TAX EXEMPT SECURITIES TRUST NEW YORK TRUST 184, 487, 2000-11-29

TAX EXEMPT SECURITIES TRUST NEW YORK TRUST 184
487, 2000-11-29

Previous: DOLLAR MAKER INC, 8-K12G3, EX-27, 2000-11-29

Next: TAX EXEMPT SECURITIES TRUST NEW YORK TRUST 184, 487, EX-99.3.1, 2000-11-29

<PAGE>

As filed with the Securities and Exchange Commission on November 29, 2000

Registration Nos. 333-50268

333-50364

333-49586

333-44814
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

AMENDMENT NO. 1
TO
Form S-6

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

A. Exact Name of Trust:

TAX EXEMPT SECURITIES TRUST

Intermediate Term Trust 37

National Trust 249

Florida Trust 96

New York Trust 184

B. Name of depositor:

SALOMON SMITH BARNEY INC.

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

SALOMON SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013

D. Name and complete address of agent for service:

LAURIE A. HESSLEIN
Salomon Smith Barney Inc.
7 World Trade Center
New York, New York 10048

Copy to:
MICHAEL R. ROSELLA, ESQ.
PAUL, HASTINGS, JANOFSKY & WALKER LLP
399 Park Avenue
New York, New York 10022

E. Title of Securities being registered:

An indefinite number of Units of beneficial interest pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended.

F. Approximate date of proposed public offering:

As soon as practicable after the effective date of the registration statement.

[X] Check box if it is proposed that this filing will become effective
immediately upon filing pursuant to Rule 487.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

TAX EXEMPT SECURITIES TRUST
--------------------------------------------------------------------

Intermediate Term Trust 37

National Trust 249

Florida Trust 96

New York Trust 184

Unit Investment Trusts

SalomonSmithBarney The Tax Exempt Securities Trust is sponsored by
--------------------- Salomon Smith Barney Inc. and consists of four
A member of citigroup separate unit investment trusts: Intermediate Term
[LOGO] Trust 37, National Trust 249, Florida Trust 96 and
New York Trust 184. Each trust contains a fixed
portfolio of long term municipal bonds. The
interest income of these bonds is generally exempt
from Federal income tax and, for state designated
trusts, state and local income tax in the state for
which the trust is named.

This Prospectus contains three parts. Part A contains the Summary of Essential
Information including summary material relating to the trusts, the Portfolios
and the Statements of Financial Condition. Part B contains more detailed
information about the Tax Exempt Securities Trust and Part C contains specific
information about the state designated trusts. Part A may not be distributed
unless accompanied by Parts B and C.

Read and retain this Prospectus for future reference.

The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation
to the contrary is a criminal offense.

Prospectus dated November 29, 2000

INVESTMENT PRODUCTS: NOT FDIC INSURED; NO BANK GUARANTEE; MAY LOSE MONEY
<PAGE>

TAX EXEMPT SECURITIES TRUST

INVESTMENT SUMMARY AS OF NOVEMBER 28, 2000
Use this Investment Summary to help you decide whether the portfolios
comprising the Tax Exempt Securities Trust are right for you. More detailed
information can be found later in this prospectus.

Investment Objective

Each of the trusts seeks to pay investors monthly distributions of tax exempt
interest income while conserving their capital. The Sponsor has selected a
fixed portfolio of municipal bonds intended to achieve these goals.

Investment Strategy

All of the bonds in each of the trusts are rated A or better by Standard &
Poor's, Moody's or Fitch. State designated trusts primarily contain bonds
issued by the state for which the trust is named or counties, municipalities,
authorities or political subdivisions of that state.

Taxes

Interest on all of the bonds in each of the trusts is generally exempt from
regular Federal income tax. Interest on all of the bonds in each state trust is
generally exempt from certain state and local personal income taxes of the
state for which the trust is named. Each of the bonds in the trusts received an
opinion from bond counsel rendered on the date of issuance confirming its tax
exempt status.

Risk Factors

Holders can lose money by investing in these trusts. The value of the units and
the bonds held in the portfolio can each decline in value. An investment in
units of a trust should be made with an understanding of the following risks:

. Municipal bonds are long-term fixed rate debt obligations that decline in
value with increases in interest rates, an issuer's worsening financial
condition or a drop in bond ratings.

. The effective maturity of a long term bond may be dramatically different
than shorter term obligations. Investors will receive early returns of
principal when bonds are called or sold before they mature. Investors may
not be able to reinvest the money they receive at as high a yield or as
long a maturity.

. The municipal bonds could lose their tax-exempt status either due to
future legislation or due to the failure of a public issuer of a bond (or
private guarantor) to meet certain conditions imposed by various tax
laws.

. The default of an issuer of a municipal bond in making its payment
obligation could result in the loss of interest income and/or principal
to investors.

. Since the portfolio of each of the trusts is fixed and not managed, in
general the Sponsor can only sell bonds at a trust's termination or in
order to meet redemptions. As a result, the price at which a bond is sold
may not be the highest price it attained during the life of a trust.

The Public Offering Price

The Public Offering Price per Unit as of November 28, 2000 would have been
$1,022.72 for the Intermediate Term Trust, $1,009.35 for the National Trust,
$1,016.00 for the Florida Trust and $1,018.89 for the New York Trust. During
the initial public offering period the Public Offering Price per unit is
calculated by:

. dividing the aggregate offering price of the underlying bonds in a trust
by the number of units outstanding

A-2
<PAGE>

. adding a sales charge of 3.70% (3.842% of the aggregate offering price of
the bonds per unit) for the Intermediate Term Trust and 4.70% (4.932% of
the aggregate offering price of the bonds per unit) for the National,
Florida and New York Trusts

. adding a per unit amount sufficient to reimburse the Sponsor for
organizational costs

After the initial offering period the Public Offering Price per unit is
calculated by:

. dividing the aggregate bid price of the underlying bonds in a trust by
the number of units outstanding

. adding a sales charge of 4.00% (4.167% of the aggregate bid price of the
bonds per unit) for the Intermediate Term Trust and 5.00% (5.263% of the
aggregate bid price of the bonds per unit) for the National, Florida and
New York Trusts

Market for Units

The Sponsor currently intends to repurchase units from holders at prices based
upon the aggregate bid price of the underlying bonds. The Sponsor is not
obligated to maintain a market and may stop doing so without prior notice for
any business reason. If the Sponsor stops repurchasing units, a unit holder
may dispose of its units by redemption. The price received from the Trustee by
the unit holder for units being redeemed is also based upon the aggregate bid
price of the underlying bonds. Units can be sold at any time to the Sponsor or
the Trustee without fee or penalty.

A-3
<PAGE>

TAX EXEMPT SECURITIES TRUST

FEE TABLE FOR INTERMEDIATE TERM TRUST 37
--------------------------------------------------------------------------------
This Fee Table is intended to help you to understand the costs and expenses
that you will bear directly or indirectly. See Public Sale of Units and
Expenses and Charges. Although each Trust is a unit investment trust rather
than a mutual fund, this information is presented to permit a comparison of
fees.
--------------------------------------------------------------------------------

Unitholder Transaction Expenses (fees paid directly from your investment)

<TABLE>
<CAPTION>
As a % of
Public Amounts
Offering per
Price Unit
---------- -------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchase (as a percentage
of offering price)........................................ 3.70% $37.75
Maximum Sales Charge Imposed on Reinvested Dividends....... 0% $ 0
Reimbursement to Sponsor for Estimated Organization Costs.. .245% $ 2.50

Estimated Annual Trust Operating Expenses (expenses that are deducted from
Trust assets)

<CAPTION>
Amounts
As a % of per
Net Assets Unit
---------- -------
<S> <C> <C>
Trustee's Fee.............................................. .118% $ 1.16
Other Operating Expenses................................... .050% $ .49
Maximum Portfolio Supervision, Bookkeeping and
Administrative Fees....................................... .025% $ .25
---- ------
Total.................................................... .193% $ 1.90
==== ======
</TABLE>

Example

<TABLE>
<CAPTION>
Cumulative Expenses
and Charges
Paid for Period
----------------------
1 3 5 10
Year Years Years Years
---- ----- ----- -----
<S> <C> <C> <C> <C>
An investor would pay the following expenses and charges
on a $10,000 investment, assuming the Trust's estimated
operating expense ratio of .193% and a 5% annual return
on the investment throughout the periods............... $389 $430 $475 $607
</TABLE>

The example assumes reinvestment of all dividends and distributions and
utilizes a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The example should not be
considered a representation of past or future expenses or annual rate of
return; the actual expenses and annual rate of return may be more or less than
those assumed for purposes of the example.

A-4
<PAGE>

TAX EXEMPT SECURITIES TRUST

FEE TABLE FOR NATIONAL TRUST 249
--------------------------------------------------------------------------------
This Fee Table is intended to help you to understand the costs and expenses
that you will bear directly or indirectly. See Public Sale of Units and
Expenses and Charges. Although each Trust is a unit investment trust rather
than a mutual fund, this information is presented to permit a comparison of
fees.
--------------------------------------------------------------------------------

Unitholder Transaction Expenses (fees paid directly from your investment)

<TABLE>
<CAPTION>
As a % of
Public Amounts
Offering per
Price Unit
---------- -------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchase (as a percentage
of offering price)........................................ 4.70% $47.32
Maximum Sales Charge Imposed on Reinvested Dividends....... 0% $ 0
Reimbursement to Sponsor for Estimated Organization Costs.. .248% $ 2.50

Estimated Annual Trust Operating Expenses (expenses that are deducted from
Trust assets)

<CAPTION>
Amounts
As a % of per
Net Assets Unit
---------- -------
<S> <C> <C>
Trustee's Fee.............................................. .140% $ 1.34
Other Operating Expenses................................... .041% $ .40
Maximum Portfolio Supervision, Bookkeeping and
Administrative Fees....................................... .026% $ .25
---- ------
Total.................................................... .207% $ 1.99
==== ======
</TABLE>

Example

<TABLE>
<CAPTION>
Cumulative Expenses
and Charges
Paid for Period
----------------------
1 3 5 10
Year Years Years Years
---- ----- ----- -----
<S> <C> <C> <C> <C>
An investor would pay the following expenses and
charges on a $10,000 investment, assuming the
Trust's estimated operating expense ratio of .207%
and a 5% annual return on the investment
throughout the periods............................ $490 $534 $581 $722
</TABLE>

A-5
<PAGE>

TAX EXEMPT SECURITIES TRUST

FEE TABLE FOR FLORIDA TRUST 96
--------------------------------------------------------------------------------
This Fee Table is intended to help you to understand the costs and expenses
that you will bear directly or indirectly. See Public Sale of Units and
Expenses and Charges. Although each Trust is a unit investment trust rather
than a mutual fund, this information is presented to permit a comparison of
fees.
--------------------------------------------------------------------------------

Unitholder Transaction Expenses (fees paid directly from your investment)

<TABLE>
<CAPTION>
As a % of
Public Amounts
Offering per
Price Unit
---------- -------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchase (as a percentage
of offering price)........................................ 4.70% $47.63
Maximum Sales Charge Imposed on Reinvested Dividends....... 0% $ 0
Reimbursement to Sponsor for Estimated Organization Costs.. .247% $ 2.50

Estimated Annual Trust Operating Expenses (expenses that are deducted from
Trust assets)

<CAPTION>
Amounts
As a % of per
Net Assets Unit
---------- -------
<S> <C> <C>
Trustee's Fee.............................................. .134% $ 1.29
Other Operating Expenses................................... .044% $ .43
Maximum Portfolio Supervision, Bookkeeping and
Administrative Fees....................................... .026% $ .25
---- ------
Total.................................................... .204% $ 1.97
==== ======
</TABLE>

Example

<TABLE>
<CAPTION>
Cumulative Expenses
and Charges
Paid for Period
----------------------
1 3 5 10
Year Years Years Years
---- ----- ----- -----
<S> <C> <C> <C> <C>
An investor would pay the following expenses and
charges on a $10,000 investment, assuming the
Trust's estimated operating expense ratio of .204%
and a 5% annual return on the investment throughout
the periods......................................... $490 $533 $580 $718
</TABLE>

A-6
<PAGE>

TAX EXEMPT SECURITIES TRUST

FEE TABLE FOR NEW YORK TRUST 184
--------------------------------------------------------------------------------
This Fee Table is intended to help you to understand the costs and expenses
that you will bear directly or indirectly. See Public Sale of Units and
Expenses and Charges. Although each Trust is a unit investment trust rather
than a mutual fund, this information is presented to permit a comparison of
fees.
--------------------------------------------------------------------------------

Unitholder Transaction Expenses (fees paid directly from your investment)

<TABLE>
<CAPTION>
As a % of
Public Amounts
Offering per
Price Unit
---------- -------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchase (as a percentage
of offering price)........................................ 4.70% $47.77
Maximum Sales Charge Imposed on Reinvested Dividends....... 0% $ 0
Reimbursement to Sponsor for Estimated Organization Costs.. .246% $ 2.50

Estimated Annual Trust Operating Expenses (expenses that are deducted from
Trust assets)

<CAPTION>
Amounts
As a % of per
Net Assets Unit
---------- -------
<S> <C> <C>
Trustee's Fee.............................................. .132% $ 1.28
Other Operating Expenses................................... .040% $ .39
Maximum Portfolio Supervision, Bookkeeping and
Administrative Fees....................................... .026% $ .25
---- ------
Total.................................................... .198% $ 1.92
==== ======
</TABLE>

Example

<TABLE>
<CAPTION>
Cumulative Expenses
and Charges
Paid for Period
----------------------
1 3 5 10
Year Years Years Years
---- ----- ----- -----
<S> <C> <C> <C> <C>
An investor would pay the following expenses and
charges on a $10,000 investment, assuming the
Trust's estimated operating expense ratio of .198%
and a 5% annual return on the investment throughout
the periods......................................... $489 $531 $576 $711
</TABLE>

A-7
<PAGE>

TAX EXEMPT SECURITIES TRUST
SUMMARY OF ESSENTIAL INFORMATION

AS OF NOVEMBER 28, 2000 /\
Sponsor

Salomon Smith Barney Inc.

Trustee

The Chase Manhattan Bank

Evaluator

Kenny S & P Evaluation Services, a division of J.J. Kenny Company, Inc.

Date of Deposit and of Trust Agreement

November 28, 2000

Mandatory Termination Date*

Each Trust will terminate on the date of maturity, redemption, sale or other
disposition of the last Bond held in the Trust.

Record Dates

The first day of each month, commencing January 1, 2001.

Distribution Dates

The fifteenth day of each month,** commencing January 15, 2001.

Evaluation Time

As of 1:00 p.m. on the Date of Deposit. Thereafter, as of 4:00 p.m. Eastern
Time.

Evaluator's Fee

The Evaluator will receive a fee of $.29 per bond per evaluation.

Sponsor's Annual Portfolio Supervision Fee***

Maximum of $.25 per $1,000 face amount of the underlying Bonds.
--------
/\ The Date of Deposit. The Date of Deposit is the date on which the Trust
Agreement was signed and the deposit with the Trustee was made.
* The actual date of termination of each Trust may be considerably earlier
(see Part B, "Amendment and Termination of the Trust Agreement--
Termination").

** The first monthly income distribution of $4.69 for the Intermediate Term
Trust, $5.33 for the National Trust, $5.02 for the Florida Trust and $5.04
for the New York Trust, will be made on January 15, 2001.
*** In addition to this amount, the Sponsor may be reimbursed for bookkeeping
and other administrative expenses not exceeding its actual costs.

A-8
<PAGE>

TAX EXEMPT SECURITIES TRUST
SUMMARY OF ESSENTIAL INFORMATION

AS OF NOVEMBER 28, 2000
<TABLE>
<CAPTION>
Intermediate Term National
Trust 37 Trust 249
----------------- ----------
<S> <C> <C>
Principal Amount of Bonds in Trust............... $3,000,000 $7,000,000
Number of Units.................................. 3,000 7,000
Principal Amount of Bonds in Trust per Unit...... $ 1,000 $ 1,000
Fractional Undivided Interest in Trust per Unit.. 1/3,000 1/7,000
Minimum Value of Trust:
Trust Agreement may be Terminated if Principal
Amount is less than............................ $1,500,000 $3,500,000
Calculation of Public Offering Price per Unit*:
Aggregate Offering Price of Bonds in Trust...... $2,947,414 $6,716,704
========== ==========
Divided by Number of Units...................... $ 982.47 $ 959.53
Plus: Sales Charge (3.70% for the Intermediate
Term Trust and 4.70% for the National Trust of
the Public Offering Price)..................... $ 37.75 $ 47.32
---------- ----------
Public Offering Price per Unit.................. $ 1,020.22 $ 1,006.85
Plus: Estimated Organization Expenses........... $ 2.50 $ 2.50
Plus Accrued Interest*.......................... $ .85 $ .96
---------- ----------
Total........................................... $ 1,023.57 $ 1,010.31
========== ==========
Sponsor's Initial Repurchase Price per Unit (per
Unit Offering Price of Bonds)**................. $ 982.47 $ 959.53
Approximate Redemption Price per Unit (per Unit
Bid Price of Bonds)**........................... $ 978.47 $ 954.14
---------- ----------
Difference Between per Unit Offering and Bid
Prices of Bonds................................. $ 4.00 $ 5.39
========== ==========
Calculation of Estimated Net Annual Income per
Unit:
Estimated Annual Income per Unit................ $ 53.14 $ 60.19
Less: Estimated Trustee's Annual Fee***......... $ 1.16 $ 1.34
Less: Other Estimated Annual Expenses........... $ .74 $ .65
---------- ----------
Estimated Net Annual Income per Unit............ $ 51.24 $ 58.20
========== ==========
Calculation of Monthly Income Distribution per
Unit:
Estimated Net Annual Income per Unit............ $ 51.24 $ 58.20
Divided by 12................................... $ 4.27 $ 4.85
Accrued interest from the day after the Date of
Deposit to the first record date**.............. $ 4.69 $ 5.33
First distribution per Unit...................... $ 4.69 $ 5.33
Daily Rate (360-day basis) of Income Accrual per
Unit............................................ $ .1423 $ .1616
Estimated Current Return based on Public Offering
Price****....................................... 5.01% 5.77%
Estimated Long-Term Return****................... 4.92% 5.83%
</TABLE>
--------
* Accrued interest will commence on the day after the Date of Deposit
through the date of settlement (normally three business days after
purchase).
** This figure will also include accrued interest from the day after the
Date of Deposit to the date of settlement (normally three business days
after purchase) and the net cash on hand in the relevant Trust, accrued
expenses of such Trust and amounts distributable to holders of record of
Units of such Trust as of a date prior to the computation date, on a pro
rata basis. As of the close of the initial offering period, the
Redemption Price per Unit and the Sponsor's Repurchase Price per Unit for
each Trust will be reduced to reflect the payment of the per Unit
organization costs.
*** Per $1,000 principal amount of Bonds, plus expenses.
**** The Estimated Current Return is calculated by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price per Unit.
The Estimated Net Annual Interest Income per Unit will vary with changes
in fees and expenses of the Trustee and the Evaluator and with the
principal prepayment, redemption, maturity, exchange or sale of Bonds
while the Public Offering Price will vary with changes in the offering
price of the underlying Bonds; therefore, there is no assurance that the
present Estimated Current Return indicated above will be realized in the
future. The Estimated Long-Term Return is calculated using a formula
which (1) takes into consideration, and factors in the relative
weightings of, the market values, yields (which takes into account the
amortization of premiums and the accretion of discounts) and estimated
retirements of all of the Bonds in the Trust and (2) takes into account
the expenses and sales charge associated with each Unit. Since the market
values and estimated retirements of the Bonds and the expenses of the
Trust will change, there is no assurance that the present Estimated Long-
Term Return as indicated above will be realized in the future. The
Estimated Current Return and Estimated Long-Term Return are expected to
differ because the calculation of the Estimated Long-Term Return reflects
the estimated date and amount of principal returned while the Estimated
Current Return calculations include only Net Annual Interest Income and
Public Offering Price as of the Date of Deposit.

A-9
<PAGE>

TAX EXEMPT SECURITIES TRUST
SUMMARY OF ESSENTIAL INFORMATION

AS OF NOVEMBER 28, 2000
<TABLE>
<CAPTION>
Florida New York
Trust 96 Trust 184
---------- ----------
<S> <C> <C>
Principal Amount of Bonds in Trust..................... $2,000,000 $3,000,000
Number of Units........................................ 2,000 3,000
Principal Amount of Bonds in Trust per Unit............ $ 1,000 $ 1,000
Fractional Undivided Interest in Trust per Unit........ 1/2,000 1/3,000
Minimum Value of Trust:
Trust Agreement may be Terminated if Principal Amount
is less than......................................... $1,000,000 $1,500,000
Calculation of Public Offering Price per Unit*:
Aggregate Offering Price of Bonds in Trust............ $1,931,731 $2,905,852
========== ==========
Divided by Number of Units............................ $ 965.87 $ 968.62
Plus: Sales Charge (4.70% for the Florida and New York
Trusts of the Public Offering Price)................. $ 47.63 $ 47.77
---------- ----------
Public Offering Price per Unit........................ $ 1,013.50 $ 1,016.39
Plus: Estimated Organization Expenses................. $ 2.50 $ 2.50
Plus Accrued Interest*................................ $ .91 $ .91
---------- ----------
Total................................................. $ 1,016.91 $ 1,019.80
========== ==========
Sponsor's Initial Repurchase Price per Unit (per Unit
Offering Price of Bonds)**............................ $ 965.87 $ 968.62
Approximate Redemption Price per Unit (per Unit Bid
Price of Bonds)**..................................... $ 961.87 $ 963.62
---------- ----------
Difference Between per Unit Offering and Bid Prices of
Bonds................................................. $ 4.00 $ 5.00
========== ==========
Calculation of Estimated Net Annual Income per Unit:
Estimated Annual Income per Unit...................... $ 56.81 $ 57.00
Less: Estimated Trustee's Annual Fee***............... $ 1.29 $ 1.28
Less: Other Estimated Annual Expenses................. $ .68 $ .64
---------- ----------
Estimated Net Annual Income per Unit.................. $ 54.84 $ 55.08
========== ==========
Calculation of Monthly Income Distribution per Unit:
Estimated Net Annual Income per Unit.................. $ 54.84 $ 55.08
Divided by 12......................................... $ 4.57 $ 4.59
Accrued interest from the day after the Date of Deposit
to the first record date**............................ $ 5.02 $ 5.04
First distribution per Unit............................ $ 5.02 $ 5.04
Daily Rate (360-day basis) of Income Accrual per Unit.. $ .1523 $ .1530
Estimated Current Return based on Public Offering
Price****............................................. 5.40% 5.41%
Estimated Long-Term Return****......................... 5.47% 5.50%
</TABLE>
--------
* Accrued interest will commence on the day after the Date of Deposit
through the date of settlement (normally three business days after
purchase).
** This figure will also include accrued interest from the day after the
Date of Deposit to the date of settlement (normally three business days
after purchase) and the net cash on hand in the relevant Trust, accrued
expenses of such Trust and amounts distributable to holders of record of
Units of such Trust as of a date prior to the computation date, on a pro
rata basis. As of the close of the initial offering period, the
Redemption Price per Unit and the Sponsor's Repurchase Price per Unit for
each Trust will be reduced to reflect the payment of the per Unit
organization costs.
*** Per $1,000 principal amount of Bonds, plus expenses.
**** The Estimated Current Return is calculated by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price per Unit.
The Estimated Net Annual Interest Income per Unit will vary with changes
in fees and expenses of the Trustee and the Evaluator and with the
principal prepayment, redemption, maturity, exchange or sale of Bonds
while the Public Offering Price will vary with changes in the offering
price of the underlying Bonds; therefore, there is no assurance that the
present Estimated Current Return indicated above will be realized in the
future. The Estimated Long-Term Return is calculated using a formula
which (1) takes into consideration, and factors in the relative
weightings of, the market values, yields (which takes into account the
amortization of premiums and the accretion of discounts) and estimated
retirements of all of the Bonds in the Trust and (2) takes into account
the expenses and sales charge associated with each Unit. Since the market
values and estimated retirements of the Bonds and the expenses of the
Trust will change, there is no assurance that the present Estimated Long-
Term Return as indicated above will be realized in the future. The
Estimated Current Return and Estimated Long-Term Return are expected to
differ because the calculation of the Estimated Long-Term Return reflects
the estimated date and amount of principal returned while the Estimated
Current Return calculations include only Net Annual Interest Income and
Public Offering Price as of the Date of Deposit.

A-10
<PAGE>

TAX EXEMPT SECURITIES TRUST

PORTFOLIO SUMMARY AS OF NOVEMBER 28, 2000
<TABLE>
<CAPTION>
Intermediate
Term National
Trust 37 Trust 249
------------ ------------
<S> <C> <C>
Number of municipal bonds (from 10 States for the
Intermediate Term Trust; from 14 States for the
National Trust)..................................... 15 16
Number of bonds issued with "original issue
discount"........................................... 9 9
Average life to maturity of the bonds in the Trust
(in years).......................................... 9.8 26.3
<CAPTION>
Percentages+ Percentages+
------------ ------------
<S> <C> <C>
Percentage of bonds acquired from the Sponsor (as
sole underwriter, member of underwriting syndicate
or otherwise from its own organization)............. 20.5% 12.3%
General obligation bonds backed by the taxing power
of state issuer..................................... 6.4% 2.6%
Bonds not supported by the issuer's power to levy
tax................................................. 93.6% 97.4%
The bonds derived their income from the following
primary sources:
. capital improvement facilities..................... 0.0% 7.8%
. educational facilities............................. 4.7% 9.0%
. hospital and health care facilities................ 43.3%* 35.1%*
. housing facilities................................. 32.4%* 28.8%*
. pollution control facilities....................... 0.0% 10.7%
. special tax........................................ 3.5% 0.0%
. tax allocation..................................... 9.7% 0.0%
. various purpose.................................... 0.0% 6.0%
The bonds in the Trust are rated as follows:
. Standard & Poor's
AAA................................................ 4.7% 2.6%
AA................................................. 9.8% 3.6%
A.................................................. 73.1% 61.2%
---- ----
Total............................................ 87.6% 67.4%
==== ====
. Moody's
Aa................................................. 0.0% 6.0%
A.................................................. 0.0% 19.2%
---- ----
Total............................................ 0.0% 25.2%
==== ====
. Fitch..............................................
A.................................................. 12.5% 7.4%
---- ----
Total............................................ 12.5% 7.4%
==== ====
The following insurance companies have insured the
bonds in the Trust as to timely payment of principal
and interest:
. ACA................................................ 42.1% 30.8%
. FGIC............................................... 0.0% 2.6%
. FSA................................................ 4.7% 0.0%
---- ----
Total............................................ 46.8% 33.4%
==== ====
</TABLE>
------------
+ Percentages based on the aggregate offering price of the bonds in the trust.
* The Trust is considered to be "concentrated" in a particular category when
bonds of that type make up 25% or more of the portfolio.

A-11
<PAGE>

TAX EXEMPT SECURITIES TRUST

PORTFOLIO SUMMARY AS OF NOVEMBER 28, 2000
<TABLE>
<CAPTION>
Florida New York
Trust 96 Trust 184
------------ ------------
<S> <C> <C>
Number of municipal bonds (from Florida for the
Florida Trust and from New York and the United
States Virgin Islands for the New York Trust)....... 8 10
Number of bonds issued with "original issue
discount"........................................... 5 9
Average life to maturity of the bonds in the Trust
(in years).......................................... 25.7 29.3
<CAPTION>
Percentages+ Percentages+
------------ ------------
<S> <C> <C>
Percentage of bonds acquired from the Sponsor (as
sole underwriter, member of underwriting syndicate
or otherwise from its own organization)............. 37.7% 17.1%
General obligation bonds backed by the taxing power
of state issuer..................................... 0.0% 7.8%
Bonds not supported by the issuer's power to levy
tax................................................. 100.0% 92.2%
The bonds derived their income from the following
primary sources:
. capital improvement facilities..................... 0.0% 8.5%
. educational facilities............................. 24.8% 0.0%
. hospital and health care facilities................ 49.7%* 44.8%*
. lease rental payments.............................. 0.0% 13.3%
. pollution control facilities....................... 13.0% 0.0%
. public financing facilities........................ 0.0% 8.5%
. public improvement facilities...................... 0.0% 17.1%
. transportation facilities.......................... 6.7% 0.0%
. water and sewer facilities......................... 5.8% 0.0%

The bonds in the Trust are rated as follows:
. Standard & Poor's
AAA................................................ 17.6% 3.8%
AA................................................. 12.9% 0.0%
A.................................................. 44.4% 79.1%
----- ----
Total............................................ 74.9% 82.9%
===== ====
. Moody's
Aa................................................. 0.0% 17.1%
A.................................................. 25.1% 0.0%
----- ----
Total............................................ 25.1% 17.1%
===== ====
The following insurance companies have insured the
bonds in the Trust as to timely payment of principal
and interest:
. ACA................................................ 6.7% 27.9%
. AMBAC.............................................. 11.8% 0.0%
. Asset Guaranty..................................... 12.9% 0.0%
. FGIC............................................... 5.8% 0.0%
. FSA................................................ 0.0% 3.8%
----- ----
Total............................................ 37.2% 31.7%
===== ====
</TABLE>
------------
+ Percentages based on the aggregate offering price of the bonds in the Trust.
* The Trust is considered to be "concentrated" in a particular category when
bonds of that type make up 25% or more of the portfolio.

A-12
<PAGE>

UNDERWRITING

The names and addresses of the Underwriters and the number of Units to be
sold by them are as follows:

<TABLE>
<CAPTION>
Units
----------------------------------------
Intermediate New York
Term National Florida Trust
Trust 37 Trust 249 Trust 96 184
------------ --------- -------- --------
<S> <C> <C> <C> <C>
Salomon Smith Barney Inc. ............. 2,800 6,400 1,900 2,650
388 Greenwich Street
New York, New York 10013

Gruntal & Co. Incorporated............. 100 100 100 100
14 Wall Street
New York, New York 10005

CIBC Oppenheimer Corp. ................ 100 -- -- 250
Oppenheimer Tower
One World Financial Center
New York, New York 10281

Raymond James Financial ............... -- 250 -- --
880 Carillon Parkway
St. Petersburg, Florida 33733

William R. Hough....................... -- 250 -- --
100 Second Avenue
Suite 800
St. Petersburg, Florida 33701
----- ----- ----- -----
Total.................................. 3,000 7,000 2,000 3,000
===== ===== ===== =====
</TABLE>

A-13
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Sponsor, Trustee and Unit Holders of

Tax Exempt Securities Trust, Intermediate Term Trust 37, National Trust 249,
Florida Trust 96 and New York Trust 184:

We have audited the accompanying statements of financial condition, including
the portfolios of securities, of each of the respective trusts constituting Tax
Exempt Securities Trust, Intermediate Term Trust 37, National Trust 249,
Florida Trust 96 and New York Trust 184 as of November 28, 2000. These
financial statements are the responsibility of the Trustee (see note 6 to the
statements of financial condition). Our responsibility is to express an opinion
on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
statements of financial condition are free of material misstatement. An audit
of a statement of financial condition includes examining, on a test basis,
evidence supporting the amounts and disclosures in that statement of financial
condition. Our procedures included confirmation with the Trustee of an
irrevocable letter of credit deposited on November 28, 2000, for the purchase
of securities, as shown in the statements of financial condition and portfolios
of securities. An audit of a statement of financial condition also includes
assessing the accounting principles used and significant estimates made by the
Trustee, as well as evaluating the overall statement of financial condition
presentation. We believe that our audits of the statements of financial
condition provide a reasonable basis for our opinion.

In our opinion, the statements of financial condition referred to above present
fairly, in all material respects, the financial position of each of the
respective trusts constituting Tax Exempt Securities Trust, Intermediate Term
Trust 37, National Trust 249, Florida Trust 96 and New York Trust 184 as of
November 28, 2000, in conformity with accounting principles generally accepted
in the United States of America.

/s/ KPMG LLP

New York, New York

November 28, 2000

A-14
<PAGE>

TAX EXEMPT SECURITIES TRUST
STATEMENTS OF FINANCIAL CONDITION

AS OF DATE OF DEPOSIT, NOVEMBER 28, 2000

<TABLE>
<CAPTION>
TRUST PROPERTY
-----------------------
Intermediate
Term National
Trust 37 Trust 249
------------ ----------
<S> <C> <C>
Investment in Tax-Exempt Securities:
Bonds represented by purchase contracts backed by
letter of credit (1)................................ $2,947,414 $6,716,704
Accrued interest through the Date of Deposit on
underlying bonds (1)(2)............................... 42,495 105,425
Cash (3)............................................... 7,500 17,500
---------- ----------
Total.............................................. $2,997,409 $6,839,629
========== ==========

<CAPTION>
LIABILITIES AND
INTEREST OF
UNIT HOLDERS
-----------------------
<S> <C> <C>
Liabilities:
Accrued interest through the Date of Deposit on
underlying bonds (1)(2)............................. $ 42,495 $ 105,425
Reimbursement to Sponsor for Organization Cost (3)... 7,500 17,500
---------- ----------
49,995 122,925
---------- ----------
Interest of Unit Holders:
Units of fractional undivided interest outstanding
(Intermediate Term Trust 37: 3,000; National Trust
249: 7,000)
Cost to investors (4)............................... 3,068,158 7,065,458
Less--Gross underwriting commission (5)............. 113,244 331,254
Less--Organization Costs (3)........................ 7,500 17,500
---------- ----------
Net amount applicable to investors.................. 2,947,414 6,716,704
---------- ----------
Total.............................................. $2,997,409 $6,839,629
========== ==========
</TABLE>
------------

(1) Aggregate cost to each Trust of the Bonds listed under the Portfolios of
Securities on the immediately following pages is based on offering prices
as of 1:00 p.m. on November 28, 2000, the Date of Deposit, determined by
the Evaluator on the basis set forth in Part B, "Public Offering--Offering
Price." Svenska Handelsbanken issued an irrevocable letter of credit in
the aggregate principal amount of $17,000,000 which was deposited with the
Trustee for the purchase of $15,000,000 principal amount of Bonds in all
of the Trusts, pursuant to contracts to purchase such Bonds at the
aggregate cost of $14,501,701 plus $219,315 representing accrued interest
thereon through the Date of Deposit.
(2) The Indenture provides that the Trustee will advance amounts equal to the
accrued interest on the underlying securities of each Trust (net of
accrued expenses) through the Date of Deposit and that such amounts will
be distributed to the Sponsor as Unit holder of record on such date, as
set forth in Part B, "Rights of Unit Holders--Distribution of Interest and
Principal."
(3) A portion of the Public Offering Price consists of cash in an amount
sufficient to reimburse the Sponsor for the per Unit portion of all or a
part of the organization costs of establishing a Trust. These costs have
been estimated at $2.50 per Unit for each of the Trusts. A payment will be
made as of the close of the initial public offering period to an account
maintained by the Trustee from which the obligation of the investors to
the Sponsor will be satisfied. To the extent that actual organization
expenses are less than the estimated amount, only the actual organization
expenses will be deducted from the assets of a Trust.

(4) Aggregate public offering price (exclusive of interest) computed on 3,000
Units of the Intermediate Term Trust and 7,000 Units of the National
Trust, on the basis set forth in Part B, "Public Offering--Offering
Price."

(5) Sales charge of 3.70% and 4.70% computed on 3,000 Units of the
Intermediate Term Trust and 7,000 Units of the National Trust,
respectively, on the basis set forth in Part B, "Public Offering--Offering
Price."
(6) The Trustee has custody of and responsibility for all accounting and
financial books, records, financial statements and related data of each
Trust and is responsible for establishing and maintaining a system of
internal controls directly related to, and designed to provide reasonable
assurance as to the integrity and reliability of, financial reporting of
each Trust. The Trustee is also responsible for all estimates (exclusive
of estimate of organization expense) and accruals reflected in each
Trust's financial statements. The Evaluator determines the price for each
underlying bond included in each Trust's Portfolio of Securities on the
basis set forth in Part B, "Public Offering--Offering Price."

A-15
<PAGE>

TAX EXEMPT SECURITIES TRUST
STATEMENTS OF FINANCIAL CONDITION

AS OF DATE OF DEPOSIT, NOVEMBER 28, 2000

<TABLE>
<CAPTION>
TRUST PROPERTY
---------------------
Florida New York
Trust 96 Trust 184
---------- ----------
<S> <C> <C>
Investment in Tax-Exempt Securities:
Bonds represented by purchase contracts backed by
letter of credit (1).................................. $1,931,731 $2,905,852
Accrued interest through the Date of Deposit on
underlying bonds (1)(2)................................. 29,694 41,701
Cash (3)................................................. 5,000 7,500
---------- ----------
Total................................................ $1,966,425 $2,955,053
========== ==========

<CAPTION>
LIABILITIES AND
INTEREST OF
UNIT HOLDERS
---------------------
<S> <C> <C>
Liabilities:
Accrued interest through the Date of Deposit on
underlying bonds (1)(2)............................... $ 29,694 $ 41,701
Reimbursement to Sponsor for Organization Costs (3).... 5,000 7,500
---------- ----------
34,694 49,201
---------- ----------
Interest of Unit Holders:
Units of fractional undivided interest outstanding
(Florida Trust 96: 2,000;
New York Trust 184: 3,000)
Cost to investors (4)................................. 2,032,000 3,056,663
Less--Gross underwriting commission (5)............... 95,269 143,311
Less--Organization Costs (3).......................... 5,000 7,500
---------- ----------
Net amount applicable to investors.................... 1,931,731 2,905,852
---------- ----------
Total................................................ $1,966,425 $2,955,053
========== ==========
</TABLE>
------------

(4) Aggregate public offering price (exclusive of interest) computed on 2,000
Units of the Florida Trust and 3,000 Units of the New York Trust, on the
basis set forth in Part B, "Public Offering--Offering Price."

(5) Sales charge of 4.70% computed on 2,000 Units of the Florida Trust and
3,000 Units of the New York Trust, on the basis set forth in Part B,
"Public Offering--Offering Price."
(6) The Trustee has custody of and responsibility for all accounting and
financial books, records, financial statements and related data of each
Trust and is responsible for establishing and maintaining a system of
internal controls directly related to, and designed to provide reasonable
assurance as to the integrity and reliability of, financial reporting of
each Trust. The Trustee is also responsible for all estimates (exclusive
of estimate of organization expense) and accruals reflected in each
Trust's financial statements. The Evaluator determines the price for each
underlying bond included in each Trust's Portfolio of Securities on the
basis set forth in Part B, "Public Offering--Offering Price."

A-16
<PAGE>

TAX EXEMPT SECURITIES TRUST

INTERMEDIATE TERM TRUST 37--PORTFOLIO OF SECURITIES

AS OF NOVEMBER 28, 2000

<TABLE>
<CAPTION>
Yield on Annual
Securities Represented Redemption Cost of Date of Interest
Aggregate by Ratings Provisions Securities Deposit Income
Principal Purchase Contracts (1) (2) to Trust (3)(4) (4) to Trust
--------- ------------------------ ------- ---------------- --------------- -------- --------
<C> <C> <S> <C> <C> <C> <C> <C>
1. $100,000 City of Birmingham, AA 4/1/08 @ 102 $ 94,447 5.100% $4,450
Alabama, General
Obligation Refunding
Bonds, 4.45% Due
4/1/2012

2. 250,000 Clearwater, Florida, A -- 249,750 5.411 13,500
Housing Authority, SF 5/1/05 @ 100
Housing Revenue
Refunding Bonds, The
Hamptons at Clearwater,
ACA Insured, 5.40% Due
5/1/2013

3. 195,000 City of Tampa, Florida, A -- 185,340 5.300 8,775
Capital Improvement
Hospital Revenue Bonds,
H. Lee Moffitt Cancer
Center Project, 4.50%
Due 7/1/2008

4. 250,000 West Orange, Florida, A- -- 249,750 5.513 13,750
Healthcare District
Revenue Bonds, 5.50% Due
2/1/2010

5. 265,000 Chicago, Illinois, Tax A -- 284,642 5.350 17,225
Increment Allocation
Bonds, Central Loop
Redevelopment Authority,
ACA Insured, 6.50% Due
12/1/2008

6. 100,000 Indiana Health Facility AA -- 100,587 5.200 5,300
Financing Authority,
Hospital Revenue Bonds,
Clarian Health Obligated
Group, 5.30% Due
2/15/2008

7. 250,000 Kentucky Economic A-** -- 252,272 6.000 15,312
Development Finance SF 10/1/06 @ 100
Authority, Health System
Revenue Bonds, Norton
Healthcare, Inc. 6.125%
Due 10/1/2010

8. 115,000 Kentucky Economic A-** 10/1/10 @ 101 115,437 6.200 7,188
Development Finance SF 10/1/11 @ 100
Authority, Health System
Revenue Bonds, Norton
Healthcare, Inc. 6.25%
Due 10/1/2012

9. 140,000 Massachusetts Health and A 11/15/08 @ 101 134,317 5.600 7,140
Educational Facilities
Authority Revenue Bonds,
Vinfen Corporation
Issue, ACA Insured,
5.10% Due 11/15/2011

</TABLE>

A-17
<PAGE>

TAX EXEMPT SECURITIES TRUST

INTERMEDIATE TERM TRUST 37--PORTFOLIO OF SECURITIES

AS OF NOVEMBER 28, 2000

<TABLE>
<CAPTION>
Cost of Yield on Annual
Securities Represented Redemption Securities Date of Interest
Aggregate by Ratings Provisions to Trust Deposit Income
Principal Purchase Contracts (1) (2) (3)(4) (4) to Trust
---------- ------------------------ ------- --------------- ---------- -------- --------
<C> <C> <S> <C> <C> <C> <C> <C>

10. $ 100,000 Missouri Development A- -- $ 104,204 5.300% $ 6,000
Finance Board,
Infrastructure
Facilities Revenue
Bonds, City of
Independence, Missouri,
Eastland Center Project
Phase II, 6.00% due
4/1/2008

11. 250,000 Allentown, Pennsylvania, A -- 238,075 5.650 12,500
Area Hospital Authority SF 7/1/09 @ 100
Hospital Revenue Bonds,
Sacred Heart Hospital of
Allentown, ACA Insured,
5.00% Due 7/1/2010

12. 100,000 Denton County, Texas, AA 7/15/09 @ 100 94,303 5.100 4,400
Permanent Improvement
Bonds, 4.40% Due
7/15/2011

13. 390,000 Harris County, Texas, A -- 373,008 5.800 20,085
Housing Finance
Corporation, Multifamily
Housing Revenue Bonds,
Windfern Pointe and
Waterford Place
Apartments Project,
5.15% Due 7/1/2009

14. 350,000 Washington State Housing A 1/1/09 @ 102 333,893 5.600 17,850
Finance Commission, SF 7/1/08 @ 100
Nonprofit Housing
Revenue and Refunding
Revenue Bonds,
Presbyterian Ministries,
Incorporated Projects,
ACA Insured, 5.10% Due
1/1/2014

15. 145,000 Bellingham School AAA -- 137,389 4.900 5,945
District No. 501,
Whatcom County,
Washington, Unlimited
Tax General Obligation
and Refunding Bonds, FSA
Insured, 4.10% Due
12/1/2008

---------- ---------- --------
$3,000,000 $2,947,414 $159,420
========== ========== ========
</TABLE>

The Notes following the Portfolios are an integral part of each Portfolio of
Securities.

A-18
<PAGE>

TAX EXEMPT SECURITIES TRUST

NATIONAL TRUST 249--PORTFOLIO OF SECURITIES

AS OF NOVEMBER 28, 2000

<TABLE>
<CAPTION>
Cost of Yield on Annual
Securities Represented Redemption Securities Date of Interest
Aggregate by Ratings Provisions to Trust Deposit Income
Principal Purchase Contracts (1) (2) (3)(4) (4) to Trust
--------- ------------------------ ------- ---------------- ---------- -------- --------
<C> <C> <S> <C> <C> <C> <C> <C>

1. $ 400,000 Northern Tobacco Aa3* 6/1/10 @ 100 $ 402,812 6.400% $ 26,000
Securitization SF 6/1/23 @ 100
Corporation, Alaska,
Tobacco Settlement
Asset-Backed Bonds,
6.50% Due 6/1/2031

2. 250,000 City of Valdez, Alaska, AA+ 10/1/03 @ 102 241,350 5.750 13,750
Marine Terminal Revenue
Refunding Bonds, BP
Pipelines Inc. Project,
5.50% Due 10/1/2028

3. 600,000 City of Tallahassee, A3* 12/1/10 @ 100 599,400 6.382 38,250
Florida, Health SF 12/1/21 @ 100
Facilities Revenue
Bonds, Tallahassee
Memorial HealthCare,
Inc. Project, 6.375% Due
12/1/2030

4. 250,000 Illinois Health A3* 7/1/09 @ 101 216,932 7.000 14,375
Facilities Authority SF 7/1/16 @ 100
Revenue Refunding Bonds,
West Suburban Hospital
Medical Center, 5.75%
Due 7/1/2020

5. 425,000 Indiana Health Facility A 2/15/08 @ 102 373,120 6.300 22,312
Financing Authority, SF 2/15/19 @ 100
Hospital Revenue
Refunding Bonds, Floyd
Memorial Hospital and
Health Services Project,
5.25% Due 2/15/2022

6. 485,000 Iowa Finance Authority A 12/1/08 @ 100 488,114 6.147 30,312
Community Provider SF 12/1/12 @ 100
Revenue Bonds, Boys and
Girls Home and Family
Services, Inc. Project,
ACA Insured, 6.25% Due
12/1/2028

7. 500,000 Kentucky Economic A-** 10/1/10 @ 101 497,185 6.550 32,500
Development Finance SF 10/1/13 @ 100
Authority, Health System
Revenue Bonds, Norton
Healthcare, Inc. 6.50%
Due 10/1/2020

</TABLE>

A-19
<PAGE>

TAX EXEMPT SECURITIES TRUST

NATIONAL TRUST 249--PORTFOLIO OF SECURITIES

AS OF NOVEMBER 28, 2000

<TABLE>
<CAPTION>
Cost of Yield on Annual
Securities Represented Redemption Securities Date of Interest
Aggregate by Ratings Provisions to Trust Deposit Income
Principal Purchase Contracts (1) (2) (3)(4) (4) to Trust
--------- ------------------------ ------- ----------------- ---------- -------- --------
<C> <C> <S> <C> <C> <C> <C> <C>

8. $ 500,000 Louisiana Local A -- $ 525,200 6.150% $ 32,750
Government
Environmental,
Facilities and Community
Development Authority
Revenue Bonds, Capital
Projects and Equipment
Acquisition Program, ACA
Insured, 6.55% Due
9/1/2025

9. 200,000 Detroit, Michigan, City AAA 5/1/09 @ 101 173,820 5.699 9,500
School District, General SF 5/1/22 @ 100
Obligation Bonds, FGIC
Insured, 4.75% Due
5/1/2028

10. 250,000 Minnesota Agricultural A 11/15/10 @ 101 255,430 6.100 15,937
and Economic Development SF 11/15/16 @ 100
Board, Health Care
System Revenue Bonds,
Fairview Health
Services, 6.375% Due
11/15/2022

11. 500,000 Business Finance A3* 10/1/03 @ 102 473,925 6.250 29,375
Authority of the State
of New Hampshire,
Pollution Control
Refunding Revenue Bonds,
The United Illuminating
Company Project, 5.875%
Due 10/1/2033

12. 600,000 The Health, Educational A 1/1/07 @ 102 599,400 6.257 37,500
and Housing Facility SF 7/1/17 @ 100
Board of the County of
Shelby, Tennessee,
Multifamily Housing
Revenue Bonds, The
Corners Apartments
Project, 6.25% Due
1/1/2027

13. 440,000 Harris County, Texas, A 7/1/09 @ 102 398,526 6.800 25,960
Housing Finance SF 1/1/10 @ 100
Corporation, Multifamily
Housing Revenue Bonds,
Windfern Pointe and
Waterford Place
Apartments Project,
5.90% Due 7/1/2019
</TABLE>

A-20
<PAGE>

TAX EXEMPT SECURITIES TRUST

NATIONAL TRUST 249--PORTFOLIO OF SECURITIES

AS OF NOVEMBER 28, 2000

<TABLE>
<CAPTION>
Cost of Yield on Annual
Securities Represented Redemption Securities Date of Interest
Aggregate by Ratings Provisions to Trust Deposit Income
Principal Purchase Contracts (1) (2) (3)(4) (4) to Trust
---------- ------------------------ ------- ---------------- ---------- -------- --------
<C> <C> <S> <C> <C> <C> <C> <C>

14. $ 500,000 Washington State Housing A 1/1/09 @ 102 $ 450,360 6.200% $ 27,250
Finance Commission, SF 7/1/19 @ 100
Nonprofit Housing
Revenue and Refunding
Revenue Bonds,
Presbyterian Ministries,
Incorporated Projects,
ACA Insured, 5.45% Due
1/1/2029

15. 600,000 Washington State Housing A 1/1/11 @ 100 606,630 6.200 38,100
Finance Commission SF 1/1/22 @ 100
Nonprofit Revenue Bonds,
Seattle Academy Project,
ACA Insured, 6.35% Due
1/1/2031

16. 500,000 Wisconsin Health and A- 2/15/08 @ 101 414,500 6.900 27,500
Educational Facilities SF 2/15/19 @ 100
Authority Revenue Bonds,
Franciscan Sisters of
Christian, Charity
HealthCare Ministry,
Inc., 5.50% Due
2/15/2028

---------- ---------- --------
$7,000,000 $6,716,704 $421,371
========== ========== ========
</TABLE>

The Notes following the Portfolios are an integral part of each Portfolio of
Securities.

A-21
<PAGE>

TAX EXEMPT SECURITIES TRUST

FLORIDA TRUST 96--PORTFOLIO OF SECURITIES

AS OF NOVEMBER 28, 2000

<TABLE>
<CAPTION>
Cost of Yield on Annual
Redemption Securities Date of Interest
Aggregate Securities Represented by Purchase Ratings Provisions to Trust Deposit Income
Principal Contracts (1) (2) (3)(4) (4) to Trust
---------- ---------------------------------- ------- ---------------- ---------- -------- --------
<C> <C> <S> <C> <C> <C> <C> <C>

1. $ 250,000 City of Jacksonville, A+ 8/1/06 @ 101 $ 251,520 5.600% $ 14,250
Florida, Pollution
Control Refunding
Revenue Bonds, Anheuser-
Busch Project, 5.70% Due
8/1/2031
2. 250,000 Marion County Hospital A2* 10/1/09 @ 101 235,155 6.100 14,063
District, Florida, SF 10/1/20 @ 100
Health System Refunding
and Improvement Revenue
Bonds, Munroe Regional
Health System, 5.625%
Due 10/1/2024
3. 250,000 The School Board of AAA 8/1/08 @ 101 228,253 5.500 12,187
Miami-Dade County, SF 8/1/20 @ 100
Florida, Certification
of Participation, AMBAC
Insured, 4.875% Due
8/1/2027
4. 250,000 Pinellas County, AA 10/1/10 @ 101 249,750 5.881 14,687
Florida, Educational SF 10/1/26 @ 100
Facilities Authority
Revenue Bonds, Barry
University Project,
Asset Guaranty Insured,
5.875% Due 10/1/2030
5. 125,000 Santa Rosa, Florida, Bay A 7/1/06 @ 102 128,406 5.800 7,813
Bridge Authority Revenue SF 7/1/23 @ 100
Bonds, ACA Insured,
6.25% Due 7/1/2028
6. 250,000 City of Tallahassee, A3* 12/1/10 @ 100 249,750 6.382 15,937
Florida, Health SF 12/1/21 @ 100
Facilities Revenue
Bonds, Tallahassee
Memorial HealthCare,
Inc. Project, 6.375% Due
12/1/2030
7. 500,000 City of Tampa, Florida, A 7/1/09 @ 101 476,980 6.169 28,750
Capital Improvement SF 7/1/15 @ 100
Hospital Revenue Bonds,
H. Lee Moffitt Cancer
Center Project, 5.75%
Due 7/1/2019
8. 125,000 Tampa Bay, Florida Water AAA 10/1/08 @ 101 111,917 5.500 5,938
Utility System Revenue SF 10/1/19 @ 100
Bonds, FGIC Insured,
4.75% Due 10/1/2027
---------- ---------- --------
$2,000,000 $1,931,731 $113,625
========== ========== ========
</TABLE>
The Notes following the Portfolios are an integral part of each Portfolio of
Securities.

A-22
<PAGE>

TAX EXEMPT SECURITIES TRUST

NEW YORK TRUST 184--PORTFOLIO OF SECURITIES

AS OF NOVEMBER 28, 2000

<TABLE>
<CAPTION>
Cost of Yield on Annual
Redemption Securities Date of Interest
Aggregate Securities Represented by Purchase Ratings Provisions to Trust Deposit Income
Principal Contracts (1) (2) (3)(4) (4) to Trust
--------- ---------------------------------- ------- ---------------- ---------- -------- --------
<C> <C> <S> <C> <C> <C> <C> <C>

1. $ 250,000 The City of New York, A- 3/15/09 @ 101 $ 227,160 5.650% $ 12,500
General Obligation SF 3/15/21 @ 100
Bonds, 5.00% Due
3/15/2029
2. 370,000 Dormitory Authority of A 7/1/08 @ 101 338,846 5.650 18,500
the State of New York, SF 7/1/19 @ 100
New York State
Department of Health
Revenue Refunding Bonds,
5.00% Due 7/1/2024
3. 125,000 Dormitory Authority of AAA 1/15/09 @ 101 110,030 5.600 5,938
the State of New York, SF 1/15/24 @ 100
Municipal Health
Facilities Improvement
Program, Lease Revenue
Bonds, FSA Insured,
4.75% Due 1/15/2029
4. 375,000 The Trust for Cultural A 7/1/10 @ 101 386,014 5.750 22,969
Resources of The City of SF 7/1/23 @ 100
New York, New York,
Revenue Bonds, Museum of
American Folk Art, ACA
Insured, 6.125% Due
7/1/2030
5. 350,000 County of Cattaraugus, A+ 8/1/08 @ 102 325,854 5.800 18,375
New York, Industrial SF 8/1/14 @ 100
Development Agency,
Civic Facility Revenue
Bonds, Olean General
Hospital Project, 5.25%
Due 8/1/2023
6. 250,000 Erie, New York, Tobacco A 7/15/10 @ 101 246,368 6.350 15,625
Asset Securitization SF 7/15/33 @ 100
Corporation, Tobacco
Settlement Asset-Backed
Bonds, 6.25% Due
7/15/2040
7. 190,000 Oneida County, New York A 3/15/09 @ 102 175,685 5.900 10,165
Industrial Development SF 3/15/20 @ 100
Agency, Civic Facility
Revenue Bonds, Mohawk
Valley Handicapped
Services, Inc. Project,
ACA Insured, 5.35% Due
3/15/2029
</TABLE>

A-23
<PAGE>

TAX EXEMPT SECURITIES TRUST

NEW YORK TRUST 184--PORTFOLIO OF SECURITIES

AS OF NOVEMBER 28, 2000

8. $ 500,000 TSASC, Inc., New York, Aa2* 7/15/09 @ 101 $ 496,475 6.300% $ 31,250
Tobacco Flexible SF 7/15/27 @ 100
Amortization Bonds,
TFABs, 6.25% Due
7/15/2034
9. 350,000 Westchester County, New A 11/1/10 @ 100 351,277 5.950 21,000
York, Health Care SF 11/1/26 @ 100
Corporation Revenue
Bonds, 6.00% Due
11/1/2030
10. 240,000 Virgin Islands Public A 10/1/10 @ 101 248,143 5.700 14,700
Finance Authority SF 10/1/25 @ 100
Revenue Bonds, Virgin
Islands Gross Receipts
Taxes Loan Note, ACA
Insured, 6.125% Due
10/1/2029
---------- ---------- --------
$3,000,000 $2,905,852 $171,022
========== ========== ========
</TABLE>

The Notes following the Portfolios are an integral part of each Portfolio of
Securities.

A-24
<PAGE>

NOTES TO PORTFOLIOS OF SECURITIES

(1) For a description of the meaning of the applicable rating symbols as
published by Standard & Poor's Ratings Group, a division of McGraw-Hill,
Inc., Moody's Investors Service(*) and Fitch Investor Services, Inc.(**),
see Part B, "Bond Ratings."

(2) There is shown under this heading the year in which each issue of Bonds
initially is redeemable and the redemption price for that year; unless
otherwise indicated, each issue continues to be redeemable at declining
prices thereafter, but not below par. "SF" indicates a sinking fund has
been or will be established with respect to an issue of Bonds. The prices
at which Bonds may be redeemed or called prior to maturity may or may not
include a premium and, in certain cases, may be less than the cost of the
Bonds to a Trust. Certain Bonds in a Portfolio, including Bonds listed as
not being subject to redemption provisions, may be redeemed in whole or in
part other than by operation of the stated redemption or sinking fund
provision under certain unusual or extraordinary circumstances specified in
the instruments setting forth the terms and provisions of such Bonds. For
example, see discussion of obligations of housing authorities in Part B,
"Tax Exempt Securities Trust--Portfolio."

(3) Contracts to purchase Bonds were entered into during the period October 17,
2000, through November 28, 2000, with the settlement date on December 4,
2000. The Profit to the Sponsor on Deposit totals $25,688 for the
Intermediate Term Trust, $81,243 for the National Trust, $23,089 for the
Florida Trust and $28,116 for the New York Trust.

(4) Evaluation of the Bonds by the Evaluator is made on the basis of current
offering prices for the Bonds. The current offering prices of the Bonds are
greater than the current bid prices of the Bonds. The Redemption Price per
Unit and the public offering price of the Units in the secondary market are
determined on the basis of the current bid prices of the Bonds. (See Part
B, "Public Offering--Offering Price" and "Rights of Unit Holders--
Redemption of Units.") Yield on Date of Deposit was computed on the basis
of offering prices on the date of deposit. On November 28, 2000, the
aggregate bid price of the Bonds was $2,935,414 for the Intermediate Term
Trust, $6,678,954 for the National Trust, $1,923,731 for the Florida Trust
and $2,890,852 for the New York Trust.

A-25
<PAGE>

PROSPECTUS--Part B:
--------------------------------------------------------------------------------

Note that Part B of this Prospectus may not be distributed unless accompanied
by Part A.
--------------------------------------------------------------------------------
TAX EXEMPT SECURITIES TRUST

The Trusts

For over 20 years, Tax Exempt Securities Trust has specialized in quality
municipal bond investments designed to meet a variety of investment objectives
and tax situations. Tax Exempt Securities Trust is a convenient and cost
effective alternative to individual bond purchases. Each Trust is one of a
series of similar but separate unit investment trusts. A unit investment trust
provides many of the same benefits as individual bond purchases. However, while
receiving many of the benefits, the holder of Units (the "Holder") avoids the
complexity of analyzing, selecting and monitoring a multi-bond portfolio. Each
Trust is also created under the laws of the State of New York by a Trust
Indenture and Agreement and related Reference Trust Agreement dated the Date of
Deposit (collectively, the "Trust Agreement"), of Salomon Smith Barney Inc., as
Sponsor, The Chase Manhattan Bank, as Trustee, and Kenny S&P Evaluation
Services, a division of J.J. Kenny Company, Inc., as Evaluator. Each Trust
containing Bonds of a State for which such Trust is named (a "State Trust") and
each National Trust is referred to herein as the "Trust" and together they are
referred to as "Trusts." On the Date of Deposit, the Sponsor deposited
contracts and funds (represented by a certified check or checks and/or an
irrevocable letter or letters of credit, issued by a major commercial bank) for
the purchase of certain interest-bearing obligations (the "Bonds") and/or Units
of preceding Series of Tax Exempt Securities Trust (the "Deposited Units"). The
Bonds and Deposited Units (if any) are referred to herein collectively as the
"Securities." After the deposit of the Securities and the creation of the
Trusts, the Trustee delivered to the Sponsor registered certificates of
beneficial interest (the "Certificates") representing the units (the "Units")
comprising the entire ownership of each Trust. These Units are now being
offered hereby. References to multiple Trusts herein should be read as
references to a single Trust if Part A indicates the creation of only one
Trust.

Objectives

The objectives of each Trust are tax-exempt income and conservation of
capital through an investment in a diversified portfolio of municipal bonds.
There is no guarantee that a Trust's objectives will be achieved.

Portfolio

The Sponsor's investment professionals select Bonds for the Trust portfolios
from among the 200,000 municipal bond issues that vary according to bond
purpose, credit quality and years to maturity. The following factors, among
others, were considered in selecting the Bonds for each Trust:

. whether the interest on the Bonds selected would be exempt from Federal
and/or state income taxes imposed on the Holders;

. whether the Bonds were rated "A" or better by a major bond rating agency;

. the maturity dates of the Bonds (including whether such Bonds may be
called or redeemed prior to their stated maturity);

. the diversity of the types of Bonds; and

. the cost of the Bonds relative to what the Sponsor believes is their
value.

An Intermediate Term Trust will have a dollar-weighted average portfolio
maturity of more than three years but no more than eleven years from Date of
Deposit. A National Trust or a State Trust not specified as to term will have a
dollar-weighted average portfolio maturity of more than ten years from the Date
of Deposit.

The Units

Each Unit in a Trust represents a fractional undivided interest in the
principal and net income of

B-1
<PAGE>

such Trust. If any Units are redeemed after the date of this Prospectus, the
principal amount of Bonds in the Trust will be reduced by an amount allocable
to redeemed Units. Also, the fractional undivided interest in the Trust
represented by each unredeemed Unit will be increased. Units will remain
outstanding until redeemed or until the termination of the Trust.

RISK FACTORS

An investment in Units is subject to the following risks.

Failure of Issuers to Pay Interest and/or Principal

The primary risk associated with an investment in Bonds is that the issuer of
the Bond will default on principal and/or interest payments when due on the
Bond. Such a default would have the effect of lessening the income generated by
the Trust and/or the value of the Trust's Units. The bond ratings assigned by
major rating organizations are an indication of the issuer's ability to make
interest and principal payments when due on its bonds. Subsequent to the date
of deposit the rating assigned to a bond may decline. Neither the Sponsor nor
the Trustee shall be liable in any way for any default, failure or defect in
any bond.

Original Issue Discount Bonds and Zero Coupon Bonds

Certain of the Bonds in the Trust may be original issue discount bonds and/or
zero coupon bonds. Original issue discount bonds are bonds originally issued at
less than the market interest rate. Zero coupon bonds are original issue
discount bonds that do not provide for the payment of current interest. For
Federal income tax purposes, original issue discount on such bonds must be
accrued over the terms of such bonds. On sale or redemption, the difference
between (i) the amount realized (other than amounts treated as tax-exempt
income), and (ii) the tax basis of such bonds (properly adjusted for the
accrual of original issue discount) will be treated as taxable income, gain or
loss. See "Taxes" herein.

"When Issued" and "Delayed Delivery" Bonds

Certain Bonds in a Trust may have been purchased by the Sponsor on a "when
issued" basis. Bonds purchased on a "when issued" basis have not yet been
issued by their governmental entity on the Date of Deposit (although such
governmental entity had committed to issue such Bonds). In the case of these
and/or certain other Bonds, the delivery of the Bonds may be delayed ("delayed
delivery") or may not occur. The effect of a Trust containing "delayed
delivery" or "when issued" Bonds is that Holders who purchased their Units
prior to the date such Bonds are actually delivered to the Trustee may have to
make a downward adjustment in the tax basis of their Units. Such downward
adjustment may be necessary to account for interest accruing on such "when
issued" or "delayed delivery" Bonds during the time between the Holders
purchase of Units and delivery of such Bonds to a Trust. Such adjustment has
been taken into account in computing the Estimated Current Return and Estimated
Long-Term Return set forth herein, which is slightly lower than Holders may
receive after the first year. To the extent that the delivery of such Bonds is
delayed beyond their respective expected delivery dates, the Estimated Current
Return and Estimated Long-Term Return for the first year may be lower than
indicated in the "Summary of Essential Information" in Part A.

Redemption or Sale Prior to Maturity

Most of the Bonds in the Portfolio of a Trust are subject to redemption prior
to their stated maturity date pursuant to sinking fund or call provisions. A
call or redemption provision is more likely to be exercised when the offering
price valuation of a bond is higher than its call or redemption price. Such
price valuation is likely to be higher in periods of declining interest rates.
Certain of the Bonds may be sold or redeemed or otherwise mature. In such
cases, the proceeds from such events will be distributed to Holders and will
not be reinvested. Thus, no assurance can be given that a Trust will retain for
any length of time its present size and composition. To the extent that a Bond
was

B-2
<PAGE>

deposited in a Trust at a price higher than the price at which it is
redeemable, or at a price higher than the price at which it is sold, a sale or
redemption will result in a loss in the value of Units. Monthly distributions
will generally be reduced by the amount of the income which would otherwise
have been paid with respect to sold or redeemed bonds. The Estimated Current
Return and Estimated Long-Term Return of the Units may be adversely affected by
such sales or redemptions.

Market Discount

The Portfolio of the Trust may consist of some Bonds whose current market
values were below face value on the Date of Deposit. A primary reason for the
market value of such Bonds being less than face value at maturity is that the
interest coupons of such Bonds are at lower rates than the current market
interest rate for comparably rated Bonds. Bonds selling at market discounts
tend to increase in market value as they approach maturity. A market discount
tax-exempt Bond will have a larger portion of its total return in the form of
taxable ordinary income (because market discount income is taxable ordinary
income) and less in the form of tax-exempt income than a comparable Bond
bearing interest at current market rates. See "Taxes" herein.

Failure of a Contract to Purchase Bonds

In the event that any contract for the purchase of any Bond fails, the
Sponsor is authorized under the Trust Agreement to instruct the Trustee to
acquire other securities (the "Replacement Bonds") for inclusion in the
Portfolio of the affected Trust. However, in order for the Trustee to acquire
any Replacement Bonds, they must be deposited not later than the earlier of (i)
the first monthly Distribution Date of the Trust or (ii) 90 days after such
Trust was established. The cost and aggregate principal amount of a Replacement
Bond may not exceed the cost and aggregate principal amount of the Bond which
it replaces. In addition, a Replacement Bond must:

. be a tax-exempt bond;

. have a fixed maturity or disposition date comparable to the Bond it
replaces;

. be purchased at a price that results in a yield to maturity and in a
current return which is approximately equivalent to the yield to maturity
and current return of the Bond which it replaces;

. be purchased within twenty days after delivery of notice of the failed
contracts; and

. be rated in a category of A or better by a major rating organization.

Whenever a Replacement Bond has been acquired for a Trust, the Trustee shall,
within five days thereafter, notify all Holders of such Trust of the
acquisition of the Replacement Bond.

In the event that a contract to purchase any of the Bonds fails and
Replacement Bonds are not acquired, the Trustee will, not later than the second
monthly Distribution Date, distribute to Holders the funds attributable to the
failed contract. The Sponsor will, in such a case, refund the sales charge
applicable to the failed contract. If less than all the funds attributable to a
failed contract are applied to purchase Replacement Bonds, the remaining moneys
will be distributed to Holders not later than the second monthly Distribution
Date. Moreover, the failed contract may reduce the Estimated Net Annual Income
per Unit, and may lower the Estimated Current Return and Estimated Long-Term
Return of the affected Trust.

Risks Inherent in an Investment in Different Types of Bonds

The Trust may contain or be concentrated in one or more of the
classifications of Bonds referred to below. A Trust is considered to be
"concentrated" in a particular category when the Bonds in that category
constitute 25% or more of the aggregate value of the Portfolio. An investment
in Units of the Trust should be made with an understanding of the risks that
these investments may entail, certain of which are described below.

B-3
<PAGE>

General Obligation Bonds. Certain of the Bonds in the Portfolio may be
general obligations of a governmental entity that are secured by the taxing
power of the entity. General obligation bonds are backed by the issuer's pledge
of its full faith, credit and taxing power for the payment of principal and
interest. However, the taxing power of any governmental entity may be limited
by provisions of state constitutions or laws and an entity's credit will depend
on many factors. Some such factors are the entity's tax base, the extent to
which the entity relies on Federal or state aid, and other factors which are
beyond the entity's control.

Industrial Development Revenue Bonds ("IDRs"). IDRs including pollution
control revenue bonds, are tax-exempt securities issued by states,
municipalities, public authorities or similar entities to finance the cost of
acquiring, constructing or improving various projects. These projects are
usually operated by corporate entities. IDRs are not general obligations of
governmental entities backed by their taxing power. Issuers are only obligated
to pay amounts due on the IDRs to the extent that funds are available from the
unexpended proceeds of the IDRs or receipts or revenues of the issuer. Payment
of IDRs is solely dependent upon the creditworthiness of the corporate operator
of the project or corporate guarantor. Such corporate operators or guarantors
that are industrial companies may be affected by many factors which may have an
adverse impact on the credit quality of the particular company or industry.

Hospital and Health Care Facility Bonds. The ability of hospitals and other
health care facilities to meet their obligations with respect to revenue bonds
issued on their behalf is dependent on various factors. Some such factors are
the level of payments received from private third-party payors and government
programs and the cost of providing health care services. There can be no
assurance that payments under governmental programs will remain at levels
comparable to present levels or will be sufficient to cover the costs
associated with their bonds. It also may be necessary for a hospital or other
health care facility to incur substantial capital expenditures or increased
operating expenses to effect changes in its facilities, equipment, personnel
and services. Hospitals and other health care facilities are additionally
subject to claims and legal actions by patients and others in the ordinary
course of business. There can be no assurance that a claim will not exceed the
insurance coverage of a health care facility or that insurance coverage will be
available to a facility.

Single Family and Multi-Family Housing Bonds. Multi-family housing revenue
bonds and single family mortgage revenue bonds are state and local housing
issues that have been issued to provide financing for various housing projects.
Multi-family housing revenue bonds are payable primarily from mortgage loans to
housing projects for low to moderate income families. Single-family mortgage
revenue bonds are issued for the purpose of acquiring notes secured by
mortgages on residences. The ability of housing issuers to make debt service
payments on their obligations may be affected by various economic and non-
economic factors. Such factors include: occupancy levels, adequate rental
income in multi-family projects, the rate of default on mortgage loans
underlying single family issues and the ability of mortgage insurers to pay
claims. All single family mortgage revenue bonds and certain multi-family
housing revenue bonds are prepayable over the life of the underlying mortgage
or mortgage pool. Therefore, the average life of housing obligations cannot be
determined. However, the average life of these obligations will ordinarily be
less than their stated maturities. Mortgage loans are frequently partially or
completely prepaid prior to their final stated maturities. To the extent that
these obligations were valued at a premium when a Holder purchased Units, any
prepayment at par would result in a loss of capital to the Holder and reduce
the amount of income that would otherwise have been paid to Holders.

Power Facility Bonds. The ability of utilities to meet their obligations with
respect to bonds they issue is dependent on various factors. These factors

B-4
<PAGE>

include the rates they may charge their customers, the demand for a utility's
services and the cost of providing those services. Utilities are also subject
to extensive regulations relating to the rates which they may charge customers.
Utilities can experience regulatory, political and consumer resistance to rate
increases. Utilities engaged in long-term capital projects are especially
sensitive to regulatory lags in granting rate increases. Utilities are
additionally subject to increased costs due to governmental environmental
regulation and decreased profits due to increasing competition. Any difficulty
in obtaining timely and adequate rate increases could adversely affect a
utility's results of operations. The Sponsor cannot predict at this time the
ultimate effect of such factors on the ability of any issuers to meet their
obligations with respect to Bonds.

Water and Sewer Revenue Bonds. Water and sewer bonds are generally payable
from user fees. The ability of state and local water and sewer authorities to
meet their obligations may be affected by a number of factors. Some such
factors are the failure of municipalities to utilize fully the facilities
constructed by these authorities, declines in revenue from user charges, rising
construction and maintenance costs, impact of environmental requirements, the
difficulty of obtaining or discovering new supplies of fresh water, the effect
of conservation programs, the impact of "no growth" zoning ordinances and the
continued availability of Federal and state financial assistance and of
municipal bond insurance for future bond issues.

University and College Bonds. The ability of universities and colleges to
meet their obligations is dependent upon various factors. Some of these
factors, of which an investor should be aware, are the size and diversity of
their sources of revenues, enrollment, reputation, management expertise, the
availability and restrictions on the use of endowments and other funds, the
quality and maintenance costs of campus facilities. Also, in the case of public
institutions, the financial condition of the relevant state or other
governmental entity and its policies with respect to education may affect an
institution's ability to make payments on its own.

Lease Rental Bonds. Lease rental bonds are predominantly issued by
governmental authorities that have no taxing power or other means of directly
raising revenues. Rather, the authorities are financing vehicles created solely
for the construction of buildings or the purchase of equipment that will be
used by a state or local government. Thus, the bonds are subject to the ability
and willingness of the lessee government to meet its lease rental payments
which include debt service on the bonds. Lease rental bonds are subject to the
risk that the lessee government is not legally obligated to budget and
appropriate for the rental payments beyond the current fiscal year. These bonds
are also subject to the risk of abatement in many states as rental bonds cease
in the event that damage, destruction or condemnation of the project prevents
its use by the lessee. Also, in the event of default by the lessee government,
there may be significant legal and/or practical difficulties involved in the
reletting or sale of the project.

Capital Improvement Facility Bonds. The Portfolio of a Trust may contain
Bonds which are in the capital improvement facilities category. Capital
improvement bonds are bonds issued to provide funds to assist political
subdivisions or agencies of a state through acquisition of the underlying debt
of a state or local political subdivision or agency. The risks of an investment
in such bonds include the risk of possible prepayment or failure of payment of
proceeds on and default of the underlying debt.

Solid Waste Disposal Bonds. Bonds issued for solid waste disposal facilities
are generally payable from tipping fees and from revenues that may be earned by
the facility on the sale of electrical energy generated in the combustion of
waste products. The ability of solid waste disposal facilities to meet their
obligations depends upon the continued use of the facility, the successful and
efficient operation of the facility and, in the case of waste-to-energy
facilities, the continued ability of the facility to generate

B-5
<PAGE>

electricity on a commercial basis. Also, increasing environmental regulation on
the federal, state and local level has a significant impact on waste disposal
facilities. While regulation requires more waste producers to use waste
disposal facilities, it also imposes significant costs on the facilities.

Moral Obligation Bonds. The Trust may also include "moral obligation" bonds.
If an issuer of moral obligation bonds is unable to meet its obligations, the
repayment of the bonds becomes a moral commitment but not a legal obligation of
the state or municipality in question. Thus, such a commitment generally
requires appropriation by the state legislature and accordingly does not
constitute a legally enforceable obligation or debt of the state. The agencies
or authorities generally have no taxing power.

Refunded Bonds. Refunded Bonds are typically secured by direct obligations of
the U.S. Government, or in some cases obligations guaranteed by the U.S.
Government, placed in an escrow account maintained by an independent trustee
until maturity or a predetermined redemption date. These obligations are
generally noncallable prior to maturity or the predetermined redemption date.
In a few isolated instances to date, however, bonds which were thought to be
escrowed to maturity have been called for redemption prior to maturity.

Airport, Port and Highway Revenue Bonds. Certain facility revenue bonds are
payable from and secured by the revenues from the ownership and operation of
particular facilities, such as airports, highways and port authorities. Airport
operating income may be affected by the ability of airlines to meet their
obligations under the agreements with airports. Similarly, payment on bonds
related to other facilities is dependent on revenues from the projects, such as
use fees from ports, tolls on turnpikes and bridges and rents from buildings.
Therefore, payment may be adversely affected by reduction in revenues due to
such factors and increased cost of maintenance or decreased use of a facility.
The Sponsor cannot predict what effect conditions may have on revenues which
are dependent for payment on these bonds.

Special Tax Bonds. Special tax bonds are payable from and secured by the
revenues derived by a municipality from a particular tax. Examples of such
special taxes are a tax on the rental of a hotel room, on the purchase of food
and beverages, on the rental of automobiles or on the consumption of liquor.
Special tax bonds are not secured by the general tax revenues of the
municipality, and they do not represent general obligations of the
municipality. Therefore, payment on special tax bonds may be adversely affected
by a reduction in revenues realized from the underlying special tax. Also,
should spending on the particular goods or services that are subject to the
special tax decline, the municipality may be under no obligation to increase
the rate of the special tax to ensure that sufficient revenues are raised from
the shrinking taxable base.

Tax Allocation Bonds. Tax allocation bonds are typically secured by
incremental tax revenues collected on property within the areas where
redevelopment projects, financed by bond proceeds are located. Such payments
are expected to be made from projected increases in tax revenues derived from
higher assessed values of property resulting from development in the particular
project area and not from an increase in tax rates. Special risk considerations
include: reduction of, or a less than anticipated increase in, taxable values
of property in the project area; successful appeals by property owners of
assessed valuations; substantial delinquencies in the payment of property
taxes; or imposition of any constitutional or legislative property tax rate
decrease.

Transit Authority Bonds. Mass transit is generally not self-supporting from
fare revenues. Therefore, additional financial resources must be made available
to ensure operation of mass transit systems as well as the timely payment of
debt

B-6
<PAGE>

service. Often such financial resources include Federal and state subsidies,
lease rentals paid by funds of the state or local government or a pledge of a
special tax. If fare revenues or the additional financial resources do not
increase appropriately to pay for rising operating expenses, the ability of the
issuer to adequately service the debt may be adversely affected.

Convention Facility Bonds. The Portfolio of a Trust may contain Bonds of
issuers in the convention facilities category. Bonds in the convention
facilities category include special limited obligation securities issued to
finance convention and sports facilities payable from rental payments and
annual governmental appropriations. The governmental agency is not obligated to
make payments in any year in which the monies have not been appropriated to
make such payments. In addition, these facilities are limited use facilities
that may not be used for purposes other than as convention centers or sports
facilities.

Correctional Facility Bonds. The Portfolio of a Trust may contain Bonds of
issuers in the correctional facilities category. Bonds in the correctional
facilities category include special limited obligation securities issued to
construct, rehabilitate and purchase correctional facilities payable from
governmental rental payments and/or appropriations.

Puerto Rico Bonds. Certain of the Bonds in the Trust may be general
obligations and/or revenue bonds of issuers located in Puerto Rico. These Bonds
will be affected by general economic conditions in Puerto Rico. The economy of
Puerto Rico is fully integrated with that of the mainland United States. During
fiscal 1999, approximately 87% of Puerto Rico's exports were to the United
States mainland, which was also the source of 60% of Puerto Rico's imports. In
fiscal 1999, Puerto Rico experienced a $9.6 billion positive adjusted
merchandise trade balance. The dominant sectors of the Puerto Rico economy are
manufacturing and services. Gross product in fiscal 1995 was $28.5 billion
($26.0 billion in 1992 prices) and gross product in fiscal 1999 was $38.2
billion ($29.8 billion in 1992 prices). This represents an increase in gross
product of 34.4% from fiscal 1995 to 1999 (14.8% in 1992 prices).

Average employment increased from 1,051,000 in fiscal 1995, to 1,147,000 in
fiscal 1999. Average unemployment decreased from 13.8% in fiscal 1995, to 12.5%
in fiscal 1999, the lowest annual unemployment rate in more than two decades.
According to the Labor Department's Household Employment Survey, during fiscal
1999, total employment increased 0.9% over fiscal 1998. Total monthly
employment averaged 1,147,000 in fiscal 1999, compared to 1,137,400 in fiscal
1998. The seasonally adjusted unemployment rate for January 2000 was 11.9%.
According to the Labor Department's Household Employment Survey, during the
first seven months of fiscal 2000, total employment increased 0.4% over the
same period in fiscal 1999. Total monthly employment averaged 1,138,6000 during
the first seven months of fiscal 2000, compared to 1,134,400 in the same period
in fiscal 1999.

The Planning Board's gross product forecast for fiscal 2000, made in October
1999, projected an increase of 2.7% over fiscal 1999 and an increase of 2.3%
for fiscal 2001. The performance of the economy during fiscal 2000 and 2001
will be effected principally by the performance of the United States economy
and by the increase in oil prices and, to a lesser extent, by the level of
interest rates. Since Puerto Rico is heavily dependent on oil imports for its
energy needs, if the level of oil prices remain at their current high levels,
this may adversely affect economic activity in Puerto Rico during the remainder
of fiscal 2000 and during fiscal 2001.

Insurance

Certain Bonds (the "Insured Bonds") may be insured or guaranteed by American
Capital Access Corporation ("ACA"), Asset Guaranty Insurance Co. ("AGI"), Ambac
Assurance Corporation ("AMBAC"), Asset Guaranty Reinsurance

B-7
<PAGE>

Company ("Asset Guaranty"), Capital Markets Assurance Corp. ("CAPMAC"), Connie
Lee Insurance Company ("Connie Lee"), Financial Guaranty Insurance Company
"Financial Guaranty"), Financial Security Assurance Inc. ("FSA"), or MBIA
Insurance Corporation ("MBIA") (collectively, the "Insurance Companies"). The
claims-paying ability of each of these companies, unless otherwise indicated,
is rated AAA by Standard & Poor's or another acceptable national rating
service. Standard & Poor's has assigned an A claims-paying ability to ACA and
an AA claims-paying ability to AGI. The ratings are subject to change at any
time at the discretion of the rating agencies.

The cost of this insurance is borne either by the issuers or previous owners
of the bonds. The Sponsor does not insure the bonds in conjunction with their
deposit in a Trust and makes no representations with regard to the adequacy of
the insurance covering any of the Insured Bonds. The insurance policies are
non-cancellable and will continue in force so long as the bonds are outstanding
and the insurers remain in business. The insurance policies guarantee the
timely payment of principal and interest on the Insured Bonds. However, the
insurance policies do not guarantee the market value of the Insured Bonds or
the value of the Units. The above information relating to the Insurance
Companies has been obtained from publicly available information. No
representation is made as to the accuracy or adequacy of the information or as
to the absence of material adverse changes since the information was made
available to the public.

Litigation and Legislation

To the best knowledge of the Sponsor, there is no litigation pending as of
the Date of Deposit in respect of any Bonds which might reasonably be expected
to have a material adverse effect upon the Trust. At any time after the Date of
Deposit, litigation may be initiated on a variety of grounds, or legislation
may be enacted, with respect to Bonds in the Trust. Litigation, for example,
challenging the issuance of pollution control revenue bonds under environmental
protection statutes may affect the validity of Bonds or the tax-free nature of
their interest. While the outcome of litigation of this nature can never be
entirely predicted, opinions of bond counsel are delivered on the date of
issuance of each Bond to the effect that the Bond has been validly issued and
that the interest thereon is exempt from regular Federal income tax. In
addition, other factors may arise from time to time which potentially may
impair the ability of issuers to make payments due on the Bonds.

Tax Exemption

From time to time Congress considers proposals to tax the interest on state
and local obligations, such as the Bonds. The Supreme Court has concluded that
the U.S. Constitution does not prohibit Congress from passing a
nondiscriminatory tax on interest on state and local obligations. This type of
legislation, if enacted into law, could adversely affect an investment in
Units. See "Taxes" herein for a more detailed discussion concerning the tax
consequences of an investment in Units. Unit holders are urged to consult their
own tax advisers.

TAXES

This is a general discussion of some of the income tax consequences of the
ownership of the Units. It applies only to investors who hold the Units as
capital assets. It does not discuss rules that apply to investors subject to
special tax treatment, such as securities dealers, financial institutions,
insurance companies or anyone who holds the Units as part of a hedge or
straddle.

The Bonds

In the opinions of bond counsel delivered on the dates the Bonds were issued
(or in opinions to be delivered, in the case of when issued Bonds), the
interest on the Bonds is excludable from gross

B-8
<PAGE>

income for regular Federal income tax purposes under the law in effect at that
time (except in certain circumstances because of the identity of the holder).
However, interest on the Bonds may be subject to state and local taxes. The
Sponsor and Paul, Hastings, Janofsky & Walker LLP have not made and will not
make any review of the procedures for the issuance of the Bonds or the basis
for these opinions.

In the opinions of bond counsel referred to above, none of the interest
received on the Bonds at the time of issuance is subject to the alternative
minimum tax for individuals. However, the interest is includible in the
calculation of a corporation's alternative minimum tax.

In the case of certain of the Bonds, the opinions of bond counsel indicate
that interest received by a substantial user of the facilities financed with
proceeds of the Bonds, or persons related thereto, will not be exempt from
regular Federal income tax, although interest on those Bonds received by others
generally would be exempt. The term substantial user includes only a person
whose gross revenue derived with respect to the facilities financed by the
issuance of the Bonds is more than 5% of the total revenue derived by all users
of those facilities, or who occupies more than 5% of the usable areas of those
facilities or for whom those facilities or a part thereof were specifically
constructed, reconstructed or acquired. Related persons are defined to include
certain related natural persons, affiliated corporations, partners and
partnerships. Similar rules may be applicable for state tax purposes.

The opinions of bond counsel are limited to law existing at the time the
Bonds were issued, and may not apply to the extent that future changes in law,
regulations or interpretations affect such Bonds. Interest on some or all of
the Bonds may become subject to regular Federal income tax, perhaps
retroactively to their dates of issuance, as a result of possible changes in
Federal law or as a result of the failure of issuers (or other users of the
proceeds of the bonds) to comply with certain ongoing requirements. Failure to
meet these requirements could cause the interest on the Bonds to become
taxable, thereby reducing the value of the Bonds, subjecting holders of the
Bonds to unanticipated tax liabilities and possibly requiring the Trustee to
sell the Bonds at reduced values.

The Sponsor and Paul, Hastings, Janofsky & Walker LLP have not made any
investigation as to the current or future owners or users of the facilities
financed by the Bonds, the amount of such persons' outstanding tax-exempt
private activity bonds, or the facilities themselves, and it is not possible to
give any assurance that future events will not affect the tax-exempt status of
the Bonds.

From time to time Congress considers proposals to tax the interest on state
and local obligations such as the Bonds and it can be expected that similar
proposals, including proposals for a flat tax or consumption tax, may be
introduced in the future. The Sponsor cannot predict whether additional
legislation in respect of the Federal income tax status of interest on state
and local obligations may be enacted and what the effect of such legislation
would be on Bonds in the Trust. The Supreme Court has concluded that the U.S.
Constitution does not prohibit Congress from passing a nondiscriminatory tax on
interest on state and local obligations. This type of legislation, if enacted,
could adversely affect an investment in Units. The decision does not, however,
affect the current exemption from taxation of the interest earned on the Bonds
in the Trust.

Investors should consult their tax advisors for advice with respect to the
effect of these provisions on their particular tax situation.

The Trust

In the opinion of Paul, Hastings, Janofsky & Walker LLP, special counsel for
the Sponsor, under existing law as of the date of this Prospectus:

The Trusts are not associations taxable as corporations for Federal
income tax purposes,

B-9
<PAGE>

and interest on the Bonds that is excludible from Federal gross income when
received by the Trusts will be excludible from the Federal gross income of
the Holders. Any proceeds paid under the insurance policies described above
issued to the Trusts with respect to the Bonds and any proceeds paid under
individual policies obtained by issuers of Bonds or other parties that
represent maturing interest on defaulted obligations held by the Trusts
will be excludible from Federal gross income to the same extent as such
interest would have been excludable if paid in the normal course by the
issuer of the defaulted obligations.

Each Holder will be considered the owner of a pro rata portion of the
Bonds and any other assets held in the Trust under the grantor trust rules
of the Code. Each Holder will be considered to have received its pro rata
share of income from Bonds held by the Trust on receipt by the Trust (or
earlier accrual, depending on the Holder's method of accounting and
depending on the existence of any original issue discount on the Bonds),
and each Holder will have a taxable event when an underlying Bond is
disposed of (whether by sale, redemption, or payment at maturity) or when
the Holder sells, exchanges or redeems its Units.

The opinion of Paul, Hastings, Janofsky & Walker LLP, which is set forth
above, as to the tax status of the Trusts is not affected by the provision of
the Trust Agreement that authorizes the acquisition of Replacement Bonds or by
the implementation of the option automatically to reinvest principal and
interest distributions from the Trusts pursuant to the Reinvestment Programs,
described under "Reinvestment Programs" in this Part B.

Other Tax Issues

The Trust may contain Bonds issued with original issue discount. Holders are
required to accrue tax-exempt original issue discount by using the constant
interest method provided for the holders of taxable obligations and to increase
the basis of a tax-exempt obligation by the amount of any accrued tax-exempt
original issue discount. These provisions are applicable to obligations issued
after September 3, 1982 and acquired after March 1, 1984. The Trust's tax basis
(and the Holder's tax basis) in a Bond is increased by any tax-exempt accrued
original issue discount. For Bonds issued after June 9, 1980 that are redeemed
prior to maturity, the difference between the Trust's basis, as adjusted, and
the amount received will be taxable gain or loss to the Unit holders.

Holders should consult their own tax advisors with respect to the state and
local tax consequences of owning original issue discount bonds. It is possible
that in determining state and local taxes, interest on tax-exempt bonds issued
with original issue discount may be deemed to be received in the year of
accrual even though there is no corresponding cash payment.

The total cost of a Unit to a Holder, including sales charge, is allocated
among the Bonds held in the Trust (in proportion to the values of each Bond) in
order to determine the Holder's per Unit tax basis for each Bond. The tax basis
reduction requirements of the Code relating to amortization of bond premium
discussed below will apply separately to the per Unit cost of each such Bond.

A Holder will be considered to have purchased its pro rata interest in a Bond
at a premium when it acquires a Unit if its tax cost for its pro rata interest
in the Bond exceeds its pro rata interest in the Bond's face amount (or the
issue price plus accrued original issue discount of an original issue discount
bond). The Holder will be required to amortize any premium over the period
remaining before the maturity or call date of the Bond. Amortization of premium
on a Bond will reduce a Holder's tax basis for its pro rata interest in the
Bond, but will not result in any deduction from the Holder's income. Thus, for
example, a Holder who purchases a Unit at a price that results in a Bond
premium and resells it

B-10
<PAGE>

at the same price will recognize taxable gain equal to the portion of the
premium that was amortized during the period the Holder is considered to have
held such interest.

Bond premium must be amortized under the method the Holder regularly employs
for amortizing bond premium (assuming such method is reasonable). With respect
to a callable bond, the premium must be computed with respect to the call price
and be amortized to the first call date (and successively to later call dates
based on the call prices for those dates).

Gain (or loss) realized on a sale, maturity or redemption of the Bonds or on
a sale or redemption of a Unit is includible in gross income for Federal, state
and local income tax purposes. That gain (or loss) will be capital gain (or
loss), assuming that the Unit is held as a capital asset, except for any
accrued interest, accrued original issue discount or accrued market discount.
When a Bond is sold by the Trust, taxable gain or loss will be realized by the
Holder equal the difference between (i) the amount received (excluding the
portion representing accrued interest) and (ii) the adjusted basis (including
any accrued original issue discount). Taxable gain (or loss) will also result
if a Unit is sold or redeemed for an amount different from its adjusted basis
to the Holder. The amount received when a Unit is sold or redeemed is allocated
among all the Bonds in the Trust in the same manner if the Trust had disposed
of the Bonds, and the Holder may exclude accrued interest, including any
accrued original issue discount, but not amounts attributable to market
discount. The return of a Holder's tax basis is otherwise a tax-free return of
capital.

A Holder may acquire its Units, or the Trust may acquire Bonds at a price
that represents a market discount for the Bonds. Bonds purchased at a market
discount tend to increase in market value as they approach maturity, when the
principal amount is payable, thus increasing the potential for taxable gain (or
reducing the potential for loss) on their redemption, maturity or sale. Gain on
the disposition of a Bond purchased at a market discount generally will be
treated as taxable ordinary income, rather than capital gain, to the extent of
any accrued market discount.

Long-term capital gains realized by non-corporate Holders (with respect to
Units and Bonds held for more than one year) will be taxed at a maximum federal
income tax rate of 20%, while ordinary income and short-term capital gains
received by non-corporate Holders will be taxed at a maximum federal income tax
rate of 39.6%. The deductibility of capital losses is limited to the amount of
capital gain; in addition, up to $3,000 of capital losses of noncorporate
Holders ($1,500 in the case of married individuals filing separate returns) may
be deducted against ordinary income. Since the proceeds from the sale of Bonds,
under certain circumstances, may not be distributed pro-rata, a Holder's
taxable income or gain for any year may exceed its actual cash distributions in
that year.

If the Trust purchases any units of a previously issued unit investment trust
series, based on the opinion of counsel with respect to such series the Trust's
pro rata ownership interest in the bonds of such series (or any previously
issued series) will be treated as though it were owned directly by the Trust.

Among other things, the Code provides for the following: (1) interest on
certain private activity bonds is an item of tax preference included in the
calculation of alternative minimum tax, however bond counsel has opined that
none of the Bonds in the Trust are covered by this provision; (2) 75% of the
amount by which adjusted current earnings (including interest on all tax-exempt
bonds) exceed alternative minimum taxable income, as modified for this
calculation, will be included in corporate alternative minimum taxable income;
(3) subject to certain exceptions, no financial institution is allowed a
deduction for interest expense allocable to tax-exempt interest on bonds
acquired after August 7, 1986; (4) the amount of the deduction allowed to
property and casualty insurance companies for

B-11
<PAGE>

underwriting loss is decreased by an amount determined with regard to tax-
exempt interest income and the deductible portion of dividends received by such
companies; (5) an issuer must meet certain requirements on a continuing basis
in order for interest on a bond to be tax-exempt, with failure to meet such
requirements resulting in the loss of tax exemption; and (6) the branch profits
tax on U.S. branches of foreign corporations may have the effect of taxing a
U.S. branch of a foreign corporation on the interest on bonds otherwise exempt
from tax.

The Code provides that a portion of social security benefits is includible in
taxable income for taxpayers whose "modified adjusted gross income" combined
with a portion of their social security benefits exceeds a base amount. The
base amount is $32,000 for a married couple filing a joint return, zero for
married persons filing separate returns and not living apart at all times
during the year, and $25,000 for all others. Interest on tax-exempt bonds is
added to adjusted gross income for purposes of determining whether an
individual's income exceeds this base amount.

Certain S corporations, with accumulated earnings and profits from years in
which they were subject to regular corporate tax, may be subject to tax on tax-
exempt interest.

If borrowed funds are used by a Holder to purchase or carry Units of the
Trust, interest on such indebtedness will not be deductible for Federal income
tax purposes. Fees and expenses of the Trust will also not be deductible. Under
rules used by the Internal Revenue Service, the purchase of Units may be
considered to have been made with borrowed funds even though the borrowed funds
are not directly traceable to the purchase of Units. Similar rules are
applicable for purposes of state and local taxation.

After the end of each calendar year, the Trustee will furnish to each Holder
an annual statement containing information relating to the interest received by
the Trust on the Bonds, the gross proceeds received by the Trust from the
disposition of any Bond (resulting from redemption or payment at maturity of
any Bond or the sale by the Trust of any Bond), and the fees and expenses paid
by the Trust. The Trustee will also furnish annual information returns to each
Holder and to the Internal Revenue Service. Holders are required to report to
the Internal Revenue Service the amount of tax-exempt interest received during
the year.

EXPENSES AND CHARGES

Initial Expenses

Investors will reimburse the Sponsor on a per Unit basis, all or a portion of
the estimated costs incurred in organizing each Trust including the cost of the
initial preparation of documents relating to a Trust, Federal and State
registration fees, the initial fees and expenses of the Trustee, legal expenses
and any other out-of-pocket expenses. The estimated organization costs will be
paid to the Sponsor from the assets of a Trust as of the close of the initial
public offering period. To the extent that actual organization costs are less
than the estimated amount, only the actual organization costs will be deducted
from the assets of a Trust. To the extent that actual organization costs are
greater than the estimated amount, only the estimated organization costs added
to the Public Offering Price will be reimbursed to the Sponsor. Any balance of
the costs incurred in establishing a Trust, as well as advertising and selling
expenses and other out-of-pocket expenses will be paid at no cost to the
Trusts.

Fees

The Trustee's, Evaluator's and Sponsor's fees are set forth under the Summary
of Essential Information. The Trustee receives for its services as Trustee
payable in monthly installments, the amount set forth under Summary of
Essential Information. The Trustee's fee is based on the principal amount of
Bonds contained in the Trust during the preceding month. The Trustee also
receives benefits to the extent that it holds funds on deposit in the various
non-interest bearing accounts created under the Indenture.

B-12
<PAGE>

The Evaluator's fee, which is earned for Bond evaluations, is received for
each evaluation of the Bonds in a Trust as set forth under Summary of Essential
Information.

The Sponsor's fee, which is earned for trust supervisory services, is based
on the largest number of Units outstanding during the year. The Sponsor's fee,
which is not to exceed the maximum amount set forth under Summary of Essential
Information, may exceed the actual costs of providing supervisory services for
the Trust. However, at no time will the total amount the Sponsor receives for
trust supervisory services rendered to all series of Tax Exempt Securities
Trusts in any calendar year exceed the aggregate cost to it of supplying these
services in that year. In addition, the Sponsor may also be reimbursed for
bookkeeping or other administrative services provided to the Trust in amounts
not exceeding its cost of providing those services.

The fees of the Trustee, Evaluator and Sponsor may be increased without
approval of Holders in proportion to increases under the classification "All
Services Less Rent" in the Consumer Price Index published by the United States
Department of Labor.

Other Charges

The following additional charges are or may be incurred by a Trust: all
expenses of the Trustee (including fees and expenses of counsel and auditors)
incurred in connection with its activities under the Trust Agreement, including
reports and communications to Holders; expenses and costs of any action
undertaken by the Trustee to protect a Trust and the rights and interests of
the Holders; fees of the Trustee for any extraordinary services performed under
the Trust Agreement; indemnification of the Trustee for any loss or liability
accruing to it without gross negligence, bad faith or willful misconduct on its
part, arising out of or in connection with its acceptance or administration of
a Trust.

To the extent lawful, the Trust will also pay expenses associated with
updating the Trusts' registration statements and maintaining registration or
qualification of the Units and/or a Trust under Federal or state securities
laws subsequent to initial registration. Such expenses shall include legal
fees, accounting fees, typesetting fees, electronic filing expenses and
regulatory filing fees. The expenses associated with updating registration
statements have been historically paid by a unit investment trust's sponsor.
Any payments received by the Sponsor reimbursing it for payments made to update
Trusts' registration statements will not exceed the costs incurred by the
Sponsors.

The Trusts shall further incur expenses associated with all taxes and other
governmental charges imposed upon the Bonds or any part of a Trust (no such
taxes or charges are being levied or made or, to the knowledge of the Sponsor,
contemplated). The above expenses, including the Trustee's fee, when paid by or
owing to the Trustee, are secured by a lien on the Trust. In addition, the
Trustee is empowered to sell Bonds in order to make funds available to pay all
expenses. All direct distribution expenses of the Trusts (including the costs
of maintaining the secondary market for the Trusts), such as printing and
distributing prospectuses, and preparing, printing and distributing any
advertisements or sales literature, will be paid at no cost to the Trusts.

PUBLIC OFFERING

Offering Price

During the initial public offering period, the Public Offering Price of the
Units is determined by adding to the Evaluator's determination of the aggregate
offering price of the Bonds per Unit a sales charge equal to a percentage of
the Public Offering Price of the Units, as set forth in the table below. In
addition, during the initial public offering period a portion of the Public
Offering Price per Unit also consists of cash in an amount sufficient to pay
the per Unit portion of all or a part of the cost

B-13
<PAGE>

incurred in organizing and offering a Trust. After the initial public offering
period, the Public Offering Price of the Units of a Trust will be determined by
adding to the Evaluator's determination of the aggregate bid price of the Bonds
per Unit a sales charge equal to 4.00% of the Public Offering Price (4.167% of
the aggregate bid price of the Bonds per Unit) for an Intermediate Term Trust
and 5% of the Public Offering Price (5.263% of the aggregate bid price of the
Bonds per Unit) for a National or State Trust. A proportionate share of accrued
and undistributed interest on the Bonds in a Trust at the date of delivery of
the Units to the purchaser is also added to the Public Offering Price.

During the initial public offering period, the sales charge and dealer
concession for the National and State Trusts will be reduced as follows:

<TABLE>
<CAPTION>
Percent of Percent of
Public Net Amount Dealer
Units Purchased+ Offering Price Invested Concession
---------------- -------------- ---------- ----------
<S> <C> <C> <C>
1-99 4.70% 4.932% $33.00
100-249 4.25% 4.439% $32.00
250-499 4.00% 4.167% $30.00
500-999 3.50% 3.627% $25.00
1,000 or more 3.00% 3.093% $20.00
</TABLE>
------------
+ The reduced sales charge is also applied on a dollar basis utilizing a
breakpoint equivalent in the above table of $1,000 for one Unit, etc. Units
held in the name of the spouse or child under the age of 21 of the purchaser
are deemed to be registered in the name of the purchaser for purposes of
calculating the applicable sales charge.

During the initial offering period, the sales charge and dealer concession
for the Intermediate Term Trusts will be reduced as follows:

The holders of units of any unit investment trust (the "Exchangeable Series")
may exchange units of the Exchangeable Series for Units of a Trust of this
Series at their relative net asset values, subject to a fixed sales charge of
$25 per Unit. See "Exchange Option" herein.

The Sponsor may at any time change the amount by which the sales charge is
reduced, or discontinue the discount completely.

Employees of the Sponsor and its subsidiaries, affiliates and employee-
related accounts may purchase Units at a Public Offering Price equal to the
Evaluator's determination of the aggregate offering price of the Bonds per Unit
plus a sales charge of .50%. In addition, during the initial public offering
period a portion of the Public Offering Price per Unit also consists of cash in
an amount sufficient to pay the per Unit portion of all or a part of the cost
incurred in organizing and offering a Trust. After the initial public offering
period such purchases may be made at a Public Offering Price equal to the
Evaluator's determination of the aggregate bid price of the Bonds per Unit plus
a sales charge of .50%. Sales through such plans to employees of the Sponsor
result in less selling effort and selling expenses than sales to the general
public. Participants in the Smith Barney Asset OneSM Program and in the
Reinvestment Program of any series of the Trust may purchase Units at a Public
Offering Price equal to the Evaluator's determination of the aggregate offering
price of the Bonds (plus cash held by the Trust for organization and offering
costs) per Unit during the initial offering period and after the initial
offering period at a Public Offering Price equal to the Evaluator's
determination of the aggregate bid price of the Bonds per Unit. Participants in
the Smith Barney Asset OneSM Program are subject to certain fees for specified
securities brokerage and execution services.

Method of Evaluation

During the initial public offering period, the aggregate offering price of
the Bonds is determined

B-14
<PAGE>

by the Evaluator (1) on the basis of current offering prices for Bonds, (2) if
offering prices are not available for any Bonds, on the basis of current
offering prices for comparable securities, (3) by appraisal, or (4) by any
combination of the above. Such determinations are made each business day as of
the Evaluation Time set forth in the Summary of Essential Information.
Following the initial public offering period, the aggregate bid price of the
Bonds will be determined by the Evaluator (1) on the basis of the current bid
prices for the Bonds, (2) if bid prices are not available for any Bonds, on the
basis of current bid prices of comparable securities, (3) by appraisal, or (4)
by any combination of the above. Such determinations will be made each business
day as of the Evaluation Time set forth in the Summary of Essential
Information. The term "business day," as used herein shall exclude Saturdays,
Sundays and any day on which the New York Stock Exchange is closed. The
difference between the bid and offering prices of the Bonds may be expected to
average approximately 1 1/2% of principal amount of the Bonds. In the case of
actively traded securities, the difference may be as little as 1/2 of 1%, and
in the case of inactively traded securities such difference will usually not
exceed 3%. On the Date of Deposit for each Trust the aggregate current offering
price of such Bonds per Unit exceeded the bid price of such Bonds per Unit by
the amounts set forth under Summary of Essential Information.

Distribution of Units

During the initial public offering period Units of a Trust will be
distributed to the public at the Public Offering Price through the Underwriters
and dealers. The initial public offering period is 30 days unless all Units of
a Trust are sold prior thereto, in which case the initial public offering
period terminates with the sale of all Units. So long as all Units initially
offered have not been sold, the Sponsor may extend the initial public offering
period for up to four additional successive 30-day periods. Upon completion of
the initial public offering, Units which remain unsold or which may be acquired
in the secondary market may be offered by this Prospectus at the Public
Offering Price determined in the manner provided for secondary market sales.

It is the Sponsor's intention to qualify Units of a Trust for sale through
the Underwriters and dealers who are members of the National Association of
Securities Dealers, Inc. Units of a State Trust will be offered for sale only
in the State for which the Trust is named, except that Units of a New York
Trust will also be offered for sale to residents of the State of Connecticut,
the State of Florida and the Commonwealth of Puerto Rico. Units will initially
be sold to dealers at prices which represent a concession equal to the amount
designated in the tables under "Public Offering--Offering Price." The Sponsor
reserves the right to change the amount of the concession to dealers from time
to time and to vary the amount of the concession to affiliated dealers. After
the initial offering period the dealer concession is negotiated on a case-by-
case basis.

Sales will be made only with respect to whole Units, and the Sponsor reserves
the right to reject, in whole or in part, any order for the purchase of Units.
A purchaser does not become a Holder or become entitled to exercise the rights
of a Holder (including the right to redeem his Units) until he has paid for his
Units. Generally, such payment must be made within five business days after an
order for the purchase of Units has been placed. The price paid by a Holder is
the Public Offering Price in effect at the time his order is received, plus
accrued interest. This price may be different from the Public Offering Price in
effect on any other day, including the day on which he made payment for the
Units.

Market for Units

While the Sponsor is not obligated to do so, its intention is to maintain a
market for the Units of a Trust and continuously to offer to purchase such
Units at prices based upon the aggregate bid price of the underlying Bonds. The
Sponsor may cease to maintain such a market at any time and from time to time
without notice if the supply of Units of a Trust

B-15
<PAGE>

of this Series exceeds demand or for any other reason. In this event the
Sponsor may nonetheless purchase Units at prices based on the current
Redemption Price of those Units. In the event that a market is not maintained
for the Units of a Trust, a Holder desiring to dispose of its Units may be able
to do so by tendering such Units to the Trustee for redemption at the
Redemption Price.

Exchange Option

Holders may exchange their Units of this Series for units of any series of
Tax Exempt Securities Trust (the "Exchange Trust") available for sale in the
state in which the Holder resides. Such exchange will be at a Public Offering
Price for the units of the Exchange Trust to be acquired based on a fixed sales
charge of $25 per unit. The terms of the Exchange Option will also apply to
holders who wish to exchange units of an Exchangeable Series for Units of a
Trust of this Series. The Sponsor reserves the right to modify, suspend or
terminate this plan at any time without further notice to Holders. Therefore,
there is no assurance that the Exchange Option will be available to a Holder.
Exchanges will be effected in whole units only. If the proceeds from the Units
being surrendered are less than the cost of a whole number of units being
acquired, the exchanging Holder will be permitted to add cash in an amount to
round up to the next highest number of whole units.

An exchange of Units pursuant to the Exchange Option for units of an Exchange
Trust, or units of an Exchangeable Series for Units of a Trust, will generally
constitute a taxable event under the Code, i.e., a Holder will recognize a gain
or loss at the time of exchange. However, an exchange of Units of this Trust
for units of any other series of the Tax Exempt Securities Trust, or units of
an Exchangeable Series for Units of a Trust of this Series, which are grantor
trusts for U.S. Federal income tax purposes, will not constitute a taxable
event to the extent that the underlying securities in each trust do not differ
materially either in kind or in extent. Holders are urged to consult their own
tax advisors as to the tax consequences to them of exchanging Units in
particular cases.

Units of the Exchange Trust or a Trust of this Series will be sold under the
Exchange Option at the bid prices (for trusts being offered in the secondary
market) and offer prices (for trusts being offered in the primary market) of
the underlying securities in the particular portfolio involved per unit plus a
fixed charge of $25 per unit. Sales to dealers will be made at prices which
represent a concession. The amount of the concession will be established at the
time of sale by the Sponsor. As an example, assume that a Holder, who has three
units of a trust with a current price of $1,020 per unit based on the bid
prices of the underlying securities, desires to exchange his Units for units of
a series of an Exchange Trust with a current price of $880 per unit based on
the bid prices of the underlying securities. In this example, the proceeds from
the Holder's units will aggregate $3,060. Since only whole units of an Exchange
Trust or a Trust may be purchased under the Exchange Option, the Holder would
be able to acquire three units in the Exchange Trust for a total cost of $2,715
($2,640 for the units and $75 for the sales charge) and would also receive $345
for the fractional Unit.

Reinvestment Programs

Distributions of interest and/or principal are made to Holders monthly. The
Holder has the option of either receiving a monthly income check from the
Trustee or participating in one of the reinvestment programs offered by the
Sponsor provided such Holder meets the minimum qualifications of the
reinvestment program and such program lawfully qualifies for sale in the
jurisdiction in which the Holder resides. Upon enrollment in a reinvestment
program, the Trustee will direct monthly interest distributions and principal
distributions to the reinvestment program selected by the Holder. Since the
Sponsor has arranged for different reinvestment alternatives Holders should
contact the Sponsor for more complete information, including charges and

B-16
<PAGE>

expenses. The appropriate prospectus will be sent to the Holder. The Holder
should read the prospectus for a reinvestment program carefully before deciding
to participate. Participation in the reinvestment program will apply to all
Units of a Trust owned by a Holder and may be terminated at any time by the
Holder. The program may also be modified or terminated by the Trustee or the
program's Sponsor.

Sponsor's and Underwriters' Profits

The Underwriters receive a commission based on the sales charge of a
particular Trust as adjusted pursuant to the agreement among Underwriters. The
Sponsor receives a gross commission equal to the applicable sales charge for
any Units they have underwritten, and receive the difference between the
applicable sales charge and the Underwriter's commission for the remainder of
the Units. In addition, the Sponsor may realize profits or sustain losses in
the amount of any difference between the cost of the Bonds to a Trust and the
purchase price of such Bonds to the Sponsor. Under certain circumstances, an
Underwriter may be entitled to share in such profits, if any, realized by the
Sponsor. The Sponsor may also realize profits or sustain losses with respect to
Bonds deposited in a Trust which were acquired from its own organization or
from underwriting syndicates of which it was a member. During the initial
public offering period the Underwriters also may realize profits or sustain
losses as a result of fluctuations after the Date of Deposit in the offering
prices of the Bonds and hence in the Public Offering Price received by the
Underwriters for Units. Cash made available to the Sponsor prior to the
anticipated first settlement date for the purchase of Units may be used in the
Sponsor's businesses to the extent permitted by applicable regulations.

In maintaining a market for the Units the Sponsor will also realize profits
or sustain losses in the amount of any difference between the price at which
they buy such Units and the price at which they resell or redeem such Units.

RIGHTS OF HOLDERS

Certificates

Ownership of Units may be evidenced by registered certificates executed by
the Trustee and the Sponsor. Certificates are transferable by presentation and
surrender to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer.

Certificates may be issued in denominations of one Unit or any multiple
thereof. A Holder may be required to pay $2.00 per certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or interchange. For new certificates issued
to replace destroyed, stolen or lost certificates, the Holder must furnish
indemnity satisfactory to the Trustee and must pay such expenses as the Trustee
may incur. Mutilated certificates must be surrendered to the Trustee for
replacement.

Distribution of Interest and Principal

Interest and principal received by a Trust will be distributed on each
monthly Distribution Date on a pro rata basis to Holders of record in such
Trust as of the preceding Record Date. All distributions will be net of
applicable expenses and funds required for the redemption of Units and, if
applicable, reimbursements to the Trustee for interest payments advanced to
Holders on previous Distribution Dates.

The Trustee will credit to the Interest Account of a Trust all interest
received by such Trust, including that part of the proceeds of any disposition
of Bonds of such Trust which represents accrued interest. Other receipts will
be credited to the Principal Account of a Trust. The pro rata share of the
Interest Account and the pro rata share of cash in the Principal Account
represented by each Unit of a Trust will be computed by the Trustee each month
as of the Record Date. Proceeds received from the disposition of any of the
Bonds subsequent to a Record Date and prior to the next succeeding Distribution
Date will be held in the Principal Account and will not be distributed until
the

B-17
<PAGE>

following Distribution Date. The distribution to the Holders as of each Record
Date will be made on the following Distribution Date or shortly thereafter.
Such distributions shall consist of an amount substantially equal to one-
twelfth of such Holders' pro rata share of the estimated annual income to the
Interest Account after deducting estimated expenses (the "Monthly Income
Distribution") plus such Holders' pro rata share of the cash balance in the
Principal Account computed as of the close of business on the preceding Record
Date. Persons who purchase Units between a Record Date and a Distribution Date
will receive their first distribution on the second Distribution Date following
their purchase of Units. No distribution need be made from the Principal
Account if the balance therein is less than an amount sufficient to distribute
$5.00 per Unit. The Monthly Income Distribution per Unit initially will be in
the amount shown under Summary of Essential Information for a Trust. The
Monthly Income Distribution will change as the income and expenses of such
Trust change and as Bonds are exchanged, redeemed, paid or sold.

Normally, interest on the Bonds is paid on a semi-annual basis. Because Bond
interest is not received by a Trust at a constant rate throughout the year any
Monthly Income Distribution may be more or less than the amount credited to the
Interest Account as of the Record Date. In order to eliminate fluctuations in
Monthly Income Distributions resulting from such variances, the Trustee is
required by the Trust Agreement to advance such amounts as may be necessary to
provide Monthly Income Distributions of approximately equal amounts. The
Trustee will then be reimbursed, without interest, for any such advances from
funds available from the Interest Account on the next ensuing Record Date. If
all or a portion of the Bonds for which advances have been made subsequently
fail to pay interest when due, the Trustee may recoup such advances by reducing
the amount distributed per Unit in one or more Monthly Interest Distributions.
If Units are redeemed subsequent to such advances by the Trustee, each
remaining Holder will be subject to a greater pro rata reduction in his Monthly
Interest Distribution. To the extent it is unable to recoup advances from the
Interest Account, the Trustee is also entitled to withdraw from the Principal
Account. Funds which are available for future distributions, payments of
expenses and redemptions are in accounts which are non-interest bearing to
Holders and are available for use by The Chase Manhattan Bank pursuant to
normal banking procedures. The Trustee is entitled to the benefit of any
reasonable cash balances in the Income and Principal Accounts. Because of the
varying interest payment dates of the Bonds, accrued interest may at any point
in time be greater than the amount of interest distributed to Holders. This
excess accrued but undistributed interest amount will be added to the value of
the Units on any purchase made after the Date of Deposit. If a Holder sells all
or a portion of his Units a portion of his sale proceeds will be allocable to
his proportionate share of the accrued interest. Similarly, if a Holder redeems
all or a portion of his Units, the Redemption Price per Unit which he is
entitled to receive from the Trustee will also include his accrued interest on
the Bonds.

As of the first day of each month the Trustee will deduct from the Interest
Account of a Trust amounts necessary to pay the expenses of such Trust. To the
extent there are not sufficient funds in the Interest Account to pay Trust
expenses, the Trustee is also entitled to withdraw from the Principal Account.
The Trustee also may withdraw from the accounts such amounts it deems necessary
to establish a reserve for any governmental charges payable out of a Trust.
Amounts so withdrawn shall not be considered a part of the Trust's assets until
such time as the Trustee returns any part of such amounts to the appropriate
account. In addition, the Trustee may withdraw from the Interest Account and
the Principal Account such amounts as may be necessary to cover redemption of
Units by the Trustee.

The Trustee has agreed to advance to a Trust the amount of accrued interest
due on the Bonds from their respective issue dates or previous interest

B-18
<PAGE>

payment dates through the Date of Deposit. This accrued interest amount will be
paid to the Sponsor as the holder of record of all Units on the first
settlement date for the Units. Consequently, when the Sponsor sells Units of a
Trust, the amount of accrued interest to be added to the Public Offering Price
of the Units purchased by an investor will include only accrued interest from
the day after the Date of Deposit through the date of settlement of the
investor's purchase (normally three business days after purchase), less any
distributions from the Interest Account. The Trustee will recover its advances
to a Trust (without interest or other cost to such Trust) from interest
received on the Bonds deposited in such Trust.

Reports and Records

The Trustee shall furnish Holders in connection with each distribution a
statement of the amount of interest and the amount of other receipts which are
being distributed, expressed in each case as a dollar amount per Unit. In the
event that the issuer of any of the Bonds fails to make payment when due of any
interest or principal and such failure results in a change in the amount which
would otherwise be distributed as a monthly distribution, the Trustee will,
with the first such distribution following such failure, set forth in an
accompanying statement, the issuer and the Bond, the amount of the reduction in
the distribution per Unit resulting from such failure, the percentage of the
aggregate principal amount of Bonds which such Bond represents and information
regarding any disposition or legal action with respect to such Bond. Within a
reasonable time after the end of each calendar year, the Trustee will furnish
to each person who at any time during the calendar year was a Holder of record,
a statement (1) as to the Interest Account: interest received, deductions for
payment of applicable taxes and for fees and expenses of a Trust, redemptions
of Units and the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount representing the
pro rata share of each Unit outstanding on the last business day of such
calendar year; (2) as to the Principal Account: the dates of disposition of any
Bonds and the net proceeds received therefrom (excluding any portion
representing interest), deductions for payments of applicable taxes and for
fees and expenses of a Trust, redemptions of Units, and the balance remaining
after such distributions and deductions, expressed both as a total dollar
amount and as a dollar amount representing the pro rata share of each Unit
outstanding on the last business day of such calendar year; (3) a list of the
Bonds held and the number of Units outstanding on the last business day of such
calendar year; (4) the Redemption Price per Unit based upon the last
computation thereof made during such calendar year; and (5) amounts actually
distributed during such calendar year from the Interest Account and from the
Principal Account. The accounts of a Trust shall be audited not less frequently
than annually by independent auditors designated by the Sponsor, and the report
of such auditors shall be furnished by the Trustee to Holders upon request.

The Trustee shall keep available for inspection by Holders at all reasonable
times during usual business hours, books of record and account of its
transactions as Trustee including records of the names and addresses of
Holders, certificates issued or held, a current list of Bonds in the Portfolio
of a Trust and a copy of the Trust Agreement.

Redemption of Units

Units may be tendered to the Trustee for redemption at its unit investment
trust office at 4 New York Plaza, New York, New York 10004, upon payment of any
relevant tax. At the present time there are no specific taxes related to the
redemption of the Units. No redemption fee will be charged by the Sponsor or
the Trustee. Units redeemed by the Trustee will be canceled.

Certificates for Units to be redeemed must be properly endorsed or
accompanied by a written instrument of transfer. Holders must sign exactly as
their name appears on the face of the certificate with the signature guaranteed
by an officer of a national

B-19
<PAGE>

bank or trust company or by a member of either the New York, Midwest or Pacific
Stock Exchange. 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 such tender, the Holder will be entitled
to receive in cash an amount for each Unit tendered equal to the Redemption
Price per Unit. The "date of tender" is deemed to be the date on which Units
are received by the Trustee, except as regards Units received after the close
of trading on the New York Stock Exchange, the date of tender is the next day
on which such Exchange is open for trading.

Accrued interest paid on redemption shall be withdrawn from the Interest
Account, or, if the balance therein is insufficient, from the Principal
Account. All other amounts paid on redemption shall be withdrawn from the
Principal Account. The Trustee is empowered to sell Bonds in order to make
funds available for redemption. Such sales could result in a sale of Bonds by
the Trustee at a loss. To the extent Bonds are sold the size and diversity of a
Trust will be reduced.

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 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 underlying Bonds is not reasonably practicable, or for such other periods
as the Securities and Exchange Commission has by order permitted.

Computation of Redemption Price per Unit

The Redemption Price per Unit of a Trust is determined by the Trustee on the
basis of the bid prices of the Bonds in such Trust as of the Evaluation Time on
the date any such determination is made. The Redemption Price per Unit of a
Trust is each Unit's pro rata share, determined by the Trustee, of: (1) the
aggregate value of the Bonds in such Trust on the bid side of the market
(determined by the Evaluator as set forth below), (2) cash on hand in such
Trust (other than funds covering contracts to purchase Bonds), and accrued and
unpaid interest on the Bonds as of the date of computation, less (a) amounts
representing taxes or governmental charges payable out of such Trust, (b) the
accrued expenses of such Trust, and (c) cash held for distribution to Holders
of such Trust of record as of a date prior to the evaluation. As of the close
of the initial public offering period the Redemption Price per Unit will be
reduced to reflect the organization costs per Unit of a Trust. To the extent
that actual organization costs are less than the estimated amount, only the
actual organization costs will be deducted from the assets of a Trust.

Purchase by the Sponsor of Units Tendered for Redemption

The Trust Agreement requires that the Trustee notify the Sponsor of any
tender of Units for redemption. So long as the Sponsor maintains a bid in the
secondary market, the Sponsor, prior to the close of business on the second
succeeding business day, will purchase any Units tendered to the Trustee. Such
a purchase by the Sponsor will be at the price so bid by making payment to the
Holder in an amount not less than the Redemption Price and not later than the
day on which the Units would otherwise have been redeemed by the Trustee.

The offering price of any Units resold by the Sponsor will be the Public
Offering Price determined in the manner provided in this Prospectus. Any profit
resulting from the resale of such Units will belong to the Sponsor. The Sponsor
likewise will bear any loss resulting from a lower offering or redemption price
subsequent to their acquisition of such Units.

B-20
<PAGE>

SPONSOR

Salomon Smith Barney Inc. ("Salomon Smith Barney"), was incorporated in
Delaware in 1960 and traces its history through predecessor partnerships to
1873. On September 1, 1998, Salomon Brothers Inc. merged with and into Smith
Barney Inc. ("Smith Barney") with Smith Barney surviving the merger and
changing its name to Salomon Smith Barney Inc. The merger of Salomon Brothers
Inc. and Smith Barney followed the merger of their parent companies in November
1997. Salomon Smith Barney, an investment banking and securities broker-dealer
firm, is a member of the New York Stock Exchange, Inc. and other major
securities and commodities exchanges, the National Association of Securities
Dealers, Inc. and the Securities Industry Association. Salomon Smith Barney is
an indirect wholly-owned subsidiary of Citigroup Inc. Salomon Smith Barney or
an affiliate is investment adviser, principal underwriter or distributor of 60
open-end investment companies and investment manager of 12 closed-end
investment companies. Salomon Smith Barney also sponsors all Series of
Corporate Securities Trust, Government Securities Trust, Harris, Upham Tax-
Exempt Fund and Tax Exempt Securities Trust, and acts as sponsor of most Series
of Defined Assets Funds.

Limitations on Liability

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
Holders for taking any action or refraining from any action in good faith or
for errors in judgment. The Sponsor shall also not be responsible in any way
for depreciation or loss incurred by reason of the sale of any Bonds, except in
cases of willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties.

Responsibility

Although the Trusts are not actively managed as mutual funds are, the
portfolios are reviewed periodically on a regular cycle. The Sponsor is
empowered to direct the Trustee to dispose of Bonds when certain events occur
that adversely affect the value of the Bonds. Such events include: default in
payment of interest or principal, default in payment of interest or principal
on other obligations of the same issuer, institution of legal proceedings,
default under other documents adversely affecting debt service, decline in
price or the occurrence of other market or credit factors, or decline in
projected income pledged for debt service on revenue Bonds and advanced
refunding that, in the opinion of the Sponsor, may be detrimental to the
interests of the Holders. The Sponsor intends to provide Portfolio supervisory
services for each Trust in order to determine whether the Trustee should be
directed to dispose of any such Bonds.

It is the responsibility of the Sponsor to instruct the Trustee to reject any
offer made by an issuer of any of the Bonds to issue new obligations in
exchange and substitution for any Bonds pursuant to a refunding or refinancing
plan. However, the Sponsor may instruct the Trustee to accept such an offer or
to take any other action with respect thereto as the Sponsor may deem proper if
the issuer is in default with respect to such Bonds or in the judgment of the
Sponsor the issuer will probably default in respect to such Bonds in the
foreseeable future.

Any obligations so received in exchange or substitution will be held by the
Trustee subject to the terms and conditions of the Trust Agreement to the same
extent as Bonds originally deposited thereunder. Within five days after the
deposit of obligations in exchange or substitution for underlying Bonds the
Trustee is required to give notice thereof to each Holder, identifying the
Bonds eliminated and the Bonds substituted therefor. Except as stated in this
and the preceding paragraph, the acquisition by a Trust of any securities other
than the Bonds initially deposited in the Trust is prohibited.

Resignation

If the Sponsor resigns or becomes unable to perform its duties under the
Trust Agreement, and no express provision is made for action by the Trustee in
such event, the Trustee may appoint a

B-21
<PAGE>

successor sponsor or terminate the Trust Agreement and liquidate the Trusts.

TRUSTEE

The Trustee is The Chase Manhattan Bank with its principal executive office
located at 270 Park Avenue, New York, New York 10017 and its unit investment
trust office at 4 New York Plaza, New York, New York 10004. The Trustee is
subject to supervision by the Superintendent of Banks of the State of New York,
the Federal Deposit Insurance Company and the Board of Governors of the Federal
Reserve System. In connection with the storage and handling of certain Bonds
deposited in the Trust, the Trustee may use the services of The Depository
Trust Company. These services may include safekeeping of the Bonds and coupon-
clipping, computer book-entry transfer and institutional delivery services. The
Depository Trust Company is a limited purpose trust company organized under the
Banking Law of the State of New York, a member of the Federal Reserve System
and a clearing agency registered under the Securities Exchange Act of 1934.

Limitations on Liability

The Trustee shall not be liable or responsible in any way for depreciation or
loss incurred by reason of the disposition of any moneys, securities or
certificates or in respect of any evaluation or for any action taken in good
faith reliance on prima facie properly executed documents except in cases of
willful misfeasance, bad faith, gross negligence or reckless disregard for its
obligations and duties. In addition, the Trustee shall not be personally liable
for any taxes or other governmental charges imposed upon or in respect of a
Trust which the Trustee may be required to pay under current or future law of
the United States or any other taxing authority having jurisdiction.

Resignation

By executing an instrument in writing and filing the same with the Sponsor,
the Trustee and any successor may resign. In such an event the Sponsor is
obligated to appoint a successor trustee as soon as possible. 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. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor trustee.
If no successor has accepted the appointment within thirty days after notice of
resignation, the retiring trustee may apply to a court of competent
jurisdiction for the appointment of a successor. The resignation or removal of
a trustee becomes effective only when the successor trustee accepts its
appointment as such or when a court of competent jurisdiction appoints a
successor trustee.

EVALUATOR

The Evaluator is Kenny S&P Evaluation Services, a division of J.J. Kenny
Company, Inc., a subsidiary of The McGraw-Hill Companies, Inc., with main
offices located at 65 Broadway, New York, New York 10006.

Limitations on Liability

The Trustee, Sponsor and Holders may rely on any evaluation furnished by the
Evaluator and shall have no responsibility for the accuracy thereof.
Determination 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 Holders for errors in judgment. But this provision shall not
protect the Evaluator in cases of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.

Responsibility

The Trust Agreement requires the Evaluator to evaluate the Bonds of a Trust
on the basis of their bid prices on the last business day of June and December
in each year, on the day on which any Unit of such Trust is tendered for
redemption and on any other day such evaluation is desired by the Trustee or is
requested by the Sponsor.

B-22
<PAGE>

Resignation

The Evaluator may resign or may be removed by the joint action of the Sponsor
and the Trustee. Should such removal occur, 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 a
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.

AMENDMENT AND TERMINATION OF THE TRUST AGREEMENT

Amendment

The Sponsor and the Trustee have the power to amend the Trust Agreement
without the consent of any of the Holders when such an amendment is (1) to cure
any ambiguity or to correct or supplement any provision of the Trust Agreement
which may be defective or inconsistent with any other provision contained
therein, or (2) to make such other provisions as shall not adversely affect the
interests of the Holders. However, the Trust Agreement may not be amended to
increase the number of Units issuable or to permit the deposit or acquisition
of securities either in addition to or in substitution for any of the Bonds
initially deposited in a Trust. In the event of any amendment, the Trustee is
obligated to notify promptly all Holders of the substance of such amendment.

Termination

The Trust Agreement provides that if the principal amount of Bonds held in
Trust is less than 50% of the principal amount of the Bonds originally
deposited in such Trust, the Trustee may in its discretion and will, when
directed by the Sponsor, terminate such Trust. A Trust may be terminated at any
time by 100% of the Holders. However, in no event may a Trust continue beyond
the Mandatory Termination Date set forth under "Summary of Essential
Information." In the event of termination, written notice thereof will be sent
by the Trustee to all Holders. Within a reasonable period after termination,
the Trustee will sell any Bonds remaining in the affected Trust. Then after
paying all expenses and charges incurred by such Trust, the Trustee will
distribute to each Holder, upon surrender for cancellation of his certificate
for Units, his pro rata share of the balances remaining in the Interest and
Principal Account of such Trust.

MISCELLANEOUS

Legal Opinion

The legality of the Units has been passed upon by Paul, Hastings, Janofsky &
Walker LLP, 399 Park Avenue, New York, New York 10022, as special counsel for
the Sponsor.

Auditors

The statements of financial condition and the portfolios of securities
included in this Prospectus have been audited by KPMG LLP, independent
auditors, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing.

Performance Information

Sales material may compare tax-equivalent yields of long-term municipal bonds
to long-term U.S. Treasury bonds and to the Bond Buyer Revenue Bond Index. Such
information is based on past performance and is not indicative of future
results. Yields on taxable investment are generally higher than those of tax-
exempt securities of comparable maturity. While income from municipal bonds is
exempt from federal income taxes, income from Treasuries is exempt from state
and local taxes. Since Treasuries are considered to have the highest possible
credit quality, the difference in yields is somewhat narrower than if compared
to corporate bonds with similar ratings and maturities.

B-23
<PAGE>

BOND RATINGS+

All ratings shown under Part A, "Portfolio of Securities", except those
identified otherwise, are by Standard & Poor's.

Standard & Poor's

A Standard & Poor's corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
debt obligation. This assessment of creditworthiness may take into
consideration obligors such as guarantors, insurers, or lessees. The bond
rating is not a recommendation to purchase or sell a security, inasmuch as it
does not comment as to market price or suitability for a particular investor.
The ratings are based on current information furnished to Standard & Poor's by
the issuer and obtained by Standard & Poor's from other sources it considers
reliable. The ratings may be changed, suspended or withdrawn as a result of
changes in, or unavailability of, such information.

The ratings are based, in varying degrees, on the following considerations:

I. Likelihood of default--capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance
with the terms of the obligation;

II. Nature of and provisions of the obligation; and

III. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangement under the laws
of bankruptcy and other laws affecting creditors' rights.

AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay interest and repay
principal.

AA--Bonds rated AA have a very strong capacity to pay interest and repay
principal, and in the majority of instances they differ from AAA issues only in
small degrees.
------------
+ As described by the rating agencies.

A--Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than bonds in higher-rated categories.

BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in the higher-rated categories.

Plus (+) or Minus (-): To provide more detailed indications of credit
quality, the ratings from "AA" to "BB" may be modified by the addition of a
plus or minus sign to show relative standing within the major rating
categories.

Provisional Ratings: The letter "p" following a rating indicates the rating
is provisional. A provisional rating assumes the successful completion of the
project being financed by the issuance of the bonds being rated and indicates
that payment of debt service requirements is largely or entirely dependent upon
the successful and timely completion of the project. This rating, however,
while addressing credit quality subsequent to completion, makes no comment on
the likelihood of, or the risk of default upon failure of, such completion.
Accordingly, the investor should exercise his own judgment with respect to such
likelihood and risk.

Conditional rating(s), indicated by "Con" are given to bonds for which the
continuance of the security rating is contingent upon Standard & Poor's receipt
of an executed copy of the escrow agreement or closing documentation confirming
investments and cash flows and/or the security rating is conditional upon the
issuance of insurance by the respective insurance company.

Moody's

A brief description of the applicable Moody's rating symbols and their
meanings is as follows:

B-24
<PAGE>

Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. Aa bonds are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuation
of protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than in
Aaa securities.

A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa--Bonds which are rated Baa are considered as medium grade obligations:
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Rating symbols may include numerical modifiers "1," "2," or "3." The
numerical modifier "1" indicates that the security ranks at the high end, "2"
in the mid-range, and "3" nearer the low end of the generic category. These
modifiers of rating symbols "Aa," "A" and "Baa" are to give investors a more
precise indication of relative debt quality in each of the historically defined
categories.

Fitch

AAA--These bonds are considered to be investment grade and of the highest
quality. The obligor has an extraordinary ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA--These bonds are considered to be investment grade and of high quality.
The obligor's ability to pay interest and repay principal, while very strong,
is somewhat less than for AAA rated securities or more subject to possible
change over the term of the issue.

A--These bonds are considered to be investment grade and of good quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.

BBB--These bonds are considered to be investment grade and of satisfactory
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however are more likely to weaken this ability than bonds with
higher ratings.

A "+" or a "-" sign after a rating symbol indicates relative standing in its
rating.

Duff & Phelps

AAA--Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA--High credit quality. Protection factors are strong. Risk is modest but
may vary slightly from time to time because of economic conditions.

A--Protection factors are average but adequate. However, risk factors are
more variable and greater in periods of economic stress.

A "+" or a "-" sign after a rating symbol indicates relative standing in its
rating.

B-25
<PAGE>

FEDERAL TAX FREE VS. TAXABLE INCOME

This table shows the approximate yields which taxable securities must earn
in various income brackets to produce, after Federal income tax, returns
equivalent to specified tax-exempt bond yields. The table is computed on the
theory that the taxpayer's highest bracket tax rate is applicable to the
entire amount of any increase or decrease in his taxable income resulting from
a switch from taxable to tax-exempt securities or vice versa. The table
reflects projected effective Federal income tax rates and tax brackets for the
2000 taxable year. Because the Federal rate brackets are subject to adjustment
based on changes in the Consumer Price Index, the taxable equivalent yields
for subsequent years may vary somewhat from those indicated in the table. Use
this table to find your tax bracket. Read across to determine the approximate
taxable yield you would need to equal a return free of Federal income tax.

2000 Tax Year
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Taxable Income Bracket Tax Exempt Yield
Federal Effective
Tax Federal
Joint Return Single Return Bracket Tax Rate 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
Taxable Equivalent Yield
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-
43,850 $ 0- 26,250 15.00% 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65%
$ 43,851-
105,950 $ 26,251- 63,550 28.00 28.00 5.56 6.25 6.94 7.64 8.33 9.03
$105,951-
128,950 $ 63,551-128,950 31.00 31.00 5.80 6.52 7.25 7.97 8.70 9.42
$128,951-
161,450 $128,951-132,600 31.00 31.93 5.88 6.61 7.35 8.08 8.81 9.55
$161,451-
288,350 $132,601-288,350 36.00 37.08 6.36 7.15 7.95 8.74 9.54 10.33
Over
$288,350 Over $288,350 39.60 40.79 6.76 7.60 8.44 9.29 10.13 10.98
------------------------------------------------------------------------------------------
</TABLE>

Note: This table reflects the following:
1 Taxable income, as reflected in the above table, equals Federal adjusted
gross income (AGI), less personal exemptions and itemized deductions.
However, certain itemized deductions are reduced by the lesser of (i)
three percent of the amount of the taxpayer's AGI over $128,950, or (ii)
80 percent of the amount of such itemized deductions otherwise allowable.
The effect of the three percent phase out on all itemized deductions and
not just those deductions subject to the phase out is reflected above in
the Federal tax rates through the use of higher effective Federal tax
rates. In addition, the effect of the 80 percent cap on overall itemized
deductions is not reflected on this table. Federal income tax rules also
provide that personal exemptions are phased out at a rate of two percent
for each $2,500 (or fraction thereof) of AGI in excess of $193,400 for
married taxpayers filing a joint tax return and $128,950 for single
taxpayers. The effect of the phase out of personal exemptions is not
reflected in the above table.
2 Interest earned on municipal obligations may be subject to the federal
alternative minimum tax. This provision is not incorporated into the
table.
3 The taxable equivalent yield table does not incorporate the effect of
graduated rate structures in determining yields. Instead, the tax rates
used are the highest marginal tax rates applicable to the income levels
indicated within each bracket.
4 Interest earned on all municipal obligations may cause certain investors
to be subject to tax on a portion of their Social Security and/or
railroad retirement benefits. The effect of this provision is not
included in the above table.

B-26
<PAGE>

PROSPECTUS--Part C:
--------------------------------------------------------------------------------

Note: Part C of this Prospectus may not be distributed unless accompanied by
Parts A and B.
--------------------------------------------------------------------------------
TAX EXEMPT SECURITIES TRUST--THE STATE TRUSTS

Potential purchasers of the Units of a State Trust should consider the fact
that the Trust's Portfolio consists primarily of Bonds issued by the state for
which such State Trust is named or its municipalities or authorities and
realize the substantial risks associated with an investment in such Bonds. Each
State Trust is subject to certain additional risk factors. The Sponsor believes
the discussions of risk factors summarized below describe some of the more
significant aspects of the State Trusts. The sources of such information are
the official statements of issuers as well as other publicly available
documents. While the Sponsor has not independently verified this information,
it has no reason to believe that such information is not correct in all
material respects. Investment in a State Trust should be made with an
understanding that the value of the underlying Portfolio may decline with
increases in interest rates.

Florida Trust

Risk Factors --

Population. In 1980, Florida was the seventh most populous state in the U.S.
Florida has grown dramatically since then and as of April 1, 1998, ranks fourth
with an estimated population of 15 million.

. In 1998, about 232,000 more new residents moved into Florida then moved
out.

. The U.S. average population increase since 1990 is about 1.0% annually,
while Florida's average increase is about 1.9% annually.

. Florida continues to be one of the fastest growing of the largest states.

Florida's strong population growth is one reason Florida's economy is
performing better than the U.S. as a whole. In addition to attracting senior
citizens to Florida as a place for retirement, Florida is also recognized as
attracting a significant number of individuals of working age (18-64).

. In recent years, Florida's prime working age population (18-44) has grown
at an average annual rate of more than 2.0%.

. More than 60% of Florida's total population is at the working age (18-
64). This share is not expected to change appreciably into the twenty-
first century.

Income. According to the U.S. Department of Commerce and the Florida Consensus
Economic Estimating Conference, personal income in Florida has been growing
strongly the last several years and has generally performed better than the
U.S. as a whole and the southeast U.S. in particular. This is due to the fact
that Florida's population has been growing at a very strong pace and, since the
early 70's, its economy has diversified providing a broader economic base.

. Florida's real income per person has tracked closely with the U.S.
average and has tracked above the southeast.

Florida has a proportionately greater retirement age population than other
states. As a result, property, income (dividends, interest, and rent), and
transfer payments (Social Security and pension benefits, among other sources of
income) are relatively more important sources of income to persons residing in
Florida. Transfer payments (Social Security and pension benefits, among other
sources of income) are typically less sensitive to the ups and downs of the
economy than wages and sources of income) are typically less sensitive to the
ups and downs of the economy than wages and salaries and other employment
income. Transfer payments (Social Security and pension benefits, and other
sources of income), therefore, act as a stabilizing force in weak economic
periods.

C-1
<PAGE>

The personal income of residents of the various states in the U.S. is
frequently used to make comparisons among the various states. However, using
personal income to compare Florida to other states can be misleading. Florida's
personal income is systematically underestimated. Contributions by employers to
employees' pension, profit sharing, and other retirement plans are included in
personal income of that employee while the employee is working and earning
wages and salary. When those same employees retire, to avoid double accounting,
retirement payments to them from those retirement plans are excluded in
computing personal income. Florida retirees are more likely to be collecting
retirement benefits that they earned in a state other than Florida. As a
result, Florida personal income is underestimated.

. Florida's personal income per person in 1998 was $25,852.

. The U.S. average personal income per person was slightly higher at
$26,412.

. Personal income per person in the southeast United States was
significantly lower at $23,725.

. Total Florida real personal income is forecasted to increase 4.9% in the
fiscal year ended June 30, 1999, and 3.5% in the fiscal year ending June
30, 2000.

. Florida real personal income per person is projected to increase 3.1% in
the fiscal year ended June 30, 1999, and 1.8% in the fiscal year ending
June 30, 2000.

. The Florida economy appears to be growing in line with, but stronger
than, the U.S. economy; however, the Florida economy is expected to grow
more slowly in the fiscal year ending June 30, 2000, than in the fiscal
year ended June 30, 1999.

Employment.

. Since 1992, Florida's population has increased an estimated 11.7%, while
the number of employed persons in Florida increased 15.0%.

. In the same period, Florida's total non-farm employment has grown
approximately 24.6%, while U.S. non-farm jobs increased 15.9%.

. Florida is gradually becoming less dependent on employment related to
construction, agriculture, or manufacturing, and more dependent on
employment related to trade and services. This has also contributed to
Florida's strong economic performance.

Presently, services constitute 36% and trade 25.5% of Florida's total non-
farm jobs. The U.S., however, has a greater percentage of manufacturing jobs
than Florida. Manufacturing jobs tend to pay higher wages, but service jobs can
also pay well and tend to be less sensitive to swings in the business cycle.
Florida has a concentration of manufacturing jobs in high-tech and high value-
added sectors, such as electrical and electronic equipment, as well as printing
and publishing. These type of manufacturing jobs tend to be less cyclical.

. Florida's unemployment rate throughout the 1980's was consistently lower
than that for the U.S.

. In the early 1990's Florida's unemployment rate was higher than that of
the U.S.

. In current years, Florida's unemployment rate has again generally fallen
below that of the U.S.

. Florida's unemployment rate was 4.3% during 1998.

. The U.S. unemployment rate was 4.5% during 1998.

C-2
<PAGE>

. It is estimated that Florida's unemployment rate will be 4.2% in the
fiscal year ended June 30, 1999, and 4.4% in the fiscal year ending June
30, 2000.

Florida's economy is expected to grow at a moderate rate along with the U.S.,
but is expected to out perform the U.S. as a whole.

. Total non-farm employment in Florida is expected to increase 3.4% for the
fiscal year ended June 30, 1999 and 2.9% for the fiscal year ending June
30, 2000. Trade and services, the two largest employment sectors, account
for more than half of the total non-farm employment in Florida.

. Employment in the service sectors should experience an increase of 5.5%
for the fiscal year ended June 30, 1999, while growing 4.4% for the
fiscal year ending June 30, 2000. Trade is expected to expand 2.8% for
the fiscal year ended June 30, 1999, and 2.8% for the fiscal year ending
June 30, 2000.

. The service sector is now Florida's largest employment category.

Construction. In the past, Florida's economy has been highly dependent on the
construction industry and construction related manufacturing. This dependency
has declined in recent years and continues to decline as a result of continued
diversification of Florida's economy. For example, in 1973, total contract
construction employment as a share of total non-farm employment was about 10%,
in the late 1980's, the share had edged downward to 7.5%, and in 1998, the
share was only 5.3%. This trend is expected to continue as Florida's economy
continues to diversify. Florida, nevertheless, has a dynamic construction
industry, with the percentage of housing starts increasing in 1998 by 11.1%,
and construction jobs overall increasing by 5.1%, due to low interest rates and
favorable economic conditions.

A driving force behind Florida's construction industry has been Florida's
rapid rate of population growth. Although Florida currently is the fourth most
populous state, its annual population growth is now projected to slow somewhat
as the number of people moving into Florida is expected to remain over 200,000
a year during the next decade. This population trend should provide fuel for
business and home builders to keep construction activity lively in Florida in
the next few years. Moreover, recent federal tax reforms reducing capital gains
realized on the sale of homes may increase the purchases of second, pre-
retirement homes in Florida.

. Single and multi-family housing starts in Florida for the fiscal year
ended June 30, 1999, are projected to reach a combined level of 144,000,
decreasing slightly to 143,000 for the fiscal year ending June 30, 2000.

. Total construction expenditures in Florida are forecasted to increase
8.6% for the fiscal year ended June 30, 1999, and increase 2.5% for the
fiscal year ending June 30, 2000.

. Single and multi-family housing starts in Florida are projected to
account for about 9% of all the housing starts in the U.S. for the fiscal
year ended June 30, 1999 and 9.53% of all housing starts in the U.S. for
the fiscal year ending June 30, 2000.

Tourism. Tourism is one of Florida's most important industries. Approximately
48.7 million tourists visited Florida in 1998, a 3.7% increase over 1997.
Tourists in Florida are, in essence, additional residents for purposes of
determining Florida tax revenues. Florida's tourist industry over the years has
become more sophisticated, attracting visitors year-round and, to a degree,
reducing its seasonality. Visitors to Florida tend to arrive slightly more by
air than by auto.

C-3
<PAGE>

. Tourist arrivals to Florida are forecasted to increase by 2.0% for the
fiscal year ended June 30, 1999, and 1.7% for the fiscal year ending June
30, 2000.

. Tourist arrivals to Florida by air are expected to increase by 3.2% for
the fiscal year ended June 30, 1999, and increase by 3.9% for the fiscal
year ending June 30, 2000.

. Tourist arrivals by car are expected to increase by 0.6% for the fiscal
year ended June 30, 1999, and decrease 1.0% for the fiscal year ending
June 30, 2000.

By June 30, 1999, 49.7 million domestic and international tourists are
expected to have visited Florida. For the fiscal year ending June 30, 2000,
about 50.6 million tourists are expected to visit Florida.

Revenues and Expenses. Estimated General Revenue plus Working Capital and
Budget Stabilization funds available to Florida for the fiscal year ended June
30, 1999, total $19,481.8 million, a 5.2% increase over the fiscal year ended
June 30, 1998. Of the total General Revenue plus Working Capital and Budget
Stabilization funds available to Florida, $17,779.5 million of that is
Estimated Revenues and represents an increase of 5.0% over the previous year's
Estimated Revenues. With effective General Revenues plus Working Capital Fund
and Budget Stabilization appropriations at $18,220.0 million, including $100.9
million transferred to the Budget Stabilization Fund, unencumbered reserves at
the fiscal year ended June 30, 1999, are estimated at $1,360.7 million.
Estimated General Revenue plus Working Capital and Budget Stabilization funds
available to Florida for the fiscal year ending June 30, 2000, total $20,133.9
million, a 3.3% increase over the fiscal year ended June 30, 1999. The
$18,555.2 million in Estimated Resources represents an increase of 4.4% over
the previous year's Estimated Revenues.

General Revenues and Expenses

For the fiscal year ended June 30, 1997, approximately 67% of Florida's total
direct revenue to its four operating funds were derived from Florida taxes and
fees, with Federal grants and other special revenue accounting for the balance.
The large majority of Florida General Revenue Funds available to Florida for
the fiscal year ended June 30, 1997, were made up of the following taxes:

. Sales and use tax--68%

. Corporate income tax--8%

. Intangible personal property tax--4%

. Beverage tax--3%

. Estate tax--3%

During the same fiscal year ended June 30, 1997, the large majority of
expenditures from Florida's General Revenue Fund were as follows:

. Education--53%

. Health and welfare--26%

. Public Safety--14%

Florida Sales and Use Tax

Florida's sales and use tax (6%) currently accounts for Florida's single
largest source of tax receipts. Slightly less than 10% of Florida's sales and
use tax is designated for local governments and is distributed to the
respective counties in which collected for use by the counties, and the
municipalities in such counties. In addition to this money from the State of
Florida, local governments may (by a vote of the residents) assess a 0.5% or a
1.0% discretionary sales surtax within their county. Proceeds from this local
option sales tax are used for funding local infrastructure programs and
acquiring land for public recreation or conservation or protection of natural
resources as provided under applicable Florida law. Certain charter counties
have other taxing powers in addition, and non-

C-4
<PAGE>

consolidated counties with a population in excess of 800,000 may levy a local
option sales tax to fund indigent health care. The indigent health care tax
alone cannot exceed 0.5% and when combined with the infrastructure surtax
cannot exceed 1.0%.

. For the fiscal year ended June 30, 1997, Florida sales and use tax
receipts (exclusive of the tax on gasoline and special fuels) totaled
$12,089 million, an increase of 5.5% over the fiscal year ended June 30,
1996, collections.

Alcoholic Beverage Tax

Florida imposes an alcoholic beverage, wholesale tax (excise tax) on beer,
wine, and liquor. This tax is one of Florida's major tax sources. Ninety-eight
percent of the revenues collected from this tax are deposited into Florida's
General Revenue Fund.

. Alcoholic beverage tax totaled $447.2 million for the fiscal year ended
June 30, 1997.

Corporate Income Tax

Florida imposes an income tax on corporations. All receipts of the corporate
income tax are credited to the General Revenue Fund.

. For the fiscal year ended June 30, 1997, corporate income tax totaled
$1,362.3 million, an increase of 17.2% from the fiscal year ended June
30, 1996.

Documentary Stamp Tax

Florida imposes a documentary stamp tax on deeds and other documents relating
to realty, corporate shares, bonds, certificate of indebtedness, promissory
notes, wage assignments, and retail charge accounts. For the fiscal year ended
June 30, 1997, 62.63% of these taxes were deposited to the General Revenue
Fund.

Documentary stamp tax collections totaled $844.2 million for the fiscal year
ended June 30, 1997, an 8.9% increase from the fiscal year ended June 30, 1996.

Intangible Personal Property Tax

Florida imposes an annual intangible personal property tax on stocks, bonds,
including bonds secured by liens on Florida real property, notes, governmental
leaseholds, and certain other intangibles not secured by a lien on Florida real
property. The annual rate of tax is currently 2 mills (a mill is $1.00 of tax
per $1,000.00 of property value). Effective January 1, 2000, the rate for the
annual intangible tax will decrease to 1.5 mills. Florida also imposes a non-
recurring 2 mill tax on mortgages and other obligations secured by liens on
Florida real property. Of the net taxes imposed on intangible personal
property, 66.5% are distributed to the General Revenue Fund.

. For the fiscal year ended June 30, 1997, total intangible personal
property tax collections were $952.4 million, a 6.3% increase from the
fiscal year ended June 30, 1996.

Estate Tax

Florida imposes an estate tax on the estate of a decedent for the privilege
of transferring property at death. All receipts of the estate tax are credited
to the General Revenue Fund.

. For the fiscal year that ended June 30, 1997, receipts from this source
were $546.9 million, an increase of 30% over the fiscal year ended June
30, 1996.

Lottery

Florida began its own lottery in 1988. Florida law requires that lottery
revenues be distributed 50% to the public in prizes, at least 38.0% for use in
enhancing education, and no more than 12.0%, for costs of administering the
lottery.

C-5
<PAGE>

. Lottery ticket sales for the fiscal year ended June 30, 1997 totaled
$2.09 billion, providing education with approximately $792.3 million.

Debt-Balanced Budget Requirement. At the end of the fiscal year ended June
30, 1998, Florida had outstanding about $8,703 million in principal amount of
debt secured by its full faith and credit. Since then, the State has issued
about $629 million in principal amount of full faith and credit bonds.

Florida's Constitution and statutes require that Florida not run a deficit in
its budget, as a whole, or in any separate fund within its budget. Rather its
budget and funds must be kept in balance from currently available revenues each
fiscal year. If the Governor or Comptroller believes a deficit will occur in
any fund, by statute, he must certify his opinion to the Administrative
Commission, which then is authorized to reduce all Florida agency budgets and
releases by a sufficient amount to prevent a deficit in any fund. Additionally,
the Florida Constitution prohibits Florida from borrowing by issuing bonds to
fund its operations.

Litigation Currently under litigation are several issues relating to Florida
actions or Florida taxes that put at risk a portion of General Revenue Fund
monies. There is no assurance that any of such matters, individually or in the
aggregate, will not have a material adverse affect on Florida's financial
position. A brief summary of these matters follows.

Nathan M. Hameroff, M.D., et al. v. Agency for Healthcare Administration, et
al.

The plaintiff challenged the constitutionality of Florida's Public
Medical Assistance Trust Fund annual assessment on net operating revenue of
free standing out-patient facilities offering sophisticated radiology
services. The trial has not been scheduled. If Florida is unsuccessful in
its action, the potential cost to Florida could be $70 million.

Barnett Bank v. Florida Department of Revenue

This case involves the issue of whether under Florida's refund statute
for dealer repossessions, the Florida Department of Revenue ("DOR") is
authorized to grant a refund to a financial institution, which is the
assignee of security agreements governing the sale of automobiles and other
property sold through dealers. The 4th Judicial Circuit found that the
statute not only provides a refund or credit to the dealer who sold the
tangible personal property and collected and remitted the tax, but that the
statute also allows the right to the refund to be assigned. Several banks
have already applied for refunds based on this holding and the potential
amount in refunds to financial institutions could exceed $30 million
annually. DOR plans to appeal this decision.

Tower Environmental v. Florida Department of Environmental Protection

The plaintiff has alleged that the State of Florida and the Department
of Environmental Protection ("DEP") breached contracts with it by freezing
the processing of reimbursement applications and by terminating the
petroleum reimbursement process. The plaintiff argues alternatively that
these actions are torts or impairment of contractual obligations. The
plaintiff further alleges that the termination of reimbursement claims
constitute a breach of contract. The plaintiff seeks damages, attorneys
fees and costs, the total of which could reach $60 million.

Barnett Banks, Inc. v. Florida Department of Revenue

The taxpayer in this case challenged the imposition of interest on
additional amounts of corporate income tax due as a result of adjustments
under a Federal income tax audit that were reported to Florida. DOR's
historical position is that interest is due from the due date

C-6
<PAGE>

of the return until payment of the additional amount of tax is made. The
taxpayer contends that interest should begin to accrue only from the date
the Federal audit adjustments were due to be reported to Florida. A Final
Order was issued adopting DOR's position, but the taxpayer has appealed.
The potential lost revenue and refund exposure is in the range of $12 to
$20 million annually.

Deficit Fund Equity

The Florida Casualty Insurance Risk Management Trust Fund has deficit
retained earnings of approximately $567 million. These represent long term
liabilities of Florida as a whole. These liabilities include claims
pertaining to state employee Workers' Compensation, federal civil rights,
and general and automotive liability.

The Special Disability Trust Fund has a deficit fund balance of
approximately $1.9 billion. This deficit is the result of claims expense
over net assessment revenue.

Bond Ratings

Florida maintains a bond rating of Aa2, AA+ and AA from Moody's Investors
Service, Standard & Poors Corporation, and Fitch, respectively, on the majority
of its general obligation bonds, although the rating of a particular series of
revenue bonds relates primarily to the project, facility, or other revenue
source from which such series derives funds for repayments While theses ratings
and some of the information presented above indicate that Florida is in
satisfactory economic health, there can be no assurance that there will not be
a decline in economic conditions or that particular Florida Municipal
Obligations purchased by the Fund will not be adversely affected by any such
changes.

The sources for the information presented above include official statements
and financial statements of the State of Florida. While the Sponsor has not
independently verified this information, the Sponsor has no to believe that the
information is not correct in all material respects.

Florida Taxes --

In the opinion of Carlton Fields, Tampa, Florida, special counsel on
Florida tax matters, under existing law:

The Florida Trust will not be subject to the Florida income tax imposed
by Chapter 220 so long as the Florida Trust transacts no business in
Florida or has no income subject to federal income taxation. In addition,
political subdivisions of Florida do not impose any income taxes.

Non-Corporate Unit holders will not be subject to any Florida income
taxation on income realized by the Florida Trust. Corporate Unit holders
with commercial domiciles in Florida will be subject to Florida income
taxation on income realized by the Trust. Other corporate Unit holders will
be subject to Florida income taxation on income realized by the Florida
Trust only to the extent that the income realized is other than "non-
business income" as defined by Chapter 220.

Florida Trust Units will be subject to Florida estate tax if owned by
Florida residents and may be subject to Florida estate tax if owned by
other decedents at death. However, the Florida estate tax is limited to the
amount of the credit allowable under the applicable Federal Revenue Act
(currently Section 2011 [and in some cases Section 2102] of the Internal
Revenue Code of 1986, as amended) for death taxes actually paid to the
several states.

Neither the Bonds nor the Units will be subject to the Florida ad
valorem property tax or Florida sales or use tax.

C-7
<PAGE>

Neither the Florida Trust nor the Units will be subject to Florida
intangible personal property tax.

New York Trust

Risk Factors--The information set forth below is derived from the Official
Statements and/or preliminary drafts of Official Statements prepared in
connection with the issuance of New York State and New York City municipal
bonds. The Sponsors have not independently verified this information.

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

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

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

New York City. The City, with a population of approximately 7.4 million, is
an international center of business and culture. Its non-manufacturing economy
is broadly based, with the banking and securities, life insurance,
communications, publishing, fashion design, retailing and construction
industries accounting for a significant portion of the City's total employment
earnings. Additionally, the City is the nation's leading tourist destination.
Manufacturing activity in the City is conducted primarily in apparel and
printing.

For each of the 1981 through 1999 fiscal years, the City had an operating
surplus, before discretionary transfers, and achieved balanced operating
results as reported in accordance with then applicable generally accepted
accounting principles ("GAAP"), after discretionary transfers. The City has
been required to close substantial gaps between forecast revenues and forecast
expenditures in order to maintain balanced operating results. There can be no
assurance that the City will continue to maintain balanced operating results as
required by State law without tax or other revenue increases or reductions in
City services or entitlement programs, which could adversely affect the City's
economic base.

As required by law, the City prepares a four-year annual financial plan,
which is reviewed and revised on a quarterly basis and which includes the
City's capital, revenue and expense projections and outlines proposed gap-
closing programs for years

C-8
<PAGE>

with projected budget gaps. The City's current financial plan projects a
surplus in the 2000 and 2001 fiscal years, before discretionary transfers, and
budget gaps for each of the 2002, 2003 and 2004 fiscal years. This pattern of
current year surplus operating results and projected subsequent year budget
gaps has been consistent through the entire period since 1982, during which the
City has achieved surplus operating results, before discretionary transfers,
for each fiscal year.

The City depends on aid from the State both to enable the City to balance its
budget and to meet its cash requirements. There can be no assurance that there
will not be reductions in State aid to the City from amounts currently
projected; that, in future years, State budgets will be adopted by the April 1
statutory deadline, or interim appropriations will be enacted; or that any such
reductions or delays will not have adverse effects on the City's cash flow or
expenditures. In addition, the Federal budget negotiation process could result
in a reduction in or a delay in the receipt of Federal grants which could have
additional adverse effects on the City's cash flow or revenues.

The Mayor is responsible for preparing the City's financial plan, including
the City's current financial plan for the 2000 through 2004 fiscal years (the
"2000-2004 Financial Plan" or "Financial Plan"). The City's projections set
forth in the Financial Plan are based on various assumptions and contingencies
which are uncertain and which may not materialize. Such assumptions and
contingencies include the condition of the regional and local economies, the
provision of State and Federal aid and the impact on City revenues and
expenditures of any future Federal or State policies affecting the City.

Implementation of the Financial Plan is dependent upon the City's ability to
market its securities successfully. The City's program for financing capital
projects for fiscal years 2001 through 2004 contemplates the issuance of $6.46
billion of general obligation bonds and $5.01 billion of bonds to be issued by
the New York City Transitional Finance Authority (the "Finance Authority"). In
addition, the Financial Plan anticipates access to approximately $2.4 billion
(including the $640 million of bond proceeds received to date) in financing
capacity of TSASC, Inc. ("TSASC"), which issues debt secured by revenues
derived from the settlement of litigation with tobacco companies selling
cigarettes in the United States. The Finance Authority and TSASC were created
to assist the City in financing its capital program while keeping the City's
indebtedness within the forecast level of the constitutional restrictions on
the amount of debt the City is authorized to incur. In addition, the City
issues revenue and tax anticipation notes to finance its seasonal working
capital requirements. The success of projected public sales of City, New York
City Municipal Water Finance Authority ("Water Authority"), Finance Authority,
TSASC and other bonds and notes will be subject to prevailing market
conditions. The City's planned capital and operating expenditures are dependent
upon the sale of its general obligation debt, as well as debt of the Water
Authority, Finance Authority and TSASC. Future developments concerning the City
and public discussion of such developments, as well as prevailing market
conditions, may affect the market for outstanding City general obligation bonds
and notes.

The City Comptroller and other agencies and public officials, from time to
time, issue reports and make public statements which, among other things, state
that projected revenues and expenditures may be different from those forecast
in the City's financial plans.

For the 1999 fiscal year, the City had an operating surplus, before
discretionary and other transfers, and achieved balanced operating results,
after discretionary and other transfers, in accordance with GAAP. The 1999
fiscal year is the nineteenth year that the City has achieved an operating
surplus, before discretionary and other transfers, and

C-9
<PAGE>

balanced operating results, after discretionary and other transfers.

On June 15, 2000, the City released the Financial Plan for the 2000 through
2004 fiscal years, which relates to the City and certain entities which receive
funds from the City, and which reflects changes as a result of the City's
expense and capital budgets for fiscal year 2001, which were adopted on June 6,
2000. The Financial Plan is a modification to the financial plan submitted to
the Control Board on June 14, 1999 (the "June Financial Plan"), which was
subsequently modified in November 1999 and January and May 2000. The Financial
Plan projects revenues and expenditures for the 2000 and 2001 fiscal years
balanced in accordance with GAAP, and projects gaps of $2.6 billion, $2.7
billion and $2.7 billion for fiscal years 2002 through 2004, respectively,
after implementation of a gap closing program.

Changes since the June Financial Plan include: (i) an increase in projected
revenues of $1.9 billion, $1.2 billion, $1.1 billion, $1.3 billion and
$1.6 billion in fiscal years 2000 through 2004, respectively, reflecting
primarily increases in projected personal income, business, sales, real estate
transfer and mortgage recording tax revenues; (ii) a delay in the assumed
collection of $730 million of projected rent payments for the City's airports
from fiscal year 2001 through 2004 to fiscal years 2002 through 2005; (iii)
establishment of a labor reserve for merit pay wage increases for
City employees of $30 million, $325 million, $750 million, $800 million and
$800 million in fiscal years 2000 through 2004, respectively, contingent upon
productivity savings set forth in the gap-closing program; and (iv) increased
costs and revenue losses from State and Federal actions of $185 million, $392
million, $454 million, $518 million and $587 million in fiscal years 2000
through 2004, respectively, including a reduction in the sales tax on utilities
approved by the State Legislature; and (v) other net expenditure savings of
$784 million in fiscal year 2000, and net expenditure increases of $771
million, $897 million, $1.2 billion and $888 million in fiscal years 2001
through 2004, respectively. The changes in net expenditures include, among
other things, pension fund savings of $524 million and $284 million in fiscal
years 2000 and 2001, respectively, resulting primarily from a market value
restart, increased net pension costs of $230 million, $348 million and $286
million in fiscal years 2002 through 2004, respectively, reflecting recent
pension benefit legislation, and increased spending for education and other
agencies. Increased pension costs reflect certain pension benefit improvements,
to which the City and its unions have agreed, which are estimated at
$279 million per year commencing in fiscal year 2001. In addition, various
benefit enhancements for City and State employees, including a cost of living
adjustment in pension payments, which have been adopted by the State
legislature, are not reflected in the Financial Plan. These benefit
enhancements are expected to increase pension costs reflected in the City's
future financial plan modifications by $98 million, $236 million, $363 million
and $480 million in fiscal years 2001 through 2004, respectively, and by $586
million in fiscal year 2005 when the adjustment is fully implemented.

The Financial Plan reflects a proposed discretionary transfer from fiscal
year 2000 to fiscal year 2001 primarily to pay debt service due in fiscal year
2001 totaling $3.2 billion, a proposed discretionary transfer from fiscal year
2001 to fiscal year 2002 to pay debt service due in fiscal year 2002 totaling
$905 million and a proposed discretionary transfer from fiscal year 2002 to
fiscal year 2003 to pay debt service in fiscal year 2003 totaling $345 million.

In addition, the Financial Plan sets forth gap-closing actions to eliminate a
previously projected gap for the 2001 fiscal year and to reduce projected gaps
for fiscal years 2002 through 2004. The gap-closing actions for the 2000
through 2004 fiscal

C-10
<PAGE>

years include: (i) additional agency actions totaling $337 million, $400
million, $210 million, $210 million and $210 million for fiscal years 2000
through 2004, respectively; (ii) assumed additional Federal and State actions
of $75 million in each of fiscal years 2001 through 2004, which are subject to
Federal and State approval; and (iii) proposed productivity savings and
reducing fringe benefits costs totaling $250 million, $265 million,
$280 million and $300 million in fiscal years 2001 through 2004, respectively,
to partly offset the costs of the proposed merit pay program which is subject
to collective bargaining negotiations. The Financial Plan also reflects a
proposed tax reduction program totaling $418 million, $735 million, $877
million and $1.1 billion in fiscal years 2001 through 2004, respectively,
including elimination of the commercial rent tax over four years commencing
June 1, 2000 at a cost of $16 million in fiscal year 2001, increasing to $430
million in fiscal year 2004; a reduction and restructuring in the 14% personal
income tax surcharge on July 1, 2000 at a cost of $329 million in fiscal year
2001, increasing to $403 million in fiscal year 2004; the extension of current
tax reductions for owners of cooperative and condominium apartments at an
annual cost of approximately $200 million starting in fiscal year 2002; and
repeal of the $2 flat fee hotel occupancy tax effective December 1, 2000; and
other tax reduction proposals including the borough commercial revitalization
program. Except for the elimination of the commercial rent tax, the proposed
tax reductions require State legislative approval. To date, only the reduction
and restructuring of the 14% personal income tax surcharge and the reduction of
the borough commercial revitalization program have been passed by the State
Legislature. In order to begin addressing the impact of recent legislation
increasing the cost of living adjustments for current and future retirees, the
Mayor has announced plans to develop a spending reduction program of
$250 million in fiscal year 2001 and $300 million in each of fiscal years 2002
through 2004 and to consider revisions to the tax reduction program reflected
in the Financial Plan which would increase revenues by $312 million in fiscal
year 2001 and between $262 million and $277 million in each of fiscal years
2002 through 2004.

Wage increases for City employees are provided for in the Financial Plan
through a merit pay plan for two years after their collective bargaining
agreements expire in fiscal years 2000 and 2001, contingent upon productivity
savings. The Financial Plan does not make any provision for wage increases
thereafter. In addition, the economic and financial condition of the City may
be affected by various financial, social, economic and other factors which
could have a material effect on the City.

The Financial Plan is based on numerous assumptions, including the condition
of the City's and the region's economies and modest employment growth and the
concomitant receipt of economically sensitive tax revenues in the amounts
projected. The 2000-2004 Financial Plan is subject to various other
uncertainties and contingencies relating to, among other factors, the extent,
if any, to which wage increases for City employees exceed the annual wage costs
assumed for the 2000 through 2004 fiscal years; continuation of projected
interest earnings assumptions for pension fund assets and current assumptions
with respect to wages for City employees affecting the City's required pension
fund contributions; the willingness and ability of the State to provide the aid
contemplated by the Financial Plan and to take various other actions to assist
the City; the ability of City agencies to maintain balanced budgets; the
willingness of the Federal government to provide the amount of Federal aid
contemplated in the Financial Plan; the impact on City revenues and
expenditures of Federal and State welfare reform and any future legislation
affecting Medicare or other entitlement programs; adoption of the City's
budgets by the City Council in substantially the forms submitted by the Mayor;
the ability of the City to implement cost reduction initiatives, and the
success with which the City

C-11
<PAGE>

controls expenditures; the impact of conditions in the real estate market on
real estate tax revenues; the City's ability to market its securities
successfully in the public credit markets; and unanticipated expenditures that
may be incurred as a result of the need to maintain the City's infrastructure.

Although the City has maintained balanced budgets in each of its last
nineteen fiscal years and is projected to achieve balanced operating results
for the 2000 and 2001 fiscal years, there can be no assurance that the gap-
closing actions proposed in the Financial Plan can be successfully implemented
or that the City will maintain a balanced budget in future years without
additional State aid, revenue increases or expenditure reductions. Additional
tax increases and reductions in essential City services could adversely affect
the City's economic base.

On July 16, 1998, Standard & Poor's revised its rating of City bonds to A-
from BBB+. On September 13, 2000, Standard & Poor's revised its rating of City
bonds upward to A. Moody's rating of City bonds was revised in August 2000 to
A2 from A3. On March 8, 1999, Fitch revised its rating of City bonds upward to
A from A- and on September 15, 2000, Fitch revised its rating to A+. Moody's,
Standard & Poor's and Fitch currently rate the City's outstanding general
obligation bonds A2, A and A+, respectively.

New York State and its Authorities. The State ended the 1999-2000 fiscal year
in balance on a cash basis, with a reported closing balance in the General Fund
of $1.17 billion. The State adopted the debt service portion of the State
budget for the 2000-01 fiscal year on March 30, 2000. The remainder of the
budget for the State's 2000-01 fiscal year was adopted by the State Legislature
on May 5, 2000, 35 days after the statutory deadline of April 1, 2000.
Following enactment of the budget, the State prepared a Financial Plan for the
2000-01 fiscal year, which as revised by the first quarter update to the
Financial Plan, projects total General Fund disbursements of $39.3 billion, and
a closing balance in the General Fund of $1.34 billion. Preliminary analysis by
the State Division of the Budget indicates that the State could face a
projected 2001-02 budget gap of approximately $2 billion. In a report released
on June 7, 2000, the State Comptroller estimated future State budget gaps of
approximately $3.0 billion in 2001-02 and $4.9 billion in 2002-03, assuming
certain one-time legislative additions to the budget would be recurring.

In 2000-01, General Fund disbursements, including transfers to support
capital projects, debt service and other funds, are estimated at
$38.92 billion, an increase of $1.75 billion or 4.72 percent over 1999-2000.
Projected spending under the 2000-01 enacted budget is $992 million above the
Governor's Executive Budget recommendations, including 30-day amendments
submitted January 31, 2000.

The November 7, 2000 Mid-Year Update to the 2000-01 Financial Plan projects a
closing balance of $1.09 billion in the General Fund for 2000-01, a decrease of
$255 million from the First Quarterly Update. The planned use of labor reserves
to finance approved labor agreements accounts for the decline. The closing
balance is comprised of $547 million in the Tax Stabilization Reserve Fund,
$150 million in the Contingency Reserve Fund, $338 million in the Community
Projects Fund, and $50 million in reserves for other purposes. The closing fund
balance excludes additional reserves of $1.2 billion in the School Tax Relief
(STAR) Special Revenue Fund (for future STAR payments), $250 million in the
Debt Reduction Reserve Fund (for 2001-02 debt reduction), and $29 million in
the Universal Pre-K Reserve Fund (for the start-up costs of pre-kindergarten
programs).

Many complex political, social and economic forces influence the State's
economy and finances, which may in turn affect the State Financial Plan.

C-12
<PAGE>

The 2000-01 Financial Plan is also necessarily based upon forecasts of national
and State economic activity. The Division of Budget believes that its
projections of receipts and disbursements relating to the 2000-01 Financial
Plan, and the assumptions on which they are based, are reasonable, however,
actual results could differ materially and adversely from these projections.

Standard & Poor's rates the State's general obligation bonds A+, and Moody's
rates the State's general obligation bonds A2. On November 9, 1999, Standard &
Poor's revised its rating on the State's general obligation bonds from A to A+.

Litigation. A number of court actions have been brought involving State
finances. The court actions in which the State is a defendant generally involve
State programs and miscellaneous tort, real property, and contract claims.
While the ultimate outcome and fiscal impact, if any, on the State of those
proceedings and claims are not currently predictable, adverse determinations in
certain of them might have a material adverse effect upon the State's ability
to carry out the State Financial Plan.

The City has estimated that its potential future liability on account of
outstanding claims against it as of June 30, 1999 amounted to approximately
$3.5 billion.

New York Taxes--

In the opinion of bond counsel delivered on the dates the Bonds were issued
(or in opinions to be delivered, in the case of when issued Bonds) the interest
on the Bonds is exempt from New York State and City personal income taxes,
except where such interest is subject to Federal income taxes, as is described
in "Taxes".

In the opinion of Paul, Hastings, Janofsky & Walker LLP, special counsel for
the Sponsor, under existing New York law:

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 Holders in the same manner as
for Federal income tax purposes. Accordingly, each Holder will be
considered to have received the interest on its pro rata portion of each
Bond when interest on the Bond is received by the Trust (or on earlier
accrual, depending on the Holder's method of accounting and depending on
the existence of any original issue discount). A noncorporate Holder who is
a New York State (and City) resident will be subject to New York State (and
City) personal income taxes on any gain or market discount income
recognized when it disposes of all or part of its pro rata portion of a
Bond. A noncorporate Holder who is not a New York State resident will not
be subject to New York State or City personal income taxes on any gain or
market discount income recognized when it disposes of all or part of its
pro rata portion of a Bond unless such Units are attributable to a
business, trade, profession or occupation carried on in New York. A New
York State (and City) resident should determine its tax basis for its pro
rata portion of each Bond for New York State (and City) income tax purposes
in the same manner as for Federal income tax purposes. Interest income on,
as well as any gain recognized on the disposition of, a Holder's pro rata
portion of the Bonds is generally not excludable from income in computing
New York State and City franchise taxes on corporations or financial
institutions.

C-13
<PAGE>

TAX FREE VS. TAXABLE INCOME

The following tables show the approximate yields which taxable securities
must earn in various income brackets to equal tax exempt yields under combined
Federal and state individual income tax rates. This table reflects projected
Federal income tax rates and tax brackets for the 2000 taxable year and state
income tax rates that were available on the date of the Prospectus. Because the
Federal rate brackets are subject to adjustment based on changes in the
Consumer Price Index, the taxable equivalent yields for subsequent years may be
lower than indicated. A table is computed on the theory that the taxpayer's
highest bracket tax rate is applicable to the entire amount of any increase or
decrease in taxable income (after allowance for any resulting change in state
income tax) resulting from a switch from taxable to tax-free securities or vice
versa. Variations between state and Federal allowable deductions and exemptions
are generally ignored. The state tax is thus computed by applying to the
Federal taxable income bracket amounts shown in the table the appropriate state
rate for those same dollar amounts. For example, a married couple living in the
State of Florida and filing a Joint Return with $53,000 in taxable income for
the 2000 tax year would need a taxable investment yielding 8.33% in order to
equal a tax-free return of 6.00%. Use the appropriate table to find your tax
bracket. Read across to determine the approximate taxable yield you would need
to equal a return free of Federal income tax and state income tax.

C-14
<PAGE>

STATE OF FLORIDA
2000 Tax Year
<TABLE>
<CAPTION>
TAX EXEMPT YIELD
Taxable Income Bracket 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
Joint Return Single Return Effective Federal Tax Rate TAXABLE EQUIVALENT YIELD
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 43,850 $ 0 - 26,250 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65%
$ 43,851 - 105,950 $ 26,251 - 63,550 28.00 5.56 6.25 6.94 7.64 8.33 9.03
$105,951 - 128,950 $ 63,551 - 128,950 31.00 5.80 6.52 7.25 7.97 8.70 9.42
$128,951 - 161,450 $128,951 - 132,600 31.93 5.88 6.61 7.35 8.08 8.81 9.55
$161,451 - 288,350 $132,601 - 288,350 37.08 6.36 7.15 7.95 8.74 9.54 10.33
OVER $288,350 OVER $288,350 40.79 6.76 7.60 8.44 9.29 10.13 10.98
</TABLE>
--------
Note: This table reflects the following:
1 Taxable income equals adjusted gross income ("AGI") less personal
exemptions and itemized deductions. However, certain itemized deductions
are reduced by the lesser of (i) three percent of the amount of the
taxpayer's AGI over $128,950, or (ii) 80 percent of the amount of such
itemized deductions otherwise allowable. The effect of the three percent
phase out on all itemized deductions and not just those deductions
subject to the phase out is reflected above in the combined Federal and
state tax rates through the use of higher effective Federal tax rates. In
addition, the effect of the 80 percent cap on overall itemized deductions
is not reflected on this table. Federal income tax rules also provide
that personal exemptions are phased out at a rate of two percent for each
$2,500 (or fraction thereof) of AGI in excess of $193,400 for married
taxpayers filing a joint tax return and $128,950 for single taxpayers.
The effect of the phase out of personal exemptions is not reflected in
the above table.
2 Interest earned on municipal obligations may be subject to the federal
alternative minimum tax. This provision is not incorporated into the
table.
3 The taxable equivalent yield table does not incorporate the effect of
graduated rate structures in determining yields. Instead, the tax rates
used are the highest rates applicable to the income levels indicated
within each bracket.
4 Interest earned on all municipal obligations may cause certain investors
to be subject to tax on a portion of their Social Security and/or
railroad retirement benefits. The effect of this provision is not
included in the above table.
5 Florida does not impose a state personal income tax.

C-15
<PAGE>

STATE OF NEW YORK
2000 Tax Year
<TABLE>
<CAPTION>
Approx. Combined TAX EXEMPT YIELD
Taxable Federal & State 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
Income Bracket Tax Rate
TAXABLE EQUIVALENT YIELD
JOINT RETURN
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 16,000 18.40% 4.90% 5.51% 6.13% 6.74% 7.35% 7.97%
$ 16,001 - 22,000 18.83 4.93 5.54 6.16 6.78 7.39 8.01
$ 22,001 - 26,000 19.46 4.97 5.59 6.21 6.83 7.45 8.07
$ 26,001 - 40,000 20.02 5.00 5.63 6.25 6.88 7.50 8.13
$ 40,001 - 43,850 20.82 5.05 5.68 6.31 6.95 7.58 8.21
$ 43,851 - 105,950 32.93 5.96 6.71 7.46 8.20 8.95 9.69
$105,951 - 128,950 35.73 6.22 7.00 7.78 8.56 9.34 10.11
$128,951 - 161,450 36.59 6.31 7.10 7.89 8.67 9.46 10.25
$161,451 - 288,350 41.39 6.82 7.68 8.53 9.38 10.24 11.09
Over $288,350 44.84 7.25 8.16 9.07 9.97 10.88 11.78
<CAPTION>
SINGLE RETURN
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 8,000 18.40% 4.90% 5.51% 6.13% 6.74% 7.35% 7.97%
$ 8,001 - 11,000 18.83 4.93 5.54 6.16 6.78 7.39 8.01
$ 11,001 - 13,000 19.46 4.97 5.59 6.21 6.83 7.45 8.07
$ 13,001 - 20,000 20.02 5.00 5.63 6.25 6.88 7.50 8.13
$ 20,001 - 26,250 20.82 5.05 5.68 6.31 6.95 7.58 8.21
$ 26,251 - 63,550 32.93 5.96 6.71 7.46 8.20 8.95 9.69
$ 63,551 - 128,950 35.73 6.22 7.00 7.78 8.56 9.34 10.11
$128,951 - 132,600 36.59 6.31 7.10 7.89 8.67 9.46 10.25
$132,601 - 288,350 41.39 6.82 7.68 8.53 9.38 10.24 11.09
Over $288,350 44.84 7.25 8.16 9.07 9.97 10.88 11.78
-------------
</TABLE>
Note: This table reflects the following:
1 Taxable income, as reflected in the above table, equals Federal adjusted
gross income (AGI), less personal exemptions and itemized deductions
(including the deduction for state income tax). However, certain itemized
deductions are reduced by the lesser of (i) three percent of the amount
of the taxpayer's AGI over $128,950, or (ii) 80 percent of the amount of
such itemized deductions otherwise allowable. The effect of the three
percent phase out on all itemized deductions and not just those
deductions subject to the phase out is reflected above in the combined
Federal and state tax rates through the used of higher effective Federal
tax rates. In addition, the effect of the 80 percent cap on overall
itemized deductions is not reflected on this table. Federal income tax
rules also provide that personal exemptions are phased out at a rate of
two effective Federal tax rates. Federal income tax rules also provide
that personal exemptions are phased out at a rate of two percent for each
$2,500 (or fraction thereof) of AGI in excess of $193,400 for married
taxpayers filing a joint tax return and $128,950 for single taxpayers.
The effect of the phase out of personal exemptions is not reflected in
the above table.
2 Interest earned on municipal obligations may be subject to the federal
alternative minimum tax. This provision is not incorporated into the
table.
3 The taxable equivalent yield table does not incorporate the effect of
graduated rate structures in determining yields. Instead, the tax rates
used are the highest rates applicable to the income levels indicated
within each bracket.
4 Interest earned on all municipal obligations may cause certain investors
to be subject to tax on a portion of their Social Security and/or
railroad retirement benefits. The effect of this provision is not
included in the above table.

C-16
<PAGE>

CITY OF NEW YORK
2000 Tax Year
<TABLE>
<CAPTION>
Approx. Combined
Federal, State & TAX EXEMPT YIELD
Taxable New York City 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
Income Bracket Tax Rate
TAXABLE EQUIVALENT YIELD

JOINT RETURN

<S> <C> <C> <C> <C> <C> <C> <C>
$ 0- 16,000 20.97% 5.06% 5.69% 6.33% 6.96% 7.59% 8.22%
$ 16,001- 21,600 21.39 5.09 5.72 6.36 7.00 7.63 8.27
$ 21,601- 22,000 21.94 5.12 5.76 6.41 7.05 7.69 8.33
$ 22,001- 26,000 22.58 5.17 5.81 6.46 7.10 7.75 8.40
$ 26,001- 40,000 23.13 5.20 5.85 6.50 7.15 7.81 8.46
$ 40,001- 43,850 23.94 5.26 5.92 6.57 7.23 7.89 8.55
$ 43,851- 45,000 35.57 6.21 6.98 7.76 8.54 9.31 10.09
$ 45,001- 105,950 35.65 6.22 6.99 7.77 8.55 9.32 10.10
$105,951- 128,950 38.33 6.49 7.30 8.11 8.92 9.73 10.54
$128,951- 161,450 39.17 6.58 7.40 8.22 9.04 9.86 10.68
$161,451- 288,350 43.77 7.11 8.00 8.89 9.78 10.67 11.56
Over $288,350 47.08 7.56 8.50 9.45 10.39 11.34 12.28

<CAPTION>
SINGLE RETURN

<S> <C> <C> <C> <C> <C> <C> <C>
$ 0- 8,000 20.97% 5.06% 5.69% 6.33% 6.96% 7.59% 8.22%
$ 8,001- 11,000 21.39 5.09 5.72 6.36 7.00 7.63 8.27
$ 11,001- 12,000 22.03 5.13 5.77 6.41 7.05 7.70 8.34
$ 12,001- 13,000 22.58 5.17 5.81 6.46 7.10 7.75 8.40
$ 13,001- 20,000 23.13 5.20 5.85 6.50 7.15 7.81 8.46
$ 20,001- 25,000 23.94 5.26 5.92 6.57 7.23 7.89 8.55
$ 25,001- 26,250 24.03 5.27 5.92 6.58 7.24 7.90 8.56
$ 26,251- 63,550 35.65 6.22 6.99 7.77 8.55 9.32 10.10
$ 63,551- 128,950 38.33 6.49 7.30 8.11 8.92 9.73 10.54
$128,951- 132,600 39.17 6.58 7.40 8.22 9.04 9.86 10.68
$132,601- 288,350 43.77 7.11 8.00 8.89 9.78 10.67 11.56
Over $288,350 47.08 7.56 8.50 9.45 10.39 11.34 12.28
</TABLE>
--------
Note: This table reflects the following:
1 Taxable income, as reflected in the above table, equals Federal adjusted
gross income (AGI), less personal exemptions and itemized deductions
(including the deduction for state income tax). However, certain itemized
deductions are reduced by the lesser of (i) three percent of the amount
of the taxpayer's AGI over $128,950, or (ii) 80 percent of the amount of
such itemized deductions otherwise allowable. The effect of the three
percent phase out on all itemized deductions and not just those
deductions subject to the phase out is reflected above in the combined
Federal and state tax rates through the use of higher effective Federal
tax rates. In addition, the effect of the 80 percent cap on overall
itemized deductions is not reflected on this table. Federal income tax
rules also provide that personal exemptions are phased out at a rate of
two effective Federal tax rates. Federal income tax rules also provide
that personal exemptions are phased out at a rate of two percent for each
$2,500 (or fraction thereof) of AIG in excess of $193,400 for married
taxpayers filing a joint tax return and $128,950 for single taxpayers.
The effect of the phase out of personal exemptions is not reflected in
the above table.
2 Interest earned on municipal obligations may be subject to the federal
alternative minimum tax. The effect of this provision is not incorporated
into the table.
3 The taxable equivalent yield table does not incorporate the effect of
graduated rate structures in determining yields. Instead, the tax rates
used are the highest rates applicable to the income levels indicated
within each bracket.
4 Interest earned on all municipal obligations may cause certain investors
to be subject to tax on a portion of their Social Security and/or
railroad retirement benefits. The effect of this provision is not
included in the above table.

C-17
<PAGE>

TAX EXEMPT SECURITIES TRUST
----------------------------------------------------------------

15,000 Units Dated November 29, 2000

PROSPECTUS

This Prospectus does not contain all of the information with respect to the
Trust set forth in its registration statements filed with the Securities and
Exchange Commission, Washington, DC under the Securities Act of 1933 (file
nos. 333-50268, 333-50364, 333-49586 and 333-44814) and the Investment Company
Act of 1940 (file no. 811-2560), and to which reference is hereby made.
Information may be reviewed and copied at the Commission's Public Reference
Room, and information on the Public Reference Room may be obtained by calling
the SEC at 1-202-942-8090. Copies may be obtained from the SEC by:
. electronic request (after paying a duplicating fee) at the following E-
mail address: [email protected]
. visiting the SEC internet address: http://www.sec.gov
. writing: Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, DC 20549-6009
--------------------------------------------------------------------------------

Index Sponsor:
<TABLE>
<S> <C>
Investment Summary A-2 Salomon Smith Barney Inc.
Summary of Essential Information A-8 7 World Trade Center
Portfolio Summary as of Date of 40th Floor
Deposit A-11 New York, New York 10048
Independent Auditors' Report A-14 (212) 816-6000
Statements of Financial Condition A-15
Portfolios A-17
Notes to Portfolios of Securities A-25 Trustee:
Tax Exempt Securities Trust B-1
Risk Factors B-2 The Chase Manhattan Bank
Taxes B-8 4 New York Plaza
Expenses and Charges B-12 New York, New York 10004
Public Offering B-13 (800) 354-6565
Rights of Holders B-17
Sponsor B-21 -------------------------
Trustee B-22
Evaluator B-22 This Prospectus does not
Amendment and Termination of the constitute an offer to
Trust Agreement B-23 sell, or a solicitation
Miscellaneous B-23 of an offer to buy,
Bond Ratings B-24 securities in any state
Federal Tax Free vs. Taxable Income B-26 to any person to whom it
The State Trusts C-1 is not lawful to make
Tax Free vs. Taxable Income C-14 such offer in such
</TABLE> state.
--------------------------------------------------------------------------------

SalomonSmithBarney
----------------------------
A member of citigroup [LOGO]
--------------------------------------------------------------------------------
No person is authorized to give any information or to make any representations
with respect to this Trust, not contained in this Prospectus and you should not
rely on any other information. The Trust is registered as a unit investment
trust that 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 other state or any agency
or office thereof.
--------------------------------------------------------------------------------
Salomon Smith Barney is the service mark used by Salomon Smith Barney Inc.

UT 6705

<PAGE>

PART II. ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS

A. The following information relating to the Depositor is incorporated by
reference to the SEC filings indicated and made a part of this Registration
Statement.

SEC FILE OR
IDENTIFICATION NO.
--------------

I. Bonding Arrangements and Date of Organization of the Depositor filed
pursuant to Items A and B of Part II of the Registration Statement on
Form S-6 under the Securities Act of 1993:

Salomon Smith Barney Inc. 2-55436

II. Information as to Officers and Directors of the Depositor filed
pursuant to Schedules A and D of Form BD under Rules 15b1-1 and
15b3-1 of the Securities Exchange Act of 1934:

Salomon Smith Barney Inc. 8-8177

III. Charter documents of the Depositor filed as Exhibits to the
Registration Statement on Form S-6 under the Securities Act of 1933
(Charter, By-Laws):

Salomon Smith Barney Inc. 33-65332, 33-36037

B. The Internal Revenue Service Employer Identification Numbers of the
Sponsor and Trustee are as follows:

Salomon Smith Barney Inc. 13-1912900
The Chase Manhattan Bank 13-4994650

UNDERTAKING

The Sponsor undertakes that it will not instruct the Trustee to accept from
(i) any insurance company affiliated with the Sponsor, in settlement of any
claim, less than an amount sufficient to pay any principal or interest (and,
in the case of a taxability redemption, premium) then due on any Security in
accordance with the municipal bond guaranty insurance policy attached to that
Security or (ii) any affiliate of the Sponsor who has any obligation with
respect to any Security, less than the full amount due pursuant to the
obligation, unless those instructions have been approved by the Securities and
Exchange Commission pursuant to Rule 17d-1 under the Investment Company Act of
1940.

II-1
<PAGE>

CONTENTS OF REGISTRATION STATEMENT

THE REGISTRATION STATEMENT ON FORM S-6 COMPRISES THE FOLLOWING PAPERS AND
DOCUMENTS:

The facing sheet of Form S-6.
The Cross-Reference Sheet (incorporated by reference to the Cross-Reference
Sheet to the Registration Statement of Tax Exempt Securities Trust, Series
384, 1933 Act File No. 33-50915).
The Prospectus.
Additional Information not included in the Prospectus (Part II).
Undertakings.
Signatures.
Consent of Independent Auditors.

The following exhibits:

<TABLE>
<C> <S>
1.1 -- Form of Trust Indenture and Agreement (incorporated by reference to
Exhibit 4.a to the Registration Statement of Tax Exempt Securities
Trust, Series 265, 1933 Act File No. 33-15123).

1.1.1 -- Form of Reference Trust Agreement (incorporated by reference to
Exhibit 1.1.1 of Tax Exempt Securities Trust, National Trust 208,
1933 Act File No. 33-58591).

1.2 -- Form of Agreement Among Underwriters (incorporated by reference to
Exhibit 99 to the Registration Statement of Tax Exempt Securities
Trust, Series 384, 1933 Act File No. 33-50915).

2.1 -- Form of Certificate of Beneficial Interest (included in Exhibit 1.1).

3.1 -- Opinion of counsel as to the legality of the securities being issued
including their consent to the use of their name under the headings
"Taxes", "Miscellaneous--Legal Opinion" and "New York Taxes" in the
Prospectus.

3.2 -- Opinion of special Florida counsel.

4.1 -- Consent of the Evaluator.

5.1 -- Consent of KPMG LLP.
</TABLE>

II-2
<PAGE>

SIGNATURES

The registrant, Tax Exempt Securities Trust, Intermediate Term Trust 37,
National Trust 249, Florida Trust 96 and New York Trust 184, hereby identifies
California Trust 163 and New York Trust 168 of the Tax Exempt Securities Trust
for purposes of the representations required by Rule 487 and represents the
following:

(1) That the portfolio securities deposited in the series as to the
securities of which this Registration Statement is being filed do not
differ materially in type or quality from those deposited in such previous
series;

(2) That, except to the extent necessary to identify the specific
portfolio securities deposited in, and to provide essential financial
information for, the series with respect to the securities of which this
Registration Statement is being filed, this Registration Statement does not
contain disclosures that differ in any material respect from those
contained in the registration statements for such previous series as to
which the effective date was determined by the Commission or the staff; and

(3) That it has complied with Rule 460 under the Securities Act of 1933.

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or amendment thereto to be signed
on its behalf by the undersigned thereunto duly authorized, in the City of New
York, and State of New York, on the 29th day of November, 2000.

Signatures appear on page II-4.

A majority of the members of the Board of Directors of Salomon Smith Barney
Inc. has signed this Registration Statement or Amendment to the Registration
Statement pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.

II-3
<PAGE>

Salomon Smith Barney Inc., Depositor

/s/ George S. Michinard, Jr.
By .................................
(George S. Michinard, Jr.)

By the following persons*, who
constitute a majority of the
directors of Salomon Smith Barney
Inc.:

Deryck C. Maughan

Michael A. Carpenter

/s/ George S. Michinard, Jr.
By ..................................
(George S. Michinard, Jr.,
Attorney-in-Fact)
--------
* Pursuant to Powers of Attorney filed as exhibits to Registration Statement
Nos. 333-62533 and 333-66875.

II-4