MORTGAGE SECURITIES TRUST CMO SERIES 15, S-6EL24, 1994-02-23

MORTGAGE SECURITIES TRUST CMO SERIES 15
S-6EL24, 1994-02-23

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 23, 1994

REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
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FORM S-6

FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2

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A. EXACT NAME OF TRUST:

Mortgage Securities Trust, CMO Series 15

B. NAME OF DEPOSITOR:

Bear, Stearns & Co. Inc.

C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:

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<S> <C>
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
</TABLE>

D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:

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<S> <C>
COPY OF COMMENTS TO:
PETER J. DEMARCO MICHAEL R. ROSELLA, ESQ.
Managing Director Battle Fowler
Bear, Stearns & Co. Inc. 280 Park Avenue
245 Park Avenue New York, New York 10017
New York, New York 10167 (212) 856-6858
</TABLE>

E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:

An indefinite number of Units of Mortgage Securities Trust, CMO
Series 15 is being registered 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.

F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE SECURITIES
BEING REGISTERED:

Indefinite

G. AMOUNT OF FILING FEE:

$500 (as required by Rule 24f-2)

H. APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:

/x/ Check if it is proposed that this filing will become effective
immediately upon filing pursuant to Rule 487.

The registrant hereby amends the registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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MORTGAGE SECURITIES TRUST, CMO SERIES 15

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)

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FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust.................................... Front cover of Prospectus
(b) Title of securities issued....................... Front cover of Prospectus
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.......................................... Not Applicable
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
</TABLE>

i
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<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
(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
(a) Amendment........................................ Trust Agreement, Amendment and Termination
(b) Termination...................................... Trust Agreement, Amendment and 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........................ Not Applicable
31. Payments by depositor for certain services rendered
to trust........................................... Not Applicable
32. Payments by depositor for certain other services
rendered to trust.................................. Not Applicable
33. Remuneration of employees of depositor for certain
services rendered to trust......................... Not Applicable
</TABLE>

ii
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<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------------- -----------------------------------------------------
<C> <S> <C>

34. Remuneration of other persons for certain services
rendered to trust.................................. Not Applicable
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................ Not Applicable
38. (a) Method of distribution........................... Distribution of Units, Total Reinvestment Plan
(b) Underwriting agreements.......................... Distribution of Units, Total Reinvestment Plan
(c) Selling agreements............................... Distribution of Units, Total Reinvestment Plan
39. (a) Organization of principal underwriters........... The Sponsor
(b) N.A.S.D. membership of principal underwriters.... The Sponsor
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............... Not Applicable
42. Ownership of trust's securities by certain persons... Not Applicable
43. Certain brokerage commissions received by principal

underwriters....................................... Not Applicable
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, and 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....................................... Trust Expenses and Charges
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. Insurance of holders of trust's securities........... Not Applicable
</TABLE>

iii
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<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
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<C> <S> <C>
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.............................................. Not Applicable
56. Certain information regarding periodic payment
certificates....................................... Not Applicable
57. Certain information regarding periodic payment
plans.............................................. Not Applicable
58. Certain other information regarding periodic payment
plans.............................................. Not Applicable
59. Financial statements (Instruction 1(c) to Form S-6).. Statement of Financial Condition
</TABLE>

<PAGE>
SUBJECT TO COMPLETION DATED FEBRUARY 23, 1994

(LOGO)
MORTGAGE SECURITIES TRUST
CMO SERIES 15

This Trust consists of three separate unit investment trusts designated
Mortgage Securities Trust, CMO Series 15 Short-Intermediate Portfolio,
Intermediate Portfolio and Long-Intermediate Portfolio (collectively, the
'Trusts'). Investors will be able to purchase units of the Trusts upon the
effectiveness of the registration statement relating to the units of these
Trusts.

The attached final prospectus for a previous series of Mortgage Securities
Trust, CMO Series is hereby used as a preliminary prospectus for this Series
offering. The narrative information and structure of the final prospectus for
this Series will be substantially similar to the attached final prospectus for a
previous Series. Information with respect to pricing, the number of units, dates
and summary information regarding the characteristics of securities to be
deposited in this Series is not now available and will be different since each
Series has a unique portfolio. Accordingly, the material found herein which
reflects the particular characteristics of a previous Series should not be taken
as applicable to the portfolios of this Series and should be considered only as
a general description of this Series. The Trusts will consist of underlying
portfolios of collateralized mortgage obligations ('CMO' or 'Securities'). All
of the CMOs in the portfolios will be backed by underlying mortgage-backed
securities which are pledged as collateral to secure payment of principal and
interest on the CMOs. Each of the underlying mortgage-backed securities will in
turn be guaranteed as to the payment of principal and interest by the Government
National Mortgage Association ('GNMA'), the Federal National Mortgage
Association ('FNMA') or the Federal Home Loan Mortgage Corporation ('FHLMC').
All of the CMOs in the Trusts will be issued by GNMA, FNMA or FHLMC or will
otherwise be rated AAA by Standard & Poor's Corporation, and therefore, the
units of the Trusts will be rated AAA by Standard & Poor's. However, the
estimated current return and estimated long term return for this Series will
depend on the interest rates and offering prices of the Securities and may vary
materially from that of the previous Series. Investors should contact account
executives of the Sponsor's or of any underwriter who will be informed of the
expected effective date of this Series and who will be supplied with complete
information with respect to such Series on the day of and immediately prior to
the effectiveness of the registration statement relating to the units of this
Series.

The sales charge for Mortgage Securities Trust, CMO Series 15,
Short-Intermediate Portfolio, Intermediate Portfolio and Long-Intermediate
Portfolio is expected to be not in excess of 6% of the Public Offering Price per
1,000 units for each Trust (6.383% of the net amount invested).

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE

SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION
OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE
IN WHICH SAID OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO THE
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.

<PAGE>
(LOGO)
MORTGAGE SECURITIES TRUST

CMO SERIES 14

STANDARD & POOR'S CORPORATION RATING: AAA

The Trust is a unit investment trust designated Mortgage Securities Trust,
CMO Series 14 Intermediate Portfolio (the 'Trust'). The Sponsor is Bear, Stearns
& Co. Inc. The Trust consists of an underlying portfolio of collateralized
mortgage obligations ('CMOs' or 'Securities') and was formed to obtain safety of
capital and provide a high level of current distributions of interest
income.

The Trust seeks to obtain a higher yield than fixed income investments with
comparable AAA ratings. The Trust seeks to achieve its objectives through
investment in a fixed portfolio of CMOs which may have been issued as debt
obligations of a trust or corporation or which may represent certificated
interests of beneficial ownership in pools of mortgage-backed securities. All of
the CMOs in the portfolio will be backed by underlying mortgage-backed
securities which are pledged as collateral to secure payment of principal and
interest on the CMOs. Each of these underlying mortgage-backed securities will
in turn be guaranteed as to the payment of principal and interest by the
Government National Mortgage Association ('GNMA'), the Federal National Mortgage
Association ('FNMA') or the Federal Home Loan Mortgage Corporation ('FHLMC').
All of the CMOs in the Trust will be issued by GNMA, FNMA or FHLMC or will
otherwise be rated AAA by Standard & Poor's and, therefore, the Units of the
Trust will be rated AAA by Standard & Poor's Corporation. The Units of the Trust
are not, however, guaranteed by GNMA, FNMA, FHLMC, the United States or any of
its agencies. The full faith and credit of the United States is pledged to the
payment of all amounts guaranteed by GNMA. However, payments guaranteed by FNMA
and FHLMC are not guaranteed by the United States and neither the CMOs in the
Trust nor any underlying Fannie Maes or Freddie Macs constitute a debt
obligation of the United States or any of its agencies. The value of the Units
will fluctuate with the value of the CMOs in the portfolio. Both the Estimated
Current Return and the Estimated Long Term Return are subject to fluctuations
with changes in portfolio composition, principal payments and prepayments,
changes in the market value of the CMOs in the portfolio and changes in fees and
expenses. Minimum purchase: 1,000 Units.

This Prospectus consists of two parts. Part A contains the Summary of Essential
Information, including descriptive material relating to the Trust, the Statement
of Condition of the Trust and the Portfolio. Part B contains general information
about the Trust. Part A may not be distributed unless accompanied by Part B.

Please read and retain both parts of this Prospectus for future reference.
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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 REPRESEN-
TATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

PROSPECTUS PART A DATED DECEMBER 15, 1993

<PAGE>
MORTGAGE SECURITIES TRUST
CMO SERIES 14, INTERMEDIATE PORTFOLIO
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 14, 1993*

<TABLE>
<S> <C>
DATE OF DEPOSIT: December 15, 1993
PRINCIPAL AMOUNT OF SECURITIES(2)........ $10,000,000
PRINCIPAL AMOUNT OF SECURITIES PER
1,000 UNITS............................ $1,000.00
NUMBER OF UNITS.......................... 10,000,000
FRACTIONAL UNDIVIDED INTEREST IN TRUST
PER UNIT............................... 1/10,000,000
PUBLIC OFFERING PRICE**+
Aggregate Offering Side Evaluation of
Securities in Trust.................. $9,633,820
Divided by 10,000,000 Units times
$1,000............................... $963.38
Plus Sales Charge of 3.5% of Public
Offering Price....................... $34.94
Public Offering Price per 1,000
Units................................ $998.32
Plus accrued interest per 1,000
Units***............................. $3.58
Total Purchase Price................... $1,001.90
REDEMPTION PRICE PER 1,000 UNITS+++...... $962.13
SPONSOR'S INITIAL REPURCHASE PRICE PER
1,000 UNITS+o.......................... $963.38
EXCESS OF PUBLIC OFFERING PRICE OVER
REDEMPTION PRICE PER 1,000 UNITS....... $36.19
EXCESS OF SPONSOR'S INITIAL REPURCHASE
PRICE OVER REDEMPTION PRICE PER 1,000
UNITS o................................ $1.25
SPONSOR'S PROFIT ON DEPOSIT.............. $4,320
EVALUATION TIME: 4:00 p.m. New York Time
MINIMUM PRINCIPAL DISTRIBUTION:
$1 per 1,000 Units.
WEIGHTED AVERAGE LIFE TO MATURITY:

6.8 years
MINIMUM VALUE OF TRUST: Trust may be
terminated if less than $4,000,000 in
principal amount of Securities.
MANDATORY TERMINATION DATE: The earlier
of December 31, 2043 or the disposition
of the last Security in the Trust.
TRUSTEE: United States Trust Company of
New York.
TRUSTEE'S ANNUAL FEE: $.84 per $1,000.
EVALUATOR: Kenny S&P Evaluation
Services.
EVALUATOR'S FEE FOR EACH EVALUATION: $7
per evaluation.
SPONSOR: Bear, Stearns & Co. Inc.
SPONSOR'S ANNUAL FEE: Maximum of $.25
per $1,000 principal amount of
Securities (see 'Trust Expense and
Charges' in Part B).
PREMIUM AND DISCOUNT ISSUES IN PORTFOLIO:
Principal amount of Securities with
offering side evaluations
at a discount from par -- 46%
at a premium from par -- 54%
</TABLE>

PER 1,000 UNIT INFORMATION

<TABLE>
<S> <C>
Gross annual interest income (cash)..................................................... $61.51
Less estimated annual fees and expenses................................................. 1.62
Estimated net annual interest income (cash)++++......................................... 59.89
Estimated daily interest accrual........................................................ .1663
Estimated current return based on Public Offering Price++(1)............................ 6.00%
Estimated long term return++(1)......................................................... 6.43%
First record date....................................................................... 1/1/94
First distribution date................................................................. 1/20/94
Subsequent record dates................................................................. 1st of each month
Subsequent distribution dates........................................................... 20th of each month
</TABLE>

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* The business day prior to the Date of Deposit. The Date of Deposit is
the date on which the Trust Agreement was signed and the deposit of the
Securities with the Trustee made.
** Per 1,000 Units.
*** Figure shown represents interest accrued on underlying Securities to
expected date of settlement (normally five business days after purchase) for
Units purchased on the Initial Date of Deposit (see 'Public Offering Price').
+ Plus accrued interest.
++ The estimated current return and estimated long term return are increased
for transactions entitled to a discount (see 'Volume and Other Discounts' in
Part B).

+++ Based solely upon the bid side evaluation of the underlying Securities.
Upon tender for redemption, the price to be paid will be calculated as
described under 'Trustee Redemption' in Part B.

++++ The first distribution, estimated at $.45 per 1,000 Units, will be made on
January 20, 1994 (the 'First Payment Date') to all Certificateholders of record
on January 1, 1994 (the 'First Record Date').

o See 'Comparison of Public Offering Price, Sponsor's Repurchase Price and
Redemption Price' in Part B.

(1) Estimated current return represents annual interest income after
estimated annual expenses divided by the Public Offering Price, including a
3.5% maximum sales charge. Estimated long term return is the net annual
percentage return based on the yield on each underlying Security in the
Trust weighted to reflect market value and estimated average life. The
estimated weighted average life to maturity of the Trust is an estimate
based upon various assumptions discussed more fully under 'Estimated Long
Term Return and Estimated Current Return' in Part B. Estimated long term
return is adjusted for estimated expenses and the maximum public offering
price but not for delays in the Trust's distribution of income. Estimated
current return shows current annual cash return to investors while
estimated long term return shows the return on Units held to estimated
average life, reflecting prepayments of principal, maturities, discounts
and premiums on underlying Securities. Actual returns will vary with
purchase price, payments and prepayments of principal on the underlying
Ginnie Maes, Fannie Maes or Freddie Macs which back the Securities, and
changes in Trust income after expenses. These returns do not include the
effects of any delay in payments to Unitholders and a calculation which
includes those effects would be lower. See 'Estimated Long Term Return and
Estimated Current Return' in Part B.

(2) The principal amount of Securities actually deposited in the Trust is
affected by the prepayment estimate or factor for each CMO. If the
prepayment estimate or factor is adjusted because the level of actual
prepayments increases with respect to a particular CMO prior to the
settlement date of the Securities, the actual principal amount of
Securities deposited in the Trust may be less than the amount noted above
and the excess of any cash returned to the Trust as a result of these
prepayments will be held in the Trust's principal account.

A-2
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THE TRUST

The Trust is a unit investment trust, designated Mortgage Securities
Trust, CMO Series 14 Intermediate Portfolio ('Intermediate Portfolio' or
'Portfolio'). The Trust was formed to obtain safety of capital and a high level
of current distributions of interest income through investment in a fixed
portfolio of CMOs. The Trust seeks to obtain a higher yield than fixed income
investments with comparable AAA ratings.

The Intermediate Portfolio will invest primarily in planned amortization or
target amortization classes of CMOs. Such classes of CMOs receive payments of

principal according to a planned schedule to the extent that prepayments on the
underlying mortgage-backed securities occur within a broad time period. The
principal is reduced only in specified amounts at specified times resulting in
greater predictability of principal payments for the planned amortization bonds
or targeted amortization bonds. For a discussion on planned amortization bonds
or targeted amortization bonds see 'The Trust -- Intermediate Portfolio' and
'The Trust -- CMO Structure' in this Part A and 'The Trust -- The Securities --
Support Bonds and Planned Amortization or Targeted Amortization Bonds' in Part
B. The Intermediate Portfolio may also invest in other types of CMOs described
above and in 'The Trust -- The Securities' in Part B.

The Trust may also contain Securities purchased on a 'when, as and if'
issued basis. (See 'Portfolio' in Part B for a description of 'when, as and if'
issued Securities.) All of the CMOs in the Trust are backed by underlying
mortgage-backed securities which are pledged as collateral to secure payment of
principal and interest on the CMOs. Each of these mortgage-backed securities
will be guaranteed as to the payment of principal and interest by either the
Government National Mortgage Association ('GNMA'), the Federal National Mortgage
Association ('FNMA') or the Federal Home Loan Mortgage Corporation ('FHLMC').
All of the CMOs in the Trust will be issued by GNMA, FNMA or FHLMC or will
otherwise be rated AAA by Standard & Poor's Corporation ('Standard & Poor's')
and therefore, the Units of the Trust will be rated AAA by Standard & Poor's.
There can be no assurance that the Trust's investment objectives can be
achieved. Investments in the Trust should be made with an understanding of the
risks inherent in an investment in CMOs. (See 'The Trust -- Special Risk
Considerations' in this Part A.) The Sponsor has a limited right to substitute
other securities in the Trust portfolio in the event of a failed contract. (See
'The Trust -- Substitution of Securities' in Part B.) Each Unit of the Trust
represents an undivided interest in the principal and net income of the Trust in
the ratio of one thousand Units for the indicated principal amount of Securities
in the Trust on the Date of Deposit as set forth in the Summary of Essential
Information for the Trust. (See 'The Trust -- Organization' in Part B.) (For the
specific number of Units in the Trust, see 'Summary of Essential Information'
for the Trust in this Part A.)

Generally, CMOs are designed to provide a substantial degree of prepayment
and reinvestment risk protection as compared to other mortgage related
securities. The CMOs may have been issued as debt obligations of a trust or
corporation or as certificated interests representing beneficial ownership in a
pool of mortgage-backed securities (See 'The Trust -- The Securities' in Part B
for further description and examples) which trust, corporation or pool may have
been established for the sole purpose of issuing CMOs by any of GNMA, FNMA or
FHLMC or by a private business organization. Such private business organizations
are typically single-purpose corporations established by mortgage-banking
institutions for the sole purpose of issuing CMOs. Any CMOs in the Trust that
have been issued by private business organizations have been rated AAA by
Standard & Poor's. The sole assets of the issuers of the CMOs are the underlying
mortgage-backed securities. If the collateral securing the Securities of these
issuers is insufficient to make payments on those Securities, it is unlikely
that any other assets of these issuers will be available for payment of the
deficiency. The underlying mortgage-backed securities which are pledged as
collateral to secure the payment of principal and interest on the CMOs may be
(i) 'fully modified pass-through' mortgage-backed certificates, guaranteed by
GNMA ('Ginnie Maes'), (ii) mortgage pass-through certificates guaranteed by FNMA

('Fannie Maes') or (iii) mortgage participation certificates guaranteed by FHLMC
('Freddie Macs'). The full faith and credit of the United States is pledged to
the payment of all amounts guaranteed by GNMA. However, payments guaranteed by
FNMA and FHLMC are not guaranteed by the United States and neither the CMOs in
the Trust nor any underlying Fannie Maes or Freddie Macs
A-3
<PAGE>
constitute a debt or obligation of the United States or any of its agencies. The
Units of the Trust, as such, are not guaranteed by any of GNMA, FNMA, FHLMC, the
United States or any of its agencies. Additionally, CMOs that are issued by
GNMA, FNMA or FHLMC or by any entity established by GNMA, FNMA or FHLMC are
guaranteed as to payment of principal and interest by GNMA, FNMA or FHLMC,
respectively. The guaranty obligations of GNMA with respect to any Ginnie Maes
or any CMOs are supported by the full faith and credit of the United States.
However, the guaranty obligations of FNMA and FHLMC with respect to any Fannie
Maes or Freddie Macs or any CMOs are obligations of FNMA and FHLMC only (limited
by their respective credit capabilities) and are not supported by the full faith
and credit of the United States or any other governmental entity.

CMO Structure. CMOs are generally issued as a series of different classes.
An issue of CMOs generally is backed by a larger number of mortgages than a pool
of Ginnie Maes, Fannie Maes or Freddie Macs, thus allowing greater statistical
prediction of prepayment characteristics. Interest and principal payments on the
mortgages underlying any series will first be applied to meet the interest
payment requirements of each class in the series other than any class in respect
of which interest accrues but is not paid or any 'principal only' class.
Principal payments on the underlying mortgages are thereafter generally applied
to pay the principal amount of the class that has the earliest maturity date.
Once that class is retired, the principal payments on the underlying mortgages
are applied to the class with the next earliest maturity date. This is repeated
until all classes are paid. Therefore, while each class of CMOs remains subject
to prepayment as the underlying mortgages prepay, structuring several classes of
CMOs in the stream of principal payments allows a more predictable estimate of
the period of time when any one class is likely to be repaid. The estimate can
be even closer with a class of planned amortization bonds or targeted
amortization bonds. The amortization schedule for these CMOs is structured so
that, at specified prepayment rates within a range, their principal will be
repaid at specified times and in specified amounts. However, if actual
prepayment rates are outside of the specified range, these CMOs will have less
predictable prepayment characteristics than other planned amortization bonds or
targeted amortization bonds that have prepayment rates within such range.
Further, if any series of CMOs contains a class of planned amortization bonds or
targeted amortization bonds, then the other classes in that series may not be
retired in an order of priority determined strictly with reference to their
maturity dates.

amortization schedule. Similarly, if the rate of prepayments is slower than
anticipated, then earlier support classes may be retired later than estimated.
Hence, support classes of a series that contains planned amortization bonds or
targeted amortization bonds have less predictable prepayment characteristics
than classes of a series that does not. This lack of predictability regarding
prepayments also causes support class bonds to have greater market value
fluctuation than other classes of a CMO. (See 'Description of Portfolio' for the
number of planned amortization bonds, targeted amortization bonds or support
class bonds in the Trust portfolio.) The rate of prepayment on the underlying
mortgages of a CMO will most likely decline as interest rates increase. If the
rate of prepayment declines, the weighted average life of the support class
bonds will most likely increase and, in some cases, the decline will impact the
yield and market value of these Securities. This may cause an investor's
principal in a support class bond to be outstanding for a longer period of time
than initially anticipated. Conversely, if interest rates decline, prepayments
on the underlying mortgages will most likely increase, and the weighted average
life of the support class bonds may be shorter than anticipated. A holder of a
support class bond in these situations may be unable to reinvest the proceeds of
these principal distributions at an effective interest rate equal to the
specified coupon rate on the original support class bond. Therefore, an investor
expecting to earn a fixed return for a fixed number of years may find the life
of a support class investment decreases as interest rates fall and increases as
they rise. Investors should be aware that the Federal Financial Institutions
Examination Council recently announced that certain high-risk CMO tranches are
generally not suitable investments for depository institutions.

A-4
<PAGE>
Some of the CMOs in the Trust may be either a class of Guaranteed REMIC
Certificates ('REMIC Certificate') issued by FNMA or a class of REMIC
Certificates issued by FHLMC. A FNMA REMIC Certificate represents a beneficial
ownership interest in a certain class of a FNMA REMIC Trust consisting of Fannie
Maes, each of which in turn represents a beneficial interest in a pool of first
lien, single-family, fixed-rate residential mortgage loans. FNMA REMIC
Certificates are issued pursuant to trust agreements executed by FNMA in both
its corporate capacity and its capacity as trustee. A FNMA REMIC Certificate
evidences a beneficial ownership interest in the distribution of principal and
interest on the underlying Fannie Maes, subject to certain limits and in an
order of distribution established for the particular FNMA REMIC Trust. Each FNMA
REMIC Certificate is backed by the guaranty obligation of FNMA to distribute on
a timely basis required installments of principal and interest and to distribute
the principal balance of the FNMA REMIC Certificate in full no later than an
established final distribution date, notwithstanding insufficiency of funds from
the underlying Fannie Maes. A FHLMC REMIC Certificate represents a beneficial
ownership interest in a certain class of a pool of Freddie Macs, each of which
in turn represents undivided interests in discrete pools of fixed-rate, first
lien, residential mortgages or participations therein purchased by FHLMC. FHLMC
REMIC Certificates are issued pursuant to multiclass mortgage participation
certificate agreements executed by FHLMC. A FHLMC REMIC Certificate evidences a
beneficial ownership interest in the distributions of principal and interest on
the underlying Freddie Macs, subject to certain limits and in an order of
distribution established for the particular FHLMC REMIC pool. Each FHLMC REMIC
Certificate is backed by the guaranty obligation of FHLMC to distribute required
interest payments on a timely basis and to distribute required principal

payments as principal payments on the underlying Freddie Macs are required to be
made. Except with respect to certain issues of 'Gold' PCs, FHLMC generally does
not guarantee timely payment of principal but does guarantee ultimate payment.
Both FNMA REMIC Certificates and FHLMC REMIC Certificates pay interest monthly.
(See, 'The Trust -- The Securities' in Part B for a description of FHLMC Gold
PCs.)

If FNMA or FHLMC were unable to fulfill its guarantees, distributions to
holders of REMIC Certificates such as the Trust would consist solely of payments
and other recoveries upon the mortgages underlying the pledged Fannie Maes or
Freddie Macs, respectively, and, accordingly, delinquencies and defaults would
diminish distributions to the holders. (See 'Description of Portfolio' for the
number of FNMA REMIC Certificates and FHLMC REMIC Certificates in the Trust
portfolio.)

Some of the CMOs in the Trust may be a class of compound interest bonds or
principal only bonds. Interest on compound interest bonds is accrued and is
added to principal. Such interest is not paid until all classes of CMOs issued
in the same series with earlier final distribution dates are paid in full.
Principal only bonds entitle the holder to no payments of interest but the
holder will receive cash flow from the amortization of principal and
prepayments. Both compound interest bonds and principal only bonds sell at a
deep discount from par. The Sponsor believes that a portfolio with a limited
amount of compound interest bonds and principal only bonds will assist the
Intermediate Portfolio in achieving its objective of preserving capital. Since
the principal only bond will accrue to par if held to maturity, the holder of
such a bond would receive a full return of his or her initial investment upon
maturity of the bond. In addition, compound interest bonds also assist in the
preservation of capital as interest which accrues on these bonds is added to
principal. (See 'Description of Portfolio' for the amount of Securities in the
Trust that are a class of compound interest bonds or principal only bonds.)

Special Risk Considerations. An investment in Units of the Trust should be
made with an understanding of risks which an investment in fixed rate CMOs may
entail, including the risk that the value of the portfolio and hence of the
Units will decline with increases in interest rates and that the life of the
CMOs in the portfolio depends on the actual prepayments received on the
underlying mortgage-backed securities, the timing of which cannot be determined
but which may be sooner or later than anticipated, especially if interest rates
decline. The potential for appreciation, which could otherwise be expected to
result from a decline in interest rates, may be limited by any increased
prepayments by mortgagors. Investors should also note that prepayments of
principal on CMOs purchased at a premium over par will result in some loss on
investment while prepayments on CMOs purchased at a discount from par will
result in some gain on investment. Also, if interest rates rise, the prepayment
risk of higher yielding, premium CMOs and the prepayment benefit for lower
yielding, discount CMOs will be reduced. (See 'The Trust -- Life of the
Securities and of the Trust' in Part B.)
A-5
<PAGE>
In addition, a number of factors, including the extent of prepayments of
principal on the underlying mortgage-backed securities, affect the availability
of funds for payment of principal of bonds on any payment date and, therefore,
the timing of principal payments on each class of such bonds.

While all of the mortgage-backed securities underlying each of the CMOs in
the Trust are guaranteed as to the payment of principal and interest by GNMA,
FNMA or FHLMC, the CMOs in the Trust represent obligations solely of the issuers
of those CMOs and are not themselves insured or guaranteed by GNMA, FNMA or
FHLMC, or any other governmental agency. If a default were to occur with respect
to any of the CMOs, there can be no assurance that the collateral securing such
bonds would be sufficient to pay the principal and interest then due.

CMOs are generally not listed on a national securities exchange or on the
National Association of Securities Dealers Automated Quotation System, Inc.
Whether or not CMOs are listed on a national securities exchange, the principal
trading market for CMOs will generally be in the over-the-counter market. As a
result the existence of a liquid trading market for CMOs may depend on whether
dealers will make a market in CMOs. There can be no assurance that a market will
be made for any of the CMOs in the Trust, that any market for the CMOs in the
Trust will be maintained or of the liquidity of the CMOs in the Trust in any
markets made. The price at which the CMOs in the Trust may be sold to meet
redemptions and the value of the Trust will be adversely affected if trading
markets for the CMOs in the Trust are limited or absent. (See 'The Trust --
Liquidity' in Part B.) In addition, the Trust may be restricted under the
Investment Company Act of 1940 from selling securities to the Sponsor. However,
taking into account the foregoing and other factors, the Sponsor believes that
the nature of the GNMA, FNMA or FHLMC guarantees of any securities that have
been issued by them, respectively, and the nature of the Ginnie Maes, Fannie
Maes or Freddie Macs securing payments of principal and interest due on the
Securities make the Securities adequately marketable for purposes of redemptions
of Units by the Trustee (see 'Redemption').

Investors should note that all of the CMOs in the Trust have been issued by
trusts, corporations or other entities that have elected to be treated as Real
Estate Mortgage Investment Conduits ('REMICs'). As such, Certificateholders will
be required to include in income their respective pro rata share of interest on
each Security (whether or not the Security has original issue discount) as
interest accrues, whether or not the Certificateholder is an accrual method
taxpayer. (See 'Tax Status' in Part B.)

The principal amount of Securities actually deposited in the Trust is
affected by the prepayment estimate or factor for each CMO. If the prepayment
estimate or factor is adjusted because the level of actual prepayments increases
with respect to a particular CMO prior to the settlement date of the Securities,
the actual principal amount of Securities deposited in the Trust may be less
than the amount noted above and the excess of any cash returned to the Trust as
a result of these prepayments will be held in the Trust's principal account.
Cash balances maintained in the principal account do not generate income for the
Trust.
PUBLIC OFFERING PRICE

The Public Offering Price per 1,000 Units of the Trust is equal to the
aggregate offering side evaluation of the underlying Securities in the Trust
divided by the number of Units outstanding times 1,000, plus a sales charge of
3.5% of the Public Offering Price per 1,000 Units or 3.627% of the net amount
invested in Securities per 1,000 Units. The Total Purchase Price is equal to the
Public Offering Price plus accrued interest. For additional information

regarding the Public Offering Price, the descriptions of interest and principal
distributions, repurchase and redemption of Units and other essential
information regarding the Trust, see the 'Summary of Essential Information' in
this Part A for the Trust. During the initial offering period orders involving
at least 100,000 Units will be entitled to a volume discount from the Public
Offering Price. The Public Offering Price per 1,000 Units may vary on a daily
basis in accordance with fluctuations in the aggregate offering price of the
Bonds. (See 'Public Offering' in Part B.)

The figures above assume a purchase of 1,000 Units. The price of a single
Unit, or any multiple thereof, is calculated by dividing the Public Offering
Price per 1,000 Units by 1,000 and multiplying by the number of Units.

A-6
<PAGE>
DISTRIBUTIONS

Distributions of principal and interest income, less expenses, will be made
by the Trust monthly. The first 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 monthly on the 20th of each month. (See
'Rights of Certificateholders -- Interest and Principal Distributions' in Part
B. For the estimated amount of the first distributions and the specific dates
representing the First Payment Date and the First Record Date for the Trust see
'Summary of Essential Information' in this Part A for the Trust).

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN

Estimated Long Term Return for the Trust is calculated by: (1) computing
the yield to maturity for each CMO in the Trust's portfolio in accordance with
accepted CMO practices, which practices take into account not only the interest
payable on the CMO but also the amortization of premiums or accretion of
discounts, if any, and estimates of projected prepayments; (2) calculating the
average of the yields for the CMOs in the Trust's portfolio by weighing each
CMO's yield by the market value of the CMO and by the amount of time remaining
to the date to which the CMO 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 Certificateholders. The resulting Estimated Long
Term Return represents a measure of the return to Certificateholders earned over
the estimated life of the Trust. The Estimated Long Term Return as of the day
prior to the Date of Deposit is stated for the Trust under 'Summary of Essential
Information' in Part A. Estimated Current Return for the Trust is calculated by
dividing the Estimated Net Annual Interest Income per 1,000 Units by the Public
Offering Price per 1,000 Units. In contrast to the Estimated Long Term Return,
the Estimated Current Return does not take into account estimates of prepayments
or the amortization of premium or accretion of discount, if any, on the CMOs in
the portfolio of the Trust. On the day prior to the Date of Deposit, the
Estimated Net Annual Interest Income per 1,000 Units divided by the Public
Offering Price per 1,000 Units resulted in the Estimated Current Return stated
for the Trust under 'Summary of Essential Information' in Part A.

If the CMOs in the Trust are priced at a discount, the Estimated Current
Return will generally be lower relative to the Estimated Long Term Return,

whereas if the CMOs are priced at a premium, the Estimated Current Return will
generally be higher relative to the Estimated Long Term Return. This is because
Estimated Current Return reflects primarily the interest rate on the CMOs, while
Estimated Long Term Return reflects yield and timing of principal payments, and
thus increases when the principal returned is greater than the price paid for
the CMOs (discount) and decreases when the principal returned is lower than the
price paid (premium). Estimated Long Term Return is calculated using an
estimated average life for the CMOs in the Trust. Estimated average life is an
essential factor in the calculation of Estimated Long Term Return. When the
Trust has a shorter average life than is estimated, Estimated Long Term Return
will be higher if the Trust contains CMOs priced at a discount and lower if the
CMOs are priced at a premium. Conversely, when the Trust has a longer average
life than is estimated, Estimated Long Term Return will be lower if the CMOs are
priced at a discount and higher if the CMOs are priced at a premium. To
calculate estimated average life several assumptions are made to derive an
estimated prepayment rate for the mortgages underlying the Ginnie Maes, Fannie
Maes or Freddie Macs that may back the CMOs in the portfolio of the Trust; the
calculation of estimated prepayment rates is based upon actual recent
prepayments and analysis of several factors including, among other things, the
spread between present market interest rates and the rate on the mortgages and
the housing environment. The estimated prepayment rate that is derived is then
applied to retire the principal amount of each CMO class of the same series as
each CMO in the Trust, including those CMOs in the Trust, according to the
specific principal reduction schedule of the series. For a more detailed
explanation of the calculation of estimated average life, see 'Estimated Long
Term Return and Estimated Current Return' in Part B. The estimated average life
for the Trust is subject to change with alterations in the data used in any of
the underlying assumptions. The actual average lives of the CMOs in the Trust
portfolio and the actual long term returns will be different from the estimated
average lives and the estimated long term returns.

The Estimated Net Annual Interest Income per 1,000 Units 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
A-7
<PAGE>
redemption, prepayment, maturity, sale or other disposition of the CMOs in the
Trust. The Public Offering Price will vary with changes in the offering prices
(bid prices in the case of the secondary market) of the CMOs. Therefore, there
is no assurance that the present Estimated Current Return or Estimated Long Term
Return will be realized in the future.

MARKET FOR UNITS

The Sponsor, although not obligated to do so, intends to maintain a
secondary market for the Units of the Trust after the initial public offering
has been completed. The secondary market repurchase price will be based on the
aggregate bid side evaluation of the Securities in the Trust; and the reoffer
price will be based on the aggregate bid side evaluation of the Securities,
divided by the number of Units outstanding times 1,000, plus a sales charge of
3.5% (3.627% 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 side evaluation of the Securities.
(See 'Sponsor Repurchase' in Part B.)

TOTAL REINVESTMENT PLAN

Distributions from the Trust are made to Certificateholders monthly. The
Certificateholder has the option, however, of either receiving his interest
check, together with any principal payments, from the Trustee or participating
in a reinvestment program offered by the Sponsor in shares of GOC Fund, Inc.,
U.S. Treasury Money Market Portfolio (the 'Fund'). Gabelli-O'Connor Fixed Income
Mutual Funds Management Co. serves as the investment advisor of the Fund and GOC
Fund Distributors, Inc. serves as distributor for the Fund. Participation in the
reinvestment option is conditioned on the Fund's lawful qualification for sale
in the state in which the Certificateholder is a resident. The Plan is not
designed to be a complete investment program. See 'Total Reinvestment Plan' in
Part B for details on how to enroll in the Total Reinvestment Plan and how to
obtain a Fund prospectus. The shares of the Fund are not rated by Standard &
Poor's.
DESCRIPTION OF PORTFOLIO

'Mortgage Securities Trust' consists of a 'unit investment trust'
designated CMO Series 14 Intermediate Portfolio whose objective is to provide
substantial safety of capital and current distributions of interest through
investment in a fixed portfolio of CMOs. On the Date of Deposit, the Sponsor
deposited with the Trustee an aggregate of $10,000,000 principal amount of CMOs,
including contracts to purchase CMOs, 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 such Securities so
deposited, delivered to the Sponsor the certificates evidencing the ownership of
all Units of the Trust. The Sponsor has not participated as a sole underwriter
or manager, co-manager or member of an underwriting syndicate from which any of
the CMOs in the Intermediate Portfolio were acquired.

INTERMEDIATE PORTFOLIO

This Trust consists of 4 issues of CMOs. None of the CMOs have been issued
by entities created by GNMA, 3 have been issued by entities created by FNMA, one
has been issued by an entity created by FHLMC and none have been issued by
private issuers. All of the CMOs in the Trust have been issued by trusts,
corporations or other entities that have elected to be treated as Real Estate
Mortage Investment Conduits. The CMOs in the Trust have stated maturity dates
ranging from June 15, 2019 through February 25, 2022 and average lives (based
upon estimated prepayment rates) ranging from 5.75 to 7.13 years. There are no
'when, as and if issued' bonds in the Portfolio.

All of the CMOs in the Portfolio (representing $10,000,000 of the principal
amount of the Securities initially deposited in the Trust) are planned
amortization bonds or targeted amortization bonds. None of the principal amount
of the Securities are support class bonds that are part of a series that
contains planned amortization bonds or targeted amortization bonds. $9,000,000
of the principal amount of the Securities initially deposited in the Trust are

FNMA REMIC Certificates. None of the principal amount
A-8

<PAGE>
of the Securities initially deposited in the Trust are a class of compound
interest bonds or principal only bonds.

On the Date of Deposit, based on the offering side evaluation, 46% of the
aggregate principal amount of the Securities in the Trust were acquired at a
discount from par, 54% were at a premium and none were at par. A
Certificateholder may receive more or less than his original purchase price upon
disposition of his Units because the value of the Units fluctuates with the
value of the underlying Securities. On the Date of Deposit, the bid side
evaluation was lower than the offering side evaluation by .1% of the aggregate
offering price of the Securities in the Trust. (See 'Public Offering' in Part
B).

No issues have been deposited in the Trust and 4 issues are represented by
contracts to purchase, which are expected to settle on or about December 30,
1993.

A-9
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Sponsor, Trustee, and Certificateholders,
Mortgage Securities Trust, CMO Series 14:

We have audited the accompanying Statement of Condition and Portfolio (the
'financial statements') of Mortgage Securities Trust, CMO Series 14 as of
December 15, 1993. These financial statements are the responsibility of the
Sponsor. 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. An audit also includes
assessing the accounting principles used and significant estimates made, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion. The irrevocable letter of
credit deposited in connection with the securities owned as of December 15,
1993, pursuant to contracts to purchase, as shown in the Statement of Condition,
were confirmed to us by United States Trust Company of New York, the Trustee.

In our opinion, the financial statements present fairly, in all material
respects, the financial position of Mortgage Securities Trust, CMO Series 14, at

December 15, 1993, in conformity with generally accepted accounting principles.

New York, New York KPMG PEAT MARWICK
December 15, 1993

A-10
<PAGE>

MORTGAGE SECURITIES TRUST

CMO SERIES 14

STATEMENT OF CONDITION

AS OF DATE OF DEPOSIT, DECEMBER 15, 1993

<TABLE>
<CAPTION>
TRUST PROPERTY
INTERMEDIATE
PORTFOLIO
------------
<S> <C>
Investment in Securities--Sponsor's Contracts to Purchase Underlying Securities Backed by Letters
of Credit(1)..................................................................................... $ 9,633,820
Accrued Interest to Date of Deposit on Securities(1)............................................... 23,923
------------
Total......................................................................................... $ 9,657,743
------------
------------
<CAPTION>
LIABILITY AND INTEREST OF CERTIFICATEHOLDERS
<S> <C>
Liability for Accrued Interest to Date of Deposit on Securities(1)................................. $ 23,923
------------
Interest of Certificateholders--(10,000,000 Units of Fractional Undivided Interest Outstanding in
Intermediate Portfolio):
Cost to Certificateholders(2)................................................................. 9,983,233
Less-Gross Underwriting Commissions(3)........................................................ 349,413
------------
Net Amount Applicable to Certificateholders................................................... 9,633,820
------------
Total......................................................................................... $ 9,657,743
------------
------------
</TABLE>

- ------------

(1) Aggregate cost to the Trust of the Securities listed in the portfolio
of the Trust is based on offering side evaluations determined by the Evaluator
on the basis set forth under 'Public Offering -- Offering Price' as of 4:00 p.m.
on December 14, 1993. An irrevocable letter of credit issued by Morgan Guaranty
Trust Company in the amount of $10,000,000 has been deposited with the Trustee
to cover the purchase of $10,000,000 principal amount of Securities pursuant to
contracts to purchase such Securities and $30,805 accrued interest on such
Securities to the expected dates of delivery.

(2) Aggregate public offering price (exclusive of interest) computed on
10,000,000 Units of CMO Series 14 -- Intermediate Portfolio on the basis set
forth under 'Public Offering -- Offering Price' in Part B.

(3) Sales charge of 3.5% computed on 10,000,000 Units of CMO Series 14 --
Intermediate Portfolio on the basis set forth under 'Public Offering Price' in
Part B.

A-11
<PAGE>
MORTGAGE SECURITIES TRUST
PORTFOLIO
------------------------------------
CMO SERIES 14
INTERMEDIATE PORTFOLIO
------------------------------------
AS OF DECEMBER 15, 1993

A MONTHLY PAYMENT SERIES
<TABLE>
<CAPTION>
COUPON/ ESTIMATED FIRST
SECURITIES FINAL PRINCIPAL
PORTFOLIO PRINCIPAL CONTRACTED STATED DISTRIBUTION DATE
NO. AMOUNT FOR(3) MATURITY (UNAUDITED)(1)
- ---------- ----------- --------------------------------------------------------------------- ----------- --------------------
<C> <C> <S> <C> <C>
1 $ 2,400,000 Federal National Mortgage Association Guaranteed REMIC Pass-Through 7.500% 7/25/2001
Certificates Fannie Mae REMIC Trust 1993--Class 2-PK 2/25/2022
2 3,000,000 Federal National Mortgage Association Guaranteed REMIC Pass-Through 7.000% 8/25/1999
Certificates Fannie Mae REMIC Trust 1993--Class 9-PH 1/25/2022
3 3,600,000 Federal National Mortgage Association Guaranteed REMIC Pass-Through 4.588% 8/25/2002
Certificates Fannie Mae REMIC Trust 1993--Class 16-H 4/25/2021
4 1,000,000 Federal Home Loan Mortgage Corporation Multiclass Mortgage 6.000% 1/15/1999
Participation Certificates (Guaranteed) Series 1552-F 6/15/2019
-----------
$10,000,000
-----------
-----------

<CAPTION>
YIELD TO
ESTIMATED

AVERAGE LIFE
ON INITIAL
ESTIMATED DATE OF COST OF
PORTFOLIO AVERAGE LIFE DEPOSIT SECURITIES
NO. (UNAUDITED)(1) (UNAUDITED)(2) TO TRUST(2)
- ---------- ---------------- --------------- -----------
<C> <C> <C> <C>
1 6.320 6.930% $2,470,098

2 7.130 6.770% 3,040,738

3 7.040 6.920% 3,141,444

4 5.750 6.420% 981,540

-----------
$9,633,820
-----------
-----------
</TABLE>

(1) The Unaudited Estimated Average Life of the Securities and Unaudited
Estimated First Principal Distribution Date were calculated using prepayment
rates which range between 350% and 500% of the Prepayment Model. See 'The
Trust -- Life of the Securities and of the Trust' in Part B.

(2) Evaluation of Securities by the Evaluator was made on the basis of current
offering side evaluation for the Securities. The offering side evaluation is
greater than the current bid side evaluation of the Securities which are the
basis on which Unit value is determined for purposes of redemption of Units.
(See 'Comparison of Public Offering Price, Sponsor's Repurchase Price and
Redemption Price' in Part B.) The aggregate value of Securities in CMO
Series 14, Intermediate Portfolio based on the bid side evaluation on the
Date of Deposit was $9,621,320 which was $12,500 lower than the aggregate
cost of the Securities to the Trust, based on the offering side evaluation.
On such date, the bid side evaluation of the Securities in CMO Series 14,
Intermediate Portfolio was lower than the offering side evaluation by .1% of
the aggregate offering price. The unaudited Yield to Estimated Average Life
on the Initial Date of Deposit of Securities was computed on the basis of
the offering side evaluation at the evaluation time on the business day
prior to the Initial Date of Deposit.

Additional information regarding the Intermediate Portfolio is as follows:
the Purchase Price of Securities to the Sponsor is $9,629,500, the profit to
the Sponsor on the Date of Deposit is $4,320, and the Estimated Annual
Interest Income to the Trust is $615,168.

(3) Forward contracts to purchase the Securities were entered into on December
14, 1993. All such contracts are expected to be settled on or about the
First Settlement Date of the Trust which is expected to be December 22, 1993
except for Portfolio No. 3 which is expected to be settled on or about
December 30, 1993.

A-12

<PAGE>
MORTGAGE SECURITIES TRUST
CMO SERIES 14
ESTIMATED CASH FLOW TO UNITHOLDERS
(Unaudited)

The table below sets forth the estimated monthly distributions per 1,000
Units of principal and interest to Unitholders of record for the Intermediate
Portfolio on the twentieth day of the month indicated below. The table assumes
no changes in expenses and no changes in current interest rates. The table is
based upon the Sponsor's estimation of the prepayment rates on the mortgages
underlying the Securities. (See 'Estimated Long Term Return and Estimated
Current Return'.) All fractions have been truncated.

INTERMEDIATE PORTFOLIO
TABLE OF ESTIMATED CASH FLOW
<TABLE>
<CAPTION>
DATE AMOUNT
- ------------ --------
<S> <C>
20-Jan-94 $ 0.4595
20-Feb-94 4.9913
20-Mar-94 4.9913
20-Apr-94 4.9913
20-May-94 4.9913
20-Jun-94 4.9913
20-Jul-94 4.9913
20-Aug-94 4.9913
20-Sep-94 4.9913
20-Oct-94 4.9913
20-Nov-94 4.9913
20-Dec-94 4.9913
20-Jan-95 4.9913
20-Feb-95 4.9913
20-Mar-95 4.9913
20-Apr-95 4.9913
20-May-95 4.9913
20-Jun-95 4.9913
20-Jul-95 4.9913
20-Aug-95 4.9913
20-Sep-95 4.9913
20-Oct-95 4.9913
20-Nov-95 4.9913
20-Dec-95 4.9913
20-Jan-96 4.9913
20-Feb-96 4.9913
20-Mar-96 4.9913
20-Apr-96 4.9913
20-May-96 4.9913
20-Jun-96 4.9913
20-Jul-96 4.9913
20-Aug-96 4.9913
20-Sep-96 4.9913

20-Oct-96 4.9913
20-Nov-96 4.9913
20-Dec-96 4.9913
20-Jan-97 4.9913
20-Feb-97 4.9913
20-Mar-97 4.9913

<CAPTION>
DATE AMOUNT
- ------------ --------
<S> <C>
20-Apr-97 $ 4.9913
20-May-97 4.9913
20-Jun-97 4.9913
20-Jul-97 4.9913
20-Aug-97 4.9913
20-Sep-97 4.9913
20-Oct-97 4.9913
20-Nov-97 4.9913
20-Dec-97 4.9913
20-Jan-98 4.9913
20-Feb-98 4.9913
20-Mar-98 4.9913
20-Apr-98 4.9913
20-May-98 4.9913
20-Jun-98 4.9913
20-Jul-98 4.9913
20-Aug-98 4.9913
20-Sep-98 4.9913
20-Oct-98 4.9913
20-Nov-98 4.9913
20-Dec-98 4.9913
20-Jan-99 4.9913
20-Feb-99 7.8623
20-Mar-99 11.7650
20-Apr-99 11.5947
20-May-99 11.4278
20-Jun-99 11.2642
20-Jul-99 11.1038
20-Aug-99 11.7808
20-Sep-99 32.9871
20-Oct-99 51.2422
20-Nov-99 50.4254
20-Dec-99 49.0647
20-Jan-2000 47.7379
20-Feb-2000 46.4442
20-Mar-2000 45.1827
20-Apr-2000 43.9527
<CAPTION>
DATE AMOUNT
- ------------ --------
<S> <C>
20-May-2000 $42.7532
20-Jun-2000 41.5836

20-Jul-2000 38.5942
20-Aug-2000 34.5460
20-Sep-2000 33.5821
20-Oct-2000 32.6427
20-Nov-2000 31.7272
20-Dec-2000 30.8349
20-Jan-2001 29.9652
20-Feb-2001 29.1176
20-Mar-2001 20.4195
20-Apr-2001 18.1617
20-May-2001 17.7185
20-Jun-2001 17.2848
20-Jul-2001 16.8606
20-Aug-2001 16.4454
20-Sep-2001 16.0393
20-Oct-2001 15.6419
20-Nov-2001 15.2530
20-Dec-2001 14.8726
20-Jan-2002 14.5004
20-Feb-2002 14.1363
20-Mar-2002 13.7800
20-Apr-2002 13.4314
20-May-2002 13.0903
20-Jun-2002 12.7566
20-Jul-2002 12.4302
20-Aug-2002 12.1107
20-Sep-2002 11.5839
20-Oct-2002 4.8232
20-Nov-2002 4.6852
20-Dec-2002 4.5505
20-Jan-2003 4.4189
20-Feb-2003 3.8538
20-Mar-2003 0.0000
20-Apr-2003 0.0000
20-May-2003 0.0000
20-Jun-2003 0.0000
</TABLE>

A-13
<PAGE>
UNDERWRITING SYNDICATE

The names and addresses of the Underwriters of the Units and their
participations in the offering of Mortgage Securities Trust are as follows:

<TABLE>
<CAPTION>
INTERMEDIATE
UNDERWRITER PORTFOLIO
- --------------------------------------------------------------------------------------- ------------
<S> <C>
BEAR, STEARNS & CO. INC.

245 Park Avenue
New York, NY 10167................................................................. 7,600,000

WHEAT, FIRST, BUTCHER & SINGER CAPITAL MARKETS
901 East Byrd Street, Richmond, VA 23219.......................................... 1,000,000

BENCH SECURITIES CORPORATION
Two Executive Drive
Fort Lee, NJ 07024................................................................ 100,000

DAIN BOSWORTH INCORPORATED
Dain Bosworth Plaza
60 South Sixth Street
Minneapolis, MN 55402............................................................. 100,000

DEAN WITTER REYNOLDS INC.
Two World Trade Center, 69th Floor
New York, NY 10048................................................................ 100,000

FIRST EQUITY CORPORATION OF FLORIDA
1400 Miami Center
201 South Biscayne Boulevard
Miami, FL 33131................................................................... 100,000

FIXED INCOME SECURITIES, INC.
7220 Trade Street, Suite 315
San Diego, CA 92121............................................................... 100,000

GRUNTAL & CO., INCORPORATED
14 Wall Street
New York, NY 10005................................................................ 100,000

LEGG MASON WOOD WALKER, INCORPORATED
Legg Mason Tower
111 South Calvert Street
Baltimore, MD 21202............................................................... 100,000

MEYERS, POLLOCK, ROBBINS INC.
One World Trade Center, Suite 9151
New York, NY 10048................................................................ 100,000

MORGAN KEEGAN & COMPANY INCORPORATED
Morgan Keegan Tower
Fifty North Front Street
Memphis, TN 38103................................................................. 100,000

OPPENHEIMER & CO., INC.
Oppenheimer Tower
World Financial Center
New York, NY 10281................................................................ 100,000
</TABLE>

A-14

<PAGE>
UNDERWRITING SYNDICATE

<TABLE>
<CAPTION>
INTERMEDIATE
UNDERWRITER PORTFOLIO
- --------------------------------------------------------------------------------------- ------------
<S> <C>
RAYMOND JAMES & ASSOCIATES, INC.
The Raymond James Financial Center
880 Carillon Parkway
St. Petersburg, FL 33716.......................................................... 100,000

SCHILD ASSET MANAGEMENT
9350 South Dixie Highway, Suite 1455
Miami, FL 33156................................................................... 100,000

SMITH BARNEY SHEARSON
Two World Trade Center, 101st Floor
New York, NY 10048................................................................ 100,000

SOUTHWEST SECURITIES INC.
1201 Elm Street, Suite 4300
Dallas, TX 75270.................................................................. 100,000
------------
TOTALS....................................................................... 10,000,000
------------
------------
</TABLE>

A-15
<PAGE>
(LOGO)
MORTGAGE SECURITIES TRUST

CMO SERIES 14 INTERMEDIATE PORTFOLIO

OBJECTIVES: TO OBTAIN SAFETY OF CAPITAL AND PROVIDE A HIGH LEVEL OF CURRENT
DISTRIBUTIONS OF INTEREST INCOME. THE TRUST WILL FEATURE A HIGHER YIELD THAN
FIXED INCOME INVESTMENTS WITH COMPARABLE AAA RATINGS.

FEATURES/BENEFITS:

o QUALITY

All of the CMOs in the Trust will be issued by GNMA, FNMA or FHLMC or will
otherwise be rated AAA by Standard & Poor's and, therefore, the Units in the
Trust are rated AAA by Standard & Poor's. This is the highest rating assigned
to securities issued by a unit investment trust. The Intermediate Portfolio
will consist of one or more types of CMOs such as PACs (Planned Amortization
Class), Plain Vanillas, and TACs (Targeted Amortization Class).

o INSTITUTIONAL YIELD LEVELS

Strong institutional demand has severely limited the amount and selection of
CMOs offered to the individual investor. The Intermediate Portfolio purchases
high-yielding CMOs, of types generally available only in the institutional
market, for convenient access to individual investors.

o DIVERSIFICATION

The Trust offers investors the opportunity for greater diversification than
they might acquire themselves by purchasing an individual CMO. This
diversification may allow the investor to reduce security specific risks such
as prepayment risk by combining bonds with different prepayment
characteristics. Prepayment risk can also be reduced by combining CMOs from
different issues which are collateralized by separate pools of mortgages.

o MONTHLY DISTRIBUTION

Principal, if any, and interest are distributed monthly. This is appealing to
investors who need cash flow for current expenditures. Reinvestment of monthly
receipts allows investors the opportunity to further increase yields through
compounding. The speed of principal prepayment will vary depending on interest
rate volatility and economic factors (see 'Special Risk Considerations').

o PROFESSIONAL SELECTION

Bear Stearns is a leader in the Mortgage-Backed Securities Market. In 1992,
Bear Stearns sole-managed $41.9 billion of CMOs, 11.1% of the market. The
Mortgage-Backed Security Department at Bear Stearns consists of 200
professionals. All bonds in the Trust will be selected through a stringent
process by a team of expert portfolio analysts; the selection process does not
insure that any particular return will be achieved.

o LIQUIDITY

The Sponsor intends to maintain a market for Units at prices based on the
aggregate bid-side evaluation of the Trust bonds, which may be more or less
than the original purchase price. A Certificateholder will also be able to
tender his Units to the Trustee through redemption at prices based on the
aggregate bid-side evaluation per Unit of the bonds in the Trust, which may be
more or less than the original purchase price.

o LOW MINIMUM INVESTMENT

Units of the Trust are conveniently priced at approximately $1 per Unit. The
minimum investment is 1,000 Units.

o VOLUME DISCOUNT

Purchasers wishing to purchase more than 100,000, 250,000, 500,000, 750,000 or
1,000,000 Units are entitled to a reduced sales charge which is explained more
fully in the prospectus.

o CONVENIENCE

The Trustee will be the custodian for the CMOs held in the Trust. In this
capacity the Trustee collects monthly interest and principal on Trust CMOs,
distributes monthly payments to Unitholders and coordinates the reinvestment
program for Unitholders who choose the reinvestment option. Unitholders will
receive a monthly accounting of the interest and principal components of their
monthly distributions and/or reinvestments.

<PAGE>
(LOGO)
o REINVESTMENT OPTION

Certificateholders have the option of either receiving their monthly income
check by mail from the Trustee or investing their regular interest and/or
principal distributions in shares of GOC Fund, Inc., U.S. Treasury Money
Market Portfolio (the 'Fund'). The Fund seeks to maximize current income,
maintain liquidity and a stable net asset value of $1 per share by investing
in short-term (maximum maturity of 397 days or less) U.S. Government
obligations. The shares of the Fund are not rated by Standard & Poor's.

THE MBS MARKET OVERVIEW

o THE MARKET

The growth of the mortgage-backed securities ('MBS') market in the United
States during the last 10 years has been phenomenal. The MBS market has grown
to over $2.2 trillion. In 1992, $458 billion of MBS were created. The trend in
resecuritization of mortgage pass-throughs is increasing at an exponential
rate. In the last year, the majority of new issue mortgage-backed securities
have been repackaged by investment bankers to create derivative products such
as CMOs. The CMO market has grown to approximately $1.0 trillion with $377
billion issued in 1992.

o MBS COLLATERAL

A MBS is collateralized by a pool of mortgage loans whereby the payments of
principal and interest pass through to the investor. MBS have variable cash
flows because the 'mortgagor' (homeowner) has the option to prepay at any
time. Prepayments create the same performance profile for an MBS as a call
feature on a corporate bond. Actual prepayments can either shorten or
lengthen the expected average life on the initial investment.

o COLLATERALIZED MORTGAGE OBLIGATIONS

CMOs were created as a means of allocating varying levels of prepayment and
interest rate risk between investors with varying attitudes towards risk. The
cash-flows from MBS are divided into 'tranches', that are securities with a
variety of maturities and average lives. CMOs enable investors to select and,
in most cases, reduce their exposure to the prepayment risk stemming from the
mortgagor's call option.

<TABLE>

<CAPTION>
PASS-THROUGH ISSUANCE SINCE 1970
($ IN BILLIONS)
YEAR AMOUNT
- --------------------------------------------- ------
<S> <C>
1970......................................... $ 0.3
1971......................................... 2.7
1972......................................... 2.9
1973......................................... 3.3
1974......................................... 4.5
1975......................................... 7.7
1976......................................... 14.9
1977......................................... 21.1
1978......................................... 20.6
1979......................................... 28.6
1980......................................... 22.6
1981......................................... 18.8
1982......................................... 53.3
1983......................................... 84.1
1984......................................... 60.9
1985......................................... 109.1
1986......................................... 264.6
1987......................................... 234.4
1988......................................... 151.9
1989......................................... 200.3
1990......................................... 233.8
1991......................................... 269.4
1992......................................... 458
</TABLE>

<TABLE>
<CAPTION>
CMO ISSUANCE SINCE 1983
YEAR AMOUNT
- --------------------------------------------- -----------
<S> <C>
1983......................................... 5
1984......................................... 12
1985......................................... 16
1986......................................... 48
1987......................................... 63
1988......................................... 81
1989......................................... 94
1990......................................... 129
1991......................................... 235
1992......................................... 377
</TABLE>

<PAGE>
(LOGO)
o CMO STRUCTURES

CMOs are available in a variety of structures and payment characteristics.

A. CMO WITH PLAIN VANILLA BONDS

BEAR STEARNS

* Buy Securities

$400,000,000
FNMA 10% MBS

* Monthly Cash Flow
Principal & Interest
*

CMO

* Designated Cashflows
to Tranches
*

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

<TABLE>
<S> <C> <C>
* * *
* * *
Principal
* * *
Interest Interest Interest
* * *
TRANCHE TRANCHE TRANCHE
A B C
$200,000,000 $150,000,000 $50,000,000
2 YR WAL 7 YR WAL 20 YR WAL
</TABLE>

<TABLE>
<CAPTION>
PREPAYMENT
SPEED WAL WAL WAL
- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C>

Projected......... 2 Years 7 Years 20 Years
2x Projected...... 1 Year 3.5 Years 10 Years
1/2 Projected..... 4 Years 10 Years 24 Years
</TABLE>

B. CMO WITH PAC BONDS

<TABLE>
<S> <C> <C>
TRANCHE TRANCHE TRANCHE
A B(PAC) C
2 YR WAL 7 YR WAL 20 YR WAL
</TABLE>

<TABLE>
<CAPTION>
PREPAYMENT
SPEED WAL WAL WAL
- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C>
Projected......... 2 Years 7 Years 20 Years
2x Projected...... 6 months 7 Years 6 Years
1/2 Projected..... 7 Years 7 Years 22 Years
</TABLE>

These structures are simplified examples of CMOs and are not indicative of the
actual MST structures and are presented for illustrative purposes only.

In the simplified CMO structures shown, the A tranche, the first tranche,
receives principal and stated interest until it matures, while the B and C
tranches receive stated interest simultaneously. Following the retirement of
the A tranche, the next tranche in the sequence then becomes the exclusive
recipient of principal. This sequential process continues until the last
tranche is retired. In the diagram above, the average lives are calculated
for prepayments at the projected, twice the projected, and half the
projected speeds. PAC (Planned Amortization Class) bonds were created to
eliminate much but not all of the prepayment risk. A PAC bond will receive a
scheduled principal payment under a range of prepayments which is set at
issuance. As a result of decreased prepayment risk in one bond, the other
bonds, support bonds and TAC (Targeted Amortization Class) bonds, will bear
more risk. The average lives of the support bonds/TAC bonds are more
affected than the average lives of the bonds in the standard CMO because of
their risk sensitivity. Average life sensitivity and other characteristics
will determine the yield required in the marketplace at the time of
issuance.

o TRUST PORTFOLIO SELECTION

The CMO bonds in the Intermediate Portfolio will consist primarily of PAC
or TAC bonds but may also include Plain Vanilla bonds.

o PACs selected provide the Trust with a stable average life over a wide
range of prepayments.

o TACs chosen for the Trust add to the estimated long term return, but
must meet certain guidelines for average life variability.

o Plain Vanilla bonds were selected to provide a stable life, attractive
yields, and a lockout period (period before principal payments begin and
interest only is received).
<PAGE>
(LOGO)

SPECIAL RISK CONSIDERATIONS

CONSEQUENCES OF INTEREST RATE VOLATILITY

A) PRINCIPAL PREPAYMENTS

The speed with which prepayments of principal will be made to holders of CMOs
(including the Trust) and hence to Unitholders will be influenced by the trend
of interest rates generally. Thus an investor can expect that if interest rates
decline greatly he may receive prepayment of his principal sooner. Conversely,
if interest rates rise sharply, the prepayment of principal may occur at a
slower rate and over a longer period of time. Also economic factors such as
sales, refinancings or foreclosures involving the underlying mortgages could
result in the faster prepayment of principal. Investors should be aware that, to
the extent the prepayment of principal may be accelerated during periods of
declining interest rates, if such an investor should decide to reinvest the
proceeds, he may be doing so at a lower yield than would otherwise be expected.
Conversely, if interest rates rise and economic conditions are such as to result
in principal payments being made over a longer period of time, the investor's
ability to reinvest his principal during this period of rising interest rates
may be limited.

B) MARKET VALUE

An investment in the Trust entails certain risks including the risk that the
value of the portfolio and hence the Units will decline with increases in
interest rates. The potential for appreciation, which could otherwise be
expected to result from a decline in interest rates, may be limited by likely
increased prepayments by mortgagors. This is due to the fact that an investor
would likely be receiving faster prepayment of his principal during a period of
steep interest rate decline. Investors should note that prepayments of principal
on CMOs purchased at a premium over par will result in some loss on investment
while prepayments on CMOs purchased at a discount from par will result in some
gain on investment.

PAYMENT GUARANTEES

While all of the mortgage backed securities underlying each of the CMOs in the
Trust are guaranteed as to payment, of principal and interest by GNMA, FNMA or
FHLMC, the CMOs in the Trust are the obligations solely of the issuers of those
CMOs and are not themselves insured or guaranteed by GNMA, FNMA or FHLMC, or any
other governmental agency or parent company. The full faith and credit of the
United States is pledged to the payment of all amounts guaranteed by GNMA.
However, payments guaranteed by FNMA or FHLMC are not guaranteed by the United
States and neither the CMOs in the Trust nor any other underlying Fannie Maes or

Freddie Macs constitute a debt or obligation of the United States or any of its
agencies. The Units of the Trust are also not guaranteed by any of GNMA, FNMA or
FHLMC, the United States or any of its agencies.

LIQUIDITY

CMOs are generally not listed on a national securities exchange or on the
National Association of Securities Dealers Automated Quotation System, Inc. The
principal trading market for CMOs will generally be in the over-the-counter
market. There can be no assurance that a market will be made or maintained for
any CMOs in the Trust or of the liquidity of the CMOs in the Trust. The value of
the Trust and the Units will be adversely affected if trading markets for the
Securities are limited. The potential illiquidity of the CMOs will impact
Unitholders of the Trust if the Sponsor is not maintaining a market for the
Units at the time the investor wishes to dispose of his Units and, therefore,
must redeem his Units with the Trustee.

PRINCIPAL PREPAYMENTS

Prepayments on the underlying mortgage-backed securities will result in
distributions of principal during the life of the Trust. Unlike a traditional
'bond' investment, the original principal amount with respect to a Unit will not
be repaid in full upon the termination of the Trust but rather will be repaid
periodically throughout the life of the Trust.

<PAGE>

(LOGO)
MORTGAGE SECURITIES TRUST
CMO SERIES
PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT
BE DISTRIBUTED UNLESS ACCOMPANIED
BY PART A

THE TRUST
ORGANIZATION

Mortgage Securities Trust CMO Series is a '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 (the 'Trust
Agreement'), dated the Date of Deposit, among Bear, Stearns & Co. Inc., as
Sponsor, United States Trust Company of New York, as Trustee, and Kenny
Information Systems, Inc. as Evaluator.

The Trust contains different issues of collateralized mortgage obligations
('CMOs' or 'Securities'). On the Date of Deposit the Sponsor deposited with the
Trustee the underlying Securities as set forth in Part A, including delivery
statements relating to contracts for the purchase of such Securities, and cash
or an irrevocable letter of credit issued by a major commercial bank in the
amount required for such purchases. Thereafter, the Trustee delivered to the
Sponsor units of interest ('Units') representing the entire ownership of the
Trust. The Sponsor has a limited right to substitute other Securities in the
Trust in the event of a failed contract. See 'The Trust -- Substitution of
Securities.'

A 'Unit' represents an undivided interest or pro rata share in the
principal and interest of the Trust in the ratio of one thousand Units for the
indicated principal amount of Securities in the Trust on the Date of Deposit as
set forth in the Summary of Essential Information for the Trust.
Certificateholders will have the right to have their Units redeemed (see
'Redemption') at a price based on the aggregate bid side evaluation of the
Securities. To the extent that any Units are redeemed by the Trustee, the
fractional undivided interest or pro rata share in the Trust represented by each
unredeemed Unit will increase, although the actual interest in the Trust
represented by such fraction will remain unchanged. Units will remain
outstanding until redeemed upon tender to the Trustee by Certificateholders,
which may include the Sponsor or the Underwriters, or until the termination of
the Trust Agreement.

With the deposit of the Securities in the Trust on the initial Date of
Deposit, the Sponsor established a proportionate relationship among the
principal amounts of specified Securities in the Trust. During the 90 day period
following the initial Date of Deposit, the Sponsor may deposit additional
Securities in the Trust that are substantially similar to the Securities already
deposited in the Trust ('Additional Securities') or contracts to purchase
Additional Securities, in order to create new Units, maintaining to the extent
practicable the original proportionate relationship among the principal amount
of each Security in the Trust portfolio. It may not be possible to maintain the
exact original proportionate relationship among the securities deposited on the
initial Date of Deposit because of,
1
<PAGE>
among other reasons, purchase requirements, changes in prices, or unavailability
of Securities. Replacement Securities may be acquired under specified conditions
when Securities originally deposited are unavailable (see 'The Trust --
Substitution of Securities'). Units may be continuously offered to the public by
means of this Prospectus (see 'Public Offering -- Distribution of Units')
resulting in a potential increase in the number of Units outstanding.
OBJECTIVES

The Trust offers investors the opportunity to participate in a portfolio of
collateralized mortgage obligations with a greater degree of safety and
diversification than they might be able to acquire themselves. The objectives of
the Trust are to obtain safety of capital and a high level of current
distribution of interest income through investment in a fixed portfolio of CMOs.
The Trust seeks to obtain a higher yield than fixed income investments with
comparable AAA ratings. These CMOs may have been issued as debt obligations of a
trust or corporation or as certificated interests representing beneficial
ownership in pools of mortgage-backed securities. All of the CMOs in the Trust
are backed by underlying mortgage-backed securities which are pledged as
collateral to secure payment of principal and interest on the CMOs. Each of
these mortgage-backed securities will be guaranteed by either the Government
National Mortgage Association ('GNMA'), the Federal National Mortgage
Association ('FNMA') or the Federal Home Loan Mortgage Corporation ('FHLMC').
All of the CMOs in the Trust will be issued by GNMA, FNMA or FHLMC or will
otherwise be rated AAA by Standard & Poor's and, therefore, the Units of the
Trust will be rated AAA by Standard & Poor's Corporation. However, neither GNMA,
FNMA, FHLMC, the United States or any of its agencies guarantees payment on

Units of the Trust. The full faith and credit of the United States is pledged to
the payment of all amounts guaranteed by GNMA. However, payments guaranteed by
FNMA and FHLMC are not guaranteed by the United States and neither the CMOs in
the Trust nor any underlying Fannie Maes or Freddie Macs constitute a debt
obligation of the United States or any of its agencies.

Investors should be aware that there is no assurance that the Trust's
objectives will be achieved. An investment in Units of the Trust should be made
with an understanding of the risks which an investment in a fixed portfolio of
fixed rate CMOs may entail, including the risk that the value of the Trust
portfolio and hence of the Units will decline with increases in interest rates.
It should also be noted that the potential for appreciation on the Securities
which would otherwise be expected to result from a decline in interest rates,
may tend to be limited by any increased prepayments by mortgagors as interest
rates decline. In addition, prepayments of principal on Securities purchased at
a premium over par will result in some loss on investment, while prepayments on
Securities purchased at a discount from par will result in some gain on
investment. The Sponsor cannot predict future economic policies or their
consequences or, therefore, the course or extent of any similar fluctuations in
the future.

Since disposition of Units prior to final liquidation of the Trust may
result in an investor receiving less than the amount paid for such Units (see
'Comparison of Public Offering Price, Sponsor's Repurchase Price and Redemption
Price'), the purchase of a Unit should be looked upon as a long-term investment.
Neither the Trust nor the Total Reinvestment Plan are designed to be complete
investment programs.
PORTFOLIO

The portfolio of the Trust consists of the Securities described in
'Description of Portfolio' in Part A and are represented by the Sponsor's
contracts to purchase, which are expected to be settled by the date set forth in
Part A. The Trust may contain Securities which have been purchased on a when,
as, and if issued basis. Accordingly, the delivery of such Securities may be
delayed or may not occur. (See 'Description of Portfolio' in Part A.) Interest
on these Securities begins accruing to the benefit of Certificateholders on
their respective dates of delivery. Certificateholders will be 'at risk' with
respect to these Securities (i.e., may derive either gain or loss from
fluctuations in the offering side evaluation of the Securities) from the date
they commit for Units. (See 'Description of Portfolio' in Part A.) For a
discussion of the Sponsor's obligations in the event of the failure of any
contract for the purchase of any of the Securities and limited right to
substitute other securities to replace any failed contract, see 'The Trust --
Substitution of Securities' in this Part B. In selecting Securities for deposit
in the Trust,
2
<PAGE>
the Sponsor considered the following factors, among others: (i) the types of
CMOs available, (ii) the yield and price of the Securities relative to other
comparable mortgage-backed securities, (iii) the estimated average lives and
prepayment schedules of the Securities, (iv) the payment provisions applicable
to the Securities, and (v) whether the Securities were issued after July 18,
1984 if interest thereon is United States source income.

The Trust consists of the Securities (or contracts to purchase the
Securities) listed under 'Portfolio' in Part A (including any additional debt
obligations deposited in the Trust pursuant to the terms of the Indenture) as
long as they may continue to be held from time to time in the Trust together
with accrued and undistributed interest thereon and undistributed and uninvested
cash realized from the disposition or redemption of Securities (See 'Trust
Administration -- Portfolio Supervision').

CMOs generally are bond-like tranches of the cash flow from a mortgage
pool. An issue of CMOs generally is backed by a larger number of mortgages than
a pool of Ginnie Maes, Fannie Maes or Freddie Macs, thus allowing greater
statistical prediction of prepayment characteristics. CMOs also differ from
regular mortgage-backed securities in that the cash flows on the mortgage pool
are applied to the various classes of any series of CMOs in the order specified
by that series, rather than to each CMO in the series pro rata.
THE SECURITIES

The Securities in the Intermediate Portfolio consist primarily of planned
amortization or targeted amortization bonds. A description of each of these
types of CMOs is provided below:

Standard (Plain Vanilla) Bonds: This class of CMO accrues interest at a
fixed rate on its outstanding principal amount. The interest is payable monthly,
quarterly or semi-annually as specified. Holders of Standard Bonds receive only
interest until all CMOs issued in the same series with earlier final
distribution dates have been paid in full. In addition, some Standard Bonds may
be issued as a support class to Planned Amortization Bonds or Targeted
Amortization Bonds (see below).

Compound Interest Bonds: Interest accrues upon this class of CMO but is not
payable until all classes of CMOs issued in the same series with earlier final
distribution dates have been paid in full. Interest that accrues but is not paid
is added to the principal amount of the Compound Interest Bond.

Adjustable Rate Bonds: Interest rates on this class of CMO may increase or
decrease at one or more specified dates according to the documentation governing
their issuance.

Floating Rate Bonds: Interest rates on these classes of CMOs vary directly
or inversely (although not necessarily proportionately) in relation to generally
accepted market interest rate indices. The interest rate is usually capped to
limit the extent of over-collateralization with mortgage-backed securities
required in order to ensure that there is sufficient cash flow to service all
the classes of CMOs in that series.

Support Bonds and Planned Amortization Bonds or Targeted Amortization
Bonds: Planned Amortization or Target Amortization classes of CMOs receive
payments of principal according to a planned schedule to the extent that
prepayments on the underlying mortgage-backed securities occur within a broad
time period (the 'Protection Period'). The principal is reduced only in
specified amounts at specified times resulting in greater predictability of
principal payments for the Planned Amortization Bonds or Targeted Amortization
Bonds. If prepayments on the underlying mortgage-backed securities occur at a
rate greater or less than that provided for by the Protection Period, then the

excess or deficiency of cash flows generated is absorbed by the other Support
Classes of CMOs in the particular series until the principal amount of each of
the other Support Classes has been paid in full, resulting in less
predictability for those other Support Classes.

Principal Only Bonds: This class of stripped CMOs has the right to all
principal payments from the underlying mortgage-backed securities. Principal
Only Bonds sell at a deep discount. The return on a Principal Only Bond
increases the faster prepayments are received at par. The return on a Principal
Only Bond decreases if the rate of prepayment is slow. Slow prepayment can also
cause great delays in recognizing gains.

Pledged as collateral to secure the payment of interest and principal on
each type of CMO in the Portfolio will be Ginnie Maes, Fannie Maes or Freddie
Macs, guaranteed by GNMA, FNMA and

3
<PAGE>
FHLMC, respectively. The Units of the Trust, however, will not be guaranteed by
GNMA, FNMA, FHLMC, the United States or any of its agencies. The Trust may
contain CMOs, the collateral pledged to secure which, are mortgages referred to
as 'Relocation Mortgages'. Relocation Mortgages are issued expressly to finance
home purchases by transferred employees. Since such mortgages are related to the
relocation of the individual rather than housing activity and mortgages rates
generally, the anticipated prepayment rate for them is different than other
individual mortgage-backed securities. Historically, prepayment speeds with
respect to Relocation Mortgages are faster and less interest rate sensitive than
traditional single family mortgages. Therefore, with respect to any CMOs in the
Trust supported by such Relocation Mortgages, the Trust would expect to receive
prepayment of principal on such instruments at a faster rate than that with
respect to other CMOs in the Trust.

GNMA. The Government National Mortgage Association is a wholly-owned
corporate instrumentality of the United States within the Department of Housing
and Urban Development. The National Housing Act of 1943, as amended, authorizes
GNMA to guarantee the timely payment of the principal of, and interest on,
certificates which are based on and backed by a pool of mortgage loans insured
by the Federal Housing Administration ('FHA'), or guaranteed by the Veterans'
Administration ('VA'). In order to meet its obligations under such guaranty,
GNMA may issue its general obligations to the United States Treasury in an
amount which is at any time sufficient to enable GNMA, with no limitations as to
amount, to perform its obligations under its guaranty. In the event it is called
upon at any time to make good its guaranty, GNMA has the full power and
authority to borrow from the Treasury of the United States, if necessary,
amounts sufficient to make payments of principal and interest on the Ginnie
Maes.

Ginnie Maes. Ginnie Maes are mortgage-backed securities of the 'fully
modified pass-through' type, the terms of which provide for timely monthly
payments by the issuers to the registered holders of their pro rata shares of
the scheduled principal payments, whether or not collected by the issuers, on
account of the mortgages backing such Ginnie Maes, plus any prepayment of

principal of such mortgages received, and interest (net of servicing and
guarantee charges) on the aggregate unpaid principal balance of such Ginnie
Maes, whether or not interest on account of such mortgages has been collected by
the issuers. Ginnie Maes will be guaranteed as to timely payment of principal
and interest by GNMA. The full faith and credit of the United States is pledged
to the payment of all amounts which may be required to be paid under the
guaranty.

FNMA. The Federal National Mortgage Association is a Federally chartered,
privately-owned corporation organized and existing under the Federal National
Mortgage Association Charter Act. It is the nation's largest investor in home
mortgage loans, with a net portfolio of $107.8 billion of mortgage loans as of
December 31, 1989. FNMA was originally established in 1938 as a United States
government agency to provide supplemental liquidity to the mortgage market but
was transformed into a stockholder owned and privately managed corporation by
legislation enacted in 1968. The Secretary of Housing and Urban Development
exercises general regulatory power over FNMA. FNMA nevertheless maintains
certain relationships with the U.S. Government. Although thirteen members of its
board of directors are authorized to be elected by the shareholders, five are
appointed by the President of the United States. The President can also remove
board members, including those elected by the shareholders. Although the
Secretary of the Treasury has discretionary authority to lend FNMA up to $2.25
billion outstanding at any time, neither the United States nor any agency
thereof is obligated to finance FNMA's obligations or to assist FNMA in any
other matter, and obligations issued by FNMA are not guaranteed by and do not
constitute a debt or obligation of the United States or of any agency or
instrumentality thereof other than FNMA. FNMA provides funds to the mortgage
market primarily by purchasing home mortgage loans from lenders, thereby
replenishing funds for additional lending. FNMA acquires funds to purchase home
mortgage loans from many capital market investors which may not ordinarily
invest in mortgages, thereby expanding the total amount of funds available for
housing.

Fannie Maes. Fannie Maes are certificates of beneficial interest evidencing
pro rata undivided ownership interests in pools of residential mortgages either
previously owned by FNMA or purchased by it in connection with the formation of
a pool. FNMA guarantees the full and timely payment of principal and interest
(adjusted to the pass-through rate) on the mortgage loans in the pool, whether
or
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<PAGE>
not received by FNMA or recovered by it in foreclosure. If FNMA were unable to
fulfill its guaranty, distributions to holders of Fannie Maes would consist
solely of payments and other recoveries upon the underlying mortgages, and,
accordingly, delinquencies and defaults would diminish distributions to the
holders. The obligations of FNMA under its guaranty are solely those of FNMA and
are not backed by the full faith and credit of the United States. Moreover,
neither the United States nor any of its agencies is obligated to finance the
operations of FNMA or to assist it. At December 31, 1989, $228.2 billion of
Fannie Maes were outstanding.

FHLMC. The Federal Home Loan Mortgage Corporation is a corporate
instrumentality of the United States created pursuant to the Emergency Home

Finance Act of 1970, as amended (the 'FHLMC or Freddie Mac Act'). Freddie Mac's
statutory mission is to provide stability in the secondary market for home
mortgages, to respond appropriately to the private capital market and to provide
ongoing assistance to the home mortgage secondary market and promote nationwide
access to residential mortgage credit by increasing the liquidity of mortgage
investments and improving the distribution of investment capital available for
home mortgage financing. The principal activity of FHLMC currently consists of
the purchase of first lien, conventional, residential mortgage loans or
participation interests in such mortgage loans and the resale of the whole loans
and participations so purchased in the form of mortgage securities. Freddie Mac
generally matches its purchases of mortgages with sales of guaranteed
securities. All mortgage loans purchased by FHLMC must meet certain standards
set forth in the FHLMC Act. Mortgages retained by FHLMC are financed with short-
term and long-term debt and equity capital.

Freddie Macs. Freddie Macs represent an undivided interest in a pool of
first lien, residential mortgages and mortgage participations ('Mortgages' or
PCs') purchased by FHLMC. PCs include 'Gold PCs,' 'Original PCs,' 'ARM PCs,'
'Gold Giant PCs,' 'Original Giant PCs,' and 'ARM Giant PCs.' PCs may include
whole loans, participation interests in whole loans and undivided interest in
whole loans or participations comprising other PCs. For example, Gold PCs,
Original PCs and ARM PCs represent undivided interests in discrete pools
consisting of Mortgages. Gold Giant PCs, Original Giant PCs and ARM Giant PCs
represent beneficial ownership interests in discrete pools consisting of PCs. In
the case of Original PCs FHLMC guarantees the timely payment of interest at the
rate provided for by Freddie Macs on the unpaid principal balance outstanding on
the underlying mortgage loans in the PCs represented by the Freddie Macs,
whether or not received, and also guarantees collection of all principal on the
underlying mortgage loans, without any offset or deduction, but does not
guarantee the timely payment of scheduled principal. Unlike Original PCs, Gold
PCs guarantee the timely payment of both interest and scheduled principal, thus
producing a more predictable payment stream. Gold PCs also offer a shorter
payment delay than that of conventional mortgage pass-through securities (FHLMC
advances payment to Gold PC holders 14 days after the borrower's scheduled
principal and interest payments are due), and a shorter period (approximately 45
days) between the first day of the month in which the Gold PCs are issued and
the initial payment date. Freddie Macs are not guaranteed by the United States
or by any Federal Home Loan Bank and do not constitute debts or obligations of
the United States or any Federal Home Loan Bank. The obligations of FHLMC under
its guarantee are obligations solely of FHLMC and are not backed by, nor
entitled to, the full faith and credit of the United States. If FHLMC were
unable to fulfill its guaranty, distributions to holders of Freddie Macs would
consist solely of payments and other recoveries upon the underlying mortgages,
and, accordingly, delinquencies and defaults would diminish distributions to the
holders.

SPECIAL FEATURES OF MARKET DISCOUNT SECURITIES

Certain of the Securities in the Trust may have been valued at a market
discount. Securities trade at less than par value because the interest rates on
the Securities are lower than interest on comparable obligations being issued at
currently prevailing interest rates. The current returns of Securities trading

at a market discount are lower than the current returns of comparably rated
obligations of a similar type issued at currently prevailing interest rates
because discount securities tend to increase in market value as they approach
maturity and the full principal amount becomes payable. If currently prevailing
interest rates for newly issued and otherwise comparable securities increase,
the market discount of previously issued securities will become deeper, and if
currently prevailing interest rates
5
<PAGE>
for newly issued comparable securities decline, the market discount of
previously issued securities will be reduced, other things, including, without
limitation, credit quality and rate of prepayment, being equal. Investors should
also note that the value of the Securities valued at a market discount will
increase faster than the Securities valued at a market premium if interest rates
decrease. Conversely, if interest rates increase, the value of the Securities
valued at a market discount will decrease faster than the Securities valued at a
premium. In addition, if interest rates rise, the prepayment risk of higher
yielding premium Securities, and the prepayment benefit for lower yielding,
discount Securities will be reduced. Market discount attributable to interest
rate changes does not indicate a lack of market confidence in the issue.
SPECIAL FEATURES OF MARKET PREMIUM SECURITIES

Certain of the Securities in the Trust may have been valued at a market
premium. Securities trade at a premium because the interest rates on the
Securities are higher than interest on comparable obligations being issued at
currently prevailing interest rates. The current returns of Securities trading
at a market premium are higher than the current returns of comparably rated
obligations of a similar type issued at currently prevailing interest rates
because premium securities tend to decrease in market value as they approach
maturity when the principal amount becomes payable. Because part of the purchase
price is returned not at maturity but through current income payments, an early
redemption of a premium security at par will result in a reduction in yield. If
currently prevailing interest rates for newly issued and otherwise comparable
securities increase, the market premium of previously issued securities will
decline and if currently prevailing interest rates for newly issued comparable
securities decline the market premium of previously issued securities will
increase, other things, including, without limitation, credit quality and rate
of prepayment, being equal. Market premium attributable to interest rate changes
does not indicate market confidence in the issue.
SUBSTITUTION OF SECURITIES

Neither the Sponsor nor the Trustee shall be liable in any way for any
default, failure or defect in any of the Securities. In the event of a failure
to deliver any Security that has been purchased for the Trust under a contract,
including those Securities purchased on a 'when as and if' issued basis ('Failed
Securities'), the Sponsor is authorized under the Trust Agreement to direct the
Trustee to acquire other securities ('Replacement Securities') to make up the
original corpus of the Trust (See 'Trust Administration -- Portfolio
Supervision').

The Replacement Securities must be purchased within 20 days after delivery
of the notice of the failed contract and the purchase price (exclusive of
accrued interest) may not exceed the purchase price of the Failed Securities.
The Replacement Securities must be substantially similar to the Securities

originally contracted for and not delivered. (See 'Trust Administration --
Portfolio Supervision'). Whenever a Replacement Security has been acquired for
the Trust, the Trustee shall, within five days thereafter, notify all
Certificateholders of the Trust of the acquisition of the Replacement Security
and shall, on the next monthly Payment Date which is more than 30 days
thereafter, make a pro rata distribution of the amount, if any, by which the
cost to the Trust of the Failed Security exceeded the cost of the Replacement
Security plus accrued interest. Once the original corpus of the Trust is
acquired, the Trustee and the Sponsor will have no power to vary the investment
of the Trust, i.e., the Trustee will have no managerial power to take advantage
of market variations to improve a Certificateholder's investment.

If the right of limited substitution described in the preceding paragraph
shall not be utilized to acquire Replacement Securities in the event of a failed
contract, the Sponsor will cause to be refunded the sales charge attributable to
such Failed Securities to all Certificateholders of the Trust, and distribute
the principal and accrued interest attributable to such Failed Securities on the
next monthly Payment Date. In all cases, accrued interest attributable to Failed
Securities will be paid to Certificateholders until such time as Replacement
Securities are acquired. All such interest paid to a Certificateholder which
accrued after the expected date of settlement for purchase of his Units will be
paid by the Sponsor.

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<PAGE>
Because certain of the Securities 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 the Trust will retain their
present size and composition for any length of time. The proceeds from the sale
of a Security or the exercise of any redemption or call provision will be
distributed to Certificateholders except to the extent such proceeds are applied
to meet redemptions of Units. (See 'Trustee Redemption').
LIQUIDITY

The Securities in the Trust have been registered, or are exempt from
registration, under the Securities Act of 1933 and, therefore, may be sold by
the Trust at any time to provide funds for purposes of redemption of Units.
However, the Securities are generally not listed on a national securities
exchange or on the National Association of Securities Dealers Automated
Quotation System, Inc. Whether or not the Securities are listed, the principal
trading market for the Securities will generally be in the over-the-counter
market. As a result, the existence of a liquid trading market for the Securities
may depend on whether dealers will make a market in the Securities. There can be
no assurance that a market will be made for any of the Securities, that any
market for the Securities will be maintained or of the liquidity of the
Securities in any markets made. In addition, the Trust may be restricted under
the Investment Company Act of 1940 from selling Securities to the Sponsor. The
price at which the Securities may be sold to meet redemptions and the value of
the Trust will be adversely affected if trading markets for the Securities are
limited or absent. However, taking into account the foregoing and other factors,
the Sponsor believes that the nature of the GNMA, FNMA or FHLMC guarantees of
any Securities that have been issued by them, respectively, and the nature of
the Ginnie Maes, Fannie Maes or Freddie Macs securing payments of principal and
interest due on the Securities make the Securities adequately marketable for

purposes of redemptions of Units by the Trustee (see 'Redemption').
LIMITED ASSETS AND LIMITED LIABILITY

Except as indicated under 'Description of Portfolio' in Part A and except
for any Securities that were issued by GNMA, FNMA or FHLMC, the issuers of the
Securities are limited purpose corporations, trusts or other entities ('Limited
Purpose Issuers'), organized solely for the purpose of issuing Ginnie Mae,
Fannie Mae or Freddie Mac-collateralized CMOs. None of the securities issued by
the Limited Purpose Issuers (including the Securities deposited in the Trust)
are guaranteed by the parent company or any other affiliate of any Limited
Purpose Issuer. Consequently, holders of these securities (including the Trust)
must rely upon payments on the Ginnie Maes, Fannie Maes or Freddie Macs and upon
any other collateral securing the securities (including the Securities deposited
in the Trust) for the payment of principal and interest due on the securities.
If the collateral securing the securities of each Limited Purpose Issuer is
insufficient to make payments on those securities, it is unlikely that any other
asset of the Limited Purpose Issuer will be available for payment of the
deficiency. The collateral securing the CMOs of each Issuer (including the
Securities deposited in the Trust) will be held by the CMO Trustee as security
for the CMOs of that Issuer. Although payment of principal of and interest on
Ginnie Maes, Fannie Maes and Freddie Macs securing the Securities is guaranteed
by GNMA, FNMA and FHLMC, respectively, the CMOs (including the Securities
deposited in the Trust except for any Securities which have been issued directly
or indirectly by GNMA, FNMA or FHLMC) represent obligations solely of the
Issuers and are not insured or guaranteed by GNMA, FNMA or FHLMC or any other
governmental agency. A default with respect to the securities of a particular
Issuer (including the Securities of the Issuer deposited in the Trust) may not
necessarily result from a corresponding default with respect to the underlying
Ginnie Maes, Fannie Maes or Freddie Macs.

For any Securities that have been issued by issuers other than GNMA, FNMA
or FHLMC, the Sponsor has obtained representations from the issuer that it has
received an opinion of counsel to the effect that it is not an investment
company or that it has been exempted from the definition of an investment
company by order of the Securities and Exchange Commission. With respect to any
Securities of issuers that have been exempted from the definition of an
investment company by order
7
<PAGE>
of the Securities and Exchange Commission, the value of those Securities will
not exceed more than 5% individually, or 10% in the aggregate, of the total
value of the Securities in the Trust.
LIFE OF THE SECURITIES AND OF THE TRUST

CMOs are generally issued as a series of different classes. An issue of
CMOs tends to be backed by a larger number of mortgages than a pool of Ginnie
Maes, Fannie Maes, or Freddie Macs, thus allowing greater statistical prediction
of prepayment characteristics. Interest and principal payments on the mortgages
underlying any series will first be applied to meet the interest payment
requirements of each class in the series other than any class in respect of
which interest accrues but is not paid or any principal only class. Then,
principal payments on the underlying mortgages are generally applied to pay the
principal amount of the class that has the earliest maturity date. Once that
class is retired, the principal payments on the underlying mortgages are applied

to the class with the next earliest maturity date. This is repeated until all
classes are paid. Therefore, while each class of CMOs remains subject to
prepayment as the underlying mortgages prepay, structuring several classes of
CMOs in the stream of principal payments allows a more predictable estimate of
the period of time when any one class is likely to be repaid. The estimate can
be even closer with a class of planned amortization bonds or targeted
amortization bonds. The amortization schedule for these CMOs is structured so
that, at specified prepayment rates within a relatively wide range, their
principal will be repaid at specified times and in specified amounts. However,
if any series of CMOs contains a class of planned amortization bonds or targeted
amortization bonds, then the other classes in that series may not be retired in
an order of priority determined strictly with reference to their maturity dates.

These other classes are often referred to as 'support classes' because
their function is to support the amortization schedule of the planned
amortization bonds or targeted amortization bonds by absorbing the prepayment
risks associated with an investment in a CMO. If the rate of prepayments on the
underlying mortgages is faster than assumed, then classes with maturity dates
later than the planned amortization bonds or targeted amortization bonds may be
retired earlier than estimated to ensure that the planned amortization bonds or
targeted amortization bonds receive the principal payments required by their
amortization schedule. Similarly, if the rate of prepayments is slower than
anticipated, earlier support classes may be retired later than estimated. Hence,
support classes of a series that contains planned amortization bonds or targeted
amortization bonds have less predictable prepayment characteristics than classes
of a series that does not. This lack of predictability regarding prepayments
also causes support class bonds to have greater market value fluctuation than
other classes of a CMO. (See 'Description of Portfolio' in Part A for the number
of planned amortization bonds, target amortization bonds and support bonds
contained in the Trust portfolio.) The rate of prepayment on the underlying
mortgages of a CMO will most likely decline as interest rates increase. If the
rate of prepayment declines, the weighted average life of the support class
bonds will most likely increase and, in some cases, the decline will impact the
yield and market value of these Securities. This may cause an investor's
principal in a support class bond to be outstanding for a longer period of time
than initially anticipated. Conversely, if interest rates decline, prepayments
on the underlying mortgages will most likely increase, and the weighted average
life of the support class bonds may be shorter than anticipated. A holder of a
support class bond in these situations may be unable to reinvest the proceeds of
these principal distributions at an effective interest rate equal to the
specified coupon rate on the original support class bond. Therefore, an investor
expecting to earn a fixed return for a fixed number of years may find the life
of a support class investment decreases as interest rates fall and increases as
they rise.

In contrast, with Ginnie Maes, Fannie Maes or Freddie Macs, estimation of
repayment is more difficult as the cash flow on the underlying mortgages is
simply passed through on a pro rata basis to the holders. However, any estimate
of the prepayment period for any class of CMO is based upon certain assumptions
as to the prepayment speed of the underlying mortgages, which assumptions may
prove to be inaccurate over time. See 'Estimated Long Term Return and Estimated
Current Return.'

All of the mortgages in the pools relating to the Ginnie Maes, Fannie Maes

or Freddie Macs backing the Securities in the Trust are subject to prepayment
without any significant premium or penalty at the option of the mortgagors
(i.e., the homeowners). Because certain of the Securities from
8
<PAGE>
time to time may be redeemed or prepaid or will mature in accordance with their
terms or may be sold under certain circumstances described herein, no assurance
can be given that the Trust will retain for any length of time its present size
and composition (see 'Redemption').

While the mortgages on the 1 to 4 family dwellings underlying Ginnie Maes,
Fannie Maes or Freddie Macs which may back the Securities are amortized over a
period of up to 30 years, it has been the experience of the mortgage industry
that the average life of comparable mortgages, owing to prepayments, is
considerably less. Prepayments on mortgages are commonly measured relative to a
prepayment standard or model. The prepayment model of the Public Securities
Association (the 'Prepayment Model') represents an assumed rate of prepayment
each month relative to the then outstanding principal balance of a pool of new
mortgage loans. 100% of the Prepayment Model assumes prepayment rates of 0.2%
per annum of the then outstanding principal balance of such mortgage loans in
the first month of the life of the mortgage loans and an additional 0.2% per
annum in each month thereafter until the 30th month. Beginning in the 30th month
and in each month thereafter during the life of the mortgage loans, 100% of the
Prepayment Model assumes a constant prepayment rate of 6% per annum. The
principal repayment behavior of any individual mortgage will likely vary from
these assumptions. The extent of this variation will depend on a variety of
factors, including the relationship between the coupon rate on a mortgage and
prevailing mortgage origination rates. As prevailing mortgage origination rates
increase in relationship to a mortgage coupon rate, the likelihood of prepayment
of that mortgage decreases. Conversely, during periods in which prevailing
mortgage origination rates are significantly less than a mortgage coupon rate,
prepayment of that mortgage becomes increasingly likely. Research analysts use
complex formulae to scrutinize the prepayments of mortgage pools in an attempt
to predict more accurately the average life of any particular class of
mortgage-backed bonds. The basis for the calculation of estimated average life
and the relationship of this calculation for Estimated Long Term Return is more
fully described under 'Estimated Long Term Return and Estimated Current Return.'

Generally speaking, a number of factors, including mortgage market interest
rates and homeowners' mobility, will affect the average life of the Ginnie Maes,
Fannie Maes or Freddie Macs which back the Securities in the Trust and,
accordingly, there can be no assurance that the prepayment levels which will be
actually realized will conform to the estimated levels. Changes in prepayment
patterns, as reported by each of GNMA, FNMA and FHLMC on a periodic basis, if
generally applicable to the mortgage pools related to specific CMOs could
influence yield assumptions used in pricing the securities. Shifts in prepayment
patterns are influenced by changes in housing cycles and mortgage refinancing
and are also subject to certain limitations on the gathering of the data; it is
impossible to predict how new statistics will affect the yield assumptions that
determine mortgage industry norms and pricing of CMOs. Moreover, there is no
assurance that the pools of mortgage loans relating to the Securities in the
Trust will conform to prepayment experience as reported by GNMA, FNMA or FHLMC
on a periodic basis or the prepayment experience of other mortgage lenders.

While the value of CMOs generally fluctuates inversely with changes in
interest rates, it should also be noted that the potential for appreciation on
CMOs, which could otherwise be expected to result from a decline in interest
rates, may tend to be limited by any increased prepayments by mortgagors as
interest rates decline (except for Principal Only Bonds whose yield increases
with the speed at which payments of principal are received at par). Accordingly,
the termination of the Trust might be accelerated as a result of prepayments
made as described above. In addition, it is possible that, in the absence of a
secondary market for the Units or otherwise, redemption of Units may occur in
sufficient numbers to reduce a Portfolio to a size resulting in the termination
of the Trust (termination for this reason would be delayed if additional Units
are issued). Early termination of the Trust may have important consequences to
Certificateholders, e.g., the extent that Units were purchased with a view to an
investment of longer duration, the overall investment program of the investor
may require readjustment, or the overall return on investment may be less or
greater than anticipated, depending in part on whether the purchase price paid
for Units represented the payment of an overall premium or a discount,
respectively, above or below the stated principal amounts of the underlying
mortgages.

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PUBLIC OFFERING
OFFERING PRICE

The Public Offering Price per 1,000 Units of the Trust is computed by
adding to the aggregate offering price of the Securities in the Trust divided by
the number of Units outstanding times 1,000, an amount equal to 3.5% of the
aggregate offering price of the Securities per 1,000 Units. A proportionate
share of accrued interest on the Securities is added to the Public Offering
Price. Accrued interest is the accumulated and unpaid interest on Securities
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. The Public Offering Price can vary on a daily basis from
the amount stated in this Prospectus in accordance with fluctuations in the
prices of the Securities and the price to be paid by each investor will be
computed as of the date the Units are purchased.

The aggregate offering side evaluation of the Securities is determined by
the Evaluator (a) on the basis of current offering prices of the Securities, (b)
if an offering price is not available for any particular Security, on the basis
of current offering prices for comparable securities, (c) by determining the
value of the Securities on the offer side of the market by appraisal, or (d) by
any combination of the above. This evaluation is made each business day during
the initial public offering as of 4 P.M. New York Time, effective for all orders
received during the preceding 24-hour period. With respect to the initial
evaluation of the offering prices of certain Securities which at the Date of
Deposit were subject to syndicate offering period pricing restrictions, it is
the practice of the Evaluator to determine such evaluation on the basis of the
syndicate offering price, unless other factors cause the Evaluator to conclude
that such syndicate offering price does not then accurately reflect the free
market value of such Securities, in which case the Evaluator will also take into
account the other criteria described above for the purpose of making its
determination.

The Evaluator may obtain current bid or offering prices for the Securities
from investment dealers or brokers (including the Sponsor) that customarily deal
in CMOs or from any other report service or source of information which the
Evaluator deems appropriate.
ACCRUED INTEREST

Accrued interest is the accumulation of unpaid interest on a Security from
the last day on which interest thereon was paid. Interest on Securities in the
Trust is actually paid monthly to the Trust. However, interest on the Securities
in the Trust is accounted for daily on an accrual basis. Because of this, a
Trust always has an amount of interest earned but not yet collected by the
Trustee because of non-collected coupons. For this reason, the Public Offering
Price of Units will have added to it the proportionate share of accrued and
undistributed interest to Date of Settlement.

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 sale or
termination and to the date of tender in the case of redemption.
VOLUME AND OTHER DISCOUNTS

Units of the Trust are available at a volume discount from the Public
Offering Price during the initial public offering. This volume discount will
result in a reduction of the sales charge applicable to such purchases. The
amount of the volume discount and the approximate sales charge applicable to
such purchases are as follows:

<TABLE>
<CAPTION>
APPROXIMATE REDUCED
DISCOUNT FROM PUBLIC SALES CHARGE
OFFERING PRICE PER UNIT -------------------
----------------------- INTERMEDIATE
NUMBER OF UNITS CMO TRUSTS PORTFOLIO
- ------------------ ----------------------- -------------------
<S> <C> <C>
100,000-249,999 $ 2.50 3.51%
250,000-499,999 5.00 3.27
500,000-749,999 7.50 3.02
750,000-999,999 10.00 2.78
1,000,000 and over 15.00 2.28
</TABLE>

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<PAGE>

These discounts will apply to all purchases of Units by the same purchaser
during the initial public offering period. Units purchased by the same
purchasers in separate transactions during the initial public offering period
will be aggregated for purposes of determining if such purchase is entitled to a
discount provided that such purchaser must own at least the required number of

Units at the time such determination is made. Units held in the name of the
spouse of the purchaser or in the name of a child of the purchaser under 21
years of age are deemed for the purposes hereof to be registered in the name of
the purchaser. The discount is also applicable to a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary account.

Employees (and their immediate families) of Bear, Stearns & Co. Inc. and of
any underwriter of the Trust may, pursuant to employee benefit arrangements,
purchase Units of the Trust at a price per 1,000 Units equal to the offering
side evaluation of the underlying Securities in the Trust during the initial
offering period and at the bid side thereafter, divided by the number of Units
outstanding multiplied by 1,000 plus a reduced charge of $10 per 1,000 Units.
Such arrangements result in less selling effort and selling expenses than sale
to employee groups of other companies. Resales or transfer of Units purchased
under the employee benefit arrangements may only be made through the Sponsor's
secondary market, so long as it is being maintained.
DISTRIBUTION OF UNITS

During the initial offering period Units will be distributed by the
Sponsor, the Underwriters and dealers at the Public Offering Price plus accrued
interest. (See 'Underwriting Syndicate' in Part A.) The initial offering period
is thirty days and, unless all Units are sold prior thereto, the Sponsor may
extend the offering period up to four additional successive thirty day periods.
Certain banks and thrifts will make Units of the Trust available to their
customers on an agency basis. A portion of the sales charge paid by their
customers is retained by or remitted to the banks. Under the Glass-Steagall Act,
banks are prohibited from underwriting Units; however, the Glass-Steagall Act
does permit certain agency transactions and the banking regulators have
indicated that these particular agency transactions are permitted under such
Act. In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.

The Sponsor intends to qualify the Units for sale in substantially all
States through 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 $25 per 1,000 Units, subject to the
Sponsor's 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 Sponsor reserves the right to
reject, in whole or in part, any order for the purchase of Units. The Sponsor
reserves the right to change the discounts from time to time.

Underwriters and broker-dealers of the Trusts, banks and/or others are
eligible to participate in a program in which such firms receive from
the Sponsor a nominal award for each of their registered representatives
who have sold a minimum number of units of unit investment trusts
created by the Sponsor during a specified time period. In addition, at
various times the Sponsor may implement other programs under which the
sales forces of underwriters, brokers, dealers, banks and/or others may
be eligible to win other nominal awards for certain sales efforts, or

under which the Sponsor will reallow to any such underwriters, brokers,
dealers, banks and/or others that sponsor sales contests or recognition
programs conforming to criteria established by the Sponsor, or
participate in sales programs sponsored by the Sponsor, an amount not
exceeding the total applicable sales charges on the sales generated by
such person at the public offering price during such programs. Also, the
Sponsor in its discretion may from time to time pursuant to objective
criteria established by the Sponsor pay fees to qualifying underwriters,
brokers, dealers, banks and/or others for certain services or activities
which are primarily intended to result in sales of Units of the Trust.
Such payments are made by the Sponsor out of its own assets and not out
of the assets of the Trusts. These programs will not change the price
Unitholders pay for their Units or the amount that the Trusts will
receive from the Units sold.

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<PAGE>

FREQUENT BUYER PROGRAM

Any dealer, underwriter, or firm whose total combined purchases of the
Trust and other unit investment trusts sponsored by Bear, Stearns & Co. Inc.
('MST/EST Units') from Bear, Stearns & Co. Inc. in a single calendar month fall
in any of the levels listed below, will be paid an additional concession.

<TABLE>
<CAPTION>
AGGREGATE MONTHLY ADDITIONAL
AMOUNT OF CONCESSION
MST/EST (PER
UNITS SOLD AT $1,000.00)
PUBLIC OFFERING PRICE SOLD
- ---------------------------------------------------------------------------------------- ----------
<S> <C>
$1,000,000 but less than $2,000,000..................................................... $ 0.50
$2,000,000 but less than $4,500,000..................................................... $ 1.00
$4,500,000 but less than $7,000,000..................................................... $ 1.50
$7,000,000 or more...................................................................... $ 2.00
</TABLE>

SPONSOR'S AND UNDERWRITERS' PROFITS

The Sponsor and the Underwriters will receive a gross underwriting
commission equal to 3.5% of the Public Offering Price per 1,000 Units
(equivalent to 3.627% of the net amount invested in the Securities).
Additionally, the Sponsor may realize a profit on the deposit of the Securities
in the Trust representing the difference between the cost of the Securities to
the Sponsor and the cost of the Securities to the Trust (See 'Portfolio').

The Sponsor may have participated as a sole underwriter or manager,
co-manager or member of underwriting syndicates from which some of the aggregate
principal amount of the Securities were acquired for the Trust in the amounts
set forth in Part A. The Sponsor or any Underwriter may realize profits or

sustain losses with respect to Securities deposited in the Trust which were
acquired from underwriting syndicates of which they were a member.

During the initial offering period the underwriting syndicate may also
realize profits or sustain losses as a result of fluctuations after the Date of
Deposit in the offering prices of the Securities and hence in the Public
Offering Price received by the Sponsor and the Underwriters for the Units. Cash,
if any, made available to the Sponsor prior to settlement date for the purchase
of Units may be used in the Sponsor's business subject to the limitations of 17
CFR 240.15c3-3 under the Securities Exchange Act of 1934, and may be of benefit
to the Sponsor.

In maintaining a market for the Units (see 'Sponsor Repurchase') the
Sponsor will realize profits or sustain losses in the amount of any difference
between the price at which 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, SPONSOR'S REPURCHASE PRICE AND REDEMPTION
PRICE

Although the Public Offering Price of Units in the Trust will be
determined on the basis of the current offering side evaluations of the
Securities, the value at which Units may be redeemed or sold in the
secondary market will be determined on the basis of the aggregate bid
side evaluation of the Securities. On the Date of Deposit, the Public
Offering Price per 1,000 Units and the Sponsor's Initial Repurchase
Price per 1,000 Units (each based on the offering side evaluation of the
Securities) each exceeded the Redemption Price per 1,000 Units and the
Sponsor's secondary market Repurchase Price per 1,000 Units (based on
the current bid side evaluation of the Securities) by the amounts shown
under 'Summary of Essential Information' in Part A.

In the past, in the experience of the Sponsor, the bid prices of publicly
offered issues of CMOs have been lower than the offering prices by as much as 1%
or more of face amount and as little as 1/4% of face amount, but the difference
between the offering and bid prices has generally been about 1/2% of face
amount; the amount of this difference as of the Evaluation Time on the business
day prior to the initial Date of Deposit, as determined by the Evaluator, is set
forth under 'Portfolio' in Part A. For this

12
<PAGE>
and other reasons (including fluctuations in the market prices of the
Securities, the fact that the Public Offering Price includes the sales
charge and the fact that the Sponsor's Repurchase Price after the
primary marketing period will be based on the bid side evaluation of the
Securities), the amount realized by a Certificateholder upon any
redemption of Units may be less than the price paid by him for the
Units.

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN

The Estimated Net Annual Interest Income per 1,000 Units for the Trust on
the business day prior to the date of this Prospectus is set forth under
'Summary of Essential Information'. This figure shows the return based on $1.00
principal amount per Unit after deducting estimated annual fees and expenses.
This figure will change as Securities mature, are prepaid, exchanged, redeemed,
paid or sold, as replacements or Additional Securities are purchased and
deposited in the Trust or as the expenses of the Trust change.

In actual operation, payments received in respect of the mortgages
underlying the Ginnie Maes, Fannie Maes or Freddie Macs which in turn back the
Securities will consist of a portion representing interest and a portion
representing principal. Although the aggregate monthly payment made by the
obligor on each mortgage remains constant (aside from optional prepayments of
principal), in the early years the larger proportion of each payment will
represent interest, while in later years, the proportion representing interest
will decline and the proportion representing principal will increase, although
the interest rate remains constant. Moreover, by reason of optional prepayments,
payments in the earlier years on mortgages may be substantially in excess of
those required by the amortization schedules of these mortgages; conversely,
payments in later years may be substantially less since the aggregate unpaid
principal balances of the underlying mortgages and, hence, the related Ginnie
Maes, Fannie Maes or Freddie Macs may have been greatly reduced -- ultimately
even sufficiently reduced to accelerate termination of the Trust. To the extent
that those Securities bearing the higher interest rate represented in the
Portfolio are prepaid faster than other Securities, the net annual interest per
1,000 Units and the return on the Units can be expected to decline. Monthly
payments to the Certificateholders will reflect all of the foregoing factors.

Interest on the Securities in the Trust, less estimated fees of the Trustee
and Sponsor and certain other expenses, is expected to accrue per 1,000 Units at
the daily rate (based on a 360-day year) shown under 'Summary of Essential
Information'. The actual daily rate will vary as Securities are prepaid,
exchanged, redeemed, paid or sold or as the expenses of the Trust change.

The Estimated Current Return and the Estimated Long Term Return for the
Trust on the business day prior to the date of this Prospectus are set
forth under 'Summary of Essential Information' in Part A. Estimated Long
Term Return for the portfolio is calculated by: (1) computing the yield
to maturity for each CMO in the portfolio in accordance with accepted
CMO practices, which practices take into account not only the interest
payable on the CMO but also the amortization of premiums or accretion of
discounts, if any, and estimated appropriate prepayments; (2)
calculating the average of yields for the CMOs in the portfolio by
weighing each CMO's yield by the market value of the CMO and by the
amount of time remaining to the date to which the CMO is priced (thus
creating an average yield for the portfolio of the Trust); and (3)
reducing the average yield for the portfolio in order to reflect
estimated fees and expenses of the Trust and the maximum sales charge
paid by Certificateholders. The resulting Estimated Long Term Return
represents a measure of the return to Certificateholders earned over the
estimated life of the Trust.

Estimated Current Return for the portfolio is computed by dividing the
Estimated Net Annual Interest Income per 1,000 Units by the Public Offering

Price per 1,000 Units. 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 CMOs in the portfolio.

The calculation of an estimated average life for any Security in the Trust
is a two stage process. First, several assumptions are made to derive an
estimated prepayment rate for the mortgages underlying the Ginnie Maes, Fannie
Maes or Freddie Macs which back the Securities. Based upon historical prepayment
data provided by GNMA, FNMA and FHLMC an assumption is made as to

13
<PAGE>
how the prepayment behavior of the mortgages will be affected as they
amortize. However, because historical prepayment data afford only a
limited basis upon which to analyze prepayment behavior, the Sponsor has
developed an econometric model that allows an analysis of several other
important variables. The principal variables are the spread between
present market interest rates and the interest rate on the mortgages and
the turnover rate in the housing market. Finally, the Sponsor uses this
model's prepayment predictions to derive an estimated prepayment rate
for the mortgage pool, expressed in terms of the PSA Prepayment Model,
from which an estimated average life and estimated prepayment schedule
can be projected for the Ginnie Maes, Fannie Maes or Freddie Macs
themselves. While the various estimates made in this first stage are
subjected to rigorous analysis, investors should be aware that they are
based upon reported statistical relations that may not remain constant
and assumptions about the future of an uncertain economic environment.

The second stage in determining the estimated average life of any Security
in the Trust involves the use of a formula to apply the estimated rate of
principal payments on the mortgage pool to amortize the Ginnie Maes, Fannie Maes
and Freddie Macs which back the Securities and to retire the principal amount of
each CMO class of the same series, including the Security itself, according to
the specific principal reduction schedule of that series. This results in an
estimate of the point at which the principal of any Security will begin to be
paid and how long it will take for the principal to be fully paid. If any
Security was issued in a series that contains planned amortization bonds or
targeted amortization bonds, then the estimated rate of principal payments on
the underlying mortgages will be applied to the other classes in that series in
a manner that takes account of the amortization schedule of the planned
amortization bonds or targeted amortization bonds. This results in less
predictable prepayment characteristics for those other classes. The estimated
average life for the Trust provided under the 'Summary of Essential Information'
is subject to change with alterations in the data used in any of the underlying
assumptions. The actual average lives of the Securities and the actual long term
returns will be different from the estimated average lives and the Estimated
Long Term Returns.

Both Estimated Current Return and Estimated Long Term Return are subject to
fluctuation with changes in portfolio composition, principal payments and
prepayments and changes in market value of the underlying Securities and changes
in fees and expenses, including sales charges, and therefore can be materially
different than the figures set forth under the Summary of Essential Information.
The size of any difference between Estimated Current Return and Estimated Long

Term Return can also be expected to fluctuate at least as frequently. In
addition, both return figures may not be directly comparable to yield figures
used to measure other investments, and since the return figures are based on
certain assumptions and variables the actual returns received by a Unitholder
may be higher or lower. The Estimated Long Term Return and Estimated Current
Return calculations do not take into account certain delays in distributions of
income and the timing of other receipts and distributions on Units and may,
depending on maturities, over or understate the impact of sales charges. Both of
these factors may result in lower figures.

In addition to the Public Offering Price, the price of a Unit includes
accrued interest on the Securities. Securities deposited in the Trust
include an item of accrued but unpaid interest up to the date of
delivery of the Securities. Certificateholders pay this additional
accrued interest when they purchase Units. In addition, interest
accruing after the date of delivery of the Securities is added to the
Public Offering Price. Accrued interest earns no return.

The payment dates of the Securities may vary and therefore accrued interest
at any time may be greater than the amount of interest actually received by the
Trust and distributed to Certificateholders. Therefore, accrued interest (if
any) is always added to the value of the Units. If a Certificateholder sells all
or a portion of his Units, he will receive his proportionate share of the
accrued interest from the purchaser of his Units. Similarly, if a
Certificateholder redeems all or a portion of his Units, the Redemption Price
per Unit will include accrued interest on the Securities.

Certain Securities may have been purchased on a when, as and if issued
basis or may have a delayed delivery (see 'Description of Portfolio' in Part A).
Certificateholders will be 'at risk' with

14
<PAGE>
respect to these Securities (i.e., may derive either gain or loss from
fluctuations in the offering side evaluation of the Securities) from the
date they commit for Units.
RIGHTS OF CERTIFICATEHOLDERS
CERTIFICATES

Ownership of Units of the Trust is evidenced by registered Certificates
executed by the Trustee and the Sponsor. Certificates may be issued in
denominations of one thousand or more Units. 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 for the Trust. Proceeds representing principal received from the
maturity, redemption, sale or other disposition of the Securities are credited

to the Principal Account of the Trust.

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 such
Certificateholder's pro rata share of the amount of interest received on the
Securities during such month in the Interest Account less amounts deducted or
estimated to be deducted as discussed below. Distributions from the Principal
Account of the Trust (other than amounts representing failed contracts, as
previously discussed) will be computed as of each monthly Record Date, and will
be made to the Certificateholders of the Trust on the next monthly Payment Date.
Proceeds representing principal received from the disposition of any of the
Securities 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 monthly Payment Date. No distributions will be made
to Certificateholders 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. All
funds in respect of the Securities 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 of the Trust, and, to the extent funds are not
sufficient therein, from the Principal Account of the Trust, 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 Securities and redemptions of Units by the Trustee.

The estimated initial distribution per 1,000 Units will be in the
approximate amount shown under 'Summary of Essential Information' in Part A and
will change and may be reduced as Securities are prepaid 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 per 1,000 Units.
RECORDS

The Trustee shall furnish Certificateholders in connection with each
distribution a statement of the amount of interest, if any, and the amount of
the receipts, if any, which are being distributed, expressed in each case as a
dollar amount per 1,000 Units. 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

15
<PAGE>
was a Certificateholder of record, a statement showing (a) as to

the Interest Account: interest received, amounts paid for purchases of
Replacement Securities 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 1,000 Units
outstanding on the last business day of such calendar year; (b) as to the
Principal Amount: the dates of disposition of any Securities and the net
proceeds received therefrom, deductions for payments of applicable taxes and
fees and expenses of the Trust, amounts paid for purchases of Replacement
Securities 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 1,000 Units
outstanding on the last business day of such calendar year; (c) a list of the
Securities held and the number of Units outstanding on the last business day of
such calendar year; (d) the Redemption Price per 1,000 Units based upon the last
computation thereof made during such calendar year; and (e) amounts actually
distributed to Certificateholders during such calendar year from the Interest
and Principal Accounts, separately stated, of the Trust, expressed both as total
dollar amounts and as dollar amounts representing the pro rata share of each
1,000 Units outstanding on the last business day of such calendar year.

The Trustee shall keep available for inspection by Certificateholders at
all reasonable times during usual business hours, books, records and accounts of
its transactions as Trustee, including records of the names and addresses of
Certificateholders, Certificates issued or held, a current list of Securities in
the Portfolio and a copy of the Trust Agreement.
TAX STATUS

The Sponsor believes that (i) each Security the interest on which is United
States source income (which is the case for most Securities issued by United
States issuers) was or will have been issued after July 18, 1984, (ii) each
Security is a regular interest in a REMIC, as defined in Sections 860A-G of the
Internal Revenue Code of 1986, as amended (the 'Code'), and (iii) interest on
any Security issued by a non-United States issuer is not subject to any foreign
withholding taxes under current law. There can be no assurance, however, that
foreign withholding taxes will not be imposed on interest on Securities issued
by non-United States issuers in the future.

Neither the Sponsor nor Battle Fowler has made or will make a review of the
facts and circumstances relating to the issuance of any Security.

Based on the foregoing, in the opinion of Battle Fowler, special counsel
for the Sponsor, under existing law:

The Trust is not an association taxable as a corporation for Federal
income tax purposes, and income received by the Trust will be treated as
the income of the Certificateholder in the manner set forth below.

Each Certificateholder in the Trust will be considered the owner of a
pro rata portion of each Security in the Trust under the grantor trust
rules of Sections 671-679 of the Code. In order to determine the face
amount of the Certificateholder's pro rata portion of each Security on the
initial Date of Deposit, see Principal Amount of Securities under
'Portfolio' for the Trust. The total cost to a Certificateholder of his

Units, including sales charges, is allocated among his or her pro rata
portion of each Security (in proportion to the fair market values thereof
on the date the Certificateholder purchases his Units) in order to
determine his tax cost for his pro rata portion of each Security. In order
for a Certificateholder who purchases his Units on the initial Date of
Deposit to determine the fair market value of his pro rata portion of each
Security on such date, see Cost of Securities to Trust under 'Portfolio'
for the Trust.

A Certificateholder will be required to include in income his or her
respective pro rata share of interest on each Security (whether or not the
Security has original issue discount, as discussed below) as interest
accrues, whether or not the Certificateholder is an accrual method
taxpayer. An individual Certificateholder who itemizes deductions may,
subject to generally applicable limitations or deductions, deduct his pro
rata share of fees and expenses of the Trust only to the

16
<PAGE>
extent that such amount together with the Certificateholder's other
miscellaneous deductions exceeds 2%of his adjusted gross income.

The Trust may contain Securities which were originally issued at a
discount ('original issue discount'). In general, original issue discount
is defined as the difference between the price at which a security was
issued and its stated redemption price at maturity. Original issue discount
on a Security will accrue as interest over the life of the Security under a
formula based on the compounding of interest. Such formula requires the
adoption by the issuer of the Securities of certain prepayment assumptions,
discussed in more detail in 'Estimated Long Term Return and Estimated
Current Return.' Certificateholders are urged to consult their own tax
advisers. In the case of a Certificateholder who purchases Units in a trust
holding a Security that was originally issued at a discount, the amount of
original issue discount that will accrue will be reduced if the
Certificateholder purchases the Units at a price that reflects a lower
yield for the Security than the yield thereon at the time of the original
issuance of such Security. Each Certificateholder will be required to
include in income in each year the amount of original issue discount which
accrues during the year on his pro rata portion of any Security originally
issued at a discount. The amount of original issue discount so included in
income in respect of a Certificateholder's pro rata portion of a Security
is added to the Certificateholder's tax cost therefor.

If a Certificateholder's tax cost for his pro rata portion of a
Security exceeds the redemption price at maturity thereof, the
Certificateholder will be considered to have purchased his pro rata portion
of the Security at a 'premium.' The Certificateholder (except in the case
of a dealer in securities or one who holds debt obligations primarily for
sale to customers in the ordinary course of his trade or business) may
elect to amortize the premium prior to the maturity of the Security. The
amount amortized in any year should be applied to offset the
Certificateholder's interest from the Security and should result in an

adjustment to basis (i.e., a reduction of the Certificateholder's tax cost)
for his pro rata portion of the Security.

A Certificateholder will recognize taxable gain or loss when all or
part of his pro rata portion of a Security is disposed of for an amount
greater or less than his original tax cost therefor plus any accrued
original issue discount or minus any amortized premium. Any such taxable
gain or loss will be a capital gain or loss, except in the case of a dealer
or financial institution, and except as provided for in the next paragraph.

Any gain from the disposition of a Certificateholder's pro rata
portion of a Security issued after July 18, 1984 and acquired by the
Certificateholder at 'market discount' (i.e., if the Certificateholder's
original cost for his pro rata portion of the Security (plus any original
issue discount which has accrued thereon) is less than its stated
redemption price at maturity) will be treated as ordinary income to the
extent the gain does not exceed the accrued market discount. The deduction
of capital losses is subject to limitations. A Certificateholder will be
considered to have disposed of all or part of his pro rata portion of each
Security when he sells or redeems all or some of his Units. A
Certificateholder will also be considered to have disposed of all or part
of his pro rata portion of a Security when all or part of the Security is
sold by the Trust or is redeemed or paid at maturity.

Units that are owned by Certificateholders, other than a dealer in
securities or one who holds debt obligations primarily for sale to
customers in the ordinary course of his trade or business, are capital
assets and generally produce capital gains and losses upon their sale or
disposition. Gain realized upon the sale or disposition of an interest in a
REMIC, however, will be ordinary income to the extent of unaccrued original
issue discount as determined by a prescribed formula.

Under the income tax laws of the State and City of New York, the Trust
is not an association taxable as a corporation and income received by the
Trust will be treated as the income of the Certificateholders in the same
manner as for Federal income tax purposes.

Notwithstanding the foregoing, a Certificateholder who is not a
citizen or resident of the United States or a United States domestic
corporation (a 'Foreign Certificateholder') will generally not be subject
to United States Federal income taxes, including withholding taxes, or
information reporting, on the interest income (including any original issue
discount) on, or any
17
<PAGE>

gain from the sale or other disposition of, his pro
rata portion of any Security provided that (i) the interest income or gain
is not effectively connected with the conduct by the Foreign
Certificateholder of a trade or business within the United States, (ii) if
the interest is United States source income (which is the case on most
Securities issued by United States issuers), the Security is issued after

July 18, 1984 and the Foreign Certificateholder does not own, actually or
constructively, 10% or more of the total combined voting power of all
classes of voting stock of the issuer of the Security and is not a
controlled foreign corporation related (within the meaning of Section
864(d)(4) of the Code) to the issuer of the Security, (iii) with respect to
any gain, the Foreign Certificateholder (if an individual) is not present
in the United States for 183 days or more during the taxable year and does
not have a 'tax home' (as defined in Section 911(d)(3) of the Code) in the
United States, and the gain is not attributable to an office or fixed place
of business maintained by such individual in the United States, and (iv)
the Foreign Certificateholder provides the required certification of his
status and of the matters contained in clauses (i), (ii) and (iii) above.
Foreign Certificateholders should consult their own tax advisers with
respect to United States Federal income tax consequences of ownership of
Units.

After the end of each calendar year, the Trustee will furnish to each
Certificateholder an annual statement containing information relating to the
interest received by the Trust on the Securities, the gross proceeds received by
the Trust from the disposition of any Security (resulting from redemption or
payment at maturity of any Security or the sale by the Trust of any Security),
and the fees and expenses paid by the Trust. The Trustee will also furnish
annual information returns to each Certificateholder and to the Internal Revenue
Service.

The foregoing discussion relates only to United States Federal and, to a
limited extent, New York State and City income taxes. Certificateholders may be
subject to taxation in New York or in other jurisdictions (including a Foreign
Certificateholder's country of residence) and should consult their own tax
advisers in this regard.

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). Long-term capital gains are generally taxed at the same rates
applicable to ordinary income, although individuals who realize long-term
capital gains will be subject to a maximum tax rate of 28% on such gain, rather
than the 'regular' maximum rate of 39.6%. Prospective investors are urged to
consult their own tax advisors as to the effect of P.L. 103-66 on an investment
in Units.

TAX-EXEMPT INVESTORS

Entities that generally qualify for an exemption from federal income tax,
such as many pension trusts, are nevertheless taxed under Section 511 of the
Code on 'unrelated business taxable income.' Unrelated business taxable income
is income from a trade or business regularly carried on by the tax-exempt entity
that is unrelated to the entity's exempt purpose. Unrelated business taxable
income generally does not include interest income or gain from the sale of
investment property, unless such income is derived from property that is
debt-financed or such gain is derived from property that is
dealer property. A tax-exempt entity's interest income from the Trust and gain
from the sale of Units in the Trust or the Trust's sale of Securities is not
expected to constitute unrelated business income to such tax-exempt entity

unless the acquisition of the Unit itself is debt-financed or constitutes dealer
property in the hands of the tax-exempt entity.

Before investing in the Trust, the trustee or investment manager of an
employee benefit plan (e.g., a pension or profit sharing retirement plan) should
consider among other things (i) whether the investment is prudent under ERISA,
taking into account the needs of the plan and all of the facts and circumstances
of the investment in the Trust; (ii) whether the investment satisfies the
diversification requirement of Section 404(a)(1)(C) of ERISA; and (iii) whether
the assets of the Trust are deemed 'plan assets' under ERISA and the Department
of Labor regulations regarding the definition of 'plan assets.'

Prospective tax-exempt investors are urged to consult their own tax
advisors prior to investing in the Trust.

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LIQUIDITY
SPONSOR REPURCHASE

The Sponsor, although not obligated to do so, intends to maintain a
secondary market for the Units and continuously to offer to repurchase the
Units. The Sponsor's secondary market repurchase price after the initial public
offering is completed will be based on the aggregate bid price of the Securities
in the Trust and will be the same as the redemption price. The aggregate bid
price will be determined by the Evaluator on a daily basis after the initial
public offering is completed and computed on the basis set forth under 'Trustee
Redemption'. During the initial offering period, the Sponsor's repurchase price
will be based on the aggregate offering price of the Securities in the Trust.
Certificateholders who wish to dispose of their Units should inquire of the
Sponsor as to current market prices prior to making a tender for redemption. The
Sponsor 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, New York
10167, on behalf of the Sponsor. 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.

Units purchased by the Sponsor in the secondary market may be reoffered
for sale by the Sponsor at a price based on the aggregate bid price of the
Securities in the Trust plus a 3.5% sales charge (3.627% of the net amount
invested) plus net accrued interest. Any Units that are purchased by the Sponsor
in the secondary market also may be redeemed by the Sponsor if it determines
such redemption to be in its best interest.

The Sponsor may, under certain circumstances, as a service to
Certificateholders, elect to purchase any Units tendered to the Trustee for
redemption (see 'Trustee Redemption'). Factors which the Sponsor will consider
in making a determination will include the number of Units of all Trusts 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 Securities, and if such
disposition cannot be made by the redemption date (seven calendar days after
tender), the Sponsor may elect to purchase such Units. Such purchase shall be
made by payment to the Certificateholder not later than the close of business on
the redemption date of an amount equal to the Redemption Price on the date of
tender.
TRUSTEE REDEMPTION

Units may also be tendered to the Trustee for redemption at its corporate
trust office at 770 Broadway, New York, New York 10003, upon proper delivery of
Certificates representing such Units and payment of any relevant tax. At the
present time there are no specific taxes related to the redemption of Units. No
redemption fee will be charged by the Sponsor or the Trustee. Units redeemed by
the Trustee will be cancelled.

Certificates representing Units to be redeemed must be delivered to the
Trustee and must be properly endorsed or accompanied by proper instruments of
transfer with signature guaranteed (or by providing satisfactory indemnity, as
in the case of lost, stolen or mutilated Certificates). Thus, redemptions of
Units cannot be effected until Certificates representing such Units have been
delivered by the person seeking redemption. (See 'Certificates'.)
Certificateholders must sign exactly as their names appear on the faces of their
Certificates. In certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority.

Within seven calendar days following a tender for redemption, or, if such
seventh day is not a business day, on the first business day prior thereto, the
Certificateholder will be entitled to receive in cash an amount for each Unit
tendered equal to the Redemption Price per Unit computed as of the Evaluation
Time 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

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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 Securities in order to make funds
available for redemptions. Such sales, if required, could result in a sale of
Securities by the Trustee at a loss. To the extent Securities 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

Securities in the Trust based on the bid prices of such Securities and (iii)
interest accrued thereon, less (a) amounts representing taxes or other
governmental charges payable out of the Trust, (b) the accrued expenses of the
Trust and (c) cash allocated for the distribution to Certificateholders of
record as of the business day prior to the evaluation being made. The Evaluator
may determine the value of the Securities in the Trust (i) if the Securities are
listed on a national securities exchange (CMOs are usually not so listed), based
on the closing sale prices on that exchange (unless the Evaluator deems these
prices inappropriate as a basis for valuation), (ii) if the Securities are not
so listed or, if so listed and the principal market therefor is other than on
the exchange or there are no closing sale prices on the exchange, based on the
closing sale prices on the over-the-counter market (unless the Evaluator deems
these prices inappropriate as a basis for evaluation), (iii) if closing sale
prices are unavailable, (a) on the basis of current bid or offering prices for
the Securities, (b) if bid or offering prices are not available for any
Securities, on the basis of current bid or offering prices for comparable
securities, (c) by appraising the value of the Securities on the bid or offering
side of the market or (d) by any combination of the above. The Evaluator may
obtain current price information as to the Securities from investment dealers or
brokers (including the Sponsor) which customarily deal in this type of security.

While the Sponsor believes that Securities of the type included in the
Trust involve minimal risk of loss of principal, due to variations in interest
rates the market value of these Securities, and Redemption Price per Unit can be
expected to fluctuate during the period of an investment in the Trust.

The Trustee is irrevocably authorized in its discretion, if the Sponsor
does not elect to purchase a Unit tendered for redemption or if the Sponsor
tenders a Unit for redemption, in lieu of redeeming such Unit, to sell such Unit
in the over-the-counter market for the account of the tendering
Certificateholder at prices which will return to the Certificateholder an amount
in cash, net after deducting brokerage commissions, transfer taxes and other
charges, equal to or in excess of the Redemption Price for such Unit. The
Trustee will pay the net proceeds of any such sale to the Certificateholder on
the day he would otherwise be entitled to receive payment of the Redemption
Price.

The Trustee reserves the right to suspend the right of redemption and to
postpone the date of payment of the Redemption Price per Unit for any period
during which the New York Stock Exchange is closed, other than customary weekend
and holiday closings, or trading on that Exchange is restricted or during which
(as determined by the Securities and Exchange Commission) an emergency exists as
a result of which disposal or evaluation of the Bonds is not reasonably
practicable, or for such other periods as the Securities and Exchange Commission
may by order permit. The Trustee and the Sponsor are not liable to any person or
in any way for any loss or damage which may result from any such suspension or
postponement.

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.

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TOTAL REINVESTMENT PLAN

Distributions of interest and principal, if any, from the Trust are made
to Certificateholders monthly. The Certificateholder has the option, however, of
either receiving his interest check, together with any principal payments, from
the Trustee or participating in a reinvestment program offered by the Sponsor in
shares of GOC Fund, Inc., U.S. Treasury Money Market Portfolio (the 'Fund').
Participation in the reinvestment option is conditioned on the Fund's lawful
qualification for sale in the state in which the Certificateholder is a
resident.

Upon enrollment in the reinvestment option, the Trustee will direct
interest and/or principal distributions, if any, to the Fund. The Fund seeks to
maximize current income and to maintain liquidity and a stable net asset value
by investing in short term U.S. Government obligations which have effective
maturities of one year or less. For more complete information concerning the
Fund, including charges and expenses, the Certificateholder should fill out and
mail the card attached to the inside back cover of the Prospectus. The
prospectus for the Fund will be sent to Certificateholders. The
Certificateholder should read the prospectus for the Fund carefully before
deciding to participate. The shares of the Fund are not rated by Standard &
Poor's.
TRUST ADMINISTRATION
PORTFOLIO SUPERVISION

The Trust is a unit investment trust and is not an actively managed fund.
Traditional methods of investment management for a managed fund typically
involve frequent changes in a portfolio of securities on the basis of economic,
financial and market analyses. The portfolio of the Trust, however, will not be
actively managed and therefore the adverse financial condition of an issuer will
not require the sale of its Securities from the portfolio of the Trust. However,
the Sponsor may direct the disposition of Securities upon default in payment of
amounts due on any of the Securities, institution of certain legal proceedings,
default in payment of amounts due on other securities of the same issuer or
guarantor, or decline in price or the occurrence of other market or credit
factors that in the opinion of the Sponsor would make the retention of these
Securities detrimental to the interest of the Certificateholders. If a default
in the payment of amounts due on any Security occurs and if the Sponsor fails to
give instructions to sell or hold that Security, the Indenture provides that the
Trustee, within 30 days of that failure by the Sponsor, shall sell the Security.

The Sponsor is required to instruct the Trustee to reject any offer made
by an issuer of any of the Securities to issue new Securities in
exchange or substitution for any Securities pursuant to a refunding or
refinancing plan, except that the Sponsor may instruct the Trustee to
accept or reject any offer or to take any other action with respect
thereto as the Sponsor may deem proper if (a) the issuer is in default
with respect to these Securities or (b) in the written opinion of the
Sponsor the issuer will probably default with respect to these
Securities in the reasonably foreseeable future. Any Securities so
received in exchange or substitution will be held by the Trustee subject
to the terms and conditions of the Indenture to the same extent as
Securities originally deposited thereunder. Within five days after the

deposit of Securities in exchange or substitution for underlying
Securities, the Trustee is required to give notice thereof to each
Certificateholder, identifying the Securities eliminated and the
Securities substituted therefor. Except as stated herein, the
acquisition by the Trust of any securities other than the Securities
initially deposited is prohibited.

The Sponsor is also authorized to direct the Trustee to acquire Replacement
Securities to make up the original portfolio of the Trust should any contract
deposited hereunder fail. Replacement Securities are expected to be deposited
into the Trust Fund within 110 days of the Initial Date of Deposit at a purchase
price that does not exceed the amount of funds reserved for the purchase of the
Failed Securities and that results in a yield to maturity and in a current
return, in each case as of the initial Date of Deposit, which are equivalent
(taking into consideration then current market conditions and the relative
creditworthiness of the underlying obligation) to the yield to maturity and
current return of the Failed Securities. The Replacement Securities shall be one
or more of the several forms of CMO in which the Trust may invest as set forth
under the Summary of Essential Information, with final distribution dates
substantially the same as those of the Failed Securities, having no warrants or

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subscription privileges attached; shall be payable in United States currency;
shall be issued after July 18, 1984 and shall be issued by GNMA, FNMA or FHLMC
or be rated AAA by Standard & Poor's. Whenever a Replacement Security has been
acquired for the Trust, the Trustee shall, within five days thereafter, notify
all Holders of the acquisition of the Replacement Security and shall, on the
next Distribution Day which is more than 30 days thereafter, make a pro rata
distribution of the amount, if any, by which the cost to the Trust of the Failed
Security exceeded the cost of the Replacement Security plus accrued interest. If
Replacement Securities are not acquired, the Sponsor shall, on or before the
next following Distribution Day, cause to be refunded the attributable sales
charge, plus the attributable Cost of Securities to the Trust listed under the
portfolio, plus undistributed income, if any, attributable to the Failed
Security.
TRUST AGREEMENT, AMENDMENT AND TERMINATION

The Trust Agreement may be amended by the Trustee, the Sponsor and the
Evaluator without the consent of any of the Certificateholders: (1) to cure any
ambiguity or to correct or supplement any provision which may be defective or
inconsistent; (2) to change any provision thereof as may be required by the
Securities and Exchange Commission or any successor governmental agency; or (3)
to make such other provisions in regard to matters arising thereunder as shall
not adversely affect the interests of the Certificateholders.

The Trust Agreement may also be amended in any respect, or performance of
any of the provisions thereof may be waived, with the consent of the holders of
Certificates evidencing 66 2/3% of the Units then outstanding for the purpose of
modifying the rights of Certificateholders; provided that no such amendment or
waiver shall reduce any Certificateholder's 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 in the Trust then outstanding, to increase the number of Units
issuable or to permit the acquisition of any bonds in addition to or in
substitution for those initially deposited in the Trust, except in accordance
with the provisions of the Trust Agreement. The Trustee shall promptly notify
Certificateholders, in writing, of the substance of any such amendment.

The Trust Agreement provides that the Trust shall terminate upon the
maturity, redemption or other disposition, as the case may be, of the last of
the Securities held in the Trust but in no event is it to continue beyond the
end of the calendar year preceding the fiftieth anniversary of the execution of
the Trust Agreement. If the value of the Trust shall be less than the minimum
amount set forth under 'Summary of Essential Information' in Part A, the Trustee
may, in its discretion, and shall when so directed by the Sponsor, terminate the
Trust. The Trust may also be terminated at any time with the consent of the
holders of Certificates representing 100% of the Units then outstanding. In the
event of termination, written notice thereof will be sent by the Trustee to all
Certificateholders. Within a reasonable period after termination, the Trustee
must sell any Securities remaining in the terminated Trust, and, after paying
all expenses and charges incurred by the Trust, distribute to each
Certificateholder, upon surrender for cancellation of his Certificate for Units,
his pro rata share of the Interest and Principal Accounts.

THE SPONSOR

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 Discount and Zero Coupon Fund, 1st Series (and
Subsequent Series), Municipal Securities Trust, Series 1 (and Subsequent

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Series), 1st Discount Series (and Subsequent Series), Multi-State Series 1 (and
Subsequent Series), High Income Series 1 (and Subsequent Series), Intermediate
Term Series 1 (and Subsequent Series), Insured Municipal Securities Trust,
Series 1 (and Subsequent Series), 5th Discount Series (and Subsequent Series)
and Equity Securities Trust, Series 1, Signature Series, Gabelli Communications
Income Trust (and Subsequent Series).

The information included herein is only for the purpose of informing
investors as to the financial responsibility of the Sponsor and its ability to
carry out its contractual obligations.

The Sponsor is liable for the performance of its obligations arising from
its responsibilities under the Trust Agreement, but will be under no liability
to Certificateholders for taking any action, or refraining from taking any
action, in good faith pursuant to the Trust Agreement, or for errors in judgment
except in cases of its own willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties.

The Sponsor may resign at any time by delivering to the Trustee an
instrument of resignation executed by the Sponsor.

If at any time the Sponsor shall resign or fail to perform any of its
duties under the Trust Agreement or becomes incapable of acting or becomes
bankrupt or its affairs are taken over by public authorities, then the Trustee
may either (a) appoint a successor Sponsor; (b) terminate the Trust Agreement
and liquidate the Trust; or (c) continue to act as Trustee without terminating
the Trust Agreement. Any successor Sponsor appointed by the Trustee shall be
satisfactory to the Trustee and, at the time of appointment, shall have a net
worth of at least $1,000,000.
THE TRUSTEE

The Trustee is 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, Securities 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 Securities 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 Securities 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 Sponsor, and mailing a copy of a notice of resignation to all
Certificateholders. In such an event, the Sponsor is obligated to appoint a
successor Trustee as soon as possible. In addition, if the Trustee becomes
incapable of acting or becomes bankrupt or its affairs are taken over by public
authorities, the Sponsor may remove the Trustee and appoint a successor as
provided in the Trust Agreement. Notice of such removal and appointment shall be

mailed to each Certificateholder by the Sponsor. If upon resignation of the
Trustee no successor has been appointed and has accepted the appointment within
thirty days after notification, the retiring Trustee may apply to a court of
competent jurisdiction for the appointment of a successor. The resignation or
removal of the Trustee becomes effective only when the successor Trustee accepts
its appointment as such or when a court of competent jurisdiction appoints a

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successor Trustee. Upon execution of a written acceptance of such appointment by
such successor Trustee, all the rights, powers, duties and obligations of the
original Trustee shall vest in the successor.

Any corporation into which the Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Trustee shall be a party, shall be the successor Trustee. The
Trustee must always be a banking corporation organized under the laws of the
United States or any state and have at all times an aggregate capital, surplus
and undivided profits of not less than $2,500,000.
THE EVALUATOR

The Evaluator is Kenny S&P Evaluation Services, a division of Kenny
Information Systems, Inc. with main offices located at 65 Broadway, New York,
New York 10006. The Evaluator is a wholly-owned subsidiary of McGraw-Hill, Inc.
The Evaluator is a registered investment advisor and also provides financial
information services.

The Trustee, the Sponsor and 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 Sponsor or Certificateholders for errors in judgment, except in
cases of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.

The Evaluator may resign or may be removed by the Sponsor and Trustee, and
the Sponsor and the Trustee are to use their best efforts to appoint a
satisfactory successor. Such resignation or removal shall become effective upon
the acceptance of appointment by the successor Evaluator. If upon resignation of
the Evaluator no successor has accepted appointment within thirty days after
notice of resignation, the Evaluator may apply to a court of competent
jurisdiction for the appointment of a successor.
TRUST EXPENSES AND CHARGES

At no cost to the Trust, the Sponsor has borne all the expenses of creating
and establishing the Trust, including the cost of initial preparation and
execution of the Trust Agreement, registration of the Trust and the Units under
the Investment Company Act of 1940 and the Securities Act of 1933, the 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' securities since the date of

settlement for the Units, initial fees and other out-of-pocket expenses.

The Sponsor will not charge the Trust a fee for its services as such. (See
'Sponsor's and Underwriters' Profits.')

The Sponsor 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. The Sponsor's fee may exceed the actual cost of
providing portfolio supervisory services for the Trust, but at no time
will the total amount received for portfolio supervisory services
rendered to all series of the Mortgage Securities Trusts in any calendar
year exceed the aggregate cost to the Sponsor 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. For a discussion of the services performed by the Trustee pursuant to
its obligations under the Trust Agreement, see 'Trust Administration' and
'Rights of Certificateholders.'

The Evaluator will receive, for each daily evaluation of the Securities 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.

The Trustee's and Evaluator's fees applicable to the Trust are payable
monthly as of the Record Date from the Interest Account of the Trust to the
extent funds are available and then from the Principal Account. Both fees may be
increased without approval of the Certificateholders by amounts

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<PAGE>
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 Certificateholders; fees of the Trustee for any
extraordinary services performed under the Trust Agreement; indemnification of
the Trustee for any loss or liability accruing to it without gross negligence,
bad faith or willful misconduct on its part, arising out of or in connection
with its acceptance or administration of the Trust; indemnification of the
Sponsor for any losses, liabilities and expenses incurred in acting as sponsor
of the Trust without gross negligence, bad faith or willful misconduct on its
part; and all taxes and other governmental charges imposed upon the Securities
or any part of the Trust (no such taxes or charges are being levied, made or, to
the knowledge of the Sponsor, contemplated). The above expenses, including the
Trustee's fees, when paid by or owing to the Trustee are secured by a first lien
on the Trust to which such expenses are charged. In addition, the Trustee is
empowered to sell Securities in order to make funds available to pay all
expenses.

The account of the Trust shall be audited not less than annually by
independent public accountants selected by the Sponsor. The expenses of the
audit shall be an expense of the Trust. So long as the Sponsor maintains a
secondary market, the Sponsor will bear any audit expense which exceeds $.50 per
1,000 Units. 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, Equity Securities Trust or A Corporate Trust (the 'Exchange
Trusts') at a reduced sales charge as set forth below. Under the Exchange
Privilege, the Sponsor's repurchase price during the initial offering period of
the Units being surrendered will be based on the aggregate offer price of the
Bonds in the Trust portfolio; and, after the initial offering period has been
completed, will be based on the aggregate bid price of the Bonds in the
particular Trust portfolio. Units in an Exchange Trust then will be sold to the
Certificateholder at a price based on the aggregate offer price of the Bonds in
the Exchange Trust portfolio during the initial public offering period of the
Exchange Trust or will be based on the aggregate bid price of the Bonds in the
Exchange Trust portfolio if its initial offering has been completed plus accrued
interest and a reduced sales charge as set forth below.

Except for unitholders who wish to exercise the Exchange Privilege within
the first five months of their purchase of Units of the 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 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)). For unitholders who
wish to exercise the Exchange Privilege within the first five months of their
purchase of Units of the 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 100 Units for the Equity
Securities Trust), or (ii) an amount which when coupled with the sales charge
paid by the unitholder upon his original purchase of Units of the Trust at least
equals the sales charge applicable in the direct purchase of units of an
Exchange Trust. The Exchange Privilege is subject to the following conditions:

1. The Sponsor must be maintaining a secondary market in both the
Units of the Trust held by the Certificateholder and the Units of the
available Exchange Trust. While the Sponsor has indicated its intention to
maintain a market in the Units of all Trusts sponsored by it, the Sponsor
is under no obligation to continue to maintain a secondary market and
therefore there is no assurance that the Exchange Privilege will be
available to a Certificateholder at any specific time

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<PAGE>

in the future. At the time of the Certificateholder's election to
participate in the Exchange Privilege, there also must be Units of the
Exchange Trust available for sale, either under the initial primary

distribution or in the Sponsor's secondary market.

2. Exchanges will be effected in whole units only. Any excess proceeds
from the Units surrendered for exchange will be remitted and the selling
Certificateholder will not be permitted to advance any new funds in order
to complete an exchange. Units of the Mortgage Securities Trust may only be
acquired in blocks of 1,000 Units. Units of the Equity Securities Trust may
only be acquired in blocks of 100 Units.

3. The Sponsor reserves the right to suspend, modify or terminate the
Exchange Privilege. The Sponsor will provide unitholders of the Trust with
60 days prior written notice of any termination or material amendment to
the Exchange Privilege, provided that, no notice need be given if (i) the
only material effect of an amendment is to reduce or eliminate the sales
charge payable at the time of the exchange, to add one or more series of
the Trust eligible for the Exchange Privilege or to delete a series which
has been terminated from eligibility for the Exchange Privilege, (ii) there
is a suspension of the redemption of units of an Exchange Trust under
Section 22(e) of the Investment Company Act of 1940, or (iii) an Exchange
Trust temporarily delays or ceases the sale of its units because it is
unable to invest amounts effectively in accordance with its investment
objectives, policies and restrictions. During the 60 day notice period
prior to the termination or material amendment of the Exchange Privilege
described above, the Sponsor will continue to maintain a secondary market
in the units of all Exchange Trusts that could be acquired by the affected
unitholders. Unitholders may, during this 60 day period, exercise the
Exchange Privilege in accordance with its terms then in effect. In the
event the Exchange Privilege is not available to a Certificateholder at the
time he wishes to exercise it, the Certificateholder will immediately be
notified and no action will be taken with respect to his Units without
further instructions from the Certificateholder.

To exercise the Exchange Privilege, a Certificateholder should notify the
Sponsor of his desire to exercise his Exchange Privilege. If Units of a
designated, outstanding series of an Exchange Trust are at the time available
for sale and such Units may lawfully be sold in the state in which the
Certificateholder is a resident, the Certificateholder will be provided with a
current prospectus or prospectuses relating to each Exchange Trust in which he
indicates an interest. He may then select the Trust or Trusts into which he
desires to invest the proceeds from his sale of Units. The exchange transaction
will operate in a manner essentially identical to a secondary market transaction
except that units may be purchased at a reduced sales charge.

EXAMPLE: Assume that after the initial public offering has been completed, a
Certificateholder has five units of a Trust with a current value of $700 per
unit which he has held for more than 5 months and the Certificateholder wishes
to exchange the proceeds for units of a secondary market Exchange Trust with a
current price of $725 per unit. The proceeds from the Certificateholder's
original units will aggregate $3,500. Since only whole units of an Exchange
Trust may be purchased under the Exchange Privilege, the Certificateholder would
be able to acquire four units (or 4,000 Units of the Mortgage
Securities Trust or 400 Units of the Equity Securities Trust) for a total cost
of $2,960 ($2,900 for units and $60 for the sales charge). The remaining $540
would be remitted to the Certificateholder in cash. If the Certificateholder

acquired the same number of units at the same time in a regular secondary market
transaction, the price would have been $3,068.80 ($2,900 for units and $168.80
for the sales charge, assuming a 5 1/2% sales charge times the public offering
price).
THE CONVERSION OFFER

Unit owners of any registered unit investment trust for which there is
no active secondary market in the units of such trust (a 'Redemption
Trust') may elect to redeem such units and apply the proceeds of the
redemption to the purchase of available Units of one or more series of A
Corporate Trust, Municipal Securities Trust, Insured Municipal
Securities Trust, Mortgage Securities Trust, New York Municipal Trust or
Equity Securities Trust 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

26
<PAGE>
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. The purchase price of the units
of the Conversion Trusts will be based on the aggregate offer price of
the underlying bonds in the Conversion Trust portfolio during its
initial offering period or at a price based on the aggregate bid price
of the underlying bonds if the initial public offering of the Conversion
Trust has been completed, plus accrued interest and a sales charge as
set forth below.

Except for unitholders who wish to exercise the Conversion Offer within the
first five months of their purchase of units of a Redemption Trust, the sales
charge applicable to the purchase of Units of the Conversion Trust shall be $15
per Unit (or per 1,000 Units for the Mortgage Securities Trust or per 100 Units
for the Equity Securities Trust). For unitholders who wish to exercise the
Conversion Offer within the first five months of their purchase of units of a
Redemption Trust, the sales charge applicable to the purchase of Units of a
Conversion Trust shall be the greater of (i) $15 per Unit (or per 1,000 Units
for the Mortgage Securities Trust or per 100 Units for the Equity Securities
Trust) or (ii) an amount which when coupled with the sales charge paid by the
unitholder upon his original purchase of units of the Redemption Trust at least
equals the sales charge applicable in the direct purchase of Units of a
Conversion Trust. The Conversion Offer is subject to the following limitations:

1. The Conversion Offer is limited only to unit owners of any
Redemption Trust, defined as a unit investment trust for which there is no
active secondary market at the time the Certificateholder elects to
participate in the Conversion Offer. At the time of the unit owner's
election to participate in the Conversion Offer, there also must be
available units of a Conversion Trust, either under a primary distribution
or in the Sponsor's secondary market.

2. Exchanges under the Conversion Offer will be effected in whole
units only. Unit owners will not be permitted to advance any new funds in

order to complete an exchange under the Conversion Offer. Any excess
proceeds from units being redeemed will be returned to the unit owner.
Units of the Mortgage Securities Trust may only be acquired in blocks of
1,000 units. Units of the Equity Securities Trust may only be acquired in
blocks of 100 units.

3. The Sponsor reserves the right to modify, suspend or terminate the
Conversion Offer at any time without notice to unit owners of Redemption
Trusts. In the event the Conversion Offer is not available to a unit owner
at the time he wishes to exercise it, the unit owner will be notified
immediately and no action will be taken with respect to his units without
further instruction from the unit owner. The Sponsor also reserves the
right to raise the sales charge based on actual increases in the Sponsor's
costs and expenses in connection with administering the program, up to a
maximum sales charge of $20 per unit (or per 1,000 units for the Mortgage
Securities Trust or per 100 Units for the Equity Securities Trust).

To exercise the Conversion Offer, a unit owner of a Redemption Trust
should notify his retail broker of his desire to redeem his Redemption
Trust Units and use the proceeds from the redemption to purchase Units
of one or more of the Conversion Trusts. If Units of a designated,
outstanding series of a Conversion Trust are at that time available for
sale and if such Units may lawfully be sold in the state in which the
unit owner is a resident, the unit owner will be provided with a current
prospectus or prospectuses relating to each Conversion Trust in which he
indicates an interest. He then may select the Trust or Trusts into which
he decides to invest the proceeds from the sale of his Units. The
transaction will be handled entirely through the unit owner's retail
broker. The retail broker must tender the units to the trustee of the
Redemption Trust for redemption and then apply the proceeds to the
redemption toward the purchase of units of a Conversion Trust at a price
based on the aggregate bid side evaluation per Unit of the Conversion
Trust, plus accrued interest and the applicable sales charge. The
certificates must be surrendered to the broker at the time the
redemption order is placed and the broker must specify to the Sponsor
that the purchase of Conversion Trust Units is being made pursuant to
the Conversion Offer. The unit owner's broker will be entitled to retain
$5 of the applicable sales charge.

EXAMPLE: Assume a unit owner has five units of a Redemption Trust which has held
for more than 5 months with a current redemption price of $675 per unit based on
the aggregate bid price of the

27
<PAGE>
underlying bonds and the unit owner wishes to participate in the
Conversion Offer and exchange the proceeds for units of a secondary
market Conversion Trust with a current price of $750 per Unit. The
proceeds for the unit owner's redemption of units will aggregate $3,375.
Since only whole units of a Redemption Trust may be purchased under the
Conversion Offer, the unit owner will be able to acquire four units of
the Conversion Trust (or 4,000 units of the Mortgage Securities Trust or
400 Units of the Equity Securities Trust) for a total cost of $2,860
($2,800 for units and $60 for the sales charge). The remaining $515

would be remitted to the unit owner in cash. If the unit owner acquired
the same number of Conversion Trust units at the same time in a regular
secondary market transaction, the price would have been $2,962.96
($2,800 for units and $162.96 sales charge, assuming a 5 1/2% sales
charge times the public offering price).
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 Certificateholder under the
Internal Revenue 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. (See 'Tax
Status'). 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.
RATING OF UNITS

Standard & Poor's has rated the Units of the Trust AAA. This is the highest
rating assigned by Standard & Poor's (see Description of Standard & Poor's
Ratings). Standard & Poor's has been compensated by the Sponsor for its service
in rating the Units.
OTHER MATTERS
LEGAL OPINIONS

The legality of the Units offered hereby and certain matters relating to
federal tax law have been passed upon by Messrs. Battle Fowler, 280 Park Avenue,
New York, New York 10017 as counsel for the Sponsor. Messrs. Carter, Ledyard &
Milburn, Two Wall Street, New York, New York 10005 have acted as counsel for the
Trustee.
INDEPENDENT AUDITORS

The Statements of Condition and Portfolio are included herein in reliance
upon the report of KPMG Peat Marwick, independent auditors, and upon the
authority of said firm as experts in accounting and auditing.

DESCRIPTION OF RATINGS
(AS DESCRIBED BY THE RATING COMPANIES THEMSELVES)
STANDARD & POOR'S CORPORATION

A Standard & Poor's rating on the units of a investment trust (hereinafter
referred to collectively as 'units' and 'trust') is a current assessment of
creditworthiness with respect to the investments held by such trust. This
assessment takes into consideration the financial capacity of the issuers and of
any guarantors, issuers, lessees, or mortgagors with respect to such
investments. The assessment, however, does not take into account the extent to
which trust expenses or portfolio asset sales for less than the Trust'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.

Trusts rated AAA are composed exclusively of assets that, together with
their credit support are rated AAA by Standard & Poor's. 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 extremely strong.

28
<PAGE>

I am the owner of __ units of Mortgage Securities Trust, CMO Series __ of
the __ Portfolio.

I would like to learn more about GOC Fund, Inc., U. S. Treasury Money Market
Portfolio including charges and expenses I understand that my request for more
information about this fund in no way obligates me to participate in the
reinvestment option, and that this request form is not an offer to sell. Please
send me more information, including a copy of the current prospectus of GOC
Fund.

Date _________________________________ 19 _________

<TABLE>
<S> <C>
_______________________________________________________ _______________________________________________________
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. ______________________________
</TABLE>

MAIL TO
GOC FUND, INC.
8 SOUND SHORE DRIVE
GREENWICH, CONNECTICUT 06830

<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN PARTS A AND B OF THIS PROSPECTUS; AND ANY
INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE TRUST, THE TRUSTEE, THE EVALUATOR, OR THE SPONSOR.
THE TRUST IS REGISTERED AS A UNIT INVESTMENT TRUST UNDER THE INVESTMENT COMPANY

ACT OF 1940. SUCH REGISTRATION DOES NOT IMPLY THAT THE TRUST OR ANY OF ITS UNITS
HAVE BEEN GUARANTEED, SPONSORED, RECOMMENDED OR APPROVED BY THE UNITED STATES OR
ANY STATE OR ANY AGENCY OR OFFICER THEREOF.

* * * * *

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.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
TITLE PAGE
Part A
<S> <C>
Summary of Essential Information.............. A-2
Independent Auditors' Report.................. A-10
Statement of Condition........................ A-11
Portfolio..................................... A-12
Underwriting Syndicate........................ A-14
<CAPTION>
Part B
<S> <C>
The Trust..................................... 1
Public Offering............................... 10
Estimated Long Term Return and Estimated
Current Return.............................. 13
Rights of Certificateholders.................. 15
Tax Status.................................... 16
Liquidity..................................... 19
Total Reinvestment Plan....................... 21
Trust Administration.......................... 21
Trust Expenses and Charges.................... 24
Exchange Privilege and Conversion Offer....... 25
Other Matters................................. 28
Description of Ratings........................ 28
</TABLE>

PARTS A AND B OF THIS PROSPECTUS DO NOT CONTAIN ALL OF THE INFORMATION SET
FORTH IN THE REGISTRATION STATEMENT AND EXHIBITS RELATING THERETO, FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C., UNDER THE SECURITIES
ACT OF 1933, AND THE INVESTMENT COMPANY ACT OF 1940, AND TO WHICH REFERENCE IS
MADE.
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------

(LOGO)
MORTGAGE SECURITIES TRUST

CMO SERIES 14

PROSPECTUS

DATED: DECEMBER 15, 1993

SPONSOR:

BEAR, STEARNS & CO. INC.
245 PARK AVENUE
NEW YORK, N.Y. 10167
212-272-2500

TRUSTEE:

UNITED STATES TRUST COMPANY
OF NEW YORK
770 BROADWAY
NEW YORK, N.Y. 10003

EVALUATOR:

KENNY S&P EVALUATION SERVICES
65 BROADWAY
NEW YORK, N.Y. 10006

<PAGE>
PART II -- ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM A -- BONDING ARRANGEMENTS

The employees of Bear, Stearns & Co. Inc. are covered under Brokers'
Blanket Policy, Standard Form 14, in the amount of $11,000,000 (plus
$196,000,000 excess coverage under Brokers' Blanket Policies, Standard Form 14
and Form B Consolidated).
ITEM B -- CONTENTS OF REGISTRATION STATEMENT

This 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.
Undertakings.
Signatures.
Listed below are the names and registration numbers of each previous
series of Mortgage Securities Trust, CMO Series, the final prospectus of
which properly supplemented, might be used as preliminary prospectuses
for Mortgage Securities Trust, CMO Series 15. These final prospectuses
are incorporated herein by reference:
Mortgage Securities Trust, CMO Series 9 (Registration No. 33-45889)
Mortgage Securities Trust, CMO Series 10 (Registration No.
33-48009)
Mortgage Securities Trust, CMO Series 11 (Registration No.
33-48838)
Mortgage Securities Trust, CMO Series 12 (Registration No.
33-52780)
Mortgage Securities Trust, CMO Series 13 (Registration No.
33-58526)
Written consents of the following persons:

Battle Fowler (included as Exhibit 99.3.1)
KPMG Peat Marwick.
Kenny S&P Evaluation Services (included as Exhibit 99.5.1)

The following exhibits:

<TABLE>
<C> <S> <C>
*99.1.1 -- Reference Trust Agreement including certain Amendments to the Trust Indenture and Agreement referred to
under Exhibit 1.1.1 below.
99.1.1.1 -- Trust Indenture and Agreement for Mortgage Securities Trust, CMO Series 1 and Subsequent Series dated
November 1, 1990 (filed as Exhibit 1.1.1 to Form S-6 Registration Statement No. 33-36316 of Mortgage
Securities Trust, CMO Series 1 on November 1, 1990 and incorporated herein by reference).
99.1.3.4 -- Certificate of Incorporation of Bear, Stearns & Co. Inc., as amended (filed as Exhibit 99.1.3.4 to Form
S-6 Registration Statement Nos. 33-50891 and 33-50901 of Insured Municipal Securities Trust, New York
Navigator Insured Series 15 and New Jersey Navigator Insured Series 11; and Municipal Securities Trust,
Multi-State Series 44, respectively, on December 9, 1993 and incorporated herein by reference).
99.1.3.5 -- By-Laws of Bear, Stearns & Co. Inc., as amended (filed as Exhibit 99.1.3.5 to Form S-6 Registration
Statement Nos. 33-50891 and 33-50901 of Insured Municipal Securities Trust, New York Navigator Insured
Series 15 and New Jersey Navigator Insured Series 11; and Municipal Securities Trust, Multi-State Series
44, respectively, on December 9, 1993 and incorporated herein by reference).
99.1.4 -- Form of Agreement Among Underwriters (filed as Exhibit 1.4 to Amendment No. 1 to Form S-6 Registration
Statement No. 33-28384 of Insured Municipal Securities Trust, 47th Discount Series and Series 20 on June
16, 1989 and incorporated herein by reference).
99.2.1 -- Form of Certificate (filed as Exhibit 2.1 to Amendment No. 2 to Form S-6 Registration Statement No.
33-36316 of Mortgage Securities Trust, CMO Series 1 on November 1, 1990 and incorporated herein by
reference).
</TABLE>

- ------------------
* To be filed by Amendment.

II-1
<PAGE>
<TABLE>
<C> <S> <C>
*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.
*99.5.1 -- Consent of the Evaluator and confirmation of ratings by 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 the Form S-6 Registration State-
ment Nos. 2-92113, 2-92660, 2-93073, 2-93884 and 2-94545 on October 30, 1992 and incorporated herein by
reference).
</TABLE>

- ------------
* To be filed by Amendment.

II-2
<PAGE>
UNDERTAKING TO FILE REPORTS

Subject to the terms and conditions of Section 15(d) of the Securities

Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
MORTGAGE SECURITIES TRUST, CMO SERIES 15, HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, HEREUNTO DULY
AUTHORIZED, IN THE CITY OF NEW YORK AND STATE OF NEW YORK ON THE 23RD DAY OF
FEBRUARY, 1994.

Mortgage Securities Trust, CMO Series
15
(Registrant)
BEAR, STEARNS & CO. INC.
(Depositor)

By /s/ PETER J. DEMARCO
Peter J. DeMarco
(Authorized Signatory)

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS, WHO
CONSTITUTE THE PRINCIPAL OFFICERS AND A MAJORITY OF THE DIRECTORS OF BEAR,
STEARNS & CO. INC., THE DEPOSITOR, IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
NAME TITLE DATE
- ---------------------- ------------------------------------------- ------------------------------------
<S> <C> <C> <C>
ALAN C. GREENBERG Chairman of the Board, Chief Executive
Officer, Director and Senior Managing
Director 4/5
JAMES E. CAYNE President, Director and Senior Managing February 23, 1994
Director
ALVIN H. EINBENDER Chief Operating Officer, Executive Vice
President, Director and Senior Managing
Director
JOHN C. SITES, JR. Executive Vice President, Director and
Senior Managing Director
MICHAEL L. TARNOPOL Executive Vice President, Director and By /s/PETER J. DEMARCO
Senior Managing Director Peter J. DeMarco
VINCENT J. MATTONE Executive Vice President, Director and Attorney-in-Fact*
Senior Managing Director
ALAN D. SCHWARTZ Executive Vice President, Director and
Senior Managing Director
DOUGLAS P.C. NATION Director and Senior Managing Director
WILLIAM J. MONTGORIS Chief Financial Officer, Senior Vice
President--Finance and Senior Managing
Director

KENNETH L. EDLOW Secretary and Senior Managing Director
MICHAEL MINIKES Treasurer and Senior Managing Director
MICHAEL J. ABATEMARCO Controller, Assistant Secretary and Senior
Managing Director
MARK E. LEHMAN Senior Vice President--General Counsel and
Senior Managing Director
FREDERICK B. CASEY Assistant Treasurer and Senior Managing
Director 9
</TABLE>

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

II-3
<PAGE>
CONSENT OF INDEPENDENT AUDITORS

The Sponsor, Trustee, and Certificateholders,
Mortgage Securities Trust, CMO Series 15:

We hereby consent to the use of our report dated February 23, 1994 included
herein and to the reference to our Firm under the heading 'Independent Auditors'
in the Prospectus.

KPMG PEAT MARWICK

New York, New York
February 23, 1994

II-4