Gaps. The 1995-1998 Financial Plan
reflects a program of proposed actions by the City, State and Federal
governments to close the gaps between projected revenues and expenditures
of $1.5 billion, $2.0 billion and $2.4 billion for the 1996, 1997 and 1998
fiscal years, respectively.

City gap-closing actions total $1.2 billion in the 1996 fiscal
year, $1.5 billion in the 1997 fiscal year and $1.7 billion in the 1998
fiscal year. These actions, a substantial number of which are
unspecified, include additional spending reductions, aggregate $501
million, $598 million and $532 million in the 1996 through 1998 fiscal
years, respectively; the reduction of City personnel through attrition,
resulting in savings of $39 million, $138 million and $253 million in the
1996 through 1998 fiscal years, respectively; government efficiency
initiatives aggregating $150 million, $230 million and $310 million in the
1996 through 1998 fiscal years, respectively; procurement initiatives,
aggregating $50 million, $100 million and $150 million in the 1996 through
1998 fiscal years, respectively; labor productivity initiatives,
aggregating $250 million in each of the 1996 through 1998 fiscal years;
and a proposed privatization of City sewage treatment plants which would
result in revenues of $200 million in each of the 1996 through 1998 fiscal
years. Certain of these initiatives may be subject to negotiation with
the City's municipal unions.

State actions proposed in the gap-closing program total $275
million, $375 million and $525 million in each of the 1996, 1997 and 1998
fiscal years, respectively. These actions include savings primarily from
the proposed State assumption of certain Medicaid costs.

The Federal actions proposed in the gap-closing program are
$100 million and $200 million in increased Federal assistance in fiscal
years 1997 and 1998, respectively.

Various actions proposed in the Financial Plan, including 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. State and Federal
actions are uncertain and no assurance can be given that such actions will
in fact be taken or that the savings that the City projects will result
from these actions will be realized. The State Legislature failed to
approve a substantial portion of the proposed State assumption of Medicaid
costs in the last session. The Financial Plan assumes that these
proposals will be approved by the State Legislature during the 1995 fiscal
year and that the Federal government will increase its share of funding
for the Medicaid program. If these measures cannot be implemented, the
City will be required to take other actions to decrease expenditures or
increase revenues to maintain a balanced financial plan.

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 1995 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.

Assumptions. The 1995-1998 Financial Plan is based on numerous
assumptions, including the continuing improvement in the City's and the
region's economy and a modest employment recovery during calendar year
1994 and the concomitant receipt of economically sensitive tax revenues in
the amounts projected. The 1995-1998 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 1995 through 1998 fiscal years;
continuation of the 9% interest earnings assumptions for pension fund
assets and current assumptions with respect to wages for City employees
affecting the City's required pension fund contributions; the willingness
and ability of the State, in the context of the State's current financial
condition, 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 HHC, BOE and other such agencies to maintain balanced budgets;
the willingness of the Federal government to provide Federal aid; approval
of the proposed continuation of the personal income tax surcharge;
adoption of the City's budgets by the City Council in substantially the
forms submitted by the Mayor; the ability of the City to implement
proposed reductions in City personnel and other cost reduction
initiatives, which may require in certain cases the cooperation of the
City's municipal unions, and the success with which the City controls
expenditures; savings for health care costs for City employees in the
amounts projected in the Financial Plan; additional expenditures that may
be incurred due to the requirements of certain legislation requiring
minimum levels of funding for education; the impact on real estate tax
revenues of the current weakness in the real estate market; 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.

The projections and assumptions contained in the 1995-1998
Financial Plan are subject to revision which may involve substantial
change, and no assurance can be given that these estimates and
projections, which include actions which the City expects will be taken
but which are not within the City's control, will be realized.

Certain Reports. From time to time, the Control Board staff,
the City Comptroller and others issue reports and make public statements
regarding the City's financial condition, commenting on, among other
matters, the City's financial plans, projected revenues and expenditures
and actions by the City to eliminate projected operating deficits. Some
of these reports and statements have warned that the City may have
underestimated certain expenditures and overestimated certain revenues and
have suggested that the City may not have adequately provided for future
contingencies. Certain of these reports have analyzed the City's future
economic and social conditions and have questioned whether the City has
the capacity to generate sufficient revenues in the future to meet the
costs of its expenditure increases and to provide necessary services.

On March 1, 1994, the City Comptroller issued a report on the
state of the City's economy. The report concluded that, while the City's
long recession is over, moderate growth is the best the City can expect,
with the local economy being held back by continuing weakness in important
international economies.

On July 11, 1994, the City Comptroller issued a report on the
City's adopted budget for the 1995 fiscal year. The City Comptroller
stated that if none of the uncertain proposals are implemented, the total
risk could be as much as $763 million to $1.02 billion. Risks which were
identified as substantial risks include a possible $208 million to $268
million increase in overtime costs; approval by the State Legislature of a
tort reform program to limit damage claims against the City, which would
result in savings of $45 million; the $65 million proceeds from a proposed
asset sale; additional expenditures at Health and Hospitals Corporation
totaling $60 million; and $60 million of increased pension contributions
resulting from lower than assumed pension fund earnings. Additional
possible risks include obtaining the agreement of municipal unions to the
proposed reduction in City expenditures for health care costs by $200
million; uncertainties concerning the assumed improvement in the
collection of taxes, fines and fees totaling $50 million; renegotiation of
the terms of certain Port Authority leases totaling $75 million; and
uncertainty concerning the receipt of the $200 million of increased
Federal aid projected for the 1995 fiscal year. The City Comptroller
noted that there are a number of additional issues, including possible
larger than projected expenditures for foster care and public assistance
and the receipt of $100 million from assumed FICA refunds. The City
Comptroller has also stated in a report issued on June 8, 1994 that
certain of the reductions in personnel and services proposed in the City's
financial plan submitted to the Control Board on May 10, 1994 (the "May
Financial Plan") will have long-term and, in some cases, severe
consequences for City residents.

In addition, on July 11, 1994, the private members of the
Control Board, Robert R. Kiley, Heather L. Ruth and Stanley S. Shuman,
issued a statement which concluded that the 1995 fiscal year is not
reasonably balanced and that further budget cuts are unavoidable in the
next six months. In addition, the private members stated that the
Financial Plan does not set forth a path to structural balance. The
private members stated that, in order to achieve this goal, City managers
must be given fiscal targets they can be expected to meet; solid new
proposals must be developed that back up the savings the City has
committed to achieve to balance future budgets; and the deferral of
expenses to future years, through actions such as the sale of property tax
receivables, stretching out pension contributions and delaying debt
service payments through refundings, must stop. On July 11, 1994, the
Control Board staff stated that the City faces risks of greater than $1
billion and $2 billion for the 1995 and 1996 fiscal years, respectively,
and risks of approximately $3 billion for each of the 1997 and 1998 fiscal
years.

New York City Indebtedness. Outstanding indebtedness having an
initial maturity greater than one year from the date of issuance of the
City as of March 31, 1994 was $21,290,000 compared to $19,624,000 as of
March 31, 1993.

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 March 31, 1994, MAC had outstanding indebtedness of
approximately $4.377 billion compared to $4.470 billion as of March 31,
1993.

The City's general obligation bonds are rated Baa1 by Moody's
Investors Service, Inc. ("Moody's"). Standard & Poor's Corporation
("Standard & Poor's") has rated the City's general obligation bonds A-.
Fitch Investors Service, Inc. ("Fitch") has rated them A-. Such ratings
reflect only the view of Moody's, Standard & Poor's and Fitch, from which
an explanation of the significance of such ratings may be obtained. There
is no assurance that such ratings will continue for any given period of
time or that they 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 City's general obligation bonds.

New York State and Its Authorities

The State's current fiscal year commenced on April 1, 1994, and
ends on March 31, 1995, and is referred to herein as the State's 1994-95
fiscal year. The State's budget for the 1994-95 fiscal year was enacted
by the Legislature on June 7, 1994, more than two months after the start
of the fiscal year. Prior to adoption of the budget, the Legislature
enacted appropriations for disbursements considered to be necessary for
State operations and other purposes, including all necessary
appropriations for debt service. The State Financial Plan for the 1994-95
fiscal year was formulated on June 16, 1994 and is based on the State's
budget as enacted by the Legislature and signed into law by the Governor.

The economic and financial condition of the State may be
affected by various financial, social, economic and political factors.
Those factors can be very complex, may vary from fiscal year to fiscal
year, and are frequently the result of actions taken not only by the State
and its agencies and instrumentalities, but also by entities, such as the
Federal government, that are not under the control of the State.

The State Financial Plan is based upon forecasts of national
and State economic activity. Economic forecasts have frequently failed to
predict accurately the timing and magnitude of changes in the national and
the State economies. Many uncertainties exist in forecasts of both the
national and State economies, including consumer attitudes toward
spending, Federal financial and monetary policies, the availability of
credit, and the condition of the world economy, which could have an
adverse effect on the State. There can be no assurance that the State
economy will not experience results in the current fiscal year that are
worse than predicted, with corresponding material and adverse effects on
the State's projections of receipts and disbursements.

The State Division of the Budget ("DOB") believes that its
projections of receipts and disbursements relating to the current State
Financial Plan, and the assumptions on which they are based, are
reasonable. Actual results, however, could differ materially and
adversely from the projections set forth below, and those projections may
be changed materially and adversely from time to time.

As noted above, the financial condition of the State is
affected by several factors, including the strength of the State and
regional economy and actions of the Federal government, as well as State
actions affecting the level of receipts and disbursements. Owing to these
and other factors, the State may, in future years, face substantial
potential budget gaps resulting from a significant disparity between tax
revenues projected from a lower recurring receipts base and the future
costs of maintaining State programs at current levels. Any such recurring
imbalance would be exacerbated if the State were to use a significant
amount of nonrecurring resources to balance the budget in a particular
fiscal year. To address a potential imbalance for a given fiscal year,
the State would be required to take actions to increase receipts and/or
reduce disbursements as it enacts the budget for that year, and under the
State Constitution the Governor is required to propose a balanced budget
each year. To correct recurring budgetary imbalances, the State would
need to take significant actions to align recurring receipts and
disbursements in future fiscal years. There can be no assurance, however,
that the State's actions will be sufficient to preserve budgetary balance
in a given fiscal year or to align recurring receipts and disbursements in
future fiscal years.

The 1994-95 State Financial Plan contains actions that provide
nonrecurring resources or savings, as well as actions that impose
nonrecurring losses of receipts or costs. It is believed that the net
positive effect of nonrecurring actions represents considerably less than
one-half of one percent of the State's General Fund, an amount
significantly lower than the amount included in the State Financial Plans
in recent years; it is believed that those actions do not materially
affect the financial condition of the State. In addition to those
nonrecurring actions, the 1994-95 State Financial Plan reflects the use of
$1.026 billion in the positive cash margin carried over from the prior
fiscal year, resources that are not expected to be available in the
State's 1995-96 fiscal year.

The General Fund is the general operating fund of the State and
is used to account for all financial transactions, except those required
to be accounted for in another fund. It is the State's largest fund and
receives almost all State taxes and other resources not dedicated to
particular purposes. In the State's 1994-95 fiscal year, the General Fund
is expected to account for approximately 52 percent of total governmental-
fund receipts and 51 percent of total governmental-fund disbursements.
General Fund moneys are also transferred to other funds, primarily to
support certain capital projects and debt service payments in other fund
types.

New York State's financial operations have improved during
recent fiscal years. During the period 1989-90 through 1991-92, the State
incurred General Fund operating deficits that were closed with receipts
from the issuance of tax and revenue anticipation notes ("TRANs"). First,
the national recession, and then the lingering economic slowdown in the
New York and regional economy, resulted in repeated shortfalls in receipts
and three budget deficits. For its 1992-93 and 1993-94 fiscal years, the
State recorded balanced budgets on a cash basis, with substantial fund
balances in each year as described below.

The State ended its 1993-94 fiscal year with a balance of
$1.140 billion in the tax refund reserve account, $265 million in its
Contingency Reserve Fund ("CRF") and $134 million in its Tax Stabilization
Reserve Fund. These fund balances were primarily the result of an
improving national economy, State employment growth, tax collections that
exceeded earlier projections and disbursements that were below
expectations. Deposits to the personal income tax refund reserve have the
effect of reducing reported personal income tax receipts in the fiscal
year when made and withdrawals from such reserve increase receipts in the
fiscal year when made. The balance in the tax refund reserve account will
be used to pay taxpayer refunds, rather than drawing from 1994-95
receipts.

Of the $1.140 billion deposited in the tax refund reserve
account, $1.026 billion was available for budgetary planning purposes in
the 1994-95 fiscal year. The remaining $114 million will be redeposited
in the tax refund reserve account at the end of the State's 1994-95 fiscal
year to continue the process of restructuring the State's cash flow as
part of the Local Government Assistance Corporation ("LGAC") program. The
balance in the CRF will be used to meet the cost of litigation facing the
State. The Tax Stabilization Reserve Fund may be used only in the event
of an unanticipated General Fund cash-basis deficit during the 1994-95
fiscal year.

Before the deposit of $1.140 billion in the tax refund reserve
account, General Fund receipts in 1993-94 exceeded those originally
projected when the State Financial Plan for that year was formulated on
April 16, 1993 by $1.002 billion. Greater-than-expected receipts in the
personal income tax, the bank tax, the corporation franchise tax and the
estate tax accounted for most of this variance, and more than offset
weaker-than-projected collections from the sales and use tax and
miscellaneous receipts. Collections from individual taxes were affected
by various factors including changes in Federal business laws, sustained
profitability of banks, strong performance of securities firms, and
higher-than-expected consumption of tobacco products following price cuts.

Disbursements and transfers from the General Fund were $303
million below the level projected in April 1993, an amount that would have
been $423 million had the State not accelerated the payment of Medicaid
billings, which in the April 1993 State Financial Plan were planned to be
deferred into the 1994-95 fiscal year. Compared to the estimates included
in the State Financial Plan formulated in April 1993, lower disbursements
resulted from lower spending for Medicaid, capital projects, and debt
service (due to refundings) and $114 million used to restructure the
State's cash flow as part of the LGAC program. Disbursements were higher-
than-expected for general support for public schools, the State share of
income maintenance, overtime for prison guards, and highway snow and ice
removal.

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.

On January 13, 1992, Standard & Poor's reduced its ratings on
the State's general obligation bonds from A to A- and, in addition,
reduced its ratings on the State's moral obligation, lease purchase,
guaranteed and contractual obligation debt. Standard & Poor's also
continued its negative rating outlook assessment on State general
obligation debt. On April 26, 1993, Standard & Poor's revised the rating
outlook assessment to stable. On February 14, 1994, Standard & Poor's
raised its outlook to positive and, on June 27, 1994, confirmed its A-
rating. On January 6, 1992, Moody's reduced its ratings on outstanding
limited-liability State lease purchase and contractual obligations from A
to Baa1. On June 27, 1994, Moody's reconfirmed its A rating on the
State's general obligation long-term indebtedness. 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.

As of March 31, 1994, the State had approximately $5.370
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 $782.5 million and $786.3 million for
the 1992-93 and 1993-94 fiscal years, respectively. These figures do not
include 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 $63.5 billion as of September 30, 1993. As of March
31, 1994 aggregate public authority debt outstanding as State-supported
debt was $21.1 billion and as State-related debt was $29.4 billion.

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 the 1994-95 State fiscal year, total
State assistance to the MTA is estimated at approximately $1.3 billion.

In 1993, State legislation authorized the funding of a five-
year $9.56 billion MTA capital plan for the five-year period, 1992 through
1996 (the "1992-96 Capital Program"). The MTA has received approval of
the 1992-96 Capital Program based on this legislation from the 1992-96
Capital Program Review Board, as State law requires. This is the third
five-year plan since the Legislature authorized procedures for the
adoption, approval and amendment of a five-year plan in 1981 for a capital
program designed to upgrade the performance of the MTA's transportation
systems and to supplement, replace and rehabilitate facilities and
equipment. The MTA, the TBTA and the TA are collectively authorized to
issue an aggregate of $3.1 billion of bonds (net of certain statutory
exclusions) to finance a portion of the 1992-96 Capital Program. The
1992-96 Capital Program is expected to be financed in significant part
through the dedication of the State petroleum business taxes.

There can be no assurance that all the necessary governmental
actions for the Capital Program will be taken, that funding sources
currently identified will not be decreased or eliminated, or that the
1992-96 Capital Program, or parts thereof, will not be delayed or reduced.
Furthermore, the power of the MTA to issue certain bonds expected to be
supported by the appropriation of State petroleum business taxes is
currently the subject of a court challenge. If the Capital Program is
delayed or reduced, ridership and fare revenues may decline, which could,
among other things, impair the MTA's ability to meet its operating
expenses without additional State assistance.

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 1994-95 fiscal year or thereafter.

In addition to the proceedings noted below, the State is party
to other claims and litigation which its legal counsel has advised are not
probable of adverse court decisions. Although the amounts of potential
losses, if any, are not presently determinable, it is the State's opinion
that its ultimate liability in these cases is not expected to have a
material adverse effect on the State's financial position in the 1994-95
fiscal year or thereafter.

On May 31, 1988 the United States Supreme Court took
jurisdiction of a claim of the State of Delaware that certain unclaimed
dividends, interest and other distributions made by issuers of securities
and held by New York-based brokers incorporated in Delaware for beneficial
owners who cannot be identified or located, had been, and were being,
wrongfully taken by the State of New York pursuant to New York's Abandoned
Property Law (State of Delaware v. State of New York, United States
Supreme Court). All 50 states and the District of Columbia moved to
intervene, claiming a portion of such distributions and similar property
taken by the State of New York from New York-based banks and depositories
incorporated in Delaware. In a decision dated March 30, 1993, the Court
granted all pending motions of the states and the District of Columbia to
intervene and remanded the case to a Special Master for further
proceedings consistent with the Court's decision. The Court determined
that the abandoned property should be remitted first to the state of the
beneficial owner's last known address, if ascertainable and, if not, then
to the state of incorporation of the intermediary bank, broker or
depository. New York and Delaware have executed a settlement agreement
which provides for payments by New York to Delaware of $35 million in the
State's 1993-94 fiscal year and five annual payments thereafter of $33
million. New York and Massachusetts have executed a settlement agreement
which provides for aggregate payments by New York of $23 million, payable
over five consecutive years. The claims of the other states and the
District of Columbia remain.

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.

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 1991 the
State ranked second among the states in per capita personal income
($25,666).

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 6.4% in July 1994, which is above the
national average of 6.1% in July 1994. 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 December 31, 1992,
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 $444.3 million for Fiscal Year 1993.

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 will close
its Fiscal Year 1993 with a surplus of $385.8 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 had contended that the income tax
package would help reduce local property tax increases by providing more
state aid to municipalities. Under the income tax legislation, the State
would 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 was 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 November 2, 1994, 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. Effective January 1, 1994, an across-the-board 5% reduction in
the income tax rates was enacted and effective January 1, 1995, further
reductions ranging from 1% to 10% in income tax rates will take effect.

On June 30, 1994, Governor Whitman signed the New Jersey
Legislature's $15.7 billion budget for Fiscal Year 1995. The balanced
budget, which includes $455 million in surplus, is $141 million less than
the 1994 budget. Whether the State can achieve a balanced budget depends
on its ability to enact and implement expenditure reductions and to
collect estimated tax revenues.

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 Aaa.
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. However, on July 27, 1994, Standard and
Poor's announced that it was changing the State's outlook from negative to
stable due to a brightening of the State's prospects as a result of
Governor Whitman's effort to trim spending and cut taxes, coupled with an
improving economy. Standard and Poor's reaffirmed its "AA+" rating at the
same time. 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. In August 1994, Moody's reaffirmed its
"Aa1" rating, citing on the positive side New Jersey's broad-based
economy, high income levels, history of maintaining a positive financial
position and moderate (although rising) debt ratios, and, on the negative
side, a continued reliance on one-time revenues and a dependence on
pension-related savings to achieve budgetary balance.

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 forAppropriation 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 the 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-l 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 State is a party in numerous legal proceedings pertaining to
matters incidental to the performance of routine governmental operations.
Such litigation includes, but is not limited to, claims asserted against
the State arising from alleged torts, alleged breaches of contracts,
condemnation proceedings and other alleged violations of State and Federal
laws. Included in the State's outstanding litigations are cases which
challenge the following: the formula relating to State aid to public
schools, the method by which the State shares with its counties
maintenance recoveries and costs for residents in State institutions,
unreasonably low Medicaid payment rates for long-term facilities in New
Jersey, the obligation of counties to maintain Medicaid or Medicare
eligible residents of institutions and facilities for the developmentally
disabled, taxes paid into the Spill Compensation Fund (a fund established
to provide money for use by the State to remediate hazardous waste sites
and to compensate other persons for damages incurred as a result of
hazardous waste discharge) based upon Federal preemption, various
provisions, including the constitutionality of the Fair Automobile
Insurance Reform Act of 1990, the State's method of funding the judicial
system, certain provisions of New Jersey's hospital rate-setting system,
the adequacy of Medicaid reimbursement for services rendered by doctors
and dentists to Medicaid eligible children, the Commissioner of Health's
calculation of the Hospital assessment required by the Health Care Cost
Reduction Act of 1991, the refusal of the State to share with Camden
County federal funding the State recently received for the
disproportionate share hospital payments made to county psychiatric
facilities, and recently enacted legislation calling for a revaluation of
several New Jersey public employee pension funds in order to provide
additional revenues for the State's general fund. 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.

Pennsylvania Trust

The following information constitutes only a brief summary of a
number of the complex factors which may impact issuers of Pennsylvania
municipal securities and does not purport to be a complete or exhaustive
description of all conditions to which issuers of Pennsylvania municipal
securities may be subject. Additionally, many factors, including
national, economic, social and environmental policies and conditions,
which are not within the control of such issuers, could have an adverse
impact on the financial condition of such issuers. The Pennsylvania Trust
cannot predict whether or to what extent such factors or other factors may
affect the issuers of Pennsylvania municipal securities, the market value
or marketability of such securities or the ability of the respective
issuers of such securities held by the Pennsylvania Trust to pay interest
on or principal of such securities. The creditworthiness of obligations
issued by local Pennsylvania issuers may be unrelated to the
creditworthiness of obligations issued by the Commonwealth of
Pennsylvania, and there is no obligation on the part of the Commonwealth
of Pennsylvania to make payments on such local obligations. There may be
specific factors that are applicable in connection with investment in the
obligations of particular issuers located within Pennsylvania, and it is
possible the Pennsylvania Trust has invested in obligations of particular
issuers as to which such specific factors are applicable. However, the
information set forth below is intended only as a general summary and not
as a discussion of any specific factors that may affect any particular
issuer of Pennsylvania municipal securities.

State Finance

State Economy. The Commonwealth of Pennsylvania is one of the
most populous states, ranking fifth behind California, New York, Texas and
Florida. Pennsylvania is an established yet growing state with a
diversified economy. It is the headquarters for 64 major corporations and
the home for more than 268,600 businesses. Pennsylvania historically has
been identified as a heavy industry state although that reputation has
changed recently as the industrial composition of the Commonwealth
diversified when the coal, steel and railroad industries began to decline.
The major new sources of growth in Pennsylvania are in the service sector,
including trade, medical and the health services, education and financial
institutions. Pennsylvania's agricultural industries are also an
important component of the Commonwealth's economic structure, accounting
for more than $3.6 billion in crop and livestock products annually, while
agribusiness and food related industries support $39 billion in economic
activity annually.

Non-agricultural employment in the Commonwealth declined by 5.1
percent during the recessionary period from 1980 to 1983. In 1984, the
declining trend was reversed as employment grew by 2.9 percent over 1983
levels. From 1984 to 1990, non-agricultural employment continued to grow
each year, increasing an additional 14.3 percent during such period. For
the last three years, employment in the Commonwealth has declined 1.2
percent. The growth in employment experienced in Pennsylvania is
comparable to the growth in employment in the Middle Atlantic region which
has occurred during this period. As a percentage of total non--
agricultural employment within the Commonwealth, non-manufacturing
employment has increased steadily since 1980 to its 1993 level of 81.6
percent of total employment. Consequently, manufacturing employment
constitutes a diminished share of total employment within the
Commonwealth. Manufacturing, contributing 18.4 percent of 1993
non-agricultural employment, has fallen behind both the services sector
and the trade sector as the largest single source of employment within the
Commonwealth. In 1993, the services sector accounted for 29.9 percent of
all non-agricultural employment while the trade sector accounted for 22.4
percent.

From 1983 to 1989, Pennsylvania's annual average unemployment
rate dropped from 11.8 percent to 4.5 percent, falling below the national
rate in 1986 for the first time in over a decade. Slower economic growth
caused the unemployment rate in the Commonwealth to rise to 6.9 percent in
1991 and 7.5 percent in 1992. As of July 1994, the seasonally adjusted
unemployment rate for the Commonwealth was 6.5 percent compared to 6.1
percent for the United States as a whole.

The Commonwealth operates under an annual budget which is
formulated and submitted for legislative approval by the Governor each
February. The Pennsylvania Constitution requires that the Governor's
budget proposal consist of three parts: (i) a balanced operating budget
setting forth proposed expenditures and estimated revenues from all
sources and, if estimated revenues and available surplus are less than
proposed expenditures, recommending specific additional sources of revenue
sufficient to pay the deficiency; (ii) a capital budget setting forth
proposed expenditures to be financed from the proceeds of obligations of
the Commonwealth or its agencies or from operating funds; and (iii) a
financial plan for not less than the succeeding five fiscal years, which
includes for each year projected operating expenditures and estimated
revenues and projected expenditures for capital projects. The General
Assembly may add, change or delete any items in the budget prepared by the
Governor, but the Governor retains veto power over the individual
appropriations passed by the legislature. The Commonwealth's fiscal year
begins on July 1 and ends on June 30.

The Constitution and the laws of the Commonwealth require all
payments from the treasury, with the exception of refunds of taxes,
licenses, fees and other charges, to be made only by duly enacted
appropriations. Amounts appropriated from a fund may not exceed its
actual and estimated revenues for the fiscal year plus any surplus
available. Appropriations from the principal operating funds of the
Commonwealth (the General Fund, the Motor License Fund and the State
Lottery Fund) are generally made for one fiscal year and are returned to
the unappropriated surplus of the fund (a lapse) if not spent or
encumbered by the end of the fiscal year.

Pennsylvania uses the "fund" method of accounting for receipts
and disbursements. For purposes of government accounting, a "fund" is an
independent fiscal and accounting entity with a self-balancing set of
accounts, recording cash and/or other resources together with all related
liabilities and equities which are segregated for the purpose of carrying
on specific activities or attaining certain objectives in accordance with
the fund's special regulations, restrictions or limitations. In the
Commonwealth, funds are established by legislative enactment or in certain
cases by administrative action. Over 150 funds have been established for
the purpose of recording the receipts and disbursements of monies received
by the Commonwealth. Annual budgets are adopted each fiscal year for the
principal operating funds of the Commonwealth and several other special
revenue funds. Expenditures and encumbrances against these funds may only
be made pursuant to appropriation measures enacted by the General Assembly
and approved by the Governor. The General Fund, the Commonwealth's
largest fund, receives all tax revenues, non-tax revenues and federal
grants and entitlements that are not specified by law to be deposited
elsewhere. The majority of the Commonwealth's operating and
administrative expenses are payable from the General Fund. Debt service
on all bond indebtedness of the Commonwealth, except that issued for
highway purposes or for the benefit of other special revenue funds, is
payable from the General Fund.

Financial information for the principal operating funds of the
Commonwealth is maintained on a budgetary basis of accounting. Since
1984, the Commonwealth has also prepared annual financial statements in
accordance with generally accepted accounting principles ("GAAP").
Financial statements prepared in accordance with GAAP have been audited
jointly by the Auditor General of the Commonwealth and an independent
public accounting firm each year since 1984. Budgetary basis financial
reports are based on a modified cash basis of accounting as opposed to a
modified accrual basis of accounting prescribed by GAAP. The budgetary
basis financial information maintained by the Commonwealth to monitor and
enforce budgetary control is adjusted at fiscal year-end to reflect
appropriate accruals for financial reporting in conformity with GAAP.

Financial Results for Recent Fiscal Years (GAAP Basis). The
five year period from fiscal 1989 through fiscal 1993 was marked by public
health and welfare costs growing at a rate double the growth for all the
state expenditures. Rising caseloads, increased utilization of services
and rising prices joined to produce the rapid rise of public health and
welfare costs at a time when a national recession caused tax revenues to
stagnate and even decline. During the period from fiscal 1989 through
fiscal 1993, public health and welfare costs rose by an average annual
rate of 10.9 percent while tax revenues were growing at an average annual
rate of 5.5 percent. Consequently, spending on other budget programs was
restrained to a growth rate below 5.0 percent and sources of revenues
other than taxes became larger components of fund revenues. Among those
sources are transfers from other funds and hospital and nursing home
pooling of contributions to use as federal matching funds.

Tax revenues declined in fiscal 1991 as a result of the
recession in the economy. A $2.7 billion tax increase enacted for fiscal
1992 brought financial stability to the General Fund. That tax increase
included several taxes with retroactive effective dates which generated
some one-time revenues during fiscal 1992. The absence of those revenues
in fiscal 1993 contributed to the decline in tax revenues shown for fiscal
1993.

Fiscal 1991 Financial Results -- GAAP Basis. The General Fund
experienced an $861.2 million operating deficit resulting in a fund
balance deficit of $980.9 million at June 30, 1991. The operating deficit
was a consequence of the effect of a national recession that restrained
budget revenues and pushed expenditures above budgeted levels. At
June 30, 1991, a negative unreserved-undesignated balance of $1,146.2
million was reported. During fiscal 1991, the balance in the Tax
Stabilization Reserve Fund was used to maintain vital state spending.

Budgetary Basis. A deficit of $453.6 million was recorded by
the General Fund at June 30, 1991. The deficit was a consequence of
higher than budgeted expenditures and lower than estimated revenues during
the fiscal year brought about by the national economic recession that
began during the fiscal year. The budgetary basis deficit at June 30,
1991 was carried into the 1992 fiscal year and funded in the fiscal 1992
budget.

A number of actions were taken throughout the fiscal year by the
Commonwealth to mitigate the effects of the recession on budget revenues
and expenditures. Actions taken, together with normal appropriation
lapses, produced $871 million in expenditure reductions and revenue
increases for the fiscal year. The most significant of these actions were
a $214 million transfer from the Pennsylvania Industrial Development
Authority ("PIDA"), a $134 million transfer from the Tax Stabilization
Reserve Fund, and a pooled financing program to match federal Medicaid
funds replacing $145 million of state funds.

Restrained by the recession, economic activity within the state
declined and caused corporation tax receipts and sales and use tax
receipts to be below year-earlier receipts. Sales and use tax collections
for the fiscal year totaled $4,200.3 million, a 0.9 percent decrease from
fiscal 1990 collections and $276.4 million below the budget estimate.
Corporation, public utility, financial and insurance taxes in aggregate
totaled $2,648.0 million, 7.3 percent below fiscal 1990 collections and
$199.0 million below the budget estimate. Personal income tax receipts
totaled $3,375.5 million, an increase of 2.0 percent over fiscal 1990
collections, but $136.6 million below the budget estimate.

Non-tax revenues were above the budget estimate largely as a
result of the $214 million transfer of funds from the PIDA
recapitalization. In addition to the transfer from PIDA, $230.1 million
of other non-recurring revenues were received during the fiscal year to
help reduce the budget deficit.

Rising program demands caused by the economic recession,
particularly for the medical assistance and cash assistance programs,
produced rapidly increasing costs during the fiscal year, causing
expenditures to exceed their respective budget estimates. Costs of
special education programs and for corrections facilities and programs
also exceeded their budgeted amounts due to underestimates of their fiscal
year costs. Meeting these higher budget needs required supplemental
appropriation authority of $374 million to be enacted during the fiscal
year.

One consequence of the lower revenues and higher expenditures
than budgeted for fiscal 1991 was the need to delay making certain
disbursements against state appropriations. Throughout the fiscal year
the Commonwealth elected to defer certain disbursements of appropriated
amounts in order to assure that sufficient cash was available to meet the
highest priority payments such as debt service, cash assistance and
payrolls. The deferred payments were accounted for as fiscal 1991
expenditures but were disbursed during fiscal 1992 from current cash flow
or from the proceeds of the fiscal 1992 tax anticipation notes.

Fiscal 1992 Financial Results -- GAAP Basis. During fiscal 1992
the General Fund recorded a $1.1 billion operating surplus. This
operating surplus was achieved through legislated tax rate increases and
tax base broadening measures enacted in August 1991 and by controlling
expenditures through numerous cost reduction measures implemented
throughout the fiscal year. These actions are described more fully below
under the heading "Budgetary Basis". As a result of the fiscal 1992
operating surplus, the fund balance has increased to $87.5 million and the
unreserved/undesignated deficit has dropped to $138.6 million from its
fiscal 1991 level of $1,146.2 million.

Budgetary Basis. Eliminating the budget deficit carried into
fiscal 1992 from fiscal 1991 and providing revenues for fiscal 1992
budgeted expenditures required tax revisions that are estimated to have
increased receipts for the 1992 fiscal year by over $2.7 billion. Total
revenues for the fiscal year were $14,516.8 million, a $2,654.5 million
increase over cash revenues during fiscal 1991. Originally based on
forecasts for an economic recovery, the budget revenue estimates were
revised downward during the fiscal year to reflect continued recessionary
economic activity. Largely due to the tax revisions enacted for the
budget, corporate tax receipts totaled $3,761.2 million, up from $2,656.3
million in fiscal 1991, sales tax receipts increased by $302.0 million to
$4,499.7 million, and personal income tax receipts totaled $4,807.4
million, an increase of $1,443.8 million over receipts in fiscal 1991.

As a result of the lowered revenue estimate during the fiscal
year, increased emphasis was placed on restraining expenditure growth and
reducing expenditure levels. A number of cost reductions were implemented
during the fiscal year that contributed to $296.8 million of appropriation
lapses. These appropriation lapses were responsible for the $8.8 million
surplus at fiscal year-end, after accounting for the required 10 percent
transfer of the surplus to the Tax Stabilization Reserve Fund.

Spending increases in the fiscal 1992 budget were largely
accounted for by increases for education, social services and corrections
programs. Commonwealth funds for the support of public schools were
increased by 9.8 percent to provide a $438.0 million increase to $4.9
billion for fiscal 1992. The fiscal 1992 budget provided additional funds
for basic and special education and included provisions designed to help
restrain the annual increase of special education costs, an area of recent
rapid cost increases. Child welfare appropriations supporting county-
operated child welfare programs were increased $67.0 million, more than
31.5 percent over fiscal 1991. Other social service areas such as medical
and cash assistance also received significant funding increases as costs
have risen quickly as a result of the economic recession and high
inflation rates of medical care costs. The costs of corrections programs,
reflecting the marked increase in prisoner population, increased by 12.0
percent. Economic development efforts, largely funded from bond proceeds
in fiscal 1991, were continued with General Fund appropriations for fiscal
1992.

The budget included the use of several Medicaid pooled financing
transactions. These pooling transactions replaced $135.0 million of
Commonwealth funds, allowing total spending under the budget to increase
by an equal amount.

Fiscal 1993 Financial Results -- GAAP Basis. The fund balance
of the General Fund increased by $611.4 million during the fiscal year,
led by an increase in the unreserved balance of $576.8 million over the
prior fiscal year balance. At June 30, 1993, the fund balance totaled
$698.9 and the unreserved/undesignated balance totaled $64.4 million. A
continuing recovery of the Commonwealth's financial condition from the
effects of the national economic recession of 1990 and 1991 is
demonstrated by this increase in the balance and a return to a positive
unreserved/undesignated balance. The previous positive
unreserved/undesignated balance was recorded in fiscal 1987. For the
second consecutive fiscal year the increase in the unreserved/undesignated
balance exceeded the increase recorded in the budgetary basis
unappropriated surplus during the fiscal year.

Budgetary Basis. The 1993 fiscal year closed with revenues
higher than anticipated and expenditures about as projected, resulting in
an ending unappropriated balance surplus (prior to the ten percent
transfer to the Tax Stabilization Reserve Fund) of $242.3 million,
slightly higher than estimated in May 1993. Cash revenues were $41.5
million above the budget estimate and totaled $14.633 billion representing
less than a one percent increase over revenues for the 1992 fiscal year.
A reduction in the personal income tax rate in July 1992 and revenues from
retroactive corporate tax increases received in fiscal 1992 were
responsible, in part, for the low revenue growth in fiscal 1993.

Appropriations less lapses totaled an estimated $13.870 billion
representing a 1.1 percent increase over those during fiscal 1992. The
low growth in spending is a consequence of a low rate of revenue growth,
significant one-time expenses during fiscal 1992, increased tax refund
reserves to cushion against adverse decisions on pending litigations, and
the receipt of federal funds for expenditures previously paid out of
Commonwealth funds.

By state statute, ten percent of the budgetary basis
unappropriated surplus at the end of a fiscal year is to be transferred to
the Tax Stabilization Reserve Fund. The transfer for the fiscal 1993
balance is $24.2 million. The remaining unappropriated surplus of $218.0
million was carried forward into the 1994 fiscal year.

Fiscal 1994 Budget (Budgetary Basis). Commonwealth revenues
during the fiscal year totaled $15,210.7 million, $38.6 million above the
fiscal year estimate, and 3.9 percent over Commonwealth revenues during
the previous fiscal year. The sales tax was an important contributor to
the higher than estimated revenues. Collections from the sales tax were
$5.124 billion, a 6.1 percent increase from the prior fiscal year and
$81.3 million above estimate. The strength of collections from the sales
tax offset the lower than budgeted performance of the personal income tax
which ended the fiscal year $74.4 million below estimate. The shortfall
in the personal income tax was largely due to shortfalls in income not
subject to withholding such as interest, dividends and other income. Tax
refunds in fiscal 1994 were reduced substantially below the $530 million
amount provided in fiscal 1993. The higher fiscal 1993 amount and the
reduced fiscal 1994 amount occurred because reserves of approximately $160
million were added to fiscal 1993 tax refunds to cover potential payments
if the Commonwealth lost litigation known as Philadelphia Suburban Corp.
v. Commonwealth. Those reserves were carried into fiscal 1994 until the
litigation was decided in the Commonwealth's favor in December 1993 and
$147.3 million of reserves for tax refunds were released.

Expenditures, excluding pooled financing expenditures and net of
all fiscal 1994 appropriation lapses, totaled $14,934.4 million
representing a 7.2 percent increase over fiscal 1993 expenditures.
Medical assistance and corrections spending contributed to the rate of
spending growth for the fiscal year.

The Commonwealth maintained an operating balance on a budgetary
basis for fiscal 1994 producing a fiscal year ending unappropriated
surplus of $335.8 million. By state statute, ten percent ($33.6 million)
of that surplus will be transferred to the Tax Stabilization Reserve Fund
and the remaining balance will be carried over into the 1995 fiscal year.

Fiscal 1995 Budget. The fiscal 1995 budget was approved by the
Governor on June 16, 1994 and provided for $15,652.9 million of
appropriations from Commonwealth funds, an increase of 3.9 percent over
appropriations, including supplemental appropriations, for fiscal 1994.
Medical assistance expenditures represent the largest single increase in
the budget ($221 million) representing a nine percent increase over the
prior fiscal year. The budget includes a reform of the state-funded
public assistance program that added certain categories of eligibility to
the program but also limited the availability of such assistance to other
eligible persons. Education subsidies to local school districts were
increased by $132.2 million to continue the increased funding for the
poorest school districts in the state.

The budget also includes tax reductions totaling an estimated
$166.4 million. Low income working families will benefit from an increase
of the dependent exemption to $3,000 from $1,500 for the first dependent
and from $1,000 for all additional dependents. A reduction to the
corporate net income tax rate from 12.25 percent to 9.99 percent to be
phased in over a period of four years was enacted. A net operating loss
provision has been added to the corporate net income tax and will be
phased in over three years with a $500,000 per firm annual cap on losses
used to offset profits. Several other tax changes to the sales tax, the
inheritance tax and the capital stock and franchise tax were also enacted.

The fiscal 1995 budget projects a $4 million fiscal year-end
unappropriated surplus. No assumption as to appropriation lapses in
fiscal 1995 has been made.

Tax Structure. The Commonwealth, through its principal
operating funds -- the General Fund, the Motor License Fund and the State
Lottery Fund -- receives over 57 percent of its revenues from taxes levied
by the Commonwealth. Interest earnings, licenses and fees, lottery ticket
sales, liquor store profits, miscellaneous revenues, augmentations and
federal government grants supply the balance of receipts to these funds.

Tax and fee proceeds relating to motor fuels and vehicles are
constitutionally dedicated for highway purposes and are deposited into the
Motor License Fund. Lottery ticket sale revenues are deposited into the
State Lottery Fund and are reserved by statute for programs to benefit
senior citizens. Revenues, other than those specified to be deposited in
a particular fund, are deposited into the General Fund.

The major tax sources for the General Fund of the Commonwealth
are the sales tax enacted in 1953, the personal income tax enacted in
1971, and the corporate net income tax which in its present form dates
back to 1935. The last restructuring of the Commonwealth's tax system
occurred with the enactment of the Tax Reform Code of 1971 that codified
many of the taxes levied by the Commonwealth.

The major tax sources for the Motor License Fund are the liquid
fuels taxes and the oil company franchise tax. The Motor License Fund
also receives revenues from fees levied on heavy trucks and from taxes on
fuels used for aviation purposes. Use of these revenues is restricted to
the repair and construction of highway bridges and aviation programs
respectively.

The Tax Stabilization Reserve Fund was established in 1986 to
provide a source of funds that can be used to alleviate emergencies
threatening the health, safety or welfare of the Commonwealth's citizens
or to offset unanticipated revenue shortfalls due to economic downturns.
Income to the fund is provided by specific appropriation from available
balances by the General Assembly, from investment income and, after fiscal
1991, by the transfer to the Tax Stabilization Reserve Fund of 10 percent
of the budgetary basis operating surplus in the General Fund at the close
of any fiscal year. In addition, the proceeds received from the
disposition of assets of the Commonwealth are also to be deposited into
the Tax Stabilization Reserve Fund. The Commonwealth has not prepared
estimates of such sales.

Assets of the Tax Stabilization Reserve Fund may be used only
upon the recommendation by the Governor and approval by the vote of
two-thirds of the members of each house of the General Assembly. In
February 1991, in response to a projected fiscal 1991 General Fund
budgetary deficit caused by lower revenues and higher expenditures than
budgeted, the Governor recommended, and the General Assembly authorized,
the available balance of $133.8 million in the Tax Stabilization Reserve
Fund be used to pay medical assistance and special education costs not
covered by budgeted funds. On June 30, 1994, the balance in the Tax
Stabilization Fund was $29.9 million. A transfer of $33.6 million into
the Fund will be made representing the 10 percent portion of the fiscal
1994 General Fund fiscal year-end balance.

Debt Limits and Outstanding Debt. The Pennsylvania Constitution
permits the Commonwealth to issue the following types of debt: (i) debt to
suppress insurrection or rehabilitate areas affected by disaster, (ii)
electorate approved debt, (iii) debt for capital projects subject to an
aggregate debt limit of 1.75 times the annual average tax revenues of the
preceding five fiscal years, and (iv) tax anticipation notes payable in
the fiscal year of issuance. All debt except tax anticipation notes must
be amortized in substantial and regular amounts.

Outstanding general obligation debt totalled $5,075.8 million on
June 30, 1994, an increase of $37 million from June 30, 1993. Over the
10-year period ending June 30, 1994, total outstanding general obligation
debt increased at an annual rate of 1.3 percent. Within the most recent
5-year period, outstanding general obligation debt has grown at an annual
rate of 1.5 percent.

General obligation debt for non-highway purposes of $3,791.9
million was outstanding on June 30, 1994. Outstanding debt for these
purposes increased $148.3 million since June 30, 1993, in large part due
to the recent emphasis the Commonwealth has placed on infrastructure
investment as a means to spur economic growth and to provide a higher
quality of life for Commonwealth residents. For the period ending June
30, 1994, the 10-year and 5-year average annual compounded growth rate for
total outstanding debt for non-highway purposes has been 3.6 percent and
4.9 percent, respectively. In its current debt financing plan,
Commonwealth infrastructure investment projects include improvement and
rehabilitation of existing capital facilities, such as water supply
systems and construction of new facilities, such as roads, prisons and
public buildings.

Outstanding general obligation debt for highway purposes was
$1,283.8 million on June 30, 1994, a decrease of $111.4 million from June
30, 1993. Highway outstanding debt has declined over the most recent
10-year and 5-year periods ending June 30, 1994 by the annual average
rates of 3.4 percent and 5.6 percent, respectively.

During the period from 1980 through 1986, all of the
Commonwealth's highway investment was funded from current year revenues.
Beginning in 1987, a limited return to the issuance of long-term bonds was
required to finance immediately needed repairs to highway bridges. The
highway bridge bonding program is funded from the Highway Bridge
Improvement Restricted Account within the Motor License Fund. Revenues in
this restricted account are derived from six cent per gallon surtax on
motor fuel used on Commonwealth highways by motor carriers and increased
registration fees for trucks and truck tractors weighing above 26,000
pounds. The two funding sources for the Highway Bridge Improvement
Restricted Account were enacted on July 13, 1987 to replace revenues from
an axle tax on heavy trucks which was declared unconstitutional by the
United States Supreme Court.

The Commonwealth has also issued obligations for its advance
construction interstate program (the "ACI Program") to fund the completion
of the interstate highway network in anticipation of the receipt of
reimbursements for the federally financed portion of these projects. As
of June 30, 1994, $48 million of ACI Program debt was outstanding.

The Commonwealth may incur debt to fund capital projects for
community colleges, highways, public improvements, transportation
assistance, flood control, redevelopment assistance, site development and
the Pennsylvania Industrial Development Authority. Before a project may
be funded, it must be itemized in a capital budget bill adopted by the
General Assembly. An annual capital budget bill states the maximum amount
of debt for capital projects that may be incurred during the current
fiscal year for projects authorized in the current or previous years'
capital budget bills. Capital projects debt is subject to a
constitutional limit on debt. As of June 30, 1994, $3,965.6 million of
capital projects debt was outstanding.

The issuance of electorate approved debt is subject to the
enactment of legislation which places on the ballot the question of
whether debt shall be incurred. Such legislation must state the purposes
for which the debt is to be authorized and, as a matter of practice,
includes a maximum amount of funds to be borrowed. Upon electorate
approval and enactment of legislation implementing the proposed
debt-funded program, bonds may be issued. As of June 30, 1994, the
Commonwealth had $848.7 million of electorate approved debt outstanding.

Debt issued to rehabilitate areas affected by disasters is
authorized by specific legislation. The Commonwealth had $51.2 million of
disaster relief debt outstanding as of June 30, 1994.

Due to the timing of major tax payment dates, the Commonwealth's
cash receipts are generally concentrated in the last four months of the
fiscal year, from March through June. Disbursements are distributed more
evenly throughout the fiscal year. As a result, operating cash shortages
can occur during certain months of the fiscal year. The Commonwealth
engages in short-term borrowing to fund expenses within the fiscal year
through the sale of tax anticipation notes. The Commonwealth may issue
tax anticipation notes only for the account of the General Fund or the
Motor License Fund or both such funds. The principal amount issued, when
added to that outstanding, may not exceed in the aggregate 20 percent of
the revenues estimated to accrue to the appropriate fund or both funds in
the fiscal year. Tax anticipation notes must mature within the fiscal
year in which they are issued. The Commonwealth is not permitted to fund
deficits between fiscal years with any form of debt. All year-end deficit
balances must be funded within the succeeding fiscal year's budget. The
Commonwealth issued $400.0 million of tax anticipation notes for the
account of the General Fund for fiscal 1994. All such notes matured on
June 30, 1994 and were paid from fiscal 1994 General Fund receipts.

Pending the issuance of bonds, the Commonwealth may issue bond
anticipation notes subject to the applicable statutory and constitutional
limitations generally imposed on bonds. The term of such borrowings may
not exceed three years. Currently, there are no bond anticipation notes
outstanding.

Certain state-created agencies have statutory authority to incur
debt for which state appropriations to pay debt service thereon is not
required. The debt of these agencies is supported by assets of, or
revenues derived from, the various projects financed and is not an
obligation of the Commonwealth. Some of these agencies, however, are
indirectly dependent on Commonwealth appropriations. These entities
include: Delaware River Joint Toll Bridge Commission, Delaware River Port
Authority, Pennsylvania Energy Development Authority, Pennsylvania Higher
Education Assistance Agency, Pennsylvania Higher Educational Facilities
Authority, Pennsylvania Industrial Development Authority, Pennsylvania
Infrastructure Investment Authority, Pennsylvania State Public School
Building Authority, Pennsylvania Turnpike Commission, the Philadelphia
Regional Port Authority and the Pennsylvania Economic Development
Financing Authority. As of December 31, 1993, the aggregate outstanding
indebtedness of these entities was $5,767.7 million.

The Pennsylvania Housing Finance Agency ("PHFA"), as of
December 31, 1993, had $2,052.5 million of revenue bonds and $13.0 million
of notes outstanding. The statute creating PHFA provides that if there is
a potential deficiency in the capital reserve fund or if funds are
necessary to avoid default on interest, principal or sinking fund payments
on bonds or notes of PHFA, the Governor, upon notification from the PHFA,
shall place in the budget of the Commonwealth for the next succeeding year
an amount sufficient to make up any such deficiency or to avoid any such
default. The budget as finally adopted by the General Assembly may or may
not include the amount so placed therein by the Governor. PHFA is not
permitted to borrow additional funds so long as any deficiency exists in
the capital reserve fund.

The Hospitals and Higher Education Facilities Authority of
Philadelphia, as of June 30, 1993, had $21.1 million of bonds outstanding
which benefit from a moral obligation of the Commonwealth's Department of
Public Welfare to request a budget appropriation to make up any deficiency
in the debt service reserve fund for said bonds. The budget as finally
adopted may or may not include the amount requested.

The Commonwealth, through several of its departments and
agencies, has entered into various agreements to lease, as lessee, certain
real property and equipment and to make lease rental payments. Some of
those lease payments are pledged as security for various outstanding debt
obligations issued by certain public authorities or other entities within
the state. All lease payments due from Commonwealth departments and
agencies are subject to and dependent upon an annual spending
authorization approved through the Commonwealth's annual budget process.
The Commonwealth is not required by law to appropriate or otherwise
provide moneys from which the lease payments are to be paid. The
obligations to be paid from such lease payments are not bonded debt of the
Commonwealth.

The Commonwealth maintains contributory benefit pension plans
covering all state employees, public school employees and employees of
certain other state-related organizations. Unfunded actuarial accrued
liabilities for the Public School Employees' Retirement Fund as of June
30, 1993 were $3,303 million, and for the State Employees' Retirement Fund
were $847 million as of December 31, 1993.

Municipal Finance

Local Finance. The Local Government Unit Debt Act (Act 52 of
1978) (the "Debt Act") establishes debt limits for local government units.
Local government units include municipalities (except a first class city
or county), school districts and intermediate units. The Act establishes
three classes of debt for a local government unit: (i) electoral debt
(debt incurred with the approval of the electors of the municipality for
which there is no limitation on the amount that may be incurred); (ii)
nonelectoral debt (debt of a local government unit not being electoral or
lease rental debt); (iii) lease rental debt (the principal amount of debt
of an authority organized by a municipality or debt of another local
government unit, which debt is to be repaid by the local government unit
through a lease, subsidy contract, guarantee or other form of agreement
evidencing acquisition of a capital asset, payable or which may be payable
out of tax revenues and other general revenues. Each local government
unit is subject to a limitation as to the amount of class "ii" and class
"iii" debt which may be issued which is based upon such local government
unit's Borrowing Base.

Borrowing Base is defined in the Debt Act as the annual
arithmetic average of the total revenues for the three full fiscal years
ended next preceding the date of the incurring of nonelectoral debt or
lease rental debt. Total revenues for the purposes of the Debt Act
excludes, inter alia, certain state and federal subsidies and
reimbursements, certain pledged revenues, interest on pledged funds and
nonrecurring items.

The debt limitations applicable to the various local government
units are set forth below:

Nonelectoral Nonelectoral plus
Lease Rental
First Class
School District 100% of Borrowing Base 200% of Borrowing Base

County 300% of Borrowing Base 400% of Borrowing Base

Other 250% of Borrowing Base 350% of Borrowing Base

A county may utilize an additional debt limit of 100% of its
Borrowing Base for additional nonelectoral or additional lease rental
debt, or both, if such county has assumed countywide responsibility for
hospitals and other public health services, air and water pollution
control, flood control, environmental protection, water distribution and
supply systems, sewage and refuse collection and disposal systems,
education at any level, highways, public transportation, or port
operations, but such additional debt limit may be so utilized only to
provide funds for and towards the costs of capital facilities for any or
any combination of the foregoing purposes.

City of Philadelphia. The City of Philadelphia ("Philadelphia")
is the largest city in the Commonwealth, with an estimated population of
1,585,577 according to the 1990 Census. Philadelphia functions both as a
city of the first class and a county for the purpose of administering
various governmental programs.

For the fiscal year ending June 30, 1991, Philadelphia
experienced a cumulative General Fund balance deficit of $153.5 million.
The audit findings for the fiscal year ending June 30, 1992, place the
Cumulative General Fund balance deficit at $224.9.

Legislation providing for the establishment of the Pennsylvania
Intergovernmental Cooperation Authority ("PICA") to assist first class
cities in remedying fiscal emergencies was enacted by the General Assembly
and approved by the Governor in June 1991. PICA is designed to provide
assistance through the issuance of funding debt to liquidate budget
deficits and to make factual findings and recommendations to the assisted
city concerning its budgetary and fiscal affairs. An intergovernmental
cooperation agreement between Philadelphia and PICA was approved by City
Council on January 3, 1992, and approved by the PICA Board and signed by
the Mayor on January 8, 1992. At this time, Philadelphia is operating
under a five year fiscal plan approved by PICA on April 6, 1992. Full
implementation of the five year plan was delayed due to labor negotiations
that were not completed until October 1992, three months after the
expiration of the old labor contracts. The terms of the new labor
contracts are estimated to cost approximately $144.0 million more than
what was budgeted in the original five year plan. An amended five year
plan was approved by PICA in May 1993. The audit findings show a surplus
of approximately $3 million for the fiscal year ending June 30, 1993. The
fiscal 1994 budget projects no deficit and a balanced budget for the year
ended June 30, 1994. The Mayor's latest update of the five year financial
plan was approved by PICA on May 2, 1994.

In June 1992, PICA issued $474,555,000 of its Special Tax
Revenue Bonds to provide financial assistance to Philadelphia and to
liquidate the cumulative General Fund balance deficit. PICA issued
$643,430,000 in July 1993 and $178,675,000 in August 1993 of Special Tax
Revenue Bonds to refund certain general obligation bonds of the city and
to fund additional capital projects.

Litigation. According to the Official Statement dated August
24, 1994 describing Certificates of Participation in Lease Payments by the
Commonwealth of Pennsylvania, the Office of Attorney General and the
Office of General Counsel have reviewed the status of pending litigation
against the Commonwealth, its officers and employees, and have identified
the following cases as ones where an adverse decision could materially
affect the Commonwealth's governmental operations. Listed below are all
litigation items so identified that may have a material effect on
government operations of the Commonwealth and consequently, the
Commonwealth's ability to pay debt service on its obligations.

Under Act No. 1978-152 approved September 28, 1978, as amended,
the General Assembly approved a limited waiver of sovereign immunity.
Damages for any loss are limited to $250,000 for each person and
$1,000,000 for each accident. The Supreme Court of Pennsylvania has held
that this limitation is constitutional. Approximately 3,500 suits against
the Commonwealth remain open. Tort claim payments for the departments and
agencies, other than the Department of Transportation, are paid from
departmental and agency operating and program appropriations. Tort claim
payments for the Department of Transportation are paid from an
appropriation from the Motor License Fund. The Motor License Fund tort
claim appropriation for fiscal 1994 has been increased by 83 percent to
$32.0 million to fund possibly higher and more numerous payments resulting
from recent decisions by the Pennsylvania Supreme Court, including Woods
v. PaDOT, that will affect the Department of Transportation's liability.
The Woods v. PaDOT ruling changes the computation for delay damages by
using the jury award as the base rather than the damage limits specified
in Act No. 1978-152.

Baby Neal v. Commonwealth

In April of 1990, the American Civil Liberties Union ("ACLU")
and various named plaintiffs filed a lawsuit against the Commonwealth in
federal court seeking an order requiring the Commonwealth to provide
additional funding for child welfare services. No figures for the amount
of funding sought are available. A similar lawsuit filed in the
Commonwealth Court, captioned as The City of Philadelphia, Hon. Wilson
Goode v. Commonwealth of Pennsylvania, Hon. Robert P. Casey et al., was
resolved through a court approved settlement providing, inter alia, for
more Commonwealth funding for these services for fiscal year 1991 as well
as a commitment to pay to counties $30.0 million over five years. The
Commonwealth then sought dismissal of the federal action based on, among
other things, the settlement of the Commonwealth Court case.

In January of 1992, the U.S. District Court, per Judge Kelly,
denied the ACLU's motion for class certification and held that the "next
friends" seeking to represent the interests of the 16 minor plaintiffs in
the case were inadequate representatives. The Commonwealth filed a motion
for summary judgment on most of the counts in the ACLU's complaint on the
basis of, among other things, Suter v. Artist M.. After the motion for
summary judgment was filed, the ACLU filed a renewed motion to certify
sub-classes. The court stayed decision on that motion pending decision on
the motion for summary judgment.

The district court has since denied the ACLU's motion for class
certification. The parties have stipulated to a judgment against the
plaintiffs in order for plaintiffs to appeal the denial of class
certification to the Third Circuit.

County of Allegheny v. Commonwealth of Pennsylvania

On December 7, 1987, the Supreme Court of Pennsylvania held in
County of Allegheny v. Commonwealth of Pennsylvania, that the statutory
scheme for county funding of the judicial system is in conflict with the
Pennsylvania Constitution. However, the Supreme Court of Pennsylvania
stayed its judgment to afford the General Assembly an opportunity to enact
appropriate funding legislation consistent with its opinion and ordered
that the prior system of county funding shall remain in place until this
is done. Allegheny County, on February 12, 1991, filed a motion in the
Supreme Court of Pennsylvania to lift the stay and enforce the judgment.
The Supreme Court subsequently denied the motion.

On March 3, 1989, the City of Philadelphia, Allegheny County,
and the state County Commissioner's Association filed suit in the Supreme
Court of Pennsylvania to require the General Assembly to appropriate the
funds required by the Supreme Court of Pennsylvania. That suit was
summarily dismissed on March 31, 1989. On February 14, 1991, the
Pennsylvania State Association of County Commissioners and the Counties of
Blair, Bucks, Erie, Huntington and Perry filed in the Commonwealth Court
of Pennsylvania an action for declaratory judgment requesting an order
that the Commonwealth be required to provide funds for the operation of
the courts of common pleas in accordance with the County of Allegheny
decision. These parties also requested the Supreme Court of Pennsylvania
to assume plenary jurisdiction over their case. The Supreme Court of
Pennsylvania refused to do so, and these parties have withdrawn the
Commonwealth Court action.

On October 5, 1992, the Pennsylvania State Association of County
Commissioners, along with Allegheny, Beaver, Clarion, Forest, Tioga and
Washington counties, filed in the Supreme Court of Pennsylvania a motion
to enforce judgment seeking an order that would direct the Commonwealth to
restore funding for local courts and district justices to levels existing
in 1987. The Commonwealth has filed a response opposing the motion. By
order dated May 26, 1993, the motion to enforce judgment was denied.

On December 7, 1992, the State Association of County
Commissioners filed a new action in mandamus seeking to compel the
Commonwealth to comply with the decision in County of Allegheny. The
Commonwealth has filed a response in opposition to the new action.

The General Assembly has yet to consider legislation
implementing the Supreme Court of Pennsylvania's judgment.

Fidelity Bank v. Commonwealth

In Dale National Bank v. Commonwealth the Pennsylvania Supreme
Court held that it was unconstitutional for the Commonwealth, in
calculating the bank shares tax, to include in the taxable base the value
represented by federal obligations. In response, in 1983, the Legislature
enacted the single excise tax which was levied on banking firms to recover
refunds owed to each bank as a result of Dale. First National Bank of
Fredericksburg challenged the constitutionality of the single excise tax.
On February 3, 1989, the Supreme Court in First National Bank of
Fredericksburg v. Commonwealth held that the single excise tax, as applied
to the First National Bank of Fredericksburg and its affiliated banks,
violated the banks' due process rights and separation of powers doctrine.

On July 1, 1989, the Governor signed into law Act 1989-21, the
Amended Bank Shares Tax. This law, which revised the bank shares tax by
adjusting the tax base and increasing the tax rate, provided additional
revenues to the Commonwealth during fiscal year 1989-90 sufficient to meet
the Fredericksburg refund liabilities and to maintain a projected positive
budget balance for the General Fund. Single excise tax refunds were given
in the form of credits against the 1989 Amended Bank Shares Tax. After
the first installment of the Amended Bank Shares Tax became due in October
30, 1989, First National Bank of Fredericksburg, Fidelity Bank, and
Equibank filed actions against the Commonwealth contesting the
constitutionality of the tax. First National Bank of Fredericksburg and
Equibank have since withdrawn their cases.

On July 7, 1994, the Commonwealth Court en banc ruled that the
1989 Amended Bank Shares Tax is constitutional. The Court also ruled that
the New Bank Shares Credit Law, passed by the General Assembly in 1989 to
provide a credit against the 1989 Amended Bank Shares Tax for banks
chartered after January 1, 1979, violates the Uniformity Clause of the
Pennsylvania Constitution. The ruling striking down the New Bank Shares
Credit Law results in an expected revenue gain of $11.6 million dollars
for the Commonwealth.

Pennsylvania Association of Rural and Small Schools (PARSS) v. Casey

This action was filed in January, 1991 by an association of
rural and small schools, several individual school districts, and a group
of parents and students, against Governor Robert P. Casey and Secretary of
Education Donald M. Carroll, Jr. The action challenges the
constitutionality of the Commonwealth's system for funding local school
districts. The action consists of two parallel cases, one in the
Commonwealth Court of Pennsylvania, and one in the United States District
Court for the Middle District of Pennsylvania. The federal court case has
been indefinitely stayed, pending resolution of the state court case. The
state court case is in the pretrial discovery stage. The trial has not
yet been scheduled.

Philadelphia Suburban Corp. v. Commonwealth

On December 10, 1993, the Pennsylvania Supreme Court overturned
a decision of the Commonwealth Court ruling that dividends received by a
corporate taxpayer which are accounted for under the equity method of
accounting are not includible in average net income for purposes of
determining capital stock value under the fixed formula. The Commonwealth
Court held that the Revenue Department regulation which requires that book
income be adjusted to include dividends accounted for under the equity
method is contrary to the capital stock tax law which requires that net
income be computed on an unconsolidated basis exclusive of the net income
or loss of corporations in which the taxpayer has an investment. The
Pennsylvania Supreme Court's decision permits the Commonwealth to release
$147 million held in reserve for potential tax refund.

Austin v. Department of Corrections, et al.

In November 1990, the American Civil Liberties Union ("ACLU")
brought a class action lawsuit on behalf of the inmate populations in
thirteen Commonwealth correctional institutions.

The lawsuit challenges the conditions of confinement at each
institution and includes specified allegations of overcrowding,
deficiencies in medical and mental health services, inadequate
environmental conditions, disparate treatment of HIV positive prisoners
and other assorted claims.

No damages are sought. The ACLU is seeking injunctive relief
which would modify conditions, change practices and procedures and
increase the number of staff deployment. The Department of Corrections
has been ordered to implement a new policy regarding detection and
prevention of tuberculosis. If injunctive relief is granted, the cost to
the Commonwealth may be substantial. The Commonwealth may incur
significant capital and personnel costs after this fiscal year ranging in
the millions of dollars.

Trial of this matter will take place in four distinct phases:
Corrections, Environmental, Medical and Mental Health. Trial of the first
phase (Corrections) began on December 6, 1993. The court recessed on
January 3, 1994, prompted by settlement negotiations between the parties,
and trial will resume if a settlement is not reached.

Scott v. Snider

In 1991, a consortium of public interest law firms filed a class
action suit, Scott v. Snider, against various Commonwealth officers,
alleging that the Commonwealth of Pennsylvania had failed to comply with a
1989 federal mandate to provide and pay for early and periodic screening,
diagnostic, and treatment services for all Medicaid-eligible children
under the age of 21. If the federal court were to grant all of the relief
that plaintiffs are seeking, the Commonwealth would be obligated, among
other things, (1) to substantially revise the methods by which it
presently identifies children in need of treatment and (2) to expand the
scope of services and treatment presently provided to such children. It
is estimated that such relief, if granted in toto, would cost the
Commonwealth approximately $98 million. On July 7, 1993, an Intervening
Complaint was filed by the City and County of Philadelphia, Allegheny
County, Pennsylvania State Association of County Commissioners, et al, but
intervention was denied by the Court.

Defendants have moved for summary judgment, and plaintiffs are
seeking partial summary judgment. The court has not yet ruled on these
motions.

Pennsylvania Medical Society v. Karen F. Snider

The Pennsylvania Medical Society sued the Commonwealth for
payment of the full co-pay and deductible for outpatient services provided
to medical assistance clients who are also eligible for Medicare. The
federal Medicare program has an established fee schedule for services
under Part B of which Medicare pays 80 percent and the patient is
responsible for the 20 percent co-pay. For medical assistance eligible
clients the medical assistance program pays the 20 percent patient co-pay
amount up to the maximum fee for service set under the Commonwealth's
medical assistance program. Consequently, when the 80 percent portion
paid by Medicare equals or exceeds the state established medical
assistance fee for that service, the Commonwealth has not paid the
remaining 20 percent portion of the fee. It is the position of the
Commonwealth that the medical assistance fee has precedence and the
service provider should not be paid more than the Commonwealth's fee
schedule. The Commonwealth received a favorable decision in the United
States District Court but the Pennsylvania Medical Society appealed that
decision and won a reversal in the United States Third Circuit Court. No
detailed cost estimates have been completed, but estimates made earlier
have estimated the cost to the Commonwealth of approximately $50 million
per year. An appeal is under consideration.

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

Units of the Trust are offered to investors on a "dollar price"
basis (using the computation method previously described under "Public
Offering Price") as distinguished from a "yield price" basis often used in
offerings of tax exempt bonds (involving the lesser of the yield as
computed to maturity of bonds or to an earlier redemption date). Since
they are offered on a dollar price basis, the rate of return on an
investment in Units of 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 gain 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 has been increased.

Corporate Certificateholders are required to include in federal
corporate alternative minimum taxable income 75 percent of the amount by
which the adjusted current earnings (which will include tax-exempt
interest) of the corporation exceeds alternative minimum taxable income
(determined without 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 Navigator 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:

The New Jersey Navigator Trust will be recognized as a trust and
not as an association taxable as a corporation.

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.

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).

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.

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.

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 Law.

In the opinion of Saul, Ewing, Remick & Saul, special counsel to
the Sponsor on Pennsylvania tax matters, under existing law:

(1) Units evidencing fractional undivided interests in the
Trust, to the extent represented by obligations issued by the
Commonwealth of Pennsylvania, any public authority, commission, board
or other agency created by the Commonwealth of Pennsylvania, any
political subdivision of the Commonwealth of Pennsylvania or any
public authority created by any such political subdivision, or by the
Government of Puerto Rico or its public authorities, are not taxable
under any of the personal property taxes presently in effect in
Pennsylvania;

(2) Distributions of interest income to Certificateholders that
would not be taxable if received directly by a Pennsylvania resident
are not subject to personal income tax under the Pennsylvania Tax
Reform Code of 1971; nor will such interest be taxable under
Philadelphia School District Investment Income Tax imposed on
Philadelphia resident individuals;

(3) A Certificateholder which is an individual, estate or trust
will have a taxable event under the Pennsylvania state and local
income tax referred to in the preceding paragraph upon the redemption
or sale of Units;

(4) A Certificateholder which is a corporation will have a
taxable event under the Pennsylvania Corporate Net Income Tax or, if
applicable, the Mutual Thrift Institutions Tax, upon the redemption
or sale of its Units. Interest income distributed to Certificate-
holder which are corporations is not subject to Pennsylvania
Corporate Net Income Tax or Mutual Thrift Institutions Tax. However,
banks, title insurance companies and trust companies may be required
to take the value of Units into account in determining the taxable
value of their shares subject to Shares Tax;

(5) Under Act No. 68 of December 3, 1993, gains derived by the
Trust from the sale, exchange or other disposition of Pennsylvania
Bonds may be subject to Pennsylvania personal or corporate income
taxes. Those gains which are distributed by the Trust to
Certificateholders who are individuals will be subject to
Pennsylvania Personal Income Tax and, for residents of Philadelphia,
to Philadelphia School District Investment Income Tax. For
Certificateholders which are corporations, the distributed gains will
be subject to Corporate Net Income Tax or Mutual Thrift Institutions
Tax;

(6) For Pennsylvania Bonds, gains which are not distributed by
the Trust will nevertheless be taxable to Certificateholders if
derived by the Trust from the sale, exchange or other disposition of
these Bonds issued on or after February 1, 1994. Such gains which
are not distributed by the Trust will remain nontaxable to
Certificateholders if derived by the Trust from the sale, exchange or
other disposition of Bonds issued prior to February 1, 1994.
However, for gains from the sale, exchange or other disposition of
these Bonds to be taxable under the Philadelphia School District
Investment Income Tax, the Bonds must be held for six months or less;

(7) Gains from the sale, exchange or other disposition of
Puerto Rico Bonds will be taxable to Certificateholders if
distributed or retained by the Trust. However, for gains from the
sale, exchange or other disposition of these Bonds to be taxable
under the Philadelphia School District Investment Income Tax, the
Bonds must be held for six months or less;

(8) Units are subject to Pennsylvania inheritance and estate
taxes;

(9) Any proceeds paid under insurance policies issued to the
Trustee or obtained by issuers or the underwriters of the Bonds, the
Sponsor or others which represent interest on defaulted obligations
held by the Trustee will be excludable from Pennsylvania gross income
if, and to the same extent as, such interest would have been so
excludable if paid in the normal course by the issuer of the
defaulted obligations; and

(10) The Trust is not taxable as a corporation under
Pennsylvania tax laws applicable to corporations.

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.

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); Short-Intermediate Term 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 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 Certificateholders 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 Certificateholders 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 Certificateholder 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 Certificateholders 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 Certificateholders. Certificateholders may,
during this 60 day period, exercise the Exchange Privilege in accordance
with its terms then in effect. In the event the Exchange Privilege is not
available to a Certificateholder at the time he wishes to exercise it, the
Certificateholder will immediately be notified and no action will be taken
with respect to his Units without further instructions from the Certifi-
cateholder.

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

Certificateholders 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 Certificateholders 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 Certificateholders 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 Certificateholder 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 Certificateholders 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
Certificateholder'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. Certificateholders 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
Certificateholder. 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 Certificateholders of
Redemption Trusts. In the event the Conversion Offer is not available to
a Certificateholder at the time he wishes to exercise it, the
Certificateholder will be notified immediately and no action will be taken
with respect to his units without further instruction from the
Certificateholder. 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 Certificateholder 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 Certificateholder is a resident, the Certificateholder 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
Certificateholder'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 Certificateholder's broker will be entitled to
retain $5 of the applicable sales charge.

Example: Assume a Certificateholder 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 Certificateholder 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
Certificateholder's redemption of units will aggregate $3,375. Since only
whole units of a Redemption Trust may be purchased under the Conversion
Offer, the Certificateholder 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 Certificateholder in cash. If the Certificateholder
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, 75 East 55th Street, New York, New York 10022, 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. Certain matters relating to Pennsylvania tax law have been
passed upon by Saul, Ewing, Remick & Saul, as special Pennsylvania counsel
to the Sponsors.

Independent Auditors

The financial statements of the Trusts included in Part A of
this Prospectus as of the dates set forth in Part A, have been examined by
KPMG Peat Marwick, independent certified public accountants, for the
periods indicated in its reports appearing herein. The financial
statements examined by KPMG Peat Marwick have been so included in reliance
on its report given upon its authority 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 Standard & Poor's Corporation.

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.

DESCRIPTION OF RATING ON THE UNITS*

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.
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

Title Page INSURED
MUNICIPAL SECURITIES TRUST
Summary of Essential Information . . . A-5 (Unit Investment Trust)
Information Regarding the Trust . . . . A-7 Prospectus
Financial and Statistical Information . A-8
Audit and Financial Information Dated: October 28, 1994
Report of Independent Accountants . . F-1
Statement of Net Assets . . . . . . . F-2 Sponsors:
Statement of Operations . . . . . . . F-3 Bear, Stearns & Co. Inc.
Statement of Changes in Net Assets . F-4 245 Park Avenue
Notes to Financial Statements . . . . F-5 New York, New York 10167
Portfolio . . . . . . . . . . . . . . F-6 212-272-2500
The Trust . . . . . . . . . . . . . . . 1
Public Offering . . . . . . . . . . . . 53 Gruntal & Co., Incorporated
Estimated Long Term Return and Estimated 14 Wall Street
Current Return . . . . . . . . . . . 55 New York, New York 10005
Rights of Certificateholders . . . . . 55 212-267-8800
Tax Status . . . . . . . . . . . . . . 58
Liquidity . . . . . . . . . . . . . . . 64 Trustee:
Total Reinvestment Plan . . . . . . . . 66
Trust Administration . . . . . . . . . 70 United States Trust Company
Trust Expenses and Charges . . . . . . 74 of New York
Exchange Privilege and Conversion Offer 75 770 Broadway
Other Matters . . . . . . . . . . . . . 80 New York, New York 10003
Description of Bond Ratings . . . . . . 80 1-800-428-8890
Description of Rating on the Units . . 81

Evaluator:
Parts A and B of this Prospectus do not
contain all of the information set forth in Kenny S&P Evaluation
the registration statement and exhibits Services
relating thereto, filed with the Securities 65 Broadway
and Exchange Commission, Washington, D.C., New York, New York 10006
under the Securities Act of 1933, and to
which reference is made.

* * *

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 New Jersey Counsel (included in Exhibit 99.3.2).
Consents of the Evaluator and Confirmation of Ratings of Standard & Poor's
Corporation (included in Exhibit 99.5.1).

The following exhibits:

99.1.1 -- Reference Trust Agreements including certain Amendments to
the Trust Indenture and Agreement referred to under
Exhibit 1.1.1 below (filed as Exhibit 1.1 to Amendment
No. 1 to Form S-6 Registration Statements Nos. 33-41110
and 33-41923 of Insured Municipal Securities Trust, New
York Navigator Insured Series 8 & New Jersey Navigator
Insured Series 5 and Series 27, New York Navigator Insured
Series 9 & New Jersey Navigator Insured Series 6,
respectively, on July 11, 1991 and November 14, 1991,
respectively, and incorporated herein by reference).

99.1.1.1 -- 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).

99.1.3.4 -- 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).

99.1.3.5 -- By-laws of Bear, Stearns & Co. Inc. (filed as
Exhibit 1.3.5 to Amendment No. 1 to Form S-6 Registration
Statement No. 33-25192 of Insured Municipal Securities
Trust, 40th Discount Series and Series 13 on December 1,
1988 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
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).

99.1.3.7 -- By-Laws of Gruntal & Co., Incorporated, as amended (filed
as Exhibit 1.3.7 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).

99.1.4 -- 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 Registration Statement No. 2-95261 of
Insured Municipal Securities Trust, 7th Discount Series on
February 7, 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 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 filing 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 tax status of the Trust (filed as
Exhibit 3.1 to Amendment No. 1 to Form S-6 Registration
Statements Nos. 33-41110 and 33-41923 of Insured Municipal
Securities Trust, New York Navigator Insured Series 8 & New
Jersey Navigator Insured Series 5 and Series 27, New York
Navigator Insured Series 9 & New Jersey Navigator Insured
Series 6, respectively, on July 11, 1991 and November 14, 1991,
respectively, and incorporated herein by reference).

99.3.2 -- Opinion of Freeman, Zeller & Bryant, Special New Jersey Counsel
including their consent to the filing thereof and to the use of
their name in the Prospectus (filed as Exhibit 3.2 to Post-
Effective Amendment No. 1 to Form S-6 Registration Statements
Nos. 33-41110 and 33-41923 of Insured Municipal Securities
Trust, New York Navigator Insured Series 8 & New Jersey
Navigator Insured Series 5 and Series 27, New York Navigator
Insured Series 9 & New Jersey Navigator Insured Series 6,
respectively, on October 30, 1992 and incorporated herein by
reference).

*99.5.1 -- Consents of the Evaluator and Confirmation of Ratings of
Standard & Poor's Corporation.

* Being filed by this Amendment.
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).

*27 -- Financial Data Schedule(s) (for EDGAR filing only).

* Being filed by this Amendment.
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrants, Insured Municipal Securities Trust, New York Navigator
Insured Series 8 & New Jersey Navigator Insured Series 5 and Insured
Municipal Securities Trust, Series 27, New York Navigator Insured Series 9
& New Jersey Navigator Insured Series 6 certify that they have met all of
the requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933. The registrants have duly caused this Post-Effective Amendment to
the Registration Statement to be signed on their behalf by the
undersigned, thereunto duly authorized, in the City of New York and State
of New York on the 28th day of October, 1994.

INSURED MUNICIPAL SECURITIES TRUST,
NEW YORK NAVIGATOR INSURED SERIES 8 &
NEW JERSEY NAVIGATOR INSURED SERIES 5 AND
INSURED MUNICIPAL SECURITIES TRUST, SERIES 27,
NEW YORK NAVIGATOR INSURED SERIES 9 &
NEW JERSEY NAVIGATOR INSURED SERIES 6
(Registrants)

GRUNTAL & CO., INCORPORATED
(Depositor)

By: ROBERT SABLOWSKY
Robert Sablowsky
(Authorized Signatory)

Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment to the Registration Statement has been
signed below by the following persons, who constitute the principal
officers and a majority of the directors of Gruntal & Co., Incorporated,
the Depositor, in the capacities and on the dates indicated.

Name Title Date

HOWARD SILVERMAN Chief Executive Officer and )
Director ) October 28, 1994
EDWARD E. BAO Executive Vice President and )
Director )
BARRY RICHTER Executive Vice President and )
Director )
ROBERT SABLOWSKY Executive Vice President and ) By: ROBERT SABLOWSKY
Director )
LIONEL G. HEST Senior Executive and Director ) Attorney-in-Fact

_______________
</TABLE>

* 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>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrants, Insured Municipal Securities Trust, New York Navigator
Insured Series 8 & New Jersey Navigator Insured Series 5 and Insured
Municipal Securities Trust, Series 27, New York Navigator Insured Series 9
& New Jersey Navigator Insured Series 6 certify that they have met all of
the requirements for effectiveness of this Post-Effective Amendment to the
Registration Statements pursuant to Rule 485(b) under the Securities Act
of 1933. The registrants have duly caused this Post-Effective Amendment
to the Registration Statements to be signed on their behalf by the
undersigned, thereunto duly authorized, in the City of New York and State
of New York on the 28th day of October, 1994.

INSURED MUNICIPAL SECURITIES TRUST,
NEW YORK NAVIGATOR INSURED SERIES 8 &
NEW JERSEY NAVIGATOR INSURED SERIES 5 AND
INSURED MUNICIPAL SECURITIES TRUST, SERIES 27,
NEW YORK NAVIGATOR INSURED SERIES 9 &
NEW JERSEY NAVIGATOR INSURED SERIES 6
(Registrants)

BEAR, STEARNS & CO. INC.
(Depositor)

By: PETER J. DeMARCO
Peter J. DeMarco
(Authorized Signatory)

Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment to the Registration Statements 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, Director )
and Senior Managing Director )
JAMES E. CAYNE President, Chief Executive )
Officer, Director and Senior )
Managing Director ) October 28, 1994
JOHN C. SITES, JR. Executive Vice President, Director )
and Senior Managing Director )
MICHAEL L. TARNOPOL Executive Vice President, Director )
and Senior Managing Director ) By: PETER J. DeMARCO
VINCENT J. MATTONE Executive Vice President, Director )
and Senior Managing Director )
ALAN D. SCHWARTZ Executive Vice President, Director ) Attorney-in-Fact*
and Senior Managing Director )
DOUGLAS P.C. NATION Director and Senior Managing )
Director )
WILLIAM J. MONTGORIS Chief Operating Officer, Chief )
Financial Officer, Senior )
Vice President-Finance and Senior )
Managing Director )
KENNETH L. EDLOW Secretary and Senior Managing )
Director )
MICHAEL MINIKES Treasurer and Senior Managing )
Director )
MICHAEL J. ABATEMARCO Controller, Assistant Secretary )
and Senior Managing Director )
MARK E. LEHMAN Senior Vice President - General )
Counsel and Senior Managing )
Director )
FREDERICK B. CASEY Assistant Treasurer and Senior )
Managing Director )
_______________
</TABLE>

* An executed power of attorney was filed as Exhibit 6.0 to Post-
Effective Amendment No. 8 to registration Statements Nos. 2-92113,
2-92660, 2-93073, 2-93884 and 2-94545 on October 30, 1992.

<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the use in these Post-Effective Amendments to the Registration
Statements of our reports on the financial statements of Insured Municipal
Securities Trust, Series 27; Insured Municipal Securities Trust, New Jersey
Navigator Insured Series 5; Insured Municipal Securities Trust, New Jersey
Navigator Insured Series 6; Insured Municipal Securities Trust, New York
Navigator Insured Series 8; and Insured Municipal Securities Trust, New York
Navigator Insured Series 9 included herein and to the reference to our firm
under the heading "Independent Auditors" in the Prospectus which is part of
this Registration Statement.

KPMG Peat Marwick LLP

New York, New York
October 27, 1994

<PAGE>
EXHIBIT INDEX

Exhibit Description Page No.

99.1.1 Reference Trust Agreements including
certain Amendments to the Trust Indenture
and Agreement referred to under
Exhibit 1.1.1 below (filed as Exhibit 1.1
to Amendment No. 1 to Form S-6
Registration Statements Nos. 33-41110 and
33-41923 of Insured Municipal Securities
Trust, New York Navigator Insured Series 8
& New Jersey Navigator Insured Series 5
and Series 27, New York Navigator Insured
Series 9 & New Jersey Navigator Insured
Series 6, respectively, on July 11, 1991
and November 14, 1991, 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. 33-28702 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 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).

99.1.3.7 By-Laws of Gruntal & Co., Incorporated, as
amended (filed as Exhibit 1.3.7 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).

99.1.4 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 Registration Statement
No. 2-95261 of Insured Municipal
Securities Trust, 7th Discount Series on
February 7, 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 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
filing 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 tax
status of the Trust (filed as Exhibit 3.1
to Amendment No. 1 to Form S-6
Registration Statements Nos. 33-41110 and
33-41923 of Insured Municipal Securities
Trust, New York Navigator Insured Series 8
& New Jersey Navigator Insured Series 5
and Series 27, New York Navigator Insured
Series 9 & New Jersey Navigator Insured
Series 6, respectively, on July 11, 1991
and November 14, 1991, respectively, and
incorporated herein by reference).

99.3.2 Opinion of Freeman, Zeller & Bryant,
Special New Jersey Counsel including their
consent to the filing thereof and to the
use of their name in the Prospectus (filed
as Exhibit 3.2 to Post-Effective Amendment
No. 1 to Form S-6 Registration Statements
Nos. 33-41110 and 33-41923 of Insured
Municipal Securities Trust, New York
Navigator Insured Series 8 & New Jersey
Navigator Insured Series 5 and Series 27,
New York Navigator Insured Series 9 & New
Jersey Navigator Insured Series 6,
respectively, on October 30, 1992 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).

27 Financial Data Schedule(s) (for EDGAR filing only)...

<ARTICLE> 6
<LEGEND> The schedule contains summary
financial information extracted from
the financial statements and
supporting schedules as of the end
of the most current period and is
qualified in its entirety by
reference to such financial
statements
</LEGEND>
<CIK> 0000875747
<NAME> IMST, NY NAV. INSURED SERIES 8 AND
NJ NAV. INSURED SERIES 5
<SERIES>
<NUMBER> 8
<NAME> SERIES NY NAV. INSURED

<S> <C>
<FISCAL-YEAR-END> Jun-30-1994
<PERIOD-START> Jul-01-1993
<PERIOD-END> Jun-30-1994
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 6433768
<INVESTMENTS-AT-VALUE> 6989763
<RECEIVABLES> 134533
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7124296
<PAYABLE-FOR-SECURITIES> 16586
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 508
<TOTAL-LIABILITIES> 17094
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 6651
<SHARES-COMMON-PRIOR> 6718
<ACCUMULATED-NII-CURRENT> 127198
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 1919
<ACCUM-APPREC-OR-DEPREC> 555995
<NET-ASSETS> 7107202
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 468728
<OTHER-INCOME> 3020
<EXPENSES-NET> 11033
<NET-INVESTMENT-INCOME> 460715
<REALIZED-GAINS-CURRENT> 7437
<APPREC-INCREASE-CURRENT> (345620)
<NET-CHANGE-FROM-OPS> 122532
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 458469
<DISTRIBUTIONS-OF-GAINS> 72012
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 67
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (407949)
<ACCUMULATED-NII-PRIOR> 125844
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 18626
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 7311177
<PER-SHARE-NAV-BEGIN> 1118.66
<PER-SHARE-NII> 68.48
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 68.64
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1068.59
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>
<FISCAL-YEAR-END> Jun-30-1994
<PERIOD-START> Jul-01-1993
<PERIOD-END> Jun-30-1994
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 5234256
<INVESTMENTS-AT-VALUE> 5467287
<RECEIVABLES> 116990
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5584277
<PAYABLE-FOR-SECURITIES> 20915
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 408
<TOTAL-LIABILITIES> 21323
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 6000
<SHARES-COMMON-PRIOR> 6000
<ACCUMULATED-NII-CURRENT> 107837
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 233031
<NET-ASSETS> 5562954
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 363937
<OTHER-INCOME> 4374
<EXPENSES-NET> 9527
<NET-INVESTMENT-INCOME> 358784
<REALIZED-GAINS-CURRENT> (9849)
<APPREC-INCREASE-CURRENT> (288575)
<NET-CHANGE-FROM-OPS> 60360
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 354868
<DISTRIBUTIONS-OF-GAINS> 210000
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (504508)
<ACCUMULATED-NII-PRIOR> 103921
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 5815208
<PER-SHARE-NAV-BEGIN> 1011.24
<PER-SHARE-NII> 58.89
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 61.75
<PER-SHARE-DISTRIBUTIONS> 35.00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 927.16
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND> The schedule contains summary
financial information extracted from
the financial statements and
supporting schedules as of the end
of the most current period and is
qualified in its entirety by
reference to such financial
statements
</LEGEND>
<CIK> 0000877673
<NAME> IMST, SERIES 27, NY NAV. INSURED
SERIES 9 AND NJ NAV. SERIES 6
<SERIES>
<NUMBER> 27
<NAME> SERIES

<S> <C>
<FISCAL-YEAR-END> Jun-30-1994
<PERIOD-START> Jul-01-1993
<PERIOD-END> Jun-30-1994
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 2924752
<INVESTMENTS-AT-VALUE> 3050295
<RECEIVABLES> 46063
<ASSETS-OTHER> 1538
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3097896
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 432
<TOTAL-LIABILITIES> 432
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 3000
<SHARES-COMMON-PRIOR> 3000
<ACCUMULATED-NII-CURRENT> 52329
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 125543
<NET-ASSETS> 3097464
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 198338
<OTHER-INCOME> 2069
<EXPENSES-NET> 7463
<NET-INVESTMENT-INCOME> 192944
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (122433)
<NET-CHANGE-FROM-OPS> 70511
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 191522
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (121011)
<ACCUMULATED-NII-PRIOR> 50907
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 3157970
<PER-SHARE-NAV-BEGIN> 1072.83
<PER-SHARE-NII> 64.42
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1032.49
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND> The schedule contains summary
financial information extracted from
the financial statements and
supporting schedules as of the end
of the most current period and is
qualified in its entirety by
reference to such financial
statements
</LEGEND>
<CIK> 0000877673
<NAME> IMST, SERIES 27, NY NAV. INSURED
SERIES 9 AND NJ NAV. SERIES 6
<SERIES>
<NUMBER> 9
<NAME> SERIES

<S> <C>
<FISCAL-YEAR-END> Jun-30-1994
<PERIOD-START> Jul-01-1993
<PERIOD-END> Jun-30-1994
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 4392149
<INVESTMENTS-AT-VALUE> 4559020
<RECEIVABLES> 97673
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4656693
<PAYABLE-FOR-SECURITIES> 26813
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 465
<TOTAL-LIABILITIES> 27278
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 4489
<SHARES-COMMON-PRIOR> 4489
<ACCUMULATED-NII-CURRENT> 76258
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 1208
<ACCUM-APPREC-OR-DEPREC> 166871
<NET-ASSETS> 4629415
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 300411
<OTHER-INCOME> 1933
<EXPENSES-NET> 9273
<NET-INVESTMENT-INCOME> 293071
<REALIZED-GAINS-CURRENT> (257)
<APPREC-INCREASE-CURRENT> (236530)
<NET-CHANGE-FROM-OPS> 56284
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 291743
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (235459)
<ACCUMULATED-NII-PRIOR> 75268
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 9287
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 4747145
<PER-SHARE-NAV-BEGIN> 1083.73
<PER-SHARE-NII> 65.47
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 65.48
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1031.28
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND> The schedule contains summary
financial information extracted from
the financial statements and
supporting schedules as of the end
of the most current period and is
qualified in its entirety by
reference to such financial
statements
</LEGEND>
<CIK> 0000877673
<NAME> IMST, SERIES 27, NY NAV. INSURED
SERIES 9 AND NJ NAV. SERIES 6
<SERIES>
<NUMBER> 6
<NAME> SERIES

<S> <C>
<FISCAL-YEAR-END> Jun-30-1994
<PERIOD-START> Jul-01-1993
<PERIOD-END> Jun-30-1994
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 3378330
<INVESTMENTS-AT-VALUE> 3476369
<RECEIVABLES> 97752
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3574121
<PAYABLE-FOR-SECURITIES> 35746
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 366
<TOTAL-LIABILITIES> 36112
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 4000
<SHARES-COMMON-PRIOR> 4000
<ACCUMULATED-NII-CURRENT> 69487
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 98039
<NET-ASSETS> 3538009
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 221386
<OTHER-INCOME> 3143
<EXPENSES-NET> 7915
<NET-INVESTMENT-INCOME> 216614
<REALIZED-GAINS-CURRENT> (5355)
<APPREC-INCREASE-CURRENT> (155577)
<NET-CHANGE-FROM-OPS> 55682
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 213970
<DISTRIBUTIONS-OF-GAINS> 75000
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (233288)
<ACCUMULATED-NII-PRIOR> 66843
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 3654653
<PER-SHARE-NAV-BEGIN> 942.82
<PER-SHARE-NII> 53.61
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 55.76
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 884.50
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

KENNY S&P EVALUATION SERVICES
A Division of Kenny Information Systems, Inc.

65 Broadway
New York, New York 10006-2511
Telephone 212/770-4440
Fax: 212/797-8681

John R. Fitzgerald
Vice President

October 28, 1994

Bear, Stearns & Co., Inc.
245 Park Avenue
New York, NY 10167

Gruntal & Co., Inc.
14 Wall Street
New York, NY 10005

RE: Insured Municipal Securities Trust
New York Navigator Insured Series 8 and
New Jersey Navigator Insured Series 5

Gentlemen:

We have examined the post-effective Amendment to the
Registration Statement File No. 33-41110 for the above-captioned
trust. We hereby acknowledge that Kenny S&P Evaluation Services,
a division of Kenny Information Systems, Inc. is currently acting
as the evaluator for the trust. We hereby consent to the use in
the Amendment of the reference to Kenny S&P Evaluation Services,
a division of Kenny Information Systems, Inc. as evaluator.

In addition, we hereby confirm that the ratings
indicated in the above-referenced Amendment to the Registration
Statement for the respective bonds comprising the trust portfolio
are the ratings currently indicated in our KENNYBASE database.

You are hereby authorized to file a copy of this letter
with the Securities and Exchange Commission.

Sincerely,

John R. Fitzgerald

JRF/cns
<PAGE>
KENNY S&P EVALUATION SERVICES
A Division of Kenny Information Systems, Inc.

65 Broadway
New York, New York 10006-2511
Telephone 212/770-4440
Fax: 212/797-8681

John R. Fitzgerald
Vice President

October 28, 1994

Bear, Stearns & Co., Inc.
245 Park Avenue
New York, NY 10167

Gruntal & Co., Inc.
14 Wall Street
New York, NY 10005

RE: Insured Municipal Securities Trust,
Series 27, New York Navigator Insured Series 9
and New Jersey Navigator Insured Series 6

Gentlemen:

We have examined the post-effective Amendment to the
Registration Statement File No. 33-41923 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,

John R. Fitzgerald

JRF/cns
<PAGE>
October 28, 1994
Standard & Poor's Corporation
Bond Insurance Administration
25 Broadway
New York, New York 10004-1064
Telephone 212/208-0138
FAX 212/208-8262

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
8 and New Jersey Navigator Insured Series 5

We have received the post-effective amendment to the registration
statement SEC file number 33-41110 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>
October 28, 1994
Standard & Poor's Corporation
Bond Insurance Administration
25 Broadway
New York, New York 10004-1064
Telephone 212/208-0138
FAX 212/208-8262

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 27, New York Navigator
Insured Series 9 and New Jersey Navigator Insured Series 6

We have received the post-effective amendment to the registration
statement SEC file number 33-41923 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