MUNICIPAL SECURITIES TRUST 1ST DISCOUNT SERIES, 485BPOS, 2000-04-28

MUNICIPAL SECURITIES TRUST 1ST DISCOUNT SERIES
485BPOS, 2000-04-28

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As filed with the Securities and Exchange Commission on April 28, 2000

Registration No. 2-73986*
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

POST-EFFECTIVE AMENDMENT
To
FORM S-6

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

A. Exact name of trust: MUNICIPAL SECURITIES TRUST,
1ST DISCOUNT SERIES
MULTI-STATE SERIES 43 (LONG),
MULTI-STATE SERIES 45, AND
MULTI-STATE SERIES 46

B. Name of depositor: ING FUNDS DISTRIBUTOR, INC.

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

ING FUNDS DISTRIBUTOR, INC.
1475 Dunwoody Drive
West Chester, Pennsylvania 19380

D. Name and complete address of agent for service:

PETER J. DeMARCO Copy of comments to:
Senior Vice President MICHAEL R. ROSELLA, ESQ.
ING Funds Distributor, Inc. Battle Fowler LLP
1475 Dunwoody Drive 75 East 55th Street
West Chester, Pennsylvania 19380 New York, NY 10022
(212) 856-6858

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

|_| immediately upon filing pursuant to paragraph (b) of Rule 485
|x| on April 29, 2000 pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)
|_| on ( date ) pursuant to paragraph (a) of Rule 485

================================================================================

* The Prospectus included in this Registration Statement constitutes a
combined Prospectus as permitted by the provisions of Rule 429 of the
General Rules and Regulations under the Securities Act of 1933 (the "Act").
Said Prospectus covers units of undivided interest in Municipal Securities
Trust, 1st Discount Series, Multi-State Series 43 (Long), Multi-State
Series 45, and Multi-State Series 46 covered by prospectuses heretofore
filed as part of separate registration statements on Form S-6 (Registration
Nos. 2-73986, 33-55996, 33-52397 and 33-58167, respectively) under the Act.
This filing constitutes Post-Effective Amendment No. 19 for 1st Discount
Series, Post-Effective Amendment No. 7 for Multi-State Series 43 (Long),
Post-Effective Amendment No. 6 for Series 55 (Intermediate) & Multi-State
Series 45, and Post-Effective Amendment No. 5 for Multi-State Series 46.

Each of the Registrants filed a Rule 24f-2 Notice for its fiscal year ended
December 31, 1999 on or about March 29, 2000.

175584.1

<PAGE>

Prospectus Part A Dated April 30, 2000

MUNICIPAL SECURITIES TRUST

1ST DISCOUNT SERIES
(MULTIPLIER PORTFOLIO)

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

The Trust is a unit investment trust designated 1st Discount Series
("Municipal Discount Trust") with an underlying portfolio of long-term
tax-exempt bonds and was formed to preserve capital and to provide interest
income which, in the opinions of bond counsel to the respective issuers, is,
with certain exceptions, currently exempt from regular federal income tax under
existing law but may be subject to state and local taxes. There can be no
assurance that the Trust's objectives will be achieved. Although the Supreme
Court has determined that Congress has the authority to subject interest on
bonds such as the Bonds in the Trust to federal income taxation, existing law
excludes such interest from regular federal income tax. Such interest income
may, however, be subject to the federal individual and corporate alternative
minimum tax and to state and local taxes. (See "Description of Portfolio" in
this Part A for a description of those Bonds, if any, which pay interest income
subject to the federal individual alternative minimum tax. In addition, capital
gains are subject to tax. (See "Tax Status" and "The Trust--Portfolio" in Part B
of this Prospectus.) The Sponsor is ING Funds Distributor, Inc. (successor to
Reich & Tang Distributors, Inc.). The value of the Units of the Trust will
fluctuate with the value of the bonds. Minimum purchase: 1 Unit.

This Prospectus consists of two parts. Part A contains the Summary of
Essential Information as of December 31, 1999 (the "Evaluation Date"), a summary
of certain specific information regarding the Trust and audited financial
statements of the Trust, including the related portfolio, as of the Evaluation
Date. Part B of this Prospectus contains a general summary of the Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should retain both parts of this Prospectus for future reference. The
Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.

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

________________________________________________________________________________

THE TRUST. The Trust seeks to achieve its investment objectives
through investment in a fixed, diversified portfolio of long-term bonds issued
by or on behalf of states, municipalities and public authorities (the "Bonds").
All of the Bonds in the Trust were rated "A" or better by Standard & Poor's
Rating Services, a division of The McGraw-Hill Companies, or Moody's Investors
Service, Inc. at the time originally deposited in the Trust. For a discussion of
the significance of such ratings see "Description of Bond Ratings" in Part B of
this Prospectus and for a list of ratings on the Evaluation Date see the
"Portfolio".

112976.1

<PAGE>

The Bonds were acquired at prices which resulted in the portfolio as a
whole being purchased at a deep discount from par value. The portfolio may also
include bonds issued at a substantial original issue discount some of which may
be "Zero Coupon Bonds", which are original issue discount bonds that provide for
payment at maturity at par value, but do not provide for the payment of current
interest. Some of the Bonds in the portfolio may have been purchased at an
aggregate premium over par. Some of the Bonds in the Trust have been issued with
optional refunding or refinancing provisions ("Refunded Bonds") whereby the
issuer of the Bond has the right to call such Bond prior to its stated maturity
date (and other than pursuant to sinking fund provisions) and to issue new bonds
("Refunding Bonds") in order to finance the redemption. Issuers typically
utilize refunding calls in order to take advantage of lower interest rates in
the marketplace. Some of these Refunded Bonds may be called for redemption
pursuant to pre-refunding provisions ("Pre- Refunded Bonds") whereby the
proceeds from the issue of the Refunding Bonds are typically invested in
government securities in escrow for the benefit of the holders of the
Pre-Refunded Bonds until the refunding call date. Usually, Pre-Refunded Bonds
will bear a triple-A rating because of this escrow. The issuers of Pre-Refunded
Bonds must call such Bonds on their refunding call date. Therefore, as of such
date, the Trust will receive the call price for such bonds but will cease
receiving interest income with respect to them. For a list of those Bonds which
are Pre-Refunded Bonds as of the Evaluation Date, if any, see "Notes to
Financial Statements" in this Part A. The payment of interest and preservation
of capital are, of course, dependent upon the continuing ability of the issuers
of the Bonds to meet their obligations.

Investment in the Trust should be made with an understanding of the
risks which an investment in long-term fixed rate obligations may entail,
including the risk that the value of the underlying portfolio will decline with
increases in interest rates, and that the value of Zero Coupon Bonds is subject
to greater fluctuations than coupon bonds in response to changes in interest
rates. A Trust designated as a long-term trust must have a dollar- weighted
average portfolio maturity of more than ten years.

Each Unit in the Trust represents a 1/6563rd undivided interest in the
principal and net income of the Trust. The principal amount of Bonds deposited
in the Trust per Unit is reflected in the Summary of Essential Information. (See
"The Trust--Organization" in Part B of this Prospectus.) The Units being offered
hereby are issued and outstanding Units which have been purchased by the Sponsor
in the secondary market.

PUBLIC OFFERING PRICE. The secondary market Public Offering Price of
each Unit is equal to the aggregate bid price of the Bonds in the Trust divided
by the number of Units outstanding, plus a sales charge of 4.8% of the Public
Offering Price, which is the same as 5.042% of the net amount invested in Bonds
per Unit. In addition, accrued interest to expected date of settlement including
earned original issue discount is added to the Public Offering Price. If Units
had been purchased on the Evaluation Date, the Public Offering Price per Unit
would have been $434.74 plus accrued interest of $13.49 under the monthly
distribution plan, $14.90 under the semi-annual distribution plan and $14.09
under the annual distribution plan, for a total of $448.23, $449.64 and $448.83,
respectively. The Public Offering Price per Unit can vary on a daily basis in
accordance with fluctuations in the aggregate bid price of the Bonds. (See the
"Summary of Essential Information" and "Public Offering--Offering Price" in Part
B of this Prospectus.)

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of each
Trust are offered to investors on a "dollar price" basis (using the computation
method described under "Public Offering -- Offering Price" in Part B) as
distinguished from a "yield price" basis often used in offerings of tax exempt
bonds (involving the lesser of the yield as computed to maturity of bonds or to
an earlier redemption date). Since they are offered on a dollar

A-2
112976.1

<PAGE>

price basis, the rate of return on an investment in Units of each Trust is
measured in terms of "Estimated Current Return" and "Estimated Long Term
Return".

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

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

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

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

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

MARKET FOR UNITS. The Sponsor, although not obligated to do so,
intends to maintain a market for the Units at prices based upon the aggregate
bid price of the Bonds in the portfolio of the Trust. The secondary market
repurchase price is based on the aggregate bid price of the Bonds in the Trust
portfolio, and the reoffer price is based on the aggregate bid price of the

A-3
112976.1

<PAGE>

Bonds plus a sales charge of 4.8% (5.042% of the net amount invested) plus net
accrued interest. If such a market is not maintained, a Certificateholder
will be able to redeem his or her Units with the Trustee at a price also based
upon the aggregate bid price of the Bonds. (See "Sponsor Repurchase" and
"Public Offering--Offering Price" in Part B of this Prospectus.)

A-4
112976.1

<PAGE>

MUNICIPAL SECURITIES TRUST
1ST DISCOUNT SERIES

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
--------------------------------------------------------

<TABLE>

Date of Deposit*: September 23, 1981 Evaluation Time: 4:00 p.m.
Principal Amount of Bonds ... $2,275,000 New York Time.
Number of Units ............. 6,563 Minimum Principal Distribution:
Fractional Undivided Inter- $1.00 per Unit.
est in Trust per Unit ..... 1/6563 Weighted Average Life
Principal Amount of to Maturity: 14.0 Years.
Bonds per Unit ............ $346.64 Minimum Value of Trust:
Secondary Market Public Trust may be terminated if
Offering Price** value of Trust is less than
Aggregate Bid Price $4,400,000 in principal amount
of Bonds in Trust ....... $2,715,888+++ of Bonds.
Divided by 6,563 Units .... $413.82 Mandatory Termination Date:
Plus Sales Charge of 4.8% The earlier of December 31,
of Public Offering Price $20.92 2030 or the disposition of the
Public Offering Price last Bond in the Trust.
per Unit ................ $434.74+ Trustee***: The Bank of New York
Redemption and Sponsor's Trustee's Annual Fee: Monthly
Repurchase Price plan $1.08 per $1,000; semi-
per Unit .................. $413.82+ annual plan $.60 per $1,000;
+++ and annual plan is $.40 per
++++ $1,000.
Excess of Secondary Market Evaluator: Kenny S&P Evaluation
Public Offering Price Services.
over Redemption and Evaluator's Fee for Each
Sponsor's Repurchase Evaluation: Minimum of $12
Price per Unit ............ $20.92++++ plus $.25 per each issue of
Difference between Public Bonds in excess of 50 issues
Offering Price per Unit (treating separate maturities
and Principal Amount per as separate issues).
Unit Premium/(Discount) ... $88.10 Sponsor: ING Funds
Distributor, Inc.

</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------
<TABLE>
<CAPTION>

Monthly Semi-Annual Annual
Option Option Option
------ ----------- -------

Gross annual interest income# ......... $27.43 $27.43 $27.43
Less estimated annual fees and
expenses ............................ 1.27 1.03 .66
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $26.16 $26.40 $26.47
Estimated interest distribution# ...... 2.18 13.20 26.47
Estimated daily interest accrual# ..... .0766 .0733 .0735
Estimated current return#++ ........... 6.02% 6.07% 6.09%
Estimated long term return++ .......... 4.74% 4.83% 4.80%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15

A-5
</TABLE>

112976.1

<PAGE>

Footnotes to Summary of Essential Information

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

** Certain amounts distributable as of December 31, 1999, may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.

*** The Trustee maintains its office at 101 Barclay Street, New York, New
York 10286 (tel. no.: 1-800-701-8178). For information regarding
redemption by the Trustee, see "Trustee Redemption" in Part B of this
Prospectus.

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $13.49 monthly, $14.90 semi-
annually and $14.09 annually.

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

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

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

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

FINANCIAL AND STATISTICAL INFORMATION

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

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

<S> <C> <C> <C> <C> <C> <C>
December 31, 1997 6,959 $645.34 $37.90 $38.25 $38.35 $ 1.14
December 31, 1998 6,827 495.58 29.87 30.19 30.28 131.34
December 31, 1999 6,563 426.96 27.44 27.71 28.59 35.91

</TABLE>

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

A-6
112976.1

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1999

DESCRIPTION OF PORTFOLIO*
- ------------------------

The portfolio of the Trust consists of 5 issues representing
obligations of issuers located in 5 states. The Sponsor has participated as a
sole underwriter or manager, co-manager or member of an underwriting syndicate
from which 5% of the initial aggregate principal amount of the Bonds were
acquired. None of the Bonds are obligations of state and local housing
authorities; approximately 22.0% are hospital revenue bonds; none are issued in
connection with the financing of nuclear generating facilities; and
approximately 15.2% are "mortgage subsidy" bonds. All of the Bonds in the Trust
are subject to redemption prior to their stated maturity dates pursuant to
sinking fund or optional call provisions. The Bonds may also be subject to other
calls, which may be permitted or required by events which cannot be predicted
(such as destruction, condemnation, termination of a contract, or receipt of
excess or unanticipated revenues). None of the Bonds are general obligation
bonds. All five issues, representing $2,275,000 of the principal amount of the
Bonds, are payable from the income of a specific project or authority and are
not supported by the issuer's power to levy taxes. The portfolio is divided for
purpose of issue as follows: Coal Power 1, Hospital 1, Housing 1, Toll Road
Revenue 1, and Water and Sewer Revenue 1. For an explanation of the significance
of these factors see "The Trust-- Portfolio" in Part B of this Prospectus.

As of December 31, 1999, $345,000 (approximately 15.2% of the
aggregate principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, none were Zero Coupon Bonds. Approximately
84.8% of the aggregate principal amount of the Bonds in the Trust were purchased
at a "market" discount from par value at maturity, none were purchased at a
premium and none were purchased at par. For an explanation of the significance
of these factors see "Discount and Zero Coupon Bonds" in Part B of this
Prospectus.

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

_________________

* Changes in the Trust Portfolio: From January 1, 2000 to March 15, 2000,
$50,000 of the principal amount of the Bond in portfolio no. 2 was sold and
$10,000 of the principal amount of the Bond in portfolio no. 4 was called
and is no longer contained in the Trust. 90.30 Units were redeemed from the
Trust.

A-7
112976.1
<PAGE>

Report of Independent Auditors

To the Sponsor, Trustee and Certificateholders of
Municipal Securities Trust, 1st Discount Series

We have audited the accompanying statement of net assets of Municipal Securities
Trust, 1st Discount Series, including the portfolio, as of December 31, 1999 and
the related statements of operations, and changes in net assets and financial
highlights for the year then ended. These financial statements and financial
highlights are the responsibility of the Trustee. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audit. The statement of operations, statement of changes in net assets
and financial highlights for each of the two years in the period ended December
31, 1998 were audited by other auditors whose report thereon dated March 19,
1999, expressed an unqualified opinion on those financial statements and
financial highlights.

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

In our opinion, the 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Municipal Securities Trust, 1st Discount Series at December 31, 1999, the
results of its operations, changes in its net assets and financial highlights
for the year then ended, in conformity with accounting principles generally
accepted in the United States.

/s/ERNST & YOUNG LLP
New York, New York
April 15, 2000

<PAGE>

Municipal Securities Trust

1st Discount Series

Portfolio

December 31, 1999

Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Rate/Date(s) S.F. -Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds Ratings (1) of Maturity Ref .-Refunding Value (3)
(2)
- ------------ ------------- ------------------------------------ -------------- -------------- -------------------- -------------

<S> <C> <C> <C> <C> <C> <C>
1 $ 500,000 Connecticut Health & Education NR 7.000% 7/01/01 @ 100.S.F. $ 544,845
Facilities Authority, Yale-New 7/01/2012 None
Haven Hospital, Series B Revenue

2 355,000 Escambia County Utilities AAA 9.500 9/01/10 @ 100.S.F. 475,302
Authority, Florida, Water and 9/01/2011 None
Sewer Revenue Bonds Series 1981
(MBIA Insured)

3 375,000 State of Indiana, Indiana Toll AAA 9.000 1/01/11 @ 100 S.F. 499,181
Road Commission East-West Toll 1/01/2015 None
Bond Revenue Bonds, 1980 Series

4 345,000 Minnesota Housing Finance Agency, AA 6.250 2/01/00 @ 101 S.F. 348,785
Housing Development, 1977 Series A 2/01/2020 2/01/00 @ 101 Ref.

5 700,000 Sam Rayburn Municipal Power Agency AAA 8.000 No Sinking Fund 866,803
(Texas) Power Supply System 9/01/2012 None
Revenue Bonds, Series 1981

------------- -------------
$2,275,000 Total Investments (Cost $1,423,146) $2,734,916
============= =============

</TABLE>

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

Municipal Securities Trust

1st Discount Series

Footnotes to Portfolio

1 All ratings are by Kenny S&P Evaluation Services, a business unit of J.J.
Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies, Inc. A brief
description of the ratings symbols and their meaning is set forth under
"Description of Bond Ratings" in Part B of the Prospectus.

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

3. At December 31, 1999, the net unrealized appreciation of all the bonds was
comprised of the following:

Gross unrealized appreciation $1,311,770
Gross unrealized depreciation -
------------------
Net unrealized appreciation $1,311,770
==================

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

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

1st Discount Series

Statement of Net Assets

December 31, 1999

<S> <C>
Investments in securities, at market value (cost $1,423,146) $ 2,734,916

Other assets
Accrued interest 73,269
-----------------
Total other assets 73,269
-----------------

Liabilities
Advance from Trustee 6,056
-----------------
Total liabilities 6,056
-----------------

Excess of other assets over total liabilities 67,213
-----------------

Net assets (6,563 units of fractional undivided
interest outstanding, $426.96 per unit) $ 2,802,129
=================

</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

1st Discount Series

Statement of Operations

Year ended December 31,
1999 1998 1997
------------------ ----------------- ----------------
<S> <C> <C> <C>
Investment income
Interest $ 191,821 $ 208,847 $ 276,883

Expenses
Trustee's fees 9,370 9,944 9,946
Evaluator's fee 3,348 3,273 3,013
------------------ ----------------- ----------------
Total expenses 12,718 13,217 12,959
------------------ ----------------- ----------------

Net investment income 179,103 195,630 263,924
------------------ ----------------- ----------------

Realized and unrealized gain (loss)
Realized gain on investments 163,895 424,807 122,791
Unrealized appreciation (depreciation)
on investments (377,288) (543,243) 146,105
------------------ ----------------- ----------------
Net gain (loss) on investments (213,393) (118,436) 268,896
------------------ ----------------- ----------------
Net increase (decrease) in net assets
resulting from operations $ (34,290) $ 77,194 $ 532,820
================== ================= ================

</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

1st Discount Series

Statement of Changes in Net Assets

Year ended December 31,
1999 1998 1997
------------------- ------------------ ------------------
<S> <C> <C> <C>
Operations
Net investment income $ 179,103 $ 195,630 $ 263,924
Realized gain on investments 163,895 424,807 122,791
Unrealized appreciation (depreciation)
on investments (377,288) (543,243) 146,105
------------------- ------------------ ----------------
Net increase (decrease) in net assets resulting
from operations (34,290) 77,194 532,820
------------------- ------------------ ----------------

Distributions to Certificateholders
Investment income 184,392 205,381 267,137
Principal 237,636 902,751 7,933

Redemptions
Interest 4,781 2,048 4,129
Principal 120,118 74,566 141,812
------------------- ------------------ ----------------
Total distributions and redemptions 546,927 1,184,746 421,011
------------------- ------------------ ----------------

Total increase (decrease) (581,217) (1,107,552) 111,809

Net assets
Beginning of year 3,383,346 4,490,898 4,379,089
------------------- ------------------ ----------------
End of year (including undistributed net
investment income of $86,245, $96,315 and
$108,114, respectively) $ 2,802,129 $ 3,383,346 $ 4,490,898
=================== ================== ===============

</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

1st Discount Series

Financial Highlights

Selected data for a unit of the Trust outstanding:*

Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------

<S> <C> <C> <C>
Net asset value, beginning of year** $495.58 $645.34 $608.46
------------------ ------------------- ------------------

Interest income 28.65 30.30 39.12
Expenses (1.90) (1.92) (1.83)
------------------ ------------------- ------------------
Net investment income 26.75 28.38 37.29
------------------ ------------------- ------------------
Net gain or loss on investments(1) (31.62) (17.07) 39.03
------------------ ------------------- ------------------
Total from investment operations (4.87) 11.31 76.32
------------------ ------------------- ------------------

Less distributions
to Certificateholders
Income 27.54 29.80 37.74
Principal 35.50 130.97 1.12
for Redemptions
Interest .71 .30 .58
------------------ ------------------- ------------------
Total distributions 63.75 161.07 39.44
------------------ ------------------- ------------------
Net asset value, end of year** $426.96 $495.58 $645.34
================== =================== ==================

(1) Net gain or loss on investments is a result of changes in outstanding
units since January 1, 1999, 1998 and 1997, respectively, and the dates of
net gain and loss on investments.

* Unless otherwise stated, based upon average units outstanding during the
year of 6,695 ([6,563 + 6,827])/2) for 1999, 6,893 ([6,827 + 6,959]/2) for
1998 and of 7,078 ([6,959 + 7,197]/2) for 1997.

** Based upon actual units outstanding.

</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust, 1st Discount Series

Notes to Financial Statements

December 31, 1999

1. Organization

Municipal Securities Trust, 1st Discount Series (the "Trust") was organized on
September 23, 1981 by Bear, Stearns & Co. Inc. under the laws of the State of
New York by a Trust Indenture and Agreement, and is registered under the
Investment Company Act of 1940. The Trust was formed to preserve capital and to
provide interest income.

On September 28, 1995, Reich & Tang Distributors, Inc. ("Reich & Tang") had
become the successor sponsor to certain of the unit investment trusts previously
sponsored by Bear, Stearns & Co. Inc. As successor sponsor, Reich & Tang had
assumed all of the obligations and rights of Bear, Stearns & Co. Inc., the
previous sponsor.

Effective February 9, 2000, ING Funds Distributor, Inc. ("ING") has become the
successor sponsor to certain unit investment trusts previously sponsored by
Reich & Tang. As successor sponsor, ING has assumed all of the obligations and
rights of Reich & Tang, the previous sponsor.

2. Summary of Significant Accounting Policies

The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ from those
estimates. Interest income is recorded on the accrual basis.

Security Valuation

Investments are carried at market value which is determined by Kenny S&P
Evaluation Services, a business unit of J.J. Kenny Company, Inc., a subsidiary
of the McGraw-Hill Companies, Inc. The market value of the portfolio is based
upon the bid prices for the bonds at the end of the year, which approximates the
fair value of the security at that date, except that the market value on the
date of deposit represents the cost to the Trust based on the offering prices
for investments at that date. The difference between cost and market value is
reflected as unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost of the
securities sold or redeemed.

<PAGE>

Municipal Securities Trust, 1st Discount Series

Notes to Financial Statements (continued)

3. Income Taxes

No provision for federal income taxes has been made in the accompanying
financial statements because the Trust intends to continue to qualify for the
tax treatment applicable to Grantor Trusts under the Internal Revenue Code.
Under existing law, if the Trust so qualifies, it will not be subject to federal
income tax on net income and capital gains that are distributed to unitholders.

4. Trust Administration

The Bank of New York (the "Trustee") has custody of assets and responsibility
for the accounting records and financial statements of the Trust and is
responsible for establishing and maintaining a system of internal control
related thereto. The Trustee is also responsible for all estimates of expenses
and accruals reflected in the Trust's financial statements.

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

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

The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the years ended December 31, 1999, 1998 and 1997, 264, 132 and 238
units were redeemed, respectively.

The Trust pays an annual fee for trustee services rendered by the Trustee that
ranges from $.40 to $1.08 per $1,000 of outstanding investment principal. In
addition, a minimum fee of $12.00 is paid to a service bureau for each portfolio
valuation. For the years ended December 31, 1999, 1998 and 1997 the "Trustee's
Fees" are comprised of Trustee fees of $2,457, $2,895 and $3,552 and other
expenses of $6,913, $7,049 and $6,394, respectively. The other expenses include
professional, printing and miscellaneous fees.

<PAGE>

Municipal Securities Trust, 1st Discount Series

Notes to Financial Statements (continued)

5. Net Assets

At December 31, 1999, the net assets of the Trust represented the interest of
Certificateholders as follows:

Original cost to Certificateholders $ 8,043,970
Less initial gross underwriting commission 442,330
-------------------
7,601,640

Accumulated cost of securities sold, matured or called (6,178,494)
Net unrealized appreciation 1,311,770
Undistributed net investment income 86,245
Distributions in excess of proceeds from investments (19,032)
-------------------
Total $ 2,802,129
===================

The original cost to Certificateholders, less the initial gross underwriting
commission, represents the aggregate initial public offering price net of the
applicable sales charge on 11,000 units of fractional undivided interest of the
Trust as of the date of deposit.

6. Concentration of Credit Risk

Since the Trust invests a portion of its assets in municipal bonds, it may be
affected by economic and political developments in the municipalities. Certain
debt obligations held by the Trust may be entitled to the benefit of insurance,
standby letters of credit or other guarantees of banks or other financial
institutions.

<PAGE>

Prospectus Part A Dated April 30, 2000

MUNICIPAL SECURITIES TRUST

MULTI-STATE SERIES 43
(MULTIPLIER PORTFOLIO)

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

The Trust consists of one unit investment trust designated Virginia
Trust (Long) (the "Trust"). The Trust contains an underlying portfolio of
long-term tax-exempt bonds issued by or on behalf of Virginia and its
municipalities and public authorities and was formed to preserve capital and to
provide interest income (including, where applicable, earned original issue
discount) which, in the opinions of bond counsel to the respective issuers, is,
with certain exceptions, currently exempt from regular Federal income tax under
existing law. There can be no assurance that the Trusts' investment objectives
will be achieved. Although the Supreme Court has determined that Congress has
the authority to subject interest on bonds such as the Bonds in the Trust to
federal income taxation, existing law excludes such interest from federal income
tax. In addition, in the opinion of counsel to the Sponsor, the interest income
of each State Trust is exempt, to the extent indicated, from state and local
taxes when held by residents of the state where the issuers of the Bonds in such
State Trust are located. Such interest income may, however, be subject to the
federal individual and corporate alternative minimum tax and to state and local
taxes in other jurisdictions. (See "Description of Portfolios" in this Part A
for a description of those Bonds, if any, which pay interest income subject to
the federal individual alternative minimum tax.) In addition, capital gains are
subject to tax. (See "Tax Status" and "The Portfolios--General.") The Sponsor is
ING Funds Distributor, Inc. (successor to Reich & Tang Distributors, Inc.). The
value of the Units of the Trust will fluctuate with the value of the underlying
bonds. Minimum purchase: 1 Unit.

This Prospectus consists of two parts. Part A contains the Summary of
Essential Information including descriptive material relating to the Trust as of
December 31, 1999 (the "Evaluation Date"), a summary of certain specific
information regarding the Trust and audited financial statements of the Trust,
including the related portfolio, as of the Evaluation Date. Part B of this
Prospectus contains a general summary of the State Trusts. Part A of this
Prospectus may not be distributed unless accompanied by Part B. Investors should
read and retain both parts of this Prospectus for future reference. The
Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.

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

Principal Secondary Market
Number of Amount of Offering Price
Units Bonds per Unit (12/31/99)
--------- --------- -------------------

Virginia Trust 2,215 $2,235,000 $985.65

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

181353.1

<PAGE>

THE TRUST. The Trust seeks to achieve its investment objectives
through investment in a fixed, diversified portfolio of long-term bonds (the
"Bonds") issued by or on behalf of the State for which such Trust is named and
political subdivisions, municipalities and public authorities thereof and of
Puerto Rico and its public authorities. All of the Bonds in each State Trust
were rated "A" or better by Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, or Moody's Investors Service, Inc. at the time originally
deposited in the State Trusts. For a discussion of the significance of such
ratings, see "Description of Bond Ratings" in Part B of this Prospectus and for
a list of ratings on the Evaluation Date see the "Portfolio."

The Trust contains bonds that were acquired at prices which resulted
in the portfolios as a whole being purchased at a deep discount from par value.
The portfolio may also include bonds issued at a substantial original issue
discount, some of which may be Zero Coupon Bonds that provide for payment at
maturity at par value, but do not provide for the payment of current interest.
Gain on the disposition of a Bond or a Unit purchased at a market discount
generally will be treated as ordinary income, rather than capital gain, to the
extent of accrued market discount. Some of the Bonds in the portfolio may have
been purchased at an aggregate premium over par. (See "Tax Status" in Part B of
this Prospectus.) Some of the Bonds in the Trust have been issued with optional
refunding or refinancing provisions ("Refunded Bonds") whereby the issuer of the
Bond has the right to call such Bond prior to its stated maturity date (and
other than pursuant to sinking fund provisions) and to issue new bonds
("Refunding Bonds") in order to finance the redemption. Issuers typically
utilize refunding calls in order to take advantage of lower interest rates in
the marketplace. Some of these Refunded Bonds may be called for redemption
pursuant to pre-refunding provisions ("Pre- Refunded Bonds") whereby the
proceeds from the issue of the Refunding Bonds are typically invested in
government securities in escrow for the benefit of the holders of the
Pre-Refunded Bonds until the refunding call date. Usually, Pre-Refunded Bonds
will bear a triple-A rating because of this escrow. The issuers of Pre-Refunded
Bonds must call such Bonds on their refunding call date. Therefore, as of such
date, the Trust will receive the call price for such bonds but will cease
receiving interest income with respect to them. For a list of those Bonds which
are Pre-Refunded Bonds, if any, as of the Evaluation Date, see "Notes to
Financial Statements" in this Part A. The payment of interest and preservation
of capital are, of course, dependent upon the continuing ability of the issuers
of the Bonds to meet their obligations.

Investment in the Trust should be made with an understanding of the
risks which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline with
increases in interest rates, and that the value of Zero Coupon Bonds is subject
to greater fluctuation than coupon bonds in response to such changes in interest
rates. A Trust designated as a long-term trust must have a dollar-weighted
average portfolio maturity of more than ten years.

Each Unit represents a fractional undivided interest in the principal
and net income of the Trust. The principal amount of Bonds deposited in the
Trust per Unit is reflected in the Summary of Essential Information. The Trust
will be administered as a distinct entity with separate certificates, expenses,
books and records. (See "The Trust-- Organization" in Part B of this
Prospectus.) The Units being offered hereby are issued and outstanding Units
which have been purchased by the Sponsor in the secondary market.

A-2
181353.1

<PAGE>

In addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units of the Trust had been purchased on the
Evaluation Date, the Public Offering Price per Unit would have been $985.65 plus
accrued interest of $5.84 under the monthly distribution plan, $10.28 under the
semi-annual distribution plan and $10.32 under the annual distribution plan, for
a total of $991.49, $995.97 and $995.93, respectively. The Public Offering Price
per Unit can vary on a daily basis in accordance with fluctuations in the
aggregate bid price of the Bonds. (See "Summary of Essential Information" and
"Public Offering--Offering Price" in Part B of this Prospectus.)

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

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

A-3
181353.1

<PAGE>

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

MARKET FOR UNITS. The Sponsor, although not obligated to do so,
intends to maintain a secondary market for the Units at prices based on the
aggregate bid price of the Bonds in the Trust portfolio. The secondary market
repurchase price is based on the aggregate bid price of the Bonds in the Trust
portfolio, and the reoffer price is based on the aggregate bid price of the
Bonds plus a sales charge of 3.6% of the Public Offering Price (3.734% of the
net amount invested) plus net accrued interest. If a market is not maintained, a
Certificateholder will be able to redeem his or her Units with the Trustee at a
price also based on the aggregate bid price of the Bonds. (See "Sponsor
Repurchase" and "Public Offering--Offering Price" in Part B of this Prospectus.)

For additional information regarding the Public Offering Price and
Estimated Current Return and Estimated Long Term Return for Units of the Trust,
descriptions of interest and principal distributions, repurchase and redemption
of Units and other essential information regarding the Trust, please refer to
the Summary of Essential Information for the Trust on the immediately succeeding
page.

A-4
181353.1

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 43

VIRGINIA TRUST (LONG)

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
--------------------------------------------------------

<S> <C> <C>
Date of Deposit*: April 22, 1993 Minimum Principal Distribution:
- --------------- ------------------------------
Principal Amount of Bonds . $2,235,000 $1.00 per Unit.
- -------------------------
Number of Units ........... 2,215 Weighted Average Life
- --------------- ---------------------
Fractional Undivided Inter- to Maturity: 10.8 Years.
- -------------------------- -----------
est in Trust per Unit ... 1/2215 Minimum Value of Trust: Trust
--------------------- ----------------------
Principal Amount of may be terminated if value of
- -------------------
Bonds per Unit .......... $1,009.03 Trust is less than $1,200,000
--------------
Secondary Market Public in principal amount of Bonds.
- -----------------------
Offering Price** Mandatory Termination Date:
-------------- --------------------------
Aggregate Bid Price The earlier of December 31,
of Bonds in Trust ..... $2,104,558+++ 2042 or the disposition of
Divided by 2,215 Units .. $950.14 the last Bond in the Trust.
Plus Sales Charge of 3.6% Trustee***:
-------
of Public Offering The Chase Manhattan Bank.
Price.................. $35.51 Trustee's Annual Fee: Monthly
--------------------
Public Offering Price plan $1.10 per $1,000; semi-
per Unit .............. $985.65+ annual plan $.63 per $1,000;
Redemption and Sponsor's and annual plan is $.36 per
- ------------------------ $1,000.
Repurchase Price
----------------
per Unit ................ $950.14+ Evaluator: Kenny S&P
-------- +++ ---------
++++ Evaluation Services.
Excess of Secondary Market Evaluator's Fee for Each
- -------------------------- ------------------------
Public Offering Price Evaluation: Minimum of $8
--------------------- ----------
over Redemption and plus $.25 per each issue of
-------------------
Sponsor's Repurchase Bonds in excess of 50 issues
--------------------
Price per Unit .......... $35.51++++ (treating separate maturities
--------------
Difference between Public as separate issues).
- -------------------------
Offering Price per Unit Sponsor: ING Funds
----------------------- -------
and Principal Amount per Distributor, Inc.
------------------------
Unit Premium/(Discount) . $(23.38) Sponsor's Annual Fee: Maximum
----------------------- --------------------
Evaluation Time: 4:00 p.m. of $.25 per $1,000 principal
- --------------- amount of Bonds (see "Trust
New York Time. Expenses and Charges" in
Part B of this Prospectus).

</TABLE>

<TABLE>
<CAPTION>
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------

Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# ......... $55.48 $55.48 $55.48
Less estimated annual fees and
expenses ............................ 2.81 2.21 1.71
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $52.67 $53.27 $53.77
Estimated interest distribution# ...... 4.38 26.63 53.77
Estimated daily interest accrual# ..... .1463 .1479 .1493
Estimated current return#++ ........... 5.34% 5.40% 5.46%
Estimated long term return++ .......... 5.46% 5.52% 5.58%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15

</TABLE>

A-5
181353.1

<PAGE>

Footnotes to Summary of Essential Information

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

** Certain amounts distributable as of December 31, 1999, may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.

*** The Trustee maintains its principal executive office at 270 Park
Avenue, New York, New York 10017 and its unit investment trust office
at 4 New York Plaza, New York, New York 10004 (tel. no.:
1-800-882-9898). For information regarding redemption by the Trustee,
see "Trustee Redemption" in Part B of this Prospectus.

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $5.84 monthly, $10.28 semi-
annually and $10.32 annually for the Virginia Trust.

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

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

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

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

FINANCIAL AND STATISTICAL INFORMATION

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

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

December 31, 1997 2,955 $1,020.54 $54.59 $55.14 $55.28 $2.73
December 31, 1998 2,695 1,028.69 53.95 54.52 54.70 9.91
December 31, 1999 2,215 960.53 53.54 54.08 54.35 -0-

</TABLE>

A-6
181353.1

<PAGE>

INFORMATION REGARDING THE TRUSTS
AS OF DECEMBER 31, 1999

DESCRIPTION OF PORTFOLIO

Each Unit in the Trust consists of a 1/2215th undivided interest in
the principal and net income of the Trust in the ratio of one Unit for each
$1,009.03 of principal amount of the Bonds currently held in the Trust. The
Sponsor has not participated as a sole underwriter or manager, co-manager or
member of an underwriting syndicate from which any of the initial aggregate
principal amount of the Bonds were acquired. The portfolio of the Virginia Trust
consists of 11 issues of 9 issuers located in Virginia and 1 in Puerto Rico.
None of the Bonds are obligations of state and local housing authorities;
approximately 1.8% are hospital revenue bonds; and none were issued in
connection with the financing of nuclear generating facilities. None of the
issues comprising the aggregate principal amount of the Trust are mortgage
revenue bonds. All of the Bonds are subject to redemption prior to their stated
maturity dates pursuant to sinking fund or optional call provisions. The Bonds
may also be subject to other calls, which may be permitted or required by events
which cannot be predicted (such as destruction, condemnation, termination of a
contract, or receipt of excess or unanticipated revenues). One issue
representing $250,000 of the principal amount of the Bonds is a general
obligation bond. All ten of the remaining issues representing $1,985,000 of the
principal amount of the Bonds are payable from the income of a specific project
or authority and are not supported by the issuer's power to levy taxes. The
portfolio is divided for purpose of issue as follows: Bridge and Tunnel 1,
College 1, Electric 2, Expressway Improvement 1, Hospital 1, Office Building 1,
Waste Improvement 1, Water and Sewer 1, and Water Improvement 1. For an
explanation of the significance of these factors see "The State
Trusts--Portfolios" in Part B of this Prospectus.

As of December 31, 1999, $1,005,000 (approximately 45.0% of the
aggregate principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, $140,000 (approximately 6.3% of the
aggregate principal amount of the Bonds) were Zero Coupon Bonds. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at par value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. None of the aggregate principal amount
of the Bonds in the Trust were purchased at a "market" discount from par value
at maturity, approximately 55.0% were purchased at a premium and none were
purchased at par. For an explanation of the significance of these factors see
"The Portfolios--Discount and Zero Coupon Bonds" in Part B of this Prospectus.

Portfolio No. 7 in the Virginia Trust (Long) is subject to the federal
individual alternative minimum tax under the Tax Reform Act of 1986. See "Tax
Status" in Part B of this Prospectus.

A-7
181353.1

<PAGE>

Report of Independent Auditors

The Sponsor, Trustee and Certificateholders of Municipal Securities Trust,
Multi-State Series 43, Virginia Trust

We have audited the accompanying statement of net assets of Municipal Securities
Trust Multi-State Series 43, Virginia Trust, including the portfolio, as of
December 31, 1999 and the related statements of operations, and changes in net
assets and financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Trustee. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of operations, statement
of changes in net assets and financial highlights for each of the two years in
the period ended December 31, 1998 were audited by other auditors whose report
thereon dated March 19, 1999, expressed an unqualified opinion on those
financial statements and financial highlights.

In our opinion, the 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Municipal Securities Trust, Multi-State Series 43, Virginia Trust at December
31, 1999, the results of its operations, changes in its net assets and financial
highlights for the year then ended, in conformity with accounting principles
generally accepted in the United States.

/s/ERNST & YOUNG LLP
New York, New York
April 15, 2000

<PAGE>

Municipal Securities Trust

Multi-State Series 43, Virginia Trust

Portfolio

December 31, 1999

<TABLE>
<CAPTION>
Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Rate/Date(s) S.F.-Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds Ratings of Maturity Ref.-Refunding Value (3)
(1) (2)
- ------------ ----------- -------------------------------------------- ----------- -------------- -------------------- -------------

<S> <C> <C> <C> <C> <C>
1 $ 270,000 Chesapeake Bay Va. Bridge & Tunnel Commsn. AAA 5.750% 7/01/23 @ 100 S.F. $ 274,882
Dist. Rev. Rfndg. Bonds 1991 (MBIA Corp.) 7/01/2025 7/01/01 @ 100 Ref.

2 40,000 Hampton Roads Va. Med. Cllg. Gen. Rev. A- 6.875 11/15/03 @ 100 S.F. 42,380
Bonds Series 1991B 11/15/2016 11/15/01 @ 102 Ref.

3 130,000 Prince William Cnty. Va. Serv. Auth. Wtr. AAA 6.000 7/01/22 @ 100 S.F. 132,817
& Swr. Sys. Rev. Bonds Series 1991 7/01/2029 7/01/01 @ 100 Ref.
(Financial Guaranty)

4 340,000 Richmond Va. Metro. Auth. Expwy. Rev. AAA 5.750 7/15/17 @ 100 S.F. 349,098
Rfndg. Bonds Series A (Financial Guaranty) 7/15/2022 7/15/02 @ 100 Ref.

5 165,000 Roanoke Cnty. Va. Ind. Dev. Auth. Lease A 5.625 4/15/07 @ 100 S.F. 162,334
Rev. Bonds (Roanoke Cnty. Admnstion. 4/15/2013 4/15/03 @ 102 Ref.
Cntr.) Series 1993

6 200,000 Roanoke Cnty. Va. Wtr. Sys. Rev. Bonds AAA 6.000 7/01/22 @ 100 S.F. 204,334
Series 1991 (Financial Guaranty) 7/01/2031 7/01/01 @ 100 Ref.

7 300,000 S.E. Va. Pub. Serv. Auth. Of Va. Sr. Rev. A- 6.000 7/01/05 @ 100 S.F. 284,457
Bonds Rgnl. Solid Waste Sys. Series 1993 7/01/2017 7/01/03 @ 102 Ref.
(AMT)

8 250,000 City of Suffolk Va. Genl. Oblig. Pub. A 6.000 No Sinking Fund 254,125
Imprvmnt. & Rfndg. Bonds Series 1993 8/01/2013 8/01/03 @ 102 Ref.

9 400,000 Williamsburg Va. Ind. Dev. Auth. Hosp. A 5.750 10/01/13 @ 100 S.F. 363,688
Fac. Rev. Bonds (Williamsburg 10/01/2022 10/01/03 @ 102 Ref.
Commnty Hosp.)

10 100,000 P.R. Elec. Pwr. Auth. Pwr. Rev. Rfndg. BBB+ 0.000 7/01/15 @ 87.06 S.F. 35,118
Bonds Series N 7/01/2017 None

11 40,000 P.R. Elec. Pwr. Auth. Pwr. Rev. Bonds BBB+ 0.000 No Sinking Fund 14,047
Series O 7/01/2017 None

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

$2,235,000 Total Investments (Cost $2,147,652) $2,117,280
=========== =============
</TABLE>

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 43, Virginia Trust

Footnotes to Portfolio

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

3. At December 31, 1999, the net unrealized depreciation of all the bonds was
comprised of the following:

Gross unrealized appreciation $ 13,388
Gross unrealized depreciation (43,760)
----------------
Net unrealized depreciation $ (30,372)
================

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 43, Virginia Trust

Statement of Net Assets

December 31, 1999

Investments in securities, at market value (cost $2,147,652) $ 2,117,280

Other assets
Accrued interest 49,988
---------------
Total other assets 49,988
---------------

Liabilities
Advance from Trustee 39,699
---------------
Total liabilities 39,699
---------------

Excess of other assets over total liabilities 10,289
---------------

Net assets (2,215 units of fractional undivided
interest outstanding, $960.53 per unit) $ 2,127,569
===============

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 43, Virginia Trust

Statement of Operations

<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------

<S> <C> <C> <C>
Investment income
Interest $ 143,834 $ 159,272 $ 171,487

Expenses
Trustee's fees 3,914 4,372 4,463
Evaluator's fee 2,113 2,283 2,046
Sponsor's advisory fee 669 738 769
------------------ ------------------- ------------------
Total expenses 6,696 7,393 7,278
------------------ ------------------- ------------------

Net investment income 137,138 151,879 164,209
------------------ ------------------- ------------------

Realized and unrealized gain (loss)
Realized gain on investments 2,694 4,645 997
Unrealized appreciation (depreciation)
on investments (172,307) 44,865 88,238
------------------ ------------------- ------------------
Net gain (loss) on investments (169,613) 49,510 89,235
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations $ (32,475) $ 201,389 $ 253,444
================== =================== ==================
</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 43, Virginia Trust

Statement of Changes in Net Assets

<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------

<S> <C> <C> <C>
Operations
Net investment income $ 137,138 $ 151,879 $ 164,209
Realized gain on investments 2,694 4,645 997
Unrealized appreciation (depreciation)
on investments (172,307) 44,865 88,238
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations (32,475) 201,389 253,444
------------------ ------------------- ------------------

Distributions to Certificateholders
Investment income 132,111 149,393 163,102
Principal - 27,263 8,067

Redemptions
Interest 6,616 3,750 302
Principal 474,284 263,631 38,821
------------------ ------------------- ------------------
Total distributions and redemptions 613,011 444,037 210,292
------------------ ------------------- ------------------

Total increase (decrease) (645,486) (242,648) 43,152

Net assets
Beginning of year 2,773,055 3,015,703 2,972,551
------------------ ------------------- ------------------
End of year (including undistributed net investment
income of $39,357, $40,946 and $42,210,
respectively) $ 2,127,569 $ 2,773,055 $ 3,015,703
================== =================== ==================
</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 43, Virginia Trust

Financial Highlights

Selected data for a unit of the Trust outstanding:*

<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------

<S> <C> <C> <C>
Net asset value, beginning of year** $ 1,028.96 $ 1,020.54 $ 992.50
------------------ ------------------- ------------------

Interest income 58.59 56.38 57.64
Expenses (2.73) (2.62) (2.45)
------------------ ------------------- ------------------
Net investment income 55.86 53.76 55.19
------------------ ------------------- ------------------
Net gain or loss on investments (1) (67.79) 18.52 30.48
------------------ ------------------- ------------------
Total from investment operations (11.93) 72.28 85.67
------------------ ------------------- ------------------

Less distributions
to Certificateholders
Income 53.81 52.88 54.82
Principal - 9.65 2.71
for Redemptions
Interest 2.69 1.33 .10
------------------ ------------------- ------------------
Total distributions 56.50 63.86 57.63
------------------ ------------------- ------------------
Net asset value, end of year** $ 960.53 $ 1,028.96 $ 1,020.54
================== =================== ==================
</TABLE>

(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net gain
and loss on investments.

* Unless otherwise stated, based upon average units outstanding during the
year of 2,455 ([2,215 + 2,695]/2) for 1999, 2,825 ([2,695 + 2,955]/2) for
1998 and of 2,975 ([2,955+ 2,995]/2) for 1997.

** Based upon actual units outstanding.

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 43, Virginia Trust

Notes to Financial Statements

December 31, 1999

1. Organization

Municipal Securities Trust, Multi-State Series 43, Virginia Trust (the "Trust")
was organized on April 22, 1993 by Bear, Stearns & Co. Inc. and Gruntal & Co.,
Incorporated under the laws of the State of New York by a Trust Indenture and
Agreement, and is registered under the Investment Company Act of 1940. The Trust
was formed to preserve capital and to provide interest income.

Effective February 9, 2000, Gruntal & Co. resigned as a co-sponsor of certain
unit investment trusts previously co-sponsored with Reich & Tang. ING Funds
Distributor, Inc. ("ING") has become the successor sponsor to certain unit
investment trusts previously sponsored by Reich & Tang. As successor sponsor,
ING has assumed all of the obligations and rights of Reich & Tang, the previous
sponsor.

2. Summary of Significant Accounting Policies

Interest Income

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

<PAGE>

Municipal Securities Trust

Multi-State Series 43, Virginia Trust

Notes to Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Security Valuation

Investments are carried at market value which is determined by Kenny S&P
Evaluation Services, a business unit of J.J. Kenny Company, Inc., a subsidiary
of the McGraw-Hill Companies, Inc. The market value of the portfolio is based
upon the bid prices for the bonds at the end of the year, which approximates the
fair value of the security at that date, except that the market value on the
date of deposit represents the cost to the Trust based on the offering prices
for investments at that date. The difference between cost (including accumulated
accretion of original issue discount on zero-coupon bonds) and market value is
reflected as unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost of the
securities sold or redeemed.

3. Income Taxes

4. Trust Administration

The Chase Manhattan Bank (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of the Trust
and is responsible for establishing and maintaining a system of internal control
related thereto. The Trustee is also responsible for all estimates of expenses
and accruals reflected in the Trust's financial statements.

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

<PAGE>
Municipal Securities Trust

Multi-State Series 43, Virginia Trust

Notes to Financial Statements (continued)

4. Trust Administration (continued)

The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the years ended December 31, 1999, 1998 and 1997, 480, 260 and 40
units were redeemed, respectively.

The Trust pays an annual fee for trustee services rendered by the Trustee that
ranges from $.36 to $1.10 per $1,000 of outstanding investment principal. In
addition, a minimum fee of $8.00 is paid to a service bureau for each portfolio
valuation. A maximum fee of $.25 per $1,000 of outstanding investment principal
is paid to the Sponsor. For the years ended December 31, 1999, 1998 and 1997,
the "Trustee's Fees" are comprised of Trustee fees of $2,220, $2,575 and $2,518
and other expenses of $1,694, $1,797 and $1,945 respectively. The other expenses
include professional, printing and miscellaneous fees.

5. Net Assets

At December 31, 1999, the net assets of the Trust represented the interest of
Certificateholders as follows:

Original cost to Certificateholders $ 3,078,037
Less initial gross underwriting commission 150,824
------------------
2,927,213

Accumulated cost of securities sold, matured or called (795,909)
Net unrealized depreciation (30,372)
Undistributed net investment income 39,357
Distributions in excess of proceeds from investments (12,720)
------------------
Total $ 2,127,569
==================

<PAGE>
Municipal Securities Trust

Multi-State Series 43, Virginia Trust

Notes to Financial Statements (continued)

5. Net Assets (continued)

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

Undistributed net investment income includes accumulated accretion of original
issue discount of $16,348.

6. Concentration of Credit Risk

<PAGE>

Prospectus Part A Dated April 30, 2000

MUNICIPAL SECURITIES TRUST

MULTI-STATE SERIES 45
(MULTIPLIER PORTFOLIO)
- -------------------------------------------------------------------------------

The Trust consists of one unit investment trust designated Virginia
Trust (the "State Trust"). The State Trust contains an underlying portfolio of
long-term tax-exempt bonds issued by or on behalf of states, municipalities and
public authorities and was formed to preserve capital and to provide interest
income (including, where applicable, earned original issue discount) which, in
the opinions of bond counsel to the respective issuers, is, with certain
exceptions, currently exempt from regular Federal income tax under existing law.
There can be no assurance that the Trusts' investment objectives will be
achieved. Although the Supreme Court has determined that Congress has the
authority to subject interest on bonds such as the Bonds in the Trust to federal
income taxation, existing law excludes such interest from federal income tax. In
addition, in the opinion of counsel to the Sponsor, the interest income of each
State Trust is exempt, to the extent indicated, from state and local taxes when
held by residents of the state where the issuers of the Bonds in such State
Trust are located. Such interest income may, however, be subject to the federal
individual and corporate alternative minimum tax and to state and local taxes in
other jurisdictions. (See "Description of Portfolios" in this Part A for a
description of those Bonds, if any, which pay interest income subject to the
federal individual alternative minimum tax.) In addition, capital gains are
subject to tax. (See "Tax Status" and "The Portfolios--General.") The Sponsor is
ING Funds Distributor, Inc. (successor to Reich & Tang Distributors, Inc.). The
value of the Units of the Trust will fluctuate with the value of the underlying
bonds. Minimum purchase: 1 Unit.

This Prospectus consists of two parts. Part A contains the Summary of
Essential Information including descriptive material relating to each State
Trust as of December 31, 1999 (the "Evaluation Date"), a summary of certain
specific information regarding each State trust and audited financial statements
of each State Trust, including the related portfolio, as of the Evaluation Date.
Part B of this Prospectus contains a general summary of the State Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should read and retain both parts of this Prospectus for future
reference. The Securities and Exchange Commission ("SEC") maintains a website
that contains reports, proxy and information statements and other information
regarding the Trust which is filed electronically with the SEC. The SEC's
Internet address is http:www.sec.gov. Offering materials for the sale of these
units available through the Internet are not being offered directly or
indirectly to residents of a particular state nor is an offer of these units
through the Internet specifically directed to any person in a state by, or on
behalf of, the issuer.

- -------------------------------------------------------------------------------
Principal Secondary Market
Number of Amount of Offering Price
Units Bonds per Unit (12/31/99)
--------- --------- -------------------

Virginia Trust 2,083 $2,065,000 $977.50

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

263868.1

<PAGE>

The State Trust contains bonds that were acquired at prices which
resulted in the portfolios as a whole being purchased at a deep discount from
par value. The portfolio may also include bonds issued at a substantial original
issue discount, some of which may be Zero Coupon Bonds that provide for payment
at maturity at par value, but do not provide for the payment of current
interest. Gain on the disposition of a Bond or a Unit purchased at a market
discount generally will be treated as ordinary income, rather than capital gain,
to the extent of accrued market discount. Some of the Bonds in the portfolio may
have been purchased at an aggregate premium over par. (See "Tax Status" in Part
B of this Prospectus.) Some of the Bonds in the Trust have been issued with
optional refunding or refinancing provisions ("Refunded Bonds") whereby the
issuer of the Bond has the right to call such Bond prior to its stated maturity
date (and other than pursuant to sinking fund provisions) and to issue new bonds
("Refunding Bonds") in order to finance the redemption. Issuers typically
utilize refunding calls in order to take advantage of lower interest rates in
the marketplace. Some of these Refunded Bonds may be called for redemption
pursuant to pre-refunding provisions ("Pre- Refunded Bonds") whereby the
proceeds from the issue of the Refunding Bonds are typically invested in
government securities in escrow for the benefit of the holders of the
Pre-Refunded Bonds until the refunding call date. Usually, Pre-Refunded Bonds
will bear a triple-A rating because of this escrow. The issuers of Pre-Refunded
Bonds must call such Bonds on their refunding call date. Therefore, as of such
date, the Trust will receive the call price for such bonds but will cease
receiving interest income with respect to them. For a list of those Bonds which
are Pre-Refunded Bonds, if any, as of the Evaluation Date, see "Notes to
Financial Statements" in this Part A. The payment of interest and preservation
of capital are, of course, dependent upon the continuing ability of the issuers
of the Bonds to meet their obligations.

Each Unit represents a fractional undivided interest in the principal
and net income of each State Trust. The principal amount of Bonds deposited in
such State Trust per Unit is reflected in the Summary of Essential Information.
Each State Trust will be administered as a distinct entity with separate
certificates, expenses, books and records. (See "The Trust--Organization" in
Part B of this Prospectus.) The Units being offered hereby are issued and
outstanding Units which have been purchased by the Sponsor in the secondary
market.

A-2
263868.1

<PAGE>

Public Offering Price, or 5.708% of the net amount invested in Bonds per Unit.
In addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units of the Virginia Trust had been purchased on the
Evaluation Date, the Public Offering Price per Unit would have been $977.50 plus
accrued interest of $.59 under the monthly distribution plan and $5.05 under the
semi-annual distribution plan, for a total of $978.09 and $982.55. The Public
Offering Price per Unit can vary on a daily basis in accordance with
fluctuations in the aggregate bid price of the Bonds. (See "Summary of Essential
Information" and "Public Offering--Offering Price" in Part B of this
Prospectus.)

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

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

A-3
263868.1

<PAGE>

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

MARKET FOR UNITS. The Sponsor, although not obligated to do so,
intends to maintain a secondary market for the Units at prices based on the
aggregate bid price of the Bonds in the Trust portfolio. The secondary market
repurchase price is based on the aggregate bid price of the Bonds in the Trust
portfolio, and the reoffer price is based on the aggregate bid price of the
Bonds plus a sales charge of 5.4% of the Public Offering Price (5.708% of the
net amount invested) plus net accrued interest. If a market is not maintained, a
Certificateholder will be able to redeem his or her Units with the Trustee at a
price also based on the aggregate bid price of the Bonds. (See "Sponsor
Repurchase" and "Public Offering--Offering Price" in Part B of this Prospectus.)

For additional information regarding the Public Offering Price and
Estimated Current Return and Estimated Long Term Return for Units of each State
Trust, descriptions of interest and principal distributions, repurchase and
redemption of Units and other essential information regarding the Trusts, please
refer to the Summary of Essential Information for the particular State Trust on
one of the immediately succeeding pages.

A-4
263868.1

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 45

VIRGINIA TRUST

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
--------------------------------------------------------

<S> <C> <C>
Date of Deposit: April 14, 1994 Minimum Principal Distribution:
- --------------- ------------------------------
Principal Amount of Bonds ... $2,065,000 $1.00 per Unit.
- -------------------------
Number of Units ............. 2,083 Weighted Average Life
- --------------- ---------------------
Fractional Undivided Inter- to Maturity: 20.5 Years.
- -------------------------- -----------
est in Trust per Unit ..... 1/2083 Minimum Value of Trust:
--------------------- ----------------------
Principal Amount of Trust may be terminated if
- -------------------
Bonds per Unit ............ $991.36 value of Trust is less than
--------------
Secondary Market Public $1,200,000 in principal amount
- -----------------------
Offering Price** of Bonds.
--------------
Aggregate Bid Price Mandatory Termination Date:
--------------------------
of Bonds in Trust ....... $1,926,957+++ The earlier of December 31,
Divided by 2,083 units .... $925.09 2044 or the disposition of the
Plus Sales Charge of 5.4% last Bond in the Trust.
of Public Offering Price $52.41 Trustee***: The Chase Manhattan
-------
Public Offering Price Bank.
per Unit ................ $977.50+ Trustee's Annual Fee: Monthly
--------------------
Redemption and Sponsor's plan $1.37 per $1,000; and
- ------------------------
Repurchase Price semi-annual plan $.92 per
----------------
per Unit.................. $925.09+ $1,000.
-------- ++
+++ Evaluator: Kenny S&P Evaluation
---------
Services.
Excess of Secondary Market Evaluator's Fee for Each
- -------------------------- ------------------------
Public Offering Price Evaluation: Minimum of $3 plus
--------------------- ----------
over Redemption and $.25 per each issue of Bonds in
-------------------
Sponsor's Repurchase excess of 50 issues (treating
--------------------
Price per Unit ............ $52.41++++ separate maturities as separate
--------------
Difference between Public issues).
- -------------------------
Offering Price per Unit Sponsor: ING Funds
----------------------- -------
and Principal Amount per Distributor, Inc.
------------------------
Unit Premium/(Discount) ... $(13.86) Sponsor's Annual Fee: Maximum of
----------------------- --------------------
Evaluation Time: 4:00 p.m. $.25 per $1,000 principal
- --------------- of $.25 per $1,000 principal
New York Time. amount of Bonds (see "Trust
Expenses and Charges" in
Part B of this Prospectus).
</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------

Monthly Semi-Annual
Option Option

Gross annual interest income# ......... $55.71 $55.71
Less estimated annual fees and
expenses ............................ 2.58 2.02
Estimated net annual interest ______ ______
income (cash)# ...................... $53.13 $53.69
Estimated interest distribution# ...... 4.42 26.84
Estimated daily interest accrual# ..... .1475 .1491
Estimated current return#++ ........... 5.44% 5.49%
Estimated long term return++ .......... 5.49% 5.55%
Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15
</TABLE>

A-5
263868.1

<PAGE>

Footnotes to Summary of Essential Information

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

** Certain amounts distributable as of December 31, 1999 may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $.59 monthly and $5.05 semi-
annually for the Virginia Trust.

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

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

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

FINANCIAL AND STATISTICAL INFORMATION

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

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

December 31, 1997 2,789 $1,036.72 $55.02 $55.58 $8.50
December 31, 1998 2,702 1,038.35 54.45 54.99 6.12
December 31, 1999 2,083 929.07 54.44 54.94 7.83
</TABLE>

A-6
263868.1

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1999

DESCRIPTION OF PORTFOLIO*
- ------------------------

Each Unit in the Virginia Trust consists of a 1/2083rd undivided
interest in the principal and net income of the Trust in the ratio of one Unit
for each $991.36 of principal amount of the Bonds currently held in the Trust.
The Sponsor has not participated as a sole underwriter or manager, co-manager or
member of an underwriting syndicate from which any of the initial aggregate
principal amount of the Bonds were acquired. The portfolio of the Virginia Trust
consists of 7 issues of 6 issuers located in Virginia and 1 in Puerto Rico.
Approximately 12.8% of the Bonds are obligations of state and local housing
authorities; approximately 33.9**% are hospital revenue bonds; and none were
issued in connection with the financing of nuclear generating facilities. None
of the issues comprising the aggregate principal amount of the Trust are
mortgage revenue bonds. All of the Bonds are subject to redemption prior to
their stated maturity dates pursuant to sinking fund or optional call
provisions. The Bonds may also be subject to other calls, which may be permitted
or required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or unanticipated
revenues). None of the Bonds are general obligation bonds. All seven issues
representing $2,065,000 of the principal amount of the Bonds are payable from
the income of a specific project or authority and are not supported by the
issuer's power to levy taxes. The portfolio is divided for purpose of issue as
follows: Building Authority 1, Electric 1, Expressway 1, Hospital 2,
Multi-Family Housing 1 and Water 1. For an explanation of the significance of
these factors see "The State Trust--Portfolio" in Part B of this Prospectus.

As of December 31, 1999, $1,765,000 (approximately 85.5% of the
aggregate principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, none were Zero Coupon Bonds. None of the
aggregate principal amount of the Bonds in the Trust were purchased at a
"market" discount from par value at maturity, approximately 14.5% were purchased
at a premium and none were purchased at par. For an explanation of the
significance of these factors see "The Portfolios--Discount and Zero Coupon
Bonds" in Part B of this Prospectus.

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

- --------
* Changes in the Trust Portfolio: From January 1, 2000 to March 15, 2000, 8
Units were redeemed from the Trust.

** A trust is considered to be "concentrated" in a particular category or
industry when the securities in that category or industry constitute 25% or
more of the aggregate face amount of the portfolio. See Part B for
disclosure, including risk factors, regarding this concentration.

A-7
263868.1

<PAGE>

Report of Independent Auditors

The Sponsor, Trustee and Certificateholders of
Municipal Securities Trust, Multi-State 45, Virginia Trust

We have audited the accompanying statement of net assets of Municipal Securities
Trust, Multi-State 45, Virginia Trust, including the portfolio, as of December
31, 1999 and the related statements of operations, and changes in net assets and
financial highlights for the year then ended. These financial statements and
financial highlights are the responsibility of the Trustee. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit. The statements of operations, statement of changes in net
assets and financial highlights for each of the two years in the period ended
December 31, 1998 were audited by other auditors whose report thereon dated
March 19, 1999, expressed an unqualified opinion on those financial statements
and financial highlights.

In our opinion, the 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Municipal Securities Trust, Multi-State 45, Virginia Trust at December 31, 1999,
the results of its operations, changes in its net assets and financial
highlights for the year then ended, in conformity with accounting principles
generally accepted in the United States.

/s/ERNST & YOUNG LLP
New York, New York
April 15, 2000

<PAGE>

Municipal Securities Trust

Multi-State Series 45, Virginia Trust

Portfolio

December 31, 1999

Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Rate/Date(s) S.F.-Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds Ratings of Maturity Ref.-Refunding Value (3)
(1) (2)
- ---------------------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 400,000 Albermarle Cnty. Va. Ind. Dev. Auth. Hosp. A2* 5.500% 10/01/03 @ 100 S.F. $ 366,788
Rfndg. Rev. Bonds (Martha Jefferson Hosp.) 10/01/2015 10/01/03 @ 102 Ref.
Series 1993

2 400,000 Indus. Dev. Auth. of the City of A 5.375 No Sinking Fund 359,868
Alexandria, Va. Poll Cntl. Rev. Rfndg. Bonds 2/15/2024 2/15/04 @ 102 Ref.

3 300,000 Fairfax Cnty. Va. Dev. Auth. Hosp. Rev. AA 5.000 8/15/20 @ 100 S.F. 255,969
Rfndg. Bonds (Inova Hlth. Sys. Hosps. 8/15/2023 None
Prjt.) Series 1993A

4 200,000 Fairfax Cnty. Wtr. Auth. Wtr. Rfndg. Rev. AA 5.750 4/01/23 @ 100 S.F. 191,268
Bonds Series 1992 4/01/2029 4/01/02 @ 100 Ref.

5 265,000 Harrisonburg Va. Redev. & Hsg. Auth. AA 6.150 3/01/04 @ 100 S.F. 269,773
Multifam. Hsg. Rev. Rfndg. Bonds (Hanover 3/01/2029 3/01/03 @ 102 Ref.
Crossing Aprtmts. Prjt.) Series 1993

6 300,000 Richmond Metro. Auth. Expy. Rev. & Rfndg. AAA 6.250 7/15/04 @ 100 S.F. 301,044
Bonds, Series 1992B 7/15/2022 7/15/02 @ 102 Ref.

7 200,000 P.R. Pub. Bldgs. Auth. Pub. Ed & Hlth. A 5.500 7/01/17 @ 100 S.F. 185,282
Facs. Rev. Rfndg. Bonds Gtd. By the 7/01/2021 7/01/03 @ 101.5 Ref.
Cmmnwlth. Of P.R. Series M

------------ --------------
$2,065,000 Total Investments (Cost $1,890,079) $1,929,992
============ ==============
</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 45, Virginia Trust

Footnotes to Portfolio

1. All ratings are by Kenny S&P Evaluation Services, a business unit of J.J.
Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies, Inc.,
except for those identified by an asterisk (*) which are by Moody's
Investors Service, Inc. A brief description of the ratings symbols and
their meaning is set forth under "Description of Bond Ratings" in Part B of
the Prospectus.

3. At December 31, 1999 the net unrealized appreciation of all the bonds was
comprised of the following:

Gross unrealized appreciation $40,840
Gross unrealized depreciation (927)
--------------
Net unrealized appreciation $39,913
==============

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 45, Virginia Trust

Statement of Net Assets

December 31, 1999

<S> <C>
Investments in securities, at market value (cost $1,890,079) $ 1,929,992

Other assets
Accrued interest 41,742
-------------------
Total other assets 41,742
-------------------

Liabilities
Advance from Trustee 36,475
-------------------
Total liabilities 36,475
-------------------

Excess of other assets over total liabilities 5,267
-------------------

Net assets (2,083 units of fractional undivided
interest outstanding, $929.07 per unit) $ 1,935,259
===================
</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 45, Virginia Trust

Statement of Operations

Year ended December 31,
1999 1998 1997
----------------------------------------------------------
<S> <C> <C> <C>
Investment income
Interest $ 133,797 $ 155,870 $ 165,714

Expenses
Trustee's fees 4,813 5,314 5,450
Evaluator's fee 880 952 818
Sponsor's advisory fee 672 698 845
----------------------------------------------------------
Total expenses 6,365 6,964 7,113

Net investment income 127,432 148,906 158,601

Realized and unrealized gain (loss)
Realized gain on investments 37,196 4,494 10,646
Unrealized appreciation (depreciation)
on investments (267,656) 17,604 110,903
----------------------------------------------------------
Net gain (loss) on investments (230,460) 22,098 121,549
----------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ (103,028) $ 171,004 $ 280,150
==========================================================
</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 45, Virginia Trust

Statement of Changes in Net Assets

Year ended December 31,
1999 1998 1997
----------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income $ 127,432 $ 148,906 $ 158,601
Realized gain on investments 37,196 4,494 10,646
Unrealized appreciation (depreciation)
on investments (267,656) 17,604 110,903
----------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (103,028) 171,004 280,150
----------------------------------------------------------

Distributions to Certificateholders
Investment income 126,342 149,839 160,001
Principal 17,054 16,885 24,681

Redemptions
Interest 4,961 267 258
Principal 618,976 89,811 183,707
----------------------------------------------------------
Total distributions and redemptions 767,333 256,802 368,647
----------------------------------------------------------

Total (decrease) (870,361) (85,798) (88,497)

Net assets
Beginning of year 2,805,620 2,891,418 2,979,915
----------------------------------------------------------
End of year (including undistributed net investment
income of $8,301, $12,172 and $13,372,
respectively) $ 1,935,259 $ 2,805,620 $ 2,891,418
==========================================================
</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 45, Virginia Trust

Financial Highlights

Selected data for a unit of the Trust outstanding*:

Year ended December 31,
1999 1998 1997
----------------------------------------------------------

<S> <C> <C> <C>
Net asset value, beginning of year** $ 1,038.35 $ 1,036.72 $ 1,002.66
----------------------------------------------------------

Interest income 55.91 56.76 57.52
Expenses (2.66) (2.54) (2.47)
----------------------------------------------------------
Net investment income 53.25 54.22 55.05
----------------------------------------------------------
Net gain or loss on investments(1) (100.53) 8.23 43.21
----------------------------------------------------------
Total from investment operations (47.28) 62.45 98.26
----------------------------------------------------------

Less distributions
to Certificateholders
Income 52.80 54.57 55.54
Principal 7.13 6.15 8.57
for Redemptions
Interest 2.07 .10 .09
----------------------------------------------------------
Total distributions 62.00 60.82 64.20
----------------------------------------------------------
Net asset value, end of year** $ 929.07 $ 1,038.35 $ 1,036.72
==========================================================
</TABLE>

(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net gain
and loss on investments.

* Unless otherwise stated, based upon average units outstanding during the
year of 2,393 ([2,083 + 2,702]/2) for 1999, 2,746 ([2,702 + 2,789]/2) for
1998 and of 2,881 ([2,789 + 2,972]/2) for 1997.

** Based upon actual units outstanding.

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 45, Virginia Trust

Notes to Financial Statements

December 31, 1999

1. Organization

Municipal Securities Trust, Multi-State Series 45, Virginia Trust (the "Trust")
was organized on April 14, 1994 by Bear, Stearns & Co. Inc. under the laws of
the State of New York by a Trust Indenture and Agreement, and is registered
under the Investment Company Act of 1940. The Trust was formed to preserve
capital and to provide interest income.

Effective February 9, 2000, ING Funds distributor, Inc. ("ING") has become the
successor sponsor to certain unit investment trusts previously sponsored by
Reich & Tang. As successor sponsor, ING has assumed all of the obligations and
rights of Reich & Tang, the previous sponsor.

2. Summary of Significant Accounting Policies

Security Valuation

Investments are carried at market value which is determined by Kenny S&P
Evaluation Services, a business unit of J.J. Kenny Company, Inc., a subsidiary
of The McGraw-Hill Companies, Inc. The market value of the portfolio is based
upon the bid prices for the bonds at the end of the year, which approximates the
fair value of the security at that date, except that the market value on the
date of deposit represents the cost to the Trust based on the offering prices
for investments at that date. The difference between cost and market value is
reflected as unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost of the
securities sold or redeemed.

<PAGE>

Municipal Securities Trust

Multi-State Series 45, Virginia Trust

Notes to Financial Statements (continued)

3. Income Taxes

4. Trust Administration

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

The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the years ended December 31, 1999, 1998 and 1997, 619, 87 and 183
units were redeemed, respectively.

The Trust pays an annual fee for trustee services rendered by the Trustee that
ranges from $.92 to $1.37 per $1,000 of outstanding investment principal. In
addition, a minimum fee of $3.00 is paid to a service bureau for each portfolio
valuation. A maximum fee of $.25 per $1,000 of outstanding investment principal
is paid to the Sponsor. For the years ended December 31, 1999, 1998 and 1997,
the "Trustee's Fees" are comprised of Trustee fees of $2,966, $3,641 and $3,652
and other expenses of $1,847, $1,673 and $1,798, respectively. The other
expenses include professional, printing and miscellaneous fees.

<PAGE>

Multi-State Series 45, Virginia Trust

Notes to Financial Statements (continued)

5. Net Assets

At December 31, 1999, the net assets of the Trust represented the interest of
Certificateholders as follows:

Original cost to Certificateholders $ 2,955,891
Less initial gross underwriting commission 144,839
-----------------
2,811,052

Accumulated cost of securities sold,
matured or called (920,973)
Net unrealized appreciation 39,913
Undistributed net investment income 8,301
Distributions in excess of proceeds
from investments (3,034)
-----------------
Total $ 1,935,259
=================

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

6. Concentration of Credit Risk

<PAGE>

Prospectus Part A Dated April 30, 2000

MUNICIPAL SECURITIES TRUST

MULTI-STATE SERIES 46
(MULTIPLIER PORTFOLIO)

The Trust consists of 3 separate unit investment trusts designated
California Trust, Florida Trust and Virginia Trust (the "State Trusts"). Each
State Trust contains an underlying portfolio of long-term tax-exempt bonds
issued by or on behalf of states, municipalities and public authorities and was
formed to preserve capital and to provide interest income (including, where
applicable, earned original issue discount) which, in the opinions of bond
counsel to the respective issuers, is, with certain exceptions, currently exempt
from regular Federal income tax under existing law. There can be no assurance
that the Trusts' investment objectives will be achieved. Although the Supreme
Court has determined that Congress has the authority to subject interest on
bonds such as the Bonds in the Trust to federal income taxation, existing law
excludes such interest from federal income tax. In addition, in the opinion of
counsel to the Sponsor, the interest income of each State Trust is exempt, to
the extent indicated, from state and local taxes when held by residents of the
state where the issuers of the Bonds in such State Trust are located. Such
interest income may, however, be subject to the federal individual and corporate
alternative minimum tax and to state and local taxes in other jurisdictions.
(See "Description of Portfolios" in this Part A for a description of those
Bonds, if any, which pay interest income subject to the federal individual
alternative minimum tax.) In addition, capital gains are subject to tax. (See
"Tax Status" and "The Portfolios--General.") The Sponsor is ING Funds
Distributor, Inc. (successor to Reich & Tang Distributors, Inc.). The value of
the Units of the Trust will fluctuate with the value of the underlying bonds.
Minimum purchase: 1 Unit.

This Prospectus consists of two parts. Part A contains the Summary of
Essential Information including descriptive material relating to each State
Trust as of December 31, 1999 (the "Evaluation Date"), a summary of certain
specific information regarding each State trust and audited financial statements
of each State Trust, including the related portfolio, as of the Evaluation Date.
Part B of this Prospectus contains a general summary of the State Trusts. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should read and retain both parts of this Prospectus for future
reference. The Securities and Exchange Commission ("SEC") maintains a website
that contains reports, proxy and information statements and other information
regarding the Trust which is filed electronically with the SEC. The SEC's
Internet address is http:www.sec.gov. Offering materials for the sale of these
units available through the Internet are not being offered directly or
indirectly to residents of a particular state nor is an offer of these units
through the Internet specifically directed to any person in a state by, or on
behalf of, the issuer.

Principal Secondary Market
Number of Amount of Offering Price
Units Bonds per Unit (12/31/99)
--------- --------- -------------------

California Trust 857 $805,000 $911.30
Florida Trust 1,361 $1,270,000 $914.44
Virginia Trust 1,321 $1,275,000 $989.45

352541.1
A-1

<PAGE>

The State Trusts contain bonds that were acquired at prices which
resulted in the portfolios as a whole being purchased at a deep discount from
par value. The portfolio may also include bonds issued at a substantial original
issue discount, some of which may be Zero Coupon Bonds that provide for payment
at maturity at par value, but do not provide for the payment of current
interest. Gain on the disposition of a Bond or a Unit purchased at a market
discount generally will be treated as ordinary income, rather than capital gain,
to the extent of accrued market discount. Some of the Bonds in the portfolio may
have been purchased at an aggregate premium over par. (See "Tax Status" in Part
B of this Prospectus.) Some of the Bonds in the Trust have been issued with
optional refunding or refinancing provisions ("Refunded Bonds") whereby the
issuer of the Bond has the right to call such Bond prior to its stated maturity
date (and other than pursuant to sinking fund provisions) and to issue new bonds
("Refunding Bonds") in order to finance the redemption. Issuers typically
utilize refunding calls in order to take advantage of lower interest rates in
the marketplace. Some of these Refunded Bonds may be called for redemption
pursuant to pre-refunding provisions ("Pre- Refunded Bonds") whereby the
proceeds from the issue of the Refunding Bonds are typically invested in
government securities in escrow for the benefit of the holders of the
Pre-Refunded Bonds until the refunding call date. Usually, Pre-Refunded Bonds
will bear a triple-A rating because of this escrow. The issuers of Pre-Refunded
Bonds must call such Bonds on their refunding call date. Therefore, as of such
date, the Trust will receive the call price for such bonds but will cease
receiving interest income with respect to them. For a list of those Bonds which
are Pre-Refunded Bonds, if any, as of the Evaluation Date, see "Notes to
Financial Statements" in this Part A. The payment of interest and preservation
of capital are, of course, dependent upon the continuing ability of the issuers
of the Bonds to meet their obligations.

PUBLIC OFFERING PRICE. The secondary market Public Offering Price of
each Unit is equal to the aggregate bid price of the Bonds in the Trust divided
by the number of Units outstanding, plus a sales charge of 5.2% for the
California Trust, 5.2% for the Florida Trust and 5.3% for the Virginia Trust of
the Public Offering Price, or 5.485% for the California Trust, 5.485% for the
Florida Trust and 5.597% for the Virginia Trust of the net amount invested in
Bonds per Unit. In addition, accrued interest to the expected date of settlement
is added to the Public Offering Price. If Units of the California Trust had been
purchased on the Evaluation Date, the Public

352541.1
A-2

<PAGE>

Offering Price per Unit would have been $911.30 plus accrued interest of $.20
under the monthly distribution plan and $4.18 under the semi-annual distribution
plan, for a total of $911.50 and $915.48, respectively. If Units of the Florida
Trust had been purchased on the Evaluation Date, the Public Offering Price per
Unit would have been $914.44 plus accrued interest of $.57 under the monthly
distribution plan and $4.86 under the semi-annual distribution plan, for a total
of $915.01 and $919.30, respectively. If Units of the Virginia Trust had been
purchased on the Evaluation Date, the Public Offering Price per Unit would have
been $989.45 plus accrued interest of $.62 under the monthly distribution plan
and $5.31 under the semi-annual distribution plan, for a total of $990.07 and
$994.76, respectively. The Public Offering Price per Unit can vary on a daily
basis in accordance with fluctuations in the aggregate bid price of the Bonds.
(See "Summary of Essential Information" and "Public Offering--Offering Price" in
Part B of this Prospectus.)

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

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

352541.1
A-3

<PAGE>

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

MARKET FOR UNITS. The Sponsor, although not obligated to do so,
intends to maintain a secondary market for the Units at prices based on the
aggregate bid price of the Bonds in the Trust portfolio. The secondary market
repurchase price is based on the aggregate bid price of the Bonds in the Trust
portfolio, and the reoffer price is based on the aggregate bid price of the
Bonds plus a sales charge of 5.2% for the California Trust, 5.2% for the Florida
Trust and 5.3% for the Virginia Trust of the Public Offering Price (5.485% for
the California Trust, 5.485% for the Florida Trust and 5.597% for the Virginia
Trust of the net amount invested) plus net accrued interest. If a market is not
maintained, a Certificateholder will be able to redeem his or her Units with the
Trustee at a price also based on the aggregate bid price of the Bonds. (See
"Sponsor Repurchase" and "Public Offering--Offering Price" in Part B of this
Prospectus.)

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

352541.1
A-4

<PAGE>

<TABLE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46

CALIFORNIA TRUST

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
--------------------------------------------------------

Date of Deposit: April 6, 1995 Minimum Principal Distribution:
Principal Amount of Bonds ... $805,000 $1.00 per Unit.
Number of Units ............. 857 Weighted Average Life to
Fractional Undivided Inter- Maturity: 18.813 Years.
est in Trust per Unit ..... 1/857 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $939.32 value of Trust is less than
Secondary Market Public $800,000 in principal amount
Offering Price** of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust ....... $740,407+++ The earlier of December 31,
Divided by 857 units .... $863.95 2044 or the disposition of
Plus Sales Charge of 5.2% the last Bond in the Trust.
of Public Offering Price $47.35 Trustee***: The Chase
Public Offering Price Manhattan Bank.
per Unit ................ $911.30+ Trustee's Annual Fee: Monthly
Redemption and Sponsor's plan $1.46 per $1,000; and
Repurchase Price semi-annual plan $1.01 per
per Unit .................. $863.95+ $1,000.
+++ Evaluator: Kenny S&P
++++ Evaluation Services.
Excess of Secondary Market Evaluator's Fee for Each
Public Offering Price Evaluation: Minimum of $2.83
over Redemption and plus $.25 per each issue of
Sponsor's Repurchase Bonds in excess of 50 issues
Price per Unit ............ $47.30++++ (treating separate maturities
Difference between Public as separate issues).
Offering Price per Unit Sponsor: ING Funds
and Principal Amount per Distributor, Inc.
Unit Premium/(Discount) ... $(28.00) Sponsor's Annual Fee: Maximum
Evaluation Time: 4:00 p.m. of $.25 per $1,000 principal
Florida Time. amount of Bonds (see "Trust
Expenses Charges" in Part B
of this Prospectus).

</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------

Monthly Semi-Annual
Option Option
------ -----------

Gross annual interest income# ......... $50.43 $50.43
Less estimated annual fees and
expenses ............................ 3.02 2.67
------ -----
Estimated net annual interest
income (cash)# ...................... $47.41 $47.76
Estimated interest distribution# ...... 3.95 23.88
Estimated daily interest accrual# ..... .1317 .1326
Estimated current return#++ ........... 5.20% 5.24%
Estimated long term return++ .......... 5.34% 5.38%
Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15

352541.1
A-5

<PAGE>

<TABLE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46

FLORIDA TRUST

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
--------------------------------------------------------
<S> <C> <C>

Date of Deposit: April 6, 1995 Minimum Principal Distribution:
Principal Amount of Bonds ... $1,270,000 $1.00 per Unit.
Number of Units ............. 1,361 Weighted Average Life to
Fractional Undivided Inter- Maturity: 21.7 Years.
est in Trust per Unit ..... 1/1361 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $933.14 value of Trust is less than
Secondary Market Public $800,000 in principal amount
Offering Price** of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust........ $1,179,730+++ The earlier of December 31,
Divided by 1,361 units .... $866.81 2044 or the disposition of
Plus Sales Charge of 5.2% the last Bond in the Trust.
of Public Offering Price $47.63 Trustee***: The Chase
Public Offering Price Manhattan Bank.
per Unit ................ $914.44+ Trustee's Annual Fee: Monthly
Redemption and Sponsor's plan $1.47 per $1,000; and
Repurchase Price semi-annual plan $1.01 per
per Unit .................. $866.81+ $1,000.
+++ Evaluator: Kenny S&P
++++ Evaluation Services.
Excess of Secondary Market Evaluator's Fee for Each
Public Offering Price Evaluation: Minimum of $2.83
over Redemption and plus $.25 per each issue of
Sponsor's Repurchase Bonds in excess of 50 issues
Price per Unit ............ $47.63++++ (treating separate maturities
Difference between Public as separate issues).
Offering Price per Unit Sponsor: ING Funds
and Principal Amount per Distributor, Inc.
Unit Premium/(Discount) ... $(18.70) Sponsor's Annual Fee: Maximum
Evaluation Time: 4:00 p.m. of $.25 per $1,000 principal
Florida Time. amount of Bonds (see "Trust
Expenses and Charges in Part B
of this Prospectus).

</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------

Monthly Semi-Annual
Option Option
------ -----------

Gross annual interest income# ......... $54.12 $54.12
Less estimated annual fees and
expenses ............................ 2.63 2.31
------ ------
Estimated net annual interest
income (cash)# ...................... $51.49 $51.81
Estimated interest distribution# ...... 4.29 25.90
Estimated daily interest accrual# ..... .1430 .1439
Estimated current return#++ ........... 5.63% 5.67%
Estimated long term return++ .......... 5.58% 5.62%
Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15

352541.1
A-6

<PAGE>

<TABLE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46

VIRGINIA TRUST

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999
--------------------------------------------------------

Date of Deposit: April 6, 1995 Minimum Principal Distribution:
Principal Amount of Bonds ... $1,275,000 $1.00 per Unit.
Number of Units ............. 1,321 Weighted Average Life
Fractional Undivided Inter- to Maturity: 20.8 Years.
est in Trust per Unit ..... 1/1321 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $965.18 value of Trust is less than
Secondary Market Public $800,000 in principal amount
Offering Price** of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust ....... $1,237,598+++ The earlier of December 31,
Divided by 1,321 units .... $936.86 2044 or the disposition of
Plus Sales Charge of 5.3% the last Bond in the Trust.
of Public Offering Price $52.59 Trustee***: The Chase
Public Offering Price Manhattan Bank.
per Unit ................ $989.45+ Trustee's Annual Fee: Monthly
Redemption and Sponsor's plan $1.45 per $1,000; and
Repurchase Price semi-annual plan $1.00 per
per Unit .................. $936.86+ $1,000.
+++ Evaluator: Kenny S&P
++++ Evaluation Services.
Excess of Secondary Market Evaluator's Fee for Each
Public Offering Price Evaluation: Minimum of $2.83
over Redemption and plus $.25 per each issue of
Sponsor's Repurchase Bonds in excess of 50 issues
Price per Unit ............ $52.59++++ (treating separate maturities
Difference between Public as separate issues).
Offering Price per Unit Sponsor: ING Funds
and Principal Amount per Distributor, Inc.
Unit Premium/(Discount) ... $24.27 Sponsor's Annual Fee: Maximum
Evaluation Time: 4:00 p.m. of $.25 per $1,000 principal
Florida Time. amount of Bonds (see "Trust
Expenses and Charges"
in Part B of this Prospectus).

</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------

Monthly Semi-Annual
Option Option

Gross annual interest income# ......... $58.91 $58.91
Less estimated annual fees and
expenses ............................ 2.86 2.29
------ ------
Estimated net annual interest
income (cash)# ...................... $56.05 $56.62
Estimated interest distribution# ...... 4.67 28.31
Estimated daily interest accrual# ..... .1557 .1572
Estimated current return#++ ........... 5.66% 5.72%
Estimated long term return++ .......... 5.62% 5.68%
Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec.15 and
each month June 15

352541.1
A-7

<PAGE>

Footnotes to Summary of Essential Information

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

** Certain amounts distributable as of December 31, 1999, may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $.20 monthly and $4.18
semi-annually for the California Trust, $.57 monthly and $4.86
semi-annually for the Florida Trust, and $.62 monthly and $5.31
semi-annually for the Virginia Trust.

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

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

<TABLE>

FINANCIAL AND STATISTICAL INFORMATION

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

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

December 31, 1997 1,566 $1,025.65 $55.69 $56.14 $15.25
December 31, 1998 983 988.33 52.03 52.49 26.68
December 31, 1999 857 868.73 48.60 48.77 19.14

Florida Trust

December 31, 1997 1,733 $959.89 $53.24 $53.81 $16.24
December 31, 1998 1,582 947.28 51.27 51.80 63.40
December 31, 1999 1,361 871.64 50.09 50.98 13.33

Virginia Trust

December 31, 1997 1,518 $1,035.06 $58.35 $58.82 $20.47
December 31, 1998 1,440 1,025.07 56.45 56.94 14.57
December 31, 1999 1,321 941.67 56.23 56.69 7.47

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

352541.1
A-8

<PAGE>

INFORMATION REGARDING THE TRUSTS
AS OF DECEMBER 31, 1999

DESCRIPTION OF PORTFOLIOS

California Trust

Each Unit in the California Trust consists of a 1/857th undivided
interest in the principal and net income of the Trust in the ratio of one Unit
for each $939.32 of principal amount of the Bonds currently held in the Trust.
The Sponsor has not participated as a sole underwriter or manager, co-manager or
member of an underwriting syndicate from which any of the Bonds were acquired.
The portfolio of the California Trust consists of 3 issues of 3 issuers located
in California. None of the Bonds are obligations of state and local housing
authorities; none are hospital revenue bonds; and none were issued in connection
with the financing of nuclear generating facilities. None of the issues are
mortgage subsidy bonds. All of the Bonds are subject to redemption prior to
their stated maturity dates pursuant to sinking fund or optional call
provisions. The Bonds may also be subject to other calls, which may be permitted
or required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or unanticipated
revenues). None of the issues are general obligation bonds. All three of the
issues representing $805,000 of the principal amount of the Bonds are payable
from the income of a specific project or authority and are not supported by the
issuer's power to levy taxes. The portfolio is divided for purpose of issue as
follows: Lease Revenue 1, Solid Waste 1 and Transit 1. For an explanation of the
significance of these factors see "The State Trusts--Portfolios" in Part B of
this Prospectus.

As of December 31, 1999, $805,000 (100% of the aggregate principal
amount of the Bonds) were original issue discount bonds. Of these original issue
discount bonds, none were Zero Coupon Bonds. Zero Coupon Bonds do not provide
for the payment of any current interest and provide for payment at maturity at
par value unless sooner sold or redeemed. The market value of Zero Coupon Bonds
is subject to greater fluctuations than coupon bonds in response to changes in
interest rates. None of the aggregate principal amount of the Bonds in the Trust
were purchased at a "market" discount from par value at maturity, none were
purchased at a premium and none were purchased at par. For an explanation of the
significance of these factors see "The Portfolios-- Discount and Zero Coupon
Bonds" in Part B of this Prospectus.

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

Florida Trust*
- -------------

Each Unit in the Florida Trust consists of a 1/1361st undivided
interest in the principal and net income of the Trust in the ratio of one Unit
for each $933.14 of principal amount of the Bonds currently held in the Trust.
The Sponsor has not participated as a sole underwriter or manager, co-manager or
member of an underwriting syndicate from which any of the Bonds were acquired.
The portfolio of the Florida Trust consists of 9 issues of 9 issuers located in
Florida. None of the Bonds are obligations of state and local housing
authorities; approximately 17.3% are hospital revenue bonds; and none were
issued in connection with the financing of nuclear generating

- --------

* Changes in the Trust Portfolio: From January 1, 2000 to March 15, 2000,
$40,000 of the principal amount of the Bond in portfolio no. 1 of the
Florida Trust was sold and is no longer contained in the Trust.

352541.1
A-9

<PAGE>

facilities. Two issues comprising approximately 38.2%* of the aggregate
principal amount of the Bonds are mortgage subsidy bonds. All of the Bonds are
subject to redemption prior to their stated maturity dates pursuant to sinking
fund or optional call provisions. The Bonds may also be subject to other calls,
which may be permitted or required by events which cannot be predicted (such as
destruction, condemnation, termination of a contract, or receipt of excess or
unanticipated revenues). None of the issues are general obligation bonds. All
nine of the issues representing $1,270,000 of the principal amount of the Bonds
are payable from the income of a specific project or authority and are not
supported by the issuer's power to levy taxes. The portfolio is divided for
purpose of issue as follows: Airport 1, Education 1, Hospital 2, Public Facility
1, Single Family Mortgage Revenue 2, Solid Waste 1 and University 1. For an
explanation of the significance of these factors see "The State
Trusts--Portfolios" in Part B of this Prospectus.

As of December 31, 1999, $680,000 (approximately 53.5% of the
aggregate principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, $100,000 (approximately 7.9% of the
aggregate principal amount of the Bonds) were Zero Coupon Bonds. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at par value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. None of the aggregate principal amount
of the Bonds in the Trust were purchased at a "market" discount from par value
at maturity, approximately 38.2% were purchased at a premium and approximately
8.3% were purchased at par. For an explanation of the significance of these
factors see "The Portfolios--Discount and Zero Coupon Bonds" in Part B of this
Prospectus.

Portfolio Nos. 2, 4 and 7 in the Florida Trust are subject to the
federal individual alternative minimum tax under the Tax Reform Act of 1986. See
"Tax Status" in Part B of this Prospectus.

Virginia Trust

Each Unit in the Virginia Trust consists of a 1/1321st undivided
interest in the principal and net income of the Trust in the ratio of one Unit
for each $965.18 of principal amount of the Bonds currently held in the Trust.
The Sponsor has not participated as a sole underwriter or manager, co-manager or
member of an underwriting syndicate from which any of the Bonds were acquired.
The portfolio of the Virginia Trust consists of 7 issues of 6 issuers located in
Virginia and 1 in Puerto Rico. None of the Bonds are obligations of state and
local housing authorities; approximately 11.4% is a hospital revenue bond; and
none were issued in connection with the financing of nuclear generating
facilities. One of the issues comprising approximately 23.5% of the aggregate
principal amount of the Bonds in the trust is a mortgage subsidy bond. All of
the Bonds are subject to redemption prior to their stated maturity dates
pursuant to sinking fund or optional call provisions. The Bonds may also be
subject to other calls, which may be permitted or required by events which
cannot be predicted (such as destruction, condemnation, termination of a
contract, or receipt of excess or unanticipated revenues). None of the issues
are general obligation bonds. All seven of the issues representing $1,275,000 of
the principal amount of the Bonds are payable from the income of a specific
project or authority and are not supported by the issuer's power to levy taxes.
The portfolio is divided for purpose of issue as follows: Bridge and Tunnel 1,
Correctional Facility 1, Electrical 1, Hospital 1, Single Family Mortgage
Revenue 1 and Solid Waste 2.

- --------

* A trust is considered to be "concentrated" in a particular category or
industry when the securities in that category or industry constitute 25% or
more of the aggregate face amount of the portfolio. See Part B for
disclosure, including risk factors, regarding this concentration.

352541.1
A-10

<PAGE>

For an explanation of the significance of these factors see "The State
Trusts--Portfolios" in Part B of this Prospectus.

As of December 31, 1999, $180,000 (approximately 6.3% of the aggregate
principal amount of the Bonds) were original issue discount bonds. Of these
original issue discount bonds, $60,000 (approximately 4.7% of the aggregate
principal amount of the Bonds) were Zero Coupon Bonds. Zero Coupon Bonds do not
provide for the payment of any current interest and provide for payment at
maturity at par value unless sooner sold or redeemed. The market value of Zero
Coupon Bonds is subject to greater fluctuations than coupon bonds in response to
changes in interest rates. Approximately 15.7% of the aggregate principal amount
of the Bonds in the Trust were purchased at a "market" discount from par value
at maturity, approximately 78.0% were purchased at a premium and none were
purchased at par. For an explanation of the significance of these factors see
"The Portfolios--Discount and Zero Coupon Bonds" in Part B of this Prospectus.

Portfolio No. 1 in the Virginia Trust is subject to the federal
individual alternative minimum tax under the Tax Reform Act of 1986. See "Tax
Status" in Part B of this Prospectus.

352541.1
A-11

<PAGE>

Report of Independent Auditors

The Sponsor, Trustee and Certificateholders of
Municipal Securities Trust, Multi-State Series 46

We have audited the accompanying statements of net assets of Municipal
Securities Trust Multi-State Series 46, (comprising, respectively, the
California Trust, Florida Trust and Virginia Trust) including the portfolios, as
of December 31, 1999 and the related statements of operations, and changes in
net assets and financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Trustee. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The statements of operations,
statements of changes in net assets and financial highlights for each of the two
years in the period ended December 31, 1998 were audited by other auditors whose
report thereon dated March 19, 1999, expressed an unqualified opinion on those
financial statements and financial highlights.

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

In our opinion, the 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Municipal Securities Trust, Multi-State Series 46 at December 31, 1999, the
results of their operations, changes in their net assets and financial
highlights for the year then ended, in conformity with accounting principles
generally accepted in the United States.

/s/ERNST & YOUNG LLP
New York, New York
April 15, 2000

<PAGE>

Municipal Securities Trust

Multi-State Series 46

California Trust

Portfolio

December 31, 1999

Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Rate/Date(s) S.F.-Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds Ratings of Maturity Ref.-Refunding Value (3)
(1) (2)
- ------------ ------------ ------------------------------------------- ----------- -------------- -------------------- -------------

<S> <C> <C> <C> <C> <C>
1 $ 270,000 Costa Mesa Pub. Fincg. Auth. Orange Cnty, A+ 5.250% 10/1/05 @ 100 S.F. $ 239,852
Ca. Rfndg. Rev. Bonds, 1993 Series A 10/1/2018 10/1/03 @ 102 Ref.
(Pub. Facs. Prjt.)

2 235,000 Redding JT. Pwrs. Fincg. Auth. Solid A* 5.500 1/1/06 @ 100 S.F. 226,963
Waste and Corp. Yard Rev. Bonds, 1993 1/1/2013 1/1/04 @ 102 Ref.
Series A

3 300,000 San Diego Ca. Muni. Trans. Dstrct. Bd. Aa* 5.375 6/1/05 @ 100 S.F. 274,452
Auth. 1993 Lease Rev. Bonds (Old Town 6/1/2023 6/1/03 @ 101 Ref.
Light Rail Trans. Ext.)

------------ -------------
$ 805,000 Total Investments (Cost $712,470) $ 741,267
============ =============

</TABLE>

<PAGE>

Municipal Securities Trust

Multi-State Series 46

Florida Trust

Portfolio

December 31, 1999

Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Rate/Date(s) S.F.-Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds Ratings of Maturity Ref.-Refunding Value (3)
(1) (2)
- ------------ ------------ ------------------------------------------- ----------- -------------- -------------------- -------------

<S> <C> <C> <C> <C> <C> <C>
1 $ 85,000 State of Fla. Full Faith and Credit State AAA 6.100% 6/1/06 @ 100 S.F. $ 90,618
Bd. of Ed. Pub. Ed. Cap. Outlay Bonds, 1993 6/1/2024 6/1/05 @ 101 Ref.
Series F

2 185,000 Brevard Cnty. Fla. Hsg. Fin. Auth. Aaa* 6.800 3/1/07 @ 100 S.F. 189,712
S.F.M.R. (AMT) 3/1/2028 3/1/05 @ 102 Ref.

3 130,000 Brevard Cnty. Fla. Solid Waste Sys. Rev. A 5.700 No Sinking fund 131,738
Bonds, Series 1993 4/1/2009 4/1/03 @ 102 Ref.

4 150,000 Dade Cnty. Fla. Aviation Rev. Bonds AAA 6.000 10/1/07 @ 100 S.F. 150,628
Series 1995 B (AMT) (MBIA) 10/1/2024 10/1/05 @ 102 Ref.

5 100,000 Dade Cnty. Fla. Ed. Facs. Auth. Rev. AA- 6.125 1/1/06 @ 100 S.F. 101,123
Rfndg. Bonds, Series 1994 (St. Thomas Univ. Issue) 1/1/2019 1/1/04 @ 102 Ref.

6 300,000 Hsg. Fincg. Auth. of Dade Cnty. (Fla.) AAA 6.700 4/1/07 @ 100 S.F. 304,716
S.F.M.R. Bond Series 1995 4/1/2028 4/1/05 @ 102 Ref.

7 20,000 Palm Beach Cnty. Hlth. Facs. Auth. Hosp. Aaa* 6.300 10/1/05 @ 100 S.F. 21,366
Rev. Bonds (Good Sam. Hlth. Sys., Inc. Proj.) 10/1/2022 10/1/03 @ 102 Ref.
Series 1993 (AMT) (MBIA)

8 200,000 St. Johns Cnty. Ind. Dev. Auth. Hosp. A2* 6.000 8/1/04 @ 100 S.F. 185,780
Rev. Bonds (Flagler Hosp. Proj.) Series 1992 8/1/2022 8/1/02 @ 102 Ref.

9 100,000 City of Sunrise Fla. Pub. Facs. Ref. Rev. AAA 0.000 No Sinking Fund 30,288
Bonds Series 1992 B (MBIA) 10/1/2019 None

------------
-------------
$1,270,000 Total Investments (Cost $1,195,641) $1,205,969
============ -------------

</TABLE>

<PAGE>

Municipal Securities Trust

Multi-State Series 46

Virginia Trust

Portfolio

December 31, 1999

Redemption
Aggregate Coupon Feature (2)(4)
Portfolio Principal Rate/Date(s) S.F.-Sinking Fund Market
No. Amount Name of Issuer and Title of Bonds Ratings of Maturity Ref.-Refunding Value (3)
(1) (2)
- ------------ ------------ ------------------------------------------- ----------- -------------- -------------------- -------------

<S> <C> <C> <C> <C> <C> <C>
1 $ 300,000 Va. Hsg. Dev. Auth. Cmmnwlth. Mtg. Bonds AA+ 6.450% 1/1/04 @ 100 S.F. $ 302,304
1992 Series B-AMT, Subseries B-4 7/1/2021 1/1/02 @ 102 Ref.

2 20,000 Chesapeake Bay Va. Bridge & Tunnel Commsn. AAA 5.750 7/1/23 @ 100 S.F. 20,362
Dist. Rev. Rfndg. Bonds (MBIA Corp.) 7/1/2025 7/1/01 @ 100 Ref.

3 250,000 Indus. Dev. Auth. of Danville, VA Solid A3* 6.500 No Sinking Fund 246,472
Waste Disposal Rev. Bonds 1995 Series A 3/1/2019 3/1/05 @ 102 Ref.
(Int'l. Paper Co. Prjts.)

4 145,000 Indus. Dev. Auth. of the City of Hampton, Aa2* 6.500 11/1/06 @ 100 S.F. 152,815
VA Hosp. Rev. and Ref. Bonds (Sentara 11/1/2012 11/1/04 @ 102 Ref.
Hampton Gen. Hosp.) Series 1994A

5 300,000 Indus. Dev. Auth. of the Cnty. of Isle of A1* 6.550 No Sinking Fund 300,111
Wight, VA Solid Waste Disp. Facs. Rev. Bonds 4/1/2024 4/1/04 @ 102 Ref.
(Union Camp Corp. Prjt.) Series 1994

6 200,000 Riverside Regl. Jail Auth. Jail Fac. Rev. AAA 6.000 7/1/07 @ 100 S.F. 196,922
Bonds Series 1995 7/1/2025 7/1/05 @ 102 Ref.

7 60,000 P.R. Elec. Pwr. Auth. Pwr. Rev. Bonds BBB+ 0.000 No Sinking Fund 21,071
Series O 1989 7/1/2017 None

------------ -------------
$1,275,000 Total Investments (Cost $1,246,381) $1,240,057
============ =============

See accompanying footnotes to portfolio and notes to financial statements.

</TABLE>

<PAGE>

Municipal Securities Trust

Multi-State Series 46

Footnotes to Portfolio

1 All ratings are by Kenny S&P Evaluation Services, a business unit of J.J.
Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies, Inc. except
for those identified by an asterisk (*) which are by Moody's Investors
Service Inc. A brief description of the ratings symbols and their meaning is
set forth under "Description of Bond Ratings" in Part B of the Prospectus.

3. At December 31, 1999, the net unrealized appreciation of all the bonds was
comprised of the following:

California Florida Virginia
Trust Trust Trust
-------------- -------------- ----------------

<S> <C> <C> <C>
Gross unrealized appreciation $ 28,797 $ 18,481 $ 6,534
Gross unrealized depreciation - (8,153) (12,858)

-------------- -------------- ----------------
Net unrealized appreciation (depreciation) $ 28,797 $ 10,328 $ (6,324)
============== ============== ================

</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 46

Statements of Net Assets

December 31, 1999

California Trust Florida Virginia
Trust Trust
--------------------- --------------------- --------------------

<S> <C> <C> <C>
Investments in securities, at market value
(cost $712,470, $1,195,641 and $1,246,381,
respectively) $741,267 $ 1,205,969 $ 1,240,057

Other assets
Accrued interest 11,351 22,130 28,150
--------------------- --------------------- --------------------
Total other assets 11,351 22,130 28,150
--------------------- --------------------- --------------------

Liabilities
Advance from Trustee 8,119 41,799 24,263
--------------------- --------------------- --------------------
Total liabilities 8,119 41,799 24,263
--------------------- --------------------- --------------------

Excess of other assets over total liabilities
(liabilities over total other assets) 3,232 (19,669) 3,887
--------------------- --------------------- --------------------

Netassets (857, 1,361 and 1,321 units of
fractional undivided interest outstanding,
$868.73, $871.64 and $941.67 per unit,
respectively)
$744,499 $ 1,186,300 $ 1,243,944
===================== ===================== ====================

</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 46

California Trust

Statements of Operations

Year ended December 31,
1999 1998 1997
----------------- ----------------- ----------------

<S> <C> <C> <C>
Investment income
Interest $ 47,896 $ 65,042 $ 106,599

Expenses
Trustee's fees 1,825 2,626 3,476
Evaluator's fee 833 1,117 772
Sponsor's advisory fee 235 389 542
----------------- ----------------- ----------------
Total expenses 2,893 4,132 4,790
----------------- ----------------- ----------------

Net investment income 45,003 60,910 101,809
----------------- ----------------- ----------------

Realized and unrealized gain (loss)
Realized gain on investments 7,435 58,403 18,279
Unrealized appreciation (depreciation)
on investments (98,880) (27,410) 52,585
----------------- ----------------- ----------------
Net gain (loss) on investments (91,445) 30,993 70,864
----------------- ----------------- ----------------
Net increase (decrease) in net assets resulting from
operations $ (46,442) $ 91,903 $ 172,673
================= ================= ================

</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 46

Florida Trust

Statements of Operations

Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------

<S> <C> <C> <C>
Investment income
Interest $ 79,331 $ 93,247 $ 104,985

Expenses
Trustee's fees 2,835 3,355 3,542
Evaluator's fee 834 902 772
Sponsor's advisory fee 363 405 513
------------------ ------------------- ------------------
Total expenses 4,032 4,662 4,827
------------------ ------------------- ------------------

Net investment income 75,299 88,585 100,158
------------------ ------------------- ------------------

Realized and unrealized gain (loss)
Realized gain on investments 17,295 18,678 13,477
Unrealized appreciation (depreciation)
on investments (108,077) 6,054 51,716
------------------ ------------------- ------------------
Net gain (loss) on investments (90,782) 24,732 65,193
------------------ ------------------- ------------------
Net increase (decrease) in net assets
resulting from operations $ (15,483) $ 113,317 $ 165,351
================== =================== ==================

</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 46

Virginia Trust

Statements of Operations

Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------

<S> <C> <C> <C>
Investment income
Interest $ 84,971 $ 87,698 $ 97,675

Expenses
Trustee's fees 2,705 2,877 3,109
Evaluator's fee 834 902 772
Sponsor's advisory fee 349 371 360
------------------ ------------------- ------------------
Total expenses 3,888 4,150 4,241
------------------ ------------------- ------------------

Net investment income 81,083 83,548 93,434
------------------ ------------------- ------------------

Realized and unrealized gain (loss)
Realized gain on investments 5,542 9,154 6,292
Unrealized appreciation (depreciation)
on investments (112,822) (2,975) 59,560
------------------ ------------------- ------------------
Net gain (loss) on investments (107,280) 6,179 65,852
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations $ (26,197) $ 89,727 $ 159,286
================== =================== ==================

</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 46

California Trust

Statements of Changes in Net Assets

Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------

<S> <C> <C> <C>
Operations
Net investment income $ 45,003 $ 60,910 $ 101,809
Realized gain on investments 7,435 58,403 18,279
Unrealized appreciation (depreciation)
on investments (98,880) (27,410) 52,585
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations (46,442) 91,903 172,673
------------------ ------------------- ------------------

Distributions to Certificateholders
Investment income 44,274 62,396 98,573
Principal 16,422 73,564 26,107

Redemptions
Interest 1,307 2,159 5,602
Principal 118,581 588,427 425,836
------------------ ------------------- ------------------
Total distributions and redemptions 180,584 726,546 556,118
------------------ ------------------- ------------------

Total (decrease) (227,026) (634,643) (383,445)

Net assets
Beginning of year 971,525 1,606,168 1,989,613
------------------ ------------------- ------------------
End of year (including undistributed net investment
income of $4,091, $4,669 and $8,314, respectively)
$ 744,499 $ 971,525 $ 1,606,168
================== =================== ==================

</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 46

Florida Trust

Statements of Changes in Net Assets

Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------

<S> <C> <C> <C>
Operations
Net investment income $ 75,299 $ 88,585 $ 100,158
Realized gain on investments 17,295 18,678 13,477
Unrealized appreciation (depreciation)
on investments (108,077) 6,054 51,716
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations (15,483) 113,317 165,351
------------------ ------------------- ------------------

Distributions to Certificateholders
Investment income 72,246 88,197 100,265
Principal 18,542 43,810 28,876

Redemptions
Interest 1,020 262 175
Principal 204,999 145,947 249,191
------------------ ------------------- ------------------
Total distributions and redemptions 296,807 278,216 378,507
------------------ ------------------- ------------------

Total (decrease) (312,290) (164,899) (213,156)

Net assets
Beginning of year 1,498,590 1,663,489 1,876,645
------------------ ------------------- ------------------
End of year (including undistributed net investment
income of $14,144, $12,111 and $11,985,
respectively) $ 1,186,300 $ 1,498,590 $ 1,663,489
================== =================== ==================

</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 46

Virginia Trust

Statements of Changes in Net Assets

Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------

<S> <C> <C> <C>
Operations
Net investment income $ 81,083 $ 83,548 $ 93,434
Realized gain on investments 5,542 9,154 6,292
Unrealized appreciation (depreciation)
on investments (112,822) (2,975) 59,560
------------------ ------------------- ------------------
Net increase (decrease) in net assets resulting from
operations (26,197) 89,727 159,286
------------------ ------------------- ------------------

Distributions to Certificateholders
Investment income 79,461 83,177 92,657
Principal 10,219 21,462 32,017

Redemptions
Interest 310 191 871
Principal 115,974 80,019 119,765
------------------ ------------------- ------------------
Total distributions and redemptions 205,964 184,849 245,310
------------------ ------------------- ------------------

Total (decrease) (232,161) (95,122) (86,024)

Net assets
Beginning of year 1,476,105 1,571,227 1,657,251
------------------ ------------------- ------------------
End of year (including undistributed net investment
income of $11,522, $10,210 and $10,030,
respectively) $ 1,243,944 $ 1,476,105 $ 1,571,227
================== =================== ==================

</TABLE>

The accompanying notes form an integral part of the financial statements.

<PAGE>

Municipal Securities Trust

Multi-State Series 46

California Trust

Financial Highlights

Selected data for a unit of the Trust outstanding:*

Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------

<S> <C> <C> <C>
Net asset value, beginning of year** $ 988.33 $ 1,025.65 $ 998.30
------------------ ------------------- ------------------

Interest income 52.06 51.01 59.89
Expenses (3.14) (3.24) (2.69)
------------------ ------------------- ------------------
Net investment income 48.92 47.77 57.20
------------------ ------------------- ------------------
Net gain or loss on investments(1) (101.13) 23.24 43.35
------------------ ------------------- ------------------
Total from investment operations (52.21) 71.01 100.55
------------------ ------------------- ------------------

Less distributions
to Certificateholders
Income 48.12 48.94 55.38
Principal 17.85 57.70 14.67
for Redemptions
Interest 1.42 1.69 3.15
------------------ ------------------- ------------------
Total distributions 67.39 108.33 73.20
------------------ ------------------- ------------------
Net asset value, end of year** $ 868.73 $ 988.33 $ 1,025.65
================== =================== ==================

(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net gain
and loss on investments.

* Unless otherwise stated, based upon average units outstanding during the
year of 920 ([857 + 983]/2) for 1999, 1,275 ([983 +1,556]/2) for 1998 and of
1,780 ([1,556 + 1,993]/2) for 1997.

** Based upon actual units outstanding.

The accompanying notes form an integral part of the financial statements.

</TABLE>

<PAGE>

Municipal Securities Trust

Multi-State Series 46

Florida Trust

Financial Highlights

Selected data for a unit of the Trust outstanding:*

Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------

<S> <C> <C> <C>
Net asset value, beginning of year** $ 947.28 $ 959.89 $ 938.32
------------------ ------------------- ------------------

Interest income 53.89 56.24 56.23
Expenses (2.74) (2.81) (2.59)
------------------ ------------------- ------------------
Net investment income 51.15 53.43 53.64
------------------ ------------------- ------------------
Net gain or loss on investments(1) (64.42) 13.73 37.19
------------------ ------------------- ------------------
Total from investment operations (13.27) 67.16 90.83
------------------ ------------------- ------------------

Less distributions
to Certificateholders
Income 49.08 53.19 53.70
Principal 12.60 26.42 15.47
for Redemptions
Interest .69 .16 .09
------------------ ------------------- ------------------
Total distributions 62.37 79.77 69.26
------------------ ------------------- ------------------
Net asset value, end of year** $ 871.64 $ 947.28 $ 959.89
================== =================== ==================

(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net gain
and loss on investments.

* Unless otherwise stated, based upon average units outstanding during the
year of 1,472 ([1,361 + 1,582]/2) for 1999, 1,658 ([1,582 +1,733]/2) for
1998 and of 1,867 ([1,733 + 2,000]/2) for 1997.

** Based upon actual units outstanding.

The accompanying notes form an integral part of the financial statements.

</TABLE>

<PAGE>

Municipal Securities Trust

Multi-State Series 46

Virginia Trust

Financial Highlights

Selected data for a unit of the Trust outstanding:*

Year ended December 31,
1999 1998 1997
------------------ ------------------- ------------------

<S> <C> <C> <C>
Net asset value, beginning of year** $ 1,025.07 $ 1,035.06 $ 1,013.61
------------------ ------------------- ------------------

Interest income 61.53 59.30 61.94
Expenses (2.82) (2.81) (2.69)
------------------ ------------------- ------------------
Net investment income 58.71 56.49 59.25
------------------ ------------------- ------------------
Net gain or loss on investments (1) (76.95) 4.40 41.81
------------------ ------------------- ------------------
Total from investment operations (18.24) 60.89 101.06
------------------ ------------------- ------------------

Less distributions
to Certificateholders
Income 57.54 56.24 58.76
Principal 7.40 14.51 20.30
for Redemptions
Interest .22 .13 .55
------------------ ------------------- ------------------
Total distributions 65.16 70.88 79.61
------------------ ------------------- ------------------
Net asset value, end of year** $ 941.67 $ 1,025.07 $ 1,035.06
================== =================== ==================

(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1999, 1998 and 1997, respectively, and the dates of net gain
and less on investments.

* Unless otherwise stated, based upon average units outstanding during the
year of 1,381 ([1,321 + 1,440]/2) for 1999, 1,479 ([1,440 +1,518]/2) for
1998 and of 1,577 ([1,518 + 1,635]/2) for 1997.

** Based upon actual units outstanding.

The accompanying notes form an integral part of the financial statements.

</TABLE>

<PAGE>

Municipal Securities Trust

Multi-State Series 46

Notes to Financial Statements (continued)

1. Organization

Municipal Securities Trust, Multi-State Series 46 (the "Trust") (comprising,
respectively, the California Trust, Florida Trust and Virginia Trust) was
organized on April 6, 1995 by Bear, Stearns & Co. Inc. and Gruntal & Co.,
Incorporated under the laws of the State of New York by a Trust Indenture and
Agreement, and is registered under the Investment Company Act of 1940. The Trust
was formed to preserve capital and to provide interest income.

2. Summary of Significant Accounting Policies

Interest Income

<PAGE>

Municipal Securities Trust

Multi-State Series 46

Notes to Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Security Valuation

Investments are carried at market value which is determined by Kenny S&P
Evaluation Services, a business unit of J.J. Kenny Company, Inc., a subsidiary
of the McGraw-Hill Companies, Inc. The market value of the portfolio is based
upon the bid prices for the bonds at the end of the year, which approximates the
fair value of the security at that date, except that the market value on the
date of deposit represents the cost to the Trust based on the offering prices
for investments at that date. The difference between cost (including accumulated
accretion of original issue discount on zero-coupon bonds) and market value is
reflected as unrealized appreciation (depreciation) of investments. Securities
transactions are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost of the
securities sold or redeemed.

3. Income Taxes

4. Trust Administration

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

<PAGE>

Municipal Securities Trust

Multi-State Series 46

Notes to Financial Statements (continued)

4. Trust Administration (continued)

The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. For the years ended December 31, 1999, 1998 and 1997, 126, 583 and 427
units were redeemed in the California Trust, respectively. For the years ended
December 31, 1999, 1998 and 1997, 221, 151 and 267 units were redeemed in the
Florida Trust, respectively. For the years ended December 31, 1999, 1998 and
1997, 119, 78 and 117 units were redeemed in the Virginia Trust, respectively.

The Trust pays an annual fee for trustee services rendered by the Trustee that
ranges from $1.00 to $1.47 per $1,000 of outstanding investment principal. In
addition, a minimum fee of $2.83 is paid to a service bureau for each portfolio
valuation. A maximum fee of $.25 per $1,000 of outstanding investment principal
is paid to the Sponsor. For the year ended December 31, 1999, the "Trustee's
Fees" are comprised of Trustee fees of $895, 1,906 and 1,795 and other expenses
of $930, 929 and 910 for the California, Florida and Virginia Trusts,
respectively. For the year ended December 31, 1998, the "Trustee's Fees" are
comprised of Trustee fees of $1,769, $2,414 and $2,001 and other expenses of
$857, $941 and $876 for the California, Florida and Virginia Trusts,
respectively. For the year ended December 31, 1997, the "Trustee's Fees" are
comprised of Trustee fees of $2,487, $2,553 and $2,125 and other expenses of
$989, $989 and $984 for the California, Florida and Virginia Trusts,
respectively. The other expenses include professional, printing and
miscellaneous fees.

<PAGE>

Municipal Securities Trust

Multi-State Series 46

Notes to Financial Statements (continued)

5. Net Assets

At December 31, 1999, the net assets of the Trust represented the interest of
Certificateholders as follows:

California Florida Virginia
Trust Trust Trust
-------------------- -------------------- --------------------

<S> <C> <C> <C>
Original cost to Certificateholders $ 1,980,414 $ 2,020,570 $ 2,045,934
Less initial gross underwriting commission
97,040 99,008 100,250
-------------------- -------------------- --------------------
1,883,374 1,921,562 1,945,684

Accumulated cost of securities sold,
matured or called (1,170,904) (733,496) (704,481)
Net unrealized appreciation
(depreciation) 28,797 10,328 (6,324)
Undistributed net investment income
4,091 14,144 11,522
Distributions in excess of proceeds
from investments (859) (26,238) (2,457)
-------------------- -------------------- --------------------
Total $ 744,499 $ 1,186,300 $ 1,243,944
==================== ==================== ====================

The original cost to Certificateholders, less the initial gross underwriting
commission, represents the aggregate initial public offering price net of the
applicable sales charge on 2,000, 2,000 and 2,000 units of fractional undivided
interest of the Trust as of the date of deposit.

Undistributed net investment income includes accumulated accretion of original
issue discount of $7,575, and $5,178 for the Florida and Virginia Trust,
respectively.

</TABLE>

<PAGE>

Municipal Securities Trust

Multi-State Series 46

Notes to Financial Statements (continued)

6. Concentration of Credit Risk

<PAGE>

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

Please Read and Retain Both Parts
---------------------------------
of the Prospectus for Future Reference.
--------------------------------------

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES
(Multiplier Portfolio)

Prospectus Part B

Dated: April 30, 2000

THE TRUST

Organization. "Municipal Securities Trust," Multi-State Series (the
"Trust") consists of several separate "unit investment trusts," which may
include the California Trust, Florida Trust, New York Trust and/or Virginia
Trust (collectively, the "State Trusts") designated as set forth in Part A. The
State Trusts were created under the laws of the State of New York pursuant to
the Trust Indenture and Agreement* (collectively, the "Trust Agreement"), dated
the Date of Deposit, among Reich & Tang Distributors, Inc., the predecessor to
ING Funds Distributor, Inc., as Sponsor, or depending on the particular Trust,
Reich & Tang Distributors, Inc. and Gruntal & Co., L.L.C., as Co-Sponsors
(Gruntal & Co., L.L.C. has resigned as co-sponsor), Kenny S&P Evaluation
Services, a business unit of J.J. Kenny Company, Inc., a subsidiary of The
McGraw-Hill Companies, as Evaluator, and, depending on the particular State
Trust, either The Bank of New York or The Chase Manhattan Bank, as Trustee. The
name of the Trustee for a particular State Trust is contained in the "Summary of
Essential Information" in Part A. For a description of the Trustee for a
particular State Trust, see "Trust Administration--The Trustee." Each State
Trust will be administered as a distinct entity with separate certificates,
expenses, books and records.

On the Date of Deposit the Sponsor deposited with the Trustee
long-term bonds, including delivery statements relating to contracts for the
purchase of certain such bonds (the "Bonds"), and cash or irrevocable letters of
credit issued by a major commercial bank in the amount required for such
purchases. Thereafter, the Trustee, in exchange for the Bonds so deposited,
delivered to the Sponsor the Certificates evidencing the ownership of all Units
of the State Trusts. The Trust consists of the interest-bearing bonds described
under "The Trust" in Part A of this Prospectus, the interest on which is, in the
opinions of bond counsel to the respective issuers given at the time of original
delivery of the Bonds, exempt from regular Federal income tax under existing
law.

Each "Unit" outstanding on the Evaluation Date represented an
undivided interest or pro rata share in the principal and interest of each State
Trust in the ratio of one Unit to the principal amount of Bonds in such

- --------
* References in this Prospectus to the Trust Agreement are qualified in their
entirety by the respective Trust Indentures and Agreements which are
incorporated herein by reference.

82600.12
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<PAGE>

State Trust on such date as specified in Part A of this Prospectus. To the
extent that any Units of a State Trust are redeemed by the Trustee, the
fractional undivided interest or pro rata share in such State Trust represented
by each unredeemed Unit of such State Trust will increase, although the actual
interest in such State Trust represented by such fraction will remain unchanged.
Units will remain outstanding until redeemed upon tender to the Trustee by
Certificateholders, which may include the Sponsor, or until the termination of
the Trust Agreement.

Objectives. Each State Trust is one of a series of similar but
separate unit investment trusts formed by the Sponsor which offers investors the
opportunity to participate in a portfolio of long-term tax-exempt bonds, which
may include deep "market" discount and original issue discount bonds, with a
greater diversification than they might be able to acquire themselves. The
objectives of each State Trust are to preserve capital and to provide interest
income which, in the opinions of bond counsel to the respective issuers given at
the time of original delivery of the Bonds, is, with certain exceptions,
currently exempt from regular Federal income tax and from present income taxes
of the State for which such Trust is named for residents thereof. Such interest
income may, however, be subject to the federal alternative minimum tax and to
state and local taxes in other jurisdictions. Investors should be aware that
there is no assurance the State Trusts' objectives will be achieved because
these objectives are dependent on the continuing ability of the issuers of the
Bonds to meet their interest and principal payment requirements, on the
continuing satisfaction of the conditions required for the exemptions of
interest thereon from regular Federal income tax and on the market value of the
Bonds, which can be affected by fluctuations in interest rates and other
factors.

Since disposition of Units prior to final liquidation of a State Trust
may result in an investor receiving less than the amount paid for such Units
(see "Comparison of Public Offering Price, Sponsor's Repurchase Price and
Redemption Price"), the purchase of a Unit should be looked upon as a long-term
investment. The State Trusts are not designed to be complete investment
programs.

The Portfolios--General. All of the Bonds in the State Trusts were
rated "A" or better by Standard & Poor's Ratings Services, A Division of The
McGraw-Hill Companies ("Standard & Poor's") or Moody's Investors Service, Inc.
("Moody's") at the time originally deposited in the State Trust. For a list of
the ratings of each Bond on the Evaluation Date, see each "Portfolio" in Part A
of this Prospectus.

For information regarding (i) the number of issues in each State
Trust, (ii) the range of fixed maturity of the Bonds, (iii) the number of issues
payable from the income of a specific project or authority and (iv) the number
of issues constituting general obligations of a government entity, see "The
Trust" and "Description of Portfolio" for each State Trust in Part A of this
Prospectus.

When selecting Bonds for the State Trusts, the following factors,
among others, were considered by the Sponsor on the Date of Deposit: (i) the
quality of the Bonds and whether such Bonds were rated "A" or better by Standard
& Poor's or Moody's, (ii) the yield and price of the Bonds relative to other
tax-exempt securities of comparable quality and maturity, (iii) income to the
Certificateholders of the State Trusts, (iv) the diversification of each State
Trust's portfolio, as to purpose of issue and location of issuer, taking into
account the availability in the market of issues which meet such State Trust's
quality, rating, yield and price criteria

82600.12
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<PAGE>

and (v)the existence of "market" discount and original issue discount.
Subsequent to the Evaluation Date, a Bond may cease to be rated or its rating
may be reduced below that specified above. Neither event requires an elimination
of such Bond from a State Trust but may be considered in the Sponsor's
determination to direct the Trustee to dispose of the Bond. See "Portfolio
Supervision." For an interpretation of the bond ratings, see "Description of
Bond Ratings."

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

Hospital Revenue Bonds. Some of the aggregate principal amount of the
Bonds may consist of hospital revenue bonds. Ratings of hospital bonds are often
initially based on feasibility studies which contain projections of occupancy
levels, revenues and expenses. Actual experience may vary considerably from such
projections. A hospital's gross receipts and net income will be affected by
future events and conditions including, among other things, demand for hospital
services and the ability of the hospital to provide them, physicians' confidence
in hospital management capability, economic developments in the service area,
competition, actions by insurers and governmental agencies and the increased
cost and possible unavailability of malpractice insurance. Additionally, a major
portion of hospital revenue typically is derived from third-party payors and
government programs such as Medicare and Medicaid. Both private third-party
payors and government programs have undertaken cost containment measures
designed to limit payments. Furthermore, government programs are subject to
statutory and regulatory changes, retroactive rate adjustments, administrative
rulings and government funding restrictions, all of which may materially
decrease the rate of program payments for health care facilities. There can be
no assurance that payments under governmental programs will remain at levels
comparable to present levels or will, in the future, be sufficient to cover the
costs allocable to patients participating in such programs. In addition, there
can be no assurance that a particular hospital or other health care facility
will continue to meet the requirements for participation in such programs.

The health care delivery system is undergoing considerable alteration
and consolidation. Consistent with that trend, the ownership or management of a
hospital or health care facility may change, which could result in (i) an early
redemption of bonds, (ii) alteration of the facilities financed by the Bonds or
which secure the Bonds, (iii) a change in the tax exempt status of the Bonds or
(iv) an inability to produce revenues sufficient to make timely payment of debt
service on the Bonds. Future legislation or changes in the areas noted above,
among other things, would affect all hospitals to varying degrees and,
accordingly, any adverse change in these areas may affect the ability of such
issuers to make payment of principal and interest on such bonds. See
"Description of Portfolio" in Part A for the amount of hospital revenue bonds
contained therein.

Nuclear Power Facility Bonds. Certain Bonds may have been issued in
connection with the financing of nuclear generating facilities. Electric
utilities which own or operate nuclear power plants are exposed to risks

82600.12
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<PAGE>

inherent in the nuclear industry. These risks include exposure to new
requirements resulting from extensive federal and state regulatory oversight,
public controversy, decommissioning costs, and spent fuel and radioactive waste
disposal issues. While nuclear power construction risks are no longer of
paramount concern, the emerging issue is radioactive waste disposal. In
addition, nuclear plants typically require substantial capital additions and
modifications throughout their operating lives to meet safety, environmental,
operational and regulatory requirements and to replace and upgrade various plant
systems. The high degree of regulatory monitoring and controls imposed on
nuclear plants could cause a plant to be out of service or on limited service
for long periods. When a nuclear facility owned by an investor-owned utility or
a state or local municipality is out of service or operating on a limited
service basis, the utility operator or its owners may be liable for the recovery
of replacement power costs. Risks of substantial liability also arise from the
operation of nuclear facilities and from the use, handling, and possible
radioactive emissions associated with nuclear fuel. Insurance may not cover all
types or amounts of loss which may be experienced in connection with the
ownership and operation of a nuclear plant and severe financial consequences
could result from a significant accident or occurrence. The Nuclear Regulatory
Commission has promulgated regulations mandating the establishment of funded
reserves to assure financial capability for the eventual decommissioning of
licensed nuclear facilities. These funds are to be accrued from revenues in
amounts currently estimated to be sufficient to pay for decommissioning costs.
The Sponsor is unable to predict whether any such actions or whether any such
proposals or litigation, if enacted or instituted, will have an adverse impact
on the revenues available to pay the debt service on the Bonds in the portfolio
issued to finance such nuclear projects. See "Description of Portfolio" in Part
A for the amount of bonds issued to finance nuclear generating facilities
contained therein.

Mortgage Subsidy Bonds. Certain Bonds may be "mortgage subsidy bonds"
which are obligations of which all or a significant portion of the proceeds are
to be used directly or indirectly for mortgages on owner-occupied residences.
Section 103A of the Internal Revenue Code of 1954 provided as a general rule
that interest on "mortgage subsidy bonds" will not be exempt from Federal income
tax. An exception is provided for certain "qualified mortgage bonds." Qualified
mortgage bonds are bonds that are used to finance owner- occupied residences and
that meet numerous statutory requirements. These requirements include certain
residency, ownership, purchase price and target area requirements, ceiling
residency, ownership, purchase price and target area requirements, ceiling
amounts for state and local issuers, arbitrage restrictions and (for bonds
issued after December 31, 1984) certain information reporting, certification,
public hearing and policy statement requirements. In the opinions of bond
counsel to the issuing governmental authorities, interest on all the Bonds in a
Trust that might be deemed "mortgage subsidy bonds" will be exempt from Federal
income tax when issued. See "Description of Portfolio" in Part A for the amount
of mortgage subsidy Bonds contained therein.

Mortgage Revenue Bonds. Certain Bonds may be "mortgage revenue bonds."
Under the Internal Revenue Code of 1986, as amended (the "Code") (and under
similar provisions of the prior tax law), "mortgage revenue bonds" are
obligations the proceeds of which are used to finance owner-occupied residences
under programs which meet numerous statutory requirements relating to residency,
ownership, purchase price and target area requirements, ceiling amounts for
state and local issuers, arbitrage restrictions, and certain information
reporting certification, and public hearing requirements. There can be no
assurance that additional federal legislation will not be introduced or that
existing legislation will not be further amended, revised, or enacted

82600.12
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<PAGE>

after delivery of these Bonds or that certain required future actions will be
taken by the issuing governmental authorities, which action or failure to act
could cause interest on the Bonds to be subject to Federal income tax. If any
portion of the Bonds proceeds are not committed for the purpose of the issue,
Bonds in such amount could be subject to earlier mandatory redemption at par,
including issues of Zero Coupon Bonds (see "Discount and Zero Coupon Bonds").
See "Description of Portfolio" in Part A for the amount of mortgage revenue
bonds contained therein.

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

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

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

Litigation. Litigation challenging the validity under state
constitutions of present systems of financing public education has been
initiated in a number of states. Decisions in some states have been reached
holding such school financing in violation of state constitutions. In addition,
legislation to effect changes in public school financing has been introduced in
a number of states. The Sponsor is unable to predict the outcome of the pending
litigation and legislation in this area and what effect, if any, resulting
change in the sources of funds, including proceeds from property taxes applied
to the support of public schools, may have on the school bonds in the State
Trusts.

Legal Proceedings Involving the Trusts. The Sponsor has not been
notified or made aware of any litigation pending with respect to any Bonds which
might reasonably be expected to have a material effect on the State

82600.12
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<PAGE>

Trusts other than that which is discussed under "The State Trusts" herein. Such
litigation as, for example, suits challenging the issuance of pollution control
revenue bonds under recently enacted environmental protection statutes, may
affect the validity of such Bonds or the tax-free nature of the interest
thereon. At any time after the date of this Prospectus, litigation may be
instituted on a variety of grounds with respect to the Bonds in the State
Trusts. The Sponsor is unable to predict whether any such litigation may be
instituted or, if instituted, whether it will have a material adverse effect on
a State Trust.

Other Factors. The Bonds in the State Trusts, despite their optional
redemption provisions which generally do not take effect until 10 years after
the original issuance dates of such bonds (often referred to as "ten year call
protection"), do contain provisions which require the issuer to redeem such
obligations at par from unused proceeds of the issue within a stated period. In
recent periods of declining interest rates there have been increased redemptions
of bonds, particularly housing bonds, pursuant to such redemption provisions. In
addition, the Bonds in the State Trusts are also subject to mandatory redemption
in whole or in part at par at any time that voluntary or involuntary prepayments
of principal on the underlying collateral are made to the trustee for such bonds
or that the collateral is sold by the bond issuer. Prepayments of principal tend
to be greater in periods of declining interest rates; it is possible that such
prepayments could be sufficient to cause a bond to be redeemed substantially
prior to its stated maturity date, earliest call date or sinking fund redemption
date.

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

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

The State Trusts may also include "moral obligation" bonds. Under
statutes applicable to such bonds, if an issuer is unable to meet its
obligations, the repayment of such bonds becomes a moral commitment but not a
legal obligation of the state or municipality in question. See "Portfolio" and
"Information Regarding the State Trust" for each State Trust in Part A of this
Prospectus for the amount of moral obligation bonds contained in each State
Trust's portfolio.

Certain of the Bonds in the State Trusts are subject to redemption
prior to their stated maturity dates pursuant to sinking fund or call
provisions. A sinking fund is a reserve fund appropriated specifically toward
the retirement of a debt. A callable bond is one which is subject to redemption
or refunding prior to maturity at the option of the issuer. A refunding is a
method by which a bond is redeemed at or before maturity from the proceeds of a
new issue of bonds. In general, call provisions are more likely to be exercised
when the offering side evaluation of a bond is at a premium over par than when
it is at a discount from par. A listing of the sinking fund and call provisions,
if any, with respect to each of the Bonds in each State Trust is contained under
the "Portfolio" for such State Trust in

82600.12
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<PAGE>

Part A of this Prospectus. Certificateholders will realize a gain or loss on the
early redemption of such Bonds, depending upon whether the price of such Bonds
is at a discount from or at a premium over par at the time the
Certificateholders purchase their Units.

Neither the Sponsor nor the Trustee shall be liable in any way for any
default, failure or defect in any of the Bonds. Because certain of the Bonds
from time to time may be redeemed or will mature in accordance with their terms
or may be sold under certain circumstances, no assurance can be given that the
State Trusts will retain their present size and composition for any length of
time. The proceeds from the sale of a Bond in a State Trust or from the exercise
of any redemption or call provision will be distributed to Certificateholders of
such State Trust, except to the extent such proceeds are applied to meet
redemptions of Units. See "Trustee Redemption."

Puerto Rico Bonds. Certain of the Bonds in the Trust may be general
obligations and/or revenue bonds of issuers located in Puerto Rico. such 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 year 1998, approximately 90% of Puerto Rico's exports were to the United
States mainland, which was also the source of 61% of Puerto Rico's imports. In
fiscal 1998, Puerto Rico experienced a $8.5 billion positive adjusted
merchandise trade balance. The dominant section of the Puerto Rico economy are
manufacturing and services. Gross product in fiscal 1995 was $28.4 billion
($25.9 billion in 1992 prices) and gross product in fiscal 1999 was $38.1
billion ($29.7 billion in 1992 prices). This represents an increase in gross
product of 34.5% from fiscal 1995 to 1999 (14.5% in 1992 prices). According to
the Labor Department's Household Employment survey, 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 Planning
Board's gross product forecast for fiscal 2000, made in October 1999, projected
an increase of 2.7% over fiscal 1999.

Discount and Zero Coupon Bonds. The State Trust portfolios may contain
original issue discount bonds. The original issue discount, which is the
difference between the initial purchase price of the Bonds and the face value,
is deemed to accrue on a daily basis and the accrued portion will be treated as
tax-exempt interest income for regular Federal income tax purposes. Upon sale or
redemption, any gain realized that is in excess of the earned portion of
original issue discount will be taxable as capital gain. See "Tax Status." The
current value of an original issue discount bond reflects the present value of
its face amount at maturity. The market value tends to increase more slowly in
early years and in greater increments as the Bonds approach maturity. Of these
original issue discount bonds, a portion of the aggregate principal amount of
the Bonds in each State Trust may be Zero Coupon Bonds. Zero Coupon Bonds do not
provide for the payment of any current interest and provide for payment at
maturity at face value unless sooner sold or redeemed. The market value of Zero
Coupon Bonds is subject to greater fluctuations than coupon bonds in response to
changes in interest rates. Zero Coupon Bonds generally are subject to redemption
at compound accredited value based on par value at maturity. Because the issuer
is not obligated to make current interest payments, Zero Coupon Bonds may be
less likely to be redeemed than coupon bonds issued at a similar interest rate.
See "Description of Portfolios" in Part A for the aggregate principal amount of
original issue discount bonds in each State Trust's portfolio.

The State Trust portfolios may also contain Bonds that were
purchased at deep "market" discount from par value at maturity. This is

82600.12
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<PAGE>

because the coupon interest rates on the discount Bonds at the time they were
purchased and deposited in the State Trusts were lower than the current market
interest rates for newly issued bonds of comparable rating and type. At the time
of issuance, the discount Bonds were for the most part issued at then current
coupon interest rates. The current returns (coupon interest income as a
percentage of market price) of discount bonds will be lower than the current
returns of comparably rated bonds of similar type newly issued at current
interest rates because discount bonds tend to increase in market value as they
approach maturity and the full principal amount becomes payable. A discount bond
held to maturity will have a larger portion of its total return in the form of
capital gain and less in the form of tax-exempt interest income than a
comparable bond newly issued at current market rates. Under the provisions of
the Internal Revenue Code in effect on the date of this Prospectus, any income
attributable to market discount will be taxable but will not be realized until
maturity, redemption or sale of the Bonds or Units. However, the
Administration's Fiscal Year 2000 Budget proposals would require accrual basis
taxpayers to accrue market discount income with respect to obligations acquired
after the date that the proposal is enacted. Gain on the disposition of a Bond
purchased at a market discount generally will be treated as ordinary income,
rather than capital gain, to the extent of accrued market discount. Discount
bonds with a longer term to maturity tend to have a higher current yield and a
lower current market value than otherwise comparable bonds with a shorter term
to maturity. If interest rates rise, the value of the bonds will decrease; and
if interest rates decline, the value of the bonds will increase. The discount
does not necessarily indicate a lack of market confidence in the issuer.

THE STATE TRUSTS

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

California Trust

General Economic Conditions

The economy of the State of California (sometimes referred to herein
as the "State") is the largest among the 50 states and one of the largest in the
world. This diversified economy has major components in high technology, trade,
entertainment, agriculture, manufacturing, tourism, construction and services.

The State's July 1, 1999 population of over 34 million represented
over 12 percent of the total United States population.

California's population is concentrated in metropolitan areas. As of
the April 1, 1990 census, 96 percent of population resided in the 23
Metropolitan Statistical Areas in the State. As of July 1, 1998, the five-county
Los Angeles area accounted for 49 percent of the State's population, with 16.0
million residents. The 10-county San Francisco Bay Area represented 21 percent,
with a population of 7.0 million.

82600.12
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<PAGE>

Following a severe recession beginning in 1990, the State of
California's financial condition improved markedly during the fiscal years
starting in 1995-96, with a combination of better than expected revenues,
slowdown in growth of social welfare programs, and continued spending restraint
based on actions taken in earlier years. California's cash position also
improved, and no external deficit borrowing occurred over the end of the last
four fiscal years (which begins on July 1 and ends on June 30).

The State's economy grew strongly during the Fiscal Years beginning in
1995-96, and as a result, the General Fund (which is the primary revenue account
of the State, holding all revenues received by the State Treasury that are not
required to be credited to a special fund and earnings from investments not
required to be allocated to another fund) took in substantially greater tax
revenues (around $2.2 billion in 1995-96, $1.6 billion in 1996-97 and $2.4
billion in 1997-98 and $1.7 billion in 1998-99) than were initially planned when
the budgets were enacted. These additional funds were largely directed to school
spending as mandated by Proposition 98, to make up shortfalls from reduced
federal health and welfare aid in 1995-96 and 1996-97 and particularly in
1998-99 to fund new program incentives. (See "Proposition 98" below.)

1998-99 Fiscal Year Budget

The following were major features of the 1998 Budget Act and certain
additional fiscal bills enacted before the end of the legislative session:

1. The most significant feature of the 1998-99 budget was agreement on
a total of $1.4 billion of tax cuts. The central element was a bill that
provided for a phased-in reduction of the Vehicle License Fee ("VLF") . Since
the VLF is transferred to cities and counties under existing law, the bill
provided for the General Fund to replace the lost revenues. Starting on January
1, 1999, the VLF has been reduced by 25 percent, at a cost to the General Fund
of approximately $500 million in the 1998-99 Fiscal Year and about $1 billion
annually thereafter.

In addition to the cut in VLF, the 1998-99 budget included both
temporary and permanent increases in the personal income tax dependent credit
($612 million General Fund cost in 1998-99, but less in future years), a
nonrefundable renters' tax credit ($133 million), and various targeted business
tax credits ($106 million).

2. Proposition 98 funding for local schools and community colleges
("K-14") was increased by $1.7 billion in General Fund moneys over revised
1997-98 levels, over $300 million higher than the minimum Proposition 98
guarantee. (See also "Proposition 98" below.) Of the 1998-99 funds, major new
programs included money for instructional and library materials, deferred
maintenance, support for increasing the school year to 180 days and reduction of
class sizes in Grade 9. The Budget also included $250 million as repayment of
prior years' loans to schools, as part of the settlement of the California
Teachers' Association v. Gould lawsuit. (See "Proposition 98" below.)

3. Funding for higher education increased substantially above the
actual 1997-98 level. General Fund support was increased by $340 million (15.6
percent) for the University of California and $267 million (14.1 percent) for
the California State University system. In addition, Community Colleges funding
increased by $300 million (6.6 percent).

82600.12
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<PAGE>

4. The Budget included increased funding for health, welfare and
social services programs. A 4.9 percent grant increase was included in the basic
welfare grants, the first increase in those grants in 9 years.

5. Funding for the judiciary and criminal justice programs increased
by about 11 percent over 1997-98, primarily to reflect increased State support
for local trial courts and rising prison population.

6. Major legislation enacted after the 1998 Budget Act included new
funding for resources projects, a share of the purchase of the Headwaters
Forest, funding for the Infrastructure and Economic Development Bank ($50
million) and funding for the construction of local jails. The State realized
savings of $433 million from a reduction in the State's contribution to the
State Teacher's Retirement System in 1998-99.

Final tabulation of revenues and expenditures contained in the 2000-01
Governor's Budget reveals that stronger than expected economic conditions in the
State produced total 1998-99 General Fund revenues of about $58.6 billion,
almost $1.6 billion above the 1998 Budget Act estimates. Actual General Fund
expenditures were $57.8 billion, the amount estimated at the 1998 Budget Act.
Some of this additional revenue will be directed to K-14 schools pursuant to
Proposition 98. The Governor's Budget projected a balance in the State's budget
reserve fund at June 30, 1999, of approximately $3.1 billion.

1999-00 Fiscal Year Budget

On January 8, 1999, Governor Davis released his proposed budget for
Fiscal Year 1999-00 (the "January Governor's Budget"). The January Governor's
Budget generally reported that General Fund revenues for Fiscal Year 1998-99 and
Fiscal Year 1999-00 would be lower than earlier projections (primarily due to
weaker overseas economic conditions perceived in late 1998), while some welfare
caseloads would be higher than earlier projections. The January Governor's
Budget proposed $60.5 billion of General Fund expenditures in Fiscal Year
1999-00, with a $415 million budget reserve at June 30, 2000.

The 1999 Governor's May Revision of the Budget (the "May Revision")
showed an additional $4.3 billion of revenues for combined Fiscal Years 1998-99
and 1999-00. The completion of the 1999 Budget Act occurred in a timely fashion.
The final Budget Bill was adopted by the Legislature on June 16, 1999, and was
signed by the Governor on June 29, 1999 (the "1999 Budget Act"), meeting the
Constitutional deadline for budget enactment for only the second time in the
1990's.

The final 1999 Budget Act estimated General Fund revenues and
transfers of $63.0 billion, and contained expenditures totaling $63.7 billion
after the Governor used his line-item veto to reduce the legislative Budget Bill
expenditures by $581 million (both General Fund and special fund). The 1999
Budget Act also contained expenditures of $16.1 billion from special funds and
$1.5 billion from bond funds. The Administration estimated that the State's
budget reserve fund would have a balance at June 30, 2000, of about $880
million. Not included in this amount was an additional $300 million that (after
the Governor's vetoes) was "set aside" to provide funds for employee salary
increases (to be negotiated in bargaining with employee unions), and for
litigation reserves. The 1999 Budget Act anticipated normal cash flow borrowing
during the Fiscal Year.

82600.12
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<PAGE>

The principal features of the 1999 Budget Act include the following:

1. Proposition 98 funding for K-12 schools was increased by $1.6
billion in General Fund moneys over revised 1998-99 levels, $108.6 million
higher than the minimum Proposition 98 guarantee. Of the 1999-00 funds, major
new programs included money for reading improvement, new textbooks, school
safety, improving teacher quality, funding teacher bonuses, providing greater
accountability for school performance, increasing preschool and after school
care programs and funding deferred maintenance of school facilities. The Budget
also includes $310 million as repayment of prior years' loans to schools, as
part of the settlement of the California Teachers' Association v. Gould lawsuit.
(See also "Proposition 98" below.)

2. Funding for higher education increased substantially above the
actual 1998-99 level. General Fund support was increased by $184 million (7.3
percent) for the University of California ("UC") and $126 million (5.9 percent)
for the California State University system ("CSU"). In addition, Community
Colleges funding increased by $324.3 million (6.6 percent). As a result,
undergraduate fees at UC and CSU will be reduced for the second consecutive
year, and the per-unit charge at Community Colleges was reduced by $1.

3. The Budget included increased funding of nearly $600 million for
health and human services.

4. About $800 million from the General Fund will be directed toward
infrastructure costs, including $425 million in additional funding for the
Infrastructure Bank, initial planning costs for the new prison in the Central
Valley, additional equipment for train and ferry service, and payment of
deferred maintenance for state parks.

5. The Legislature enacted a one-year additional reduction of 10
percent of the VLF for calendar year 2000, at a General Fund cost of about $250
million in each of Fiscal Year 1999-00 and 2000-01 to make up lost funding to
local governments. Conversion of this one-time reduction to a permanent cut will
remain subject to the revenue tests in the legislation adopted previously.
Several other targeted tax cuts, primarily for businesses, were also approved,
at a cost of $54 million in 1999-00.

6. A one-time appropriation of $150 million, to be split between
cities and counties, was made to offset property tax shifts during the early
1990's. Additionally, an ongoing $50 million was appropriated as a subvention to
cities for jail booking or processing fees charged by counties when an
individual arrested by city personnel is taken to a county detention facility.

Proposed 2000-01 Fiscal Year Budget

On January 10, 2000, Governor Davis released his proposed budget for
Fiscal Year 2000-01. The 2000-01 Governor's Budget generally reflects that
General Fund revenues for Fiscal Year 1999-00 will be higher than projections
made at the time of the 1999 Budget Act.

The revised 1999-00 budget included in the 2000-01 Governor's Budget
also reflects the latest estimated costs or savings as provided in various
pieces of legislation passed and signed after the 1999 Budget Act. The revised
budget includes $730 million for various departments for enrollment, caseload
and population changes and $562 million for Smog Impact

82600.12
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<PAGE>

Fee refunds. (See discussion of the Jordan case under "Pending Litigation"
below.) Revised 1999-00 revenues are $65.2 billion or $2.2 billion higher than
projections at the 1999 Budget Act. Revised 1999-00 expenditures are $65.9
billion or $2.1 billion higher than projections at the 1999 Budget Act.

The State's Legislative Analyst (LAO) issued a report in February
2000. The LAO report indicates General Fund revenues for the 18-month period
(January 2000 through June 2001) could be as much as $4.2 billion higher than
the 2000-01 Governor's Budget estimates. The LAO estimate was issued after
analyzing actual revenues for December 1999 and January 2000, which were not
available at the time the Governor's Budget estimates were prepared. The LAO
report assumed the continuation of strong economic growth in the State during
this period.

The Governor's Budget projects General Fund revenues and transfers in
2000-01 of $68.2 billion. This includes anticipated payments from the tobacco
litigation settlement of $387.9 million and the receipt of one-time revenue from
the sale of assets. (See "Tobacco Litigation: and "Pending Litigation" below.)
More accurate revenue estimates will be available in May and June before the
adoption of the Budget. The Governor has proposed $167 million in tax reduction
initiatives.

The Governor's Budget proposes General Fund expenditures of $68.8
billion. Included in the Budget are set-asides of $500 million for legal
contingencies and $100 million for various one-time legislative initiatives. At
the time of the release of the 2000-01 Governor's Proposed Budget, on January
10, 2000, the Department of Finance projected the State's budget reserve fund
would have a balance of about $2.420 billion at June 30, 2000, compared to the
amount of $880 million projected at the time the 1999 Budget Act was signed on
June 29, 1999. Based on the proposed revenues and expenditures, the Governor's
Budget projects the June 30, 2001 balance in the State budget reserve fund will
be $1.238 billion.

Future Budgets

It cannot be predicted what actions will be taken in the future by the
State Legislature and the Governor to deal with changing State revenues and
expenditures. The State budget will be affected by national and State economic
conditions and other factors.

State Indebtedness

General Obligation Bonds - As of January 1, 2000, the State had
outstanding $20,506,076,000 aggregate principal amount of long-term general
obligation bonds, and unused voter authorizations for the future issuance of
$11,827,414,000 of long-term general obligation bonds. This latter figure
consists of $4,123,734,000 of authorized commercial paper notes, described below
(of which $681,065,000 was outstanding), which had not yet been refunded by
general obligation bonds, and $7,703,680,000 of other authorized but unissued
general obligation debt.

In its 1999 session, the Legislature passed and the Governor signed
five bond acts, totaling $4.69 billion in new authorizations. Of these five bond
measures, voters in the March 7, 2000 election passed four, totaling $4.47
billion in new authorizations.

Commercial Paper Program - Pursuant to the terms of the bank credit
agreement presently in effect supporting the general obligation commercial paper
program, not more than $1.5 billion of general obligation

82600.12
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<PAGE>

commercial paper notes May be outstanding at any time; this amount May be
increased or decreased in the future. Commercial paper notes are deemed issued
upon authorization by the respective Finance Committees, whether or not such
notes are actually issued. As of January 1, 2000, the Finance Committees had
authorized the issuance of up to $4,123,734,000 of commercial paper notes; as of
that date $681,065,000 aggregate principal amount of general obligation
commercial paper notes was outstanding.

Lease-Purchase Debt - In addition to general obligation bonds, the
State builds and acquires capital facilities through the use of lease-purchase
borrowing. Under these arrangements, the State Public Works Board, another State
or local agency or a joint powers authority issues bonds to pay for the
construction of facilities such as office buildings, university buildings or
correctional institutions. These facilities are leased to a State agency or the
University of California under a long-term lease that provides the source of
payment of the debt service on the lease-purchase bonds. In some cases, there is
not a separate bond issue, but a trustee directly creates certificates of
participation in the State's lease obligation, which are marketed to investors.
Under applicable court decisions, such lease arrangements do not constitute the
creation of "indebtedness" within the meaning of the Constitutional provisions
that require voter approval. The State had $6,719,629,434 General Fund-supported
lease-purchase debt outstanding at January 1, 2000. The State Public Works
Board, which is authorized to sell lease revenue bonds, had $1,836,518,000
authorized and unissued as of January 1, 2000.

Non-Recourse Debt - Certain State agencies and authorities issue
revenue obligations for which the General Fund has no liability. Revenue bonds
represent obligations payable from State revenue-producing enterprises and
projects, which are not payable from the General Fund, and conduit obligations
payable only from revenues paid by private users of facilities financed by the
revenue bonds. The enterprises and projects financed include transportation
projects, various public works projects, public and private educational
facilities (including the California State University and University of
California systems), housing, health facilities and pollution control
facilities. There are 17 agencies and authorities authorized to issue revenue
obligations (excluding lease-purchase debt). State agencies and authorities had
$26,008,006,628 aggregate principal amount of revenue bonds and notes that are
non-recourse to the General Fund outstanding as of June 30, 1999.

Cash Flow Borrowings - As part of its cash management program, the
State has regularly issued short-term obligations to meet cash flow needs. The
State issued $1.0 billion of revenue anticipation notes for the 1999-00 Fiscal
Year to mature on June 30, 2000.

Ratings

In February 2000, the following ratings for California debt issues
have been received from Moody's Investors Service ("Moody's"), Standard & Poor's
Ratings Services ("S&P") and Fitch IBCA, Inc. ("Fitch"):

Fitch Moody's S&P
Insured General Obligation Bonds AAA Aaa AAA
General Obligation Bonds AA Aa3 AA-

82600.12
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<PAGE>

Any explanation of the significance of such ratings May be obtained
only from the rating agency furnishing such ratings. There is no assurance that
such ratings will continue for any given period of time or that they will not be
revised downward or withdrawn entirely if, in the judgment of the particular
rating agency, circumstances so warrant.

State Appropriations Limit

The State is subject to an annual appropriations limit imposed by
Article XIII B of the State Constitution (the "Appropriations Limit"). The
Appropriations Limit does not restrict appropriations to pay debt service on
voter-authorized bonds.

Article XIII B prohibits the State from spending "appropriations
subject to limitation" in excess of the Appropriations Limit. "Appropriations
subject to limitation," with respect to the State, are authorizations to spend
"proceeds of taxes," which consist of tax revenues and certain other funds,
including proceeds from regulatory licenses, user charges or other fees to the
extent that such proceeds exceed "the cost reasonably borne by that entity in
providing the regulation, product or service," but "proceeds of taxes" exclude
most State subventions to local governments, tax refunds and some benefit
payments such as unemployment insurance. No limit is imposed on appropriations
of funds that are not "proceeds of taxes," such as reasonable user charges or
fees and certain other non-tax funds.

Not included in the Appropriations Limit are appropriations for the
debt service costs of bonds existing or authorized by January 1, 1979, or
subsequently authorized by the voters, appropriations required to comply with
mandates of courts or the federal government, appropriations for qualified
capital outlay projects, appropriations of revenues derived from any increase in
gasoline taxes and motor vehicle weight fees above January 1, 1990 levels, and
appropriation of certain special taxes imposed by initiative (e.g., cigarette
and tobacco taxes). The Appropriations Limit May also be exceeded in cases of
emergency.

The State's Appropriations Limit in each year is based on the limit
for the prior year, adjusted annually for changes in State per capita personal
income and changes in population, and adjusted, when applicable, for any
transfer of financial responsibility of providing services to or from another
unit of government or any transfer of the financial source for the provisions of
services from tax proceeds to non tax proceeds. The measurement of change in
population is a blended average of statewide overall population growth, and
change in attendance at K-14 districts. The Appropriations Limit is tested over
consecutive two-year periods. Any excess of the aggregate "proceeds of taxes"
received over such two-year period above the combined Appropriations Limits for
those two years is divided equally between transfers to K-14 districts and
refunds to taxpayers.

The Legislature has enacted legislation to implement Article XIII B
that defines certain terms used in Article XIII B and sets forth the methods for
determining the Appropriations Limit. California Government Code Section 7912
requires an estimate of the Appropriations Limit to be included in the
Governor's Budget, and thereafter to be subject to the budget process and
established in the Budget Act.

The following table shows the State's Appropriations Limit for the
past three Fiscal Years, the current Fiscal Year and the proposed budget year.
As of the release of the 2000-01 Governor's Budget, the Department of Finance
projects the State's appropriations subject to limitations will be

82600.12
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<PAGE>

$3.8 billion under the State's Appropriations Limit in Fiscal Year 1999-00 and
$4.0 billion in Fiscal Year 2000-01.

State Appropriations Limit
(Millions)
<TABLE>
<CAPTION>
Fiscal Years

1996-97 1997-98 1998-99* 1990-00* 2000-01*
------- ------- ------- ------- --------

<S> <C> <C> <C> <C> <C>
State Appropriations Limit $42,002 $44,778 $47,573 $50,673 $53,419
Appropriations Subject to (35,103) (40,743) (43,695) (46,896) (49,444)
Limit -------- -------- -------- -------- --------

Amount (Over)/Under Limit $6,899 $4,035 $3,878 $3,777 $3,975
====== ====== ====== ====== ======

- --------------
*Estimated/Projected
Source: State of California, Department of Finance.

</TABLE>

Proposition 98

Article XIII B, as amended by Proposition 98 on November 8, 1988, also
establishes a minimum level of state funding for school and community college
districts and requires that excess revenues up to a certain limit be transferred
to schools and community college districts instead of returned to the taxpayers.

Proposition 98 changed State funding of public education below
the university level and the operation of the State appropriations funding,
primarily by guaranteeing K-14 schools a minimum share of General Fund revenues.
(See "State Appropriations Limit" above.) Under Proposition 98 (as modified by
Proposition 111, which was enacted on June 5, 1990), K-14 schools are guaranteed
the greater of (a) in general, a fixed percent of General Fund revenues ("Test
1"), (b) the amount appropriated to K-14 schools in the prior year, adjusted for
changes in the cost of living (measured as in California Constitution Article
XIII B by reference to State per capita personal income) and enrollment ("Test
2"), or (c) a third test, which would replace Test 2 in any year when the
percentage growth in per capita General Fund revenues from the prior year plus
one half of one percent is less than the percentage growth in State per capita
personal income ("Test 3"). Under Test 3, schools would receive the amount
appropriated in the prior year adjusted for changes in enrollment and per capita
General Fund revenues, plus an additional small adjustment factor. If Test 3 is
used in any year, the difference between Test 3 and Test 2 would become a
"credit" to schools that would be the basis of payments in future years when per
capita General Fund revenue growth exceeds per capita personal income growth.
Legislation adopted prior to the end of the 1988-89 Fiscal Year, implementing
Proposition 98, determined the K-14 schools' funding guarantee under Test 1 to
be 40.3 percent of the General Fund tax revenues, based on 1986-87
appropriations. However, that percentage has been adjusted to approximately 35
percent to account for a subsequent redirection of local property taxes, since
such redirection directly affects the share of General Fund revenues to schools.

Proposition 98 permits the Legislature by two-thirds vote of both
houses, with the Governor's concurrence, to suspend the K-14 schools' minimum
funding formula for a one-year period. Proposition 98 also contains provisions
transferring certain State tax revenues in excess of the Article XIII B limit to
K-14 schools.

During the recession in the early 1990's, General Fund revenues for
several years were less than originally projected, so that the original

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<PAGE>

Proposition 98 appropriations turned out to be higher than the minimum
percentage provided in the law. The Legislature responded to these developments
by designating the "extra" Proposition 98 payments in one year as a "loan" from
future years' Proposition 98 entitlements and also intended that the "extra"
payments would not be included in the Proposition 98 "base" for calculating
future years' entitlement. By implementing these actions, per-pupil funding from
Proposition 98 sources stayed almost constant at approximately $4,220 from
Fiscal Year 1991-92 to Fiscal Year 1993-94.

In 1992, a lawsuit was filed, called California Teachers' Association
v. Gould, that challenged the validity of these off-budget loans. The settlement
of this case, finalized in July 1996, provides, among other things, that both
the State and K-14 schools share in the repayment of prior years' emergency
loans to schools. Of the total $1.76 billion in loans, the State will repay $935
million by forgiveness of the amount owed, while schools will repay $825
million. The State's share of the repayment will be reflected as an
appropriation above the current Proposition 98 base calculation. The schools'
share of the repayment will count as appropriations that count toward satisfying
the Proposition 98 guarantee, or from "below" the current base. Repayments are
spread over the eight-year period of 1994-95 through 2001-02 to mitigate any
adverse fiscal impact.

Substantially increased General Fund revenues, above initial budget
projections, in the 1994-95 through 1999-00 Fiscal Years have resulted in
retroactive increases in Proposition 98 appropriations from subsequent Fiscal
Years' budgets. Because of the State's increasing revenues, per-pupil funding at
the K-12 level has increased by about 50 percent from the level in place in
1991-92, and is estimated at about $6,313 per average daily attendance in
2000-01. A significant amount of the "extra" Proposition 98 monies in the last
few years has been allocated to special programs, including an initiative to
increase the number of computers in schools throughout the State. Furthermore,
since General Fund revenue growth is expected to continue in 2000-01, the
Governor has also proposed new initiatives to improve student achievement,
provide better teacher recruitment and training, and provide schools with
advanced technology and the opportunity to form academic partnerships to help
them meet increased expectations.

Because of the complexities of Article XIII B, the ambiguities and
possible inconsistencies in its terms, the applicability of its exceptions and
exemptions and the impossibility of predicting future appropriations, the
Sponsor cannot predict the impact of this or related legislation on the Bonds in
the California Trust Portfolio. Other Constitutional amendments affecting state
and local taxes and appropriations have been proposed from time to time. If any
such initiatives are adopted, the State could be pressured to provide additional
financial assistance to local governments or appropriate revenues as mandated by
such initiatives. Propositions such as Proposition 98 and others that May be
adopted in the future, May place increasing pressure on the State's budget over
future years, potentially reducing resources available for other State programs,
especially to the extent the Article XIII B spending limit would restrain the
State's ability to fund such other programs by raising taxes.

Constitutional and Statutory Limitations

Article XIII A of the California Constitution (which resulted from the
voter-approved Proposition 13 in 1978) limits the taxing powers of California
public agencies. Article XIII A provides that the maximum ad valorem tax on real
property cannot exceed one percent of the "full cash value" of the property and
effectively prohibits the levying of any other ad

82600.12
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<PAGE>

valorem tax on real property for general purposes. However, on May 3, 1986,
Proposition 46, an amendment to Article XIII A, was approved by the voters of
the State of California, creating a new exemption under Article XIII A
permitting an increase in ad valorem taxes on real property in excess of one
percent for bonded indebtedness approved by two-thirds of the voters voting on
the proposed indebtedness. "Full cash value" is defined as "the county
assessor's valuation of real property as shown on the 1975-76 tax bill under
'full cash value' or, thereafter, the appraised value of real property when
purchased, newly constructed, or a change in ownership has occurred after the
1975 assessment." The "full cash value" is subject to annual adjustment to
reflect increases (not to exceed two percent) or decreases in the consumer price
index or comparable local data, or to reflect reductions in property value
caused by damage, destruction or other factors.

At the November 1998 election, voters approved Proposition 2. This
Proposition required the General Fund to repay loans made from certain
transportation special accounts (such as the State Highway Account) at least
once per Fiscal Year, or up to 30 days after adoption of the annual Budget Act.
Since the General Fund May reborrow from the transportation accounts soon after
the annual repayment is made, the Proposition is not expected to have any
adverse impact on the State's cash flow.

Future Initiatives

Articles XIII A, XIII B, XIII C and XIII D were each adopted as
measures that qualified for the ballot pursuant to the State's initiative
process. From time to time, other initiative measures could be adopted that
could affect revenues of the State or public agencies within the State.

Local Government

The primary units of local government in California are the counties,
ranging in population from 1,200 in Alpine County to over 9,600,000 in Los
Angeles County. Counties are responsible for the provision of many basic
services, including indigent healthcare, welfare, courts, jails and public
safety in unincorporated areas. There are also about 470 incorporated cities and
thousands of other special districts formed for education, utility and other
services. The fiscal condition of local governments has been constrained since
the enactment of "Proposition 13" in 1978, which reduced and limited the future
growth of property taxes and limited the ability of local governments to impose
"special taxes" (those devoted to a specific purpose) without two-thirds voter
approval. Counties, in particular, have had fewer options to raise revenues than
many other local government entities, and have been required to maintain many
services.

In the aftermath of Proposition 13, the State provided aid to local
governments from the General Fund to make up some of the loss of property tax
moneys, including taking over the principal responsibility for funding K-12
schools and community colleges. During the recession of the early 1990's, the
Legislature eliminated most of the remaining components of post-Proposition 13
aid to local government entities other than K-14 education districts by
requiring cities and counties to transfer some of their property tax revenues to
school districts. However, the Legislature also provided additional funding
sources (such as sales taxes) and reduced certain mandates for local services.
Since then the State has also provided additional funding to counties and cities
through such programs as health and welfare realignment, welfare reform, trial
court restructuring, the Citizens' Option for Public Safety Program supporting
local public safety departments and various other measures.

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<PAGE>

The 1999 Budget Act includes a $150 million one-time subvention from
the General Fund to local agencies for relief from the 1992 and 1993 property
tax shifts. Legislation has been passed, subject to voter approval at the
election in November 2000, to provide a more permanent payment to local
governments to offset the property tax shift. In addition, legislation was
enacted in 1999 to provide approximately $35.8 million annual relief to cities
based on 1997-98 costs of jail booking and processing fees paid to counties.

The entire statewide welfare system has been changed in response to
the change in federal welfare law enacted in 1996. The federal block grant
formula established in 1996 is operative through federal fiscal year 2002. Under
the new basic State welfare system, California Work Opportunity and
Responsibility to Kids ("CalWORKs"), counties are given flexibility to develop
their own plans, consistent with State law, to implement Welfare-to-Work and to
administer many of its elements and their costs for administrative and support
services are capped at 1996-97 levels. Counties are also given financial
incentives if, at the individual county level or statewide, the CalWORKs program
produces savings associated with specified Welfare-to-Work outcomes; counties
May also suffer penalties for failing to meet federal standards. Under CalWORKs,
counties will still be required to provide "general assistance" aid to certain
persons who cannot obtain welfare from other programs.

Counties have been successful in earning performance incentive
payments and have earned amounts in excess of the available appropriation for
1998-99 and, it is estimated, for 1999-00 as well. The Administration proposes
to repeal or modify the current incentive structure in 2000-01 to permit
adequate funding for other CalWORKs program demands in the future.

To date, the implementation of the CalWORKs program has continued the
trend of declining welfare caseloads. The CalWORKs caseload is projected to be
589,000 in 1999-00 and 557,000 in 2000-01, down from a high of 921,000 cases in
1994-95. The longer-term impact of the new federal law and CalWORKs is being
evaluated by the RAND Corporation, with a series of reports to be furnished and
the final report due October 2001.

The 2000-01 CalWORKs budget reflects that California has met the
federally-mandated work participation requirements for federal fiscal year 1998.
With that goal being met, the federally-imposed maintenance-of-effort (MOE)
level for California is reduced from 80 percent of the federal fiscal year 1994
baseline expenditures for the former Aid to Families with Dependent Children
("AFDC") program ($2.9 billion) to 75 percent ($2.7 billion). It is still
uncertain if the State will meet the work participation requirements for federal
fiscal year 1999; however, due to program changes, it is expected that
California will meet the work participation goal in federal fiscal year 2000 and
beyond. In addition, California will receive a Temporary Assistance for Needy
Families ("TANF") High Performance Bonus award of $45.5 million. This one-time
bonus is awarded to states for their successes in moving welfare recipients to
work and sustaining their participation in the workforce.

The 2000-01 Governor's Budget proposes expenditures that will continue
to meet, but not exceed, the federally-required $2.7 billion combined State and
county MOE requirement. Total CalWORKs-related expenditures are estimated to be
$7.2 billion for 1999-00 and $6.9 billion for 2000-01, including child care
transfer amounts for the Department of Education.

Historically, funding for the State's trial court system was divided
between the State and the counties. However, Chapter 850, Statutes of 1997,
implements a restructuring of the State's trial court funding system.

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Funding for the courts, with the exception of costs for facilities, local
judicial benefits, and revenue collection, was consolidated at the State level.
The county contribution for both their general fund and fine and penalty amounts
is capped at the 1994-95 level and becomes part of the Trial Court Trust Fund,
which supports all trial court operations. The State assumed responsibility for
future growth in trial court funding. The consolidation of funding is intended
to streamline the operation of the courts, provide a dedicated revenue source,
and relieve fiscal pressure on the counties. Beginning in 1998-99, the county
general fund contribution for court operations was reduced by $290 million, and
cities retained $62 million in fine and penalty revenue previously remitted to
the State. The General Fund reimbursed the $352 million revenue loss to the
Trial Court Trust Fund. The 1999 Budget Act included funds to further reduce the
county general fund contribution by an additional $96 million.

On November 5, 1996, voters approved Proposition 218, entitled the
"Right to Vote on Taxes Act," which incorporates new Articles XIII C and XIII D
into the California Constitution. These new provisions enact limitations on the
ability of local government agencies to impose or raise various taxes, fees,
charges and assessments without voter approval. Certain "general taxes" imposed
after January 1, 1995 must be approved by voters in order to remain in effect.
In addition, Article XIII C clarifies the right of local voters to reduce taxes,
fees, assessments or charges through local initiatives. There are a number of
ambiguities concerning the Proposition and its impact on local governments and
their bonded debt that will require interpretation by the courts or the State
Legislature. Proposition 218 does not affect the State or its ability to levy or
collect taxes.

Tobacco Litigation

In late 1998, the State signed a settlement agreement with the four
major cigarette manufacturers. The State agreed to drop its lawsuit and not to
sue in the future. Tobacco manufacturers agreed to billions of dollars in
payments and restrictions in marketing activities. Under the settlement, the
manufacturers will pay California governments a total of approximately $25
billion over a period of 25 years. In addition, payments of approximately $1
billion per year will continue in perpetuity. Under the settlement, half of the
moneys will be paid to the State and half to local governments (all counties and
the cities of San Diego, Los Angeles, San Francisco and San Jose). The State's
revised 1999-00 Budget includes receipt of $517 million of settlement money to
the General Fund. The Governor's Budget for 2000-01 projects receipt of $388
million of settlement money to the General Fund.

The specific amount to be received by the State and local governments
is subject to adjustment. Details in the settlement allow reduction of the
companies' payments because of federal government actions, or reductions in
cigarette sales. Settlement payments can increase due to inflation or increases
in cigarette sales. The "second initial" payment, received in December 1999, was
14 percent lower than the base settlement amount due to reduced sales. Future
payment estimates have been reduced by a similar percentage. In the event that
any of the companies goes into bankruptcy, the State could seek to terminate the
agreement with respect to those companies filing bankruptcy actions, thereby
reinstating all claims against those companies. The State May then pursue those
claims in the bankruptcy litigation, or as otherwise provided by law. Also,
several parties have brought a lawsuit challenging the settlement and seeking
damages. (See "Pending Litigation" below.)

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Pending Litigation

The State is a party to numerous legal proceedings, many of which
normally occur in governmental operations. In addition, the State is involved in
certain other legal proceedings that, if decided against the State might require
the State to make significant future expenditures or impair future revenue
sources. Because of the prospective nature of these proceedings, it is not
presently possible to predict the outcome of such litigation or estimate the
potential impact on the ability of the State to pay debt service costs on its
obligations. Some of the more significant lawsuits pending against the State are
described below.

On December 24, 1997, a consortium of California counties filed a test
claim with the Commission on State Mandates (the "Commission") asking the
Commission to determine whether the property tax shift from counties to school
districts beginning in 1993-94, is a reimbursable state-mandated cost. The test
claim was heard on October 29, 1998, and the Commission found in favor of the
State. In October 1999, the Superior Court of Sonoma County overturned the
Commission's decision. The State has appealed. Should the final decision on this
matter be in favor of the counties, the impact to the State General Fund could
be as high as $10.0 billion. In addition, there would be an annual Proposition
98 General Fund cost of at least $3.75 billion. This cost would grow in
accordance with the annual assessed value growth rate.

In January of 1997, California experienced major flooding in six
different areas with preliminary estimates of property damage of approximately
$1.6 to $2.0 billion. In McMahon v. the State of California, a substantial
number of plaintiffs have joined suit against the State, local agencies, and
private companies and contractors seeking compensation for the damages they
suffered as a result of the 1997 flooding. The State is defending the action.

The State is a defendant in Ceridian Corporation v. Franchise Tax
Board, a suit that challenges the constitutionality of a Revenue & Taxation Code
section that limits deductions for insurance dividends to those dividends paid
from earnings previously subject to California taxation. On August 13, 1998, the
trial court issued a judgment against the Franchise Tax Board. The Franchise Tax
Board has appealed the judgment. Briefing has been completed. The State has
taken the position that, if the challenged section of the Revenue & Taxation
Code is struck down, all deductions relating to dividends would be eliminated
and the result would be additional income to the State. Plaintiffs, however,
contend that if they prevail, the deduction should be extended to all dividends,
which would result in a one-time liability for open years of approximately $60
million, including interest, and an annual revenue loss of approximately $10
million.

The State is also a defendant in First Credit Bank etc. v. Franchise
Tax Board, which challenges a Revenue & Taxation Code section similar to the one
challenged in the Ceridian case, but applicable to a different group of
corporate taxpayers. The State's motion for summary judgment is currently
pending and a trial date has been set in April 2000. A decision in the Ceridian
case could impact the outcome of this case. The State has taken the position
that, if the challenged section of the Revenue & Taxation Code is struck down,
all deductions relating to dividends would be eliminated and the result would be
additional income to the State. Plaintiffs, however, contend that if they
prevail, the deduction should be extended to all dividends that would result in
a one-time liability for open years of approximately $385 million, including
interest, and an annual revenue loss of approximately $60 million.

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Plaintiffs in County of San Bernardino v. Barlow Respiratory Hospital
and related actions seek mandamus relief requiring the State to retroactively
increase out-patient Medi-Cal reimbursement rates. Plaintiffs have estimated the
damages to be several hundred million dollars. The State is defending these
cases, as well as related federal cases addressing the calculation of Medi-Cal
reimbursement rates in the future.

The State is involved in a lawsuit, Thomas Hayes v. Commission on
State Mandates, related to state-mandated costs. The action involves an appeal
by the Director of Finance from a 1984 decision by the State Board of Control
(now succeeded by the Commission on State Mandates). The Board of Control
decided in favor of local school districts' claims for reimbursement for special
education programs for handicapped students. The case was then brought to the
trial court by the State and later remanded to the Commission for
redetermination. The Commission expanded the claim to include supplemental
claims filed by several other educational institutions. To date, the Legislature
has not appropriated funds. The Commission issued a decision in December 1998
determining that a small number of components of the State's special education
program are state-mandated local costs. The administrative proceeding is in the
"parameters and guidelines" stage where the Commission is considering whether
and to what extent the costs associated with the state-mandated components of
the special education program are offset by funds that the State already
allocates to that program. The State's position is that all costs are offset by
existing funding. The State has the option to seek judicial review of the
mandate finding. Potential liability of the State, if all potentially eligible
school districts pursue timely claims, has been estimated by the Department of
Finance to be in excess of $1.5 billion, if the State is not credited for its
existing funding of the program.

The State is involved in a lawsuit related to contamination at the
Stringfellow toxic waste site. In United States, People of the State of
California v. J.B. Stringfellow, Jr., et al., the State is seeking recovery for
past costs of cleanup of the site, a declaration that the defendants are jointly
and severally liable for future costs, and an injunction ordering completion of
the cleanup. The defendants, however, have filed a counterclaim against the
State for alleged negligent acts, resulting in significant findings of liability
against the State as owner, operator, and generator of wastes taken to the site.
The State has appealed the rulings. Present estimates of the cleanup range from
$400 million to $600 million. Potential State liability falls within this same
range. However, all or a portion of any judgment against the State could be
satisfied by recoveries from the State's insurance carriers. The State has filed
a suit against certain of these carriers. The trial is expected to begin in
early 2001.

The State is a defendant in a coordinated action involving 3,000
plaintiffs seeking recovery for damages caused by the Yuba River flood of
February 1986. The appellate court affirmed the trial court finding of liability
in inverse condemnation and awarded damages of $500,000 to a sample of
plaintiffs. Potential liability to the remaining plaintiffs, from claims filed,
ranges from $800 million to $1.5 billion. In 1992, the State and plaintiffs
filed appeals. In August 1999, the court of appeal issued a decision reversing
the trial court's judgment against the State and remanded the case for retrial
on the inverse condemnation cause of action. The California Supreme Court denied
plaintiffs' petition for review.

On June 24, 1998, plaintiffs in Howard Jarvis Taxpayers Association et
al. v. Kathleen Connell filed a complaint for certain declaratory and injunctive
relief challenging the authority of the State

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Controller to make payments from the State Treasury in the absence of a State
budget. On July 21, 1998, the trial court issued a preliminary injunction
prohibiting the State Controller from paying moneys from the State Treasury for
Fiscal Year 1998-99, with certain limited exceptions, in the absence of a State
budget. The preliminary injunction, among other things, prohibited the State
Controller from making any payments pursuant to any continuing appropriation. On
July 22 and 27, 1998, various employee unions that had intervened in the case
appealed the trial court's preliminary injunction and asked the court of appeal
to stay the preliminary injunction. On July 28, 1998, the court of appeal
granted the unions' requests and stayed the preliminary injunction pending the
court of appeal's decision on the merits of the appeal. On August 5, 1998, the
court of appeal denied the plaintiffs' request to reconsider the stay. Also on
July 22, 1998, the State Controller asked the California Supreme Court to
immediately stay the trial court's preliminary injunction and to overrule the
order granting the preliminary injunction on the merits. On July 29, 1998, the
Supreme Court transferred the State Controller's request to the court of appeal.
The matters are now pending before the court of appeal. Briefs have been
submitted; no date has yet been set for oral argument.

The State is involved in two refund actions, Cigarettes Cheaper!, et
al. v. Board of Equalization, et al. and California Assn. of Retail Tobacconists
(CART), et al. v. Board of Equalization, et al., that challenge the
constitutionality of Proposition 10, approved by the voters in 1998. Plaintiffs
allege that Proposition 10, which increases the excise tax on tobacco products,
violates 11 sections of the California Constitution and related provisions of
law. Plaintiffs Cigarettes Cheaper! seek declaratory and injunctive relief and a
refund of over $4 million. The CART case, filed by retail tobacconists in San
Diego, seeks a refund of $5 million. The State is contesting these cases. If the
statute is declared unconstitutional, exposure May include the entire $750
million collected annually with interest.

The State is involved in two cases challenging the constitutionality
of the interest offset provisions of the Revenue and Taxation Code: Hunt-Wesson,
Inc., v. Franchise Tax Board and F.W. Woolworth Co. and Kinney Shoe Corporation
v. Franchise Tax Board. In both cases, the Franchise Tax Board prevailed in the
California court of appeal and the California Supreme Court denied taxpayers'
petitions for review. In both cases, the United States Supreme Court granted
certiorari. On February 22, 2000, the United States Supreme Court reversed and
remanded the Hunt-Wesson case to the California court of appeal for further
proceedings. Although the Court did not take similar action in the Woolworth Co.
case, it is anticipated that it will do so. The Franchise Tax Board recently
estimated that the adverse decisions in these cases will result in a reduction
in state revenues of approximately $15 million annually, with past year
collection and interest exposure of approximately $95 million.

Guy F. Atkinson Company of California v. Franchise Tax Board is a
corporation tax refund action involving the solar energy system tax credit
provided for under the Revenue & Taxation Code. The case went to trial in May
1998 and the trial court entered judgment in favor of the Franchise Tax Board.
The taxpayer has filed an appeal to the California Court of Appeal and briefing
is completed. The Franchise Tax Board estimates that the cost would be $150
million annually, if the plaintiff prevails. Allowing refunds for all open years
would entail a refund of at least $500 million.

Jordan, et al. v. Department of Motor Vehicles, et al., challenges the
validity of the Vehicle Smog Impact Fee, a $300 fee that is collected by

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the Department of Motor Vehicles from vehicle registrants when a vehicle without
a California new-vehicle certification is first registered in California. The
plaintiffs contend that the fee violates the interstate commerce and equal
protection clauses of the United States Constitution as well as Article XIX of
the State Constitution. In October 1999, the court of appeal upheld a trial
court judgment for the plaintiffs and the State has declined to appeal further.
Although refunds through the court actions could be limited by a three-year
statute of limitations, with a potential liability of about $350 million, the
Governor has proposed refunding fees collected back to the initiation of these
fees in 1990. The 2000-01 Governor's Budget proposes expenditures of $562
million as a supplemental appropriation in 1999-00 to pay these claims.

PTI, Inc., et al. v. Philip Morris, et al. was filed by five
distributors in the cigarette import-/re-entry business, seeking to overturn the
tobacco Master Settlement Agreement (MSA) entered between 46 states and the
tobacco industry in November 1998. The primary focus of the complaint is the
provision of the MSA encouraging participating states to adopt a statute
requiring nonparticipating manufacturers to either become participating
manufacturers and share the financial obligations under the MSA or pay money
into an escrow account. Plaintiffs seek compensatory and punitive damages
against the State and State officials and an order placing tobacco settlement
funds into a trust to be administered by the court for the treatment of medical
expenses of persons injured by tobacco products. A motion to dismiss the
complaint is currently scheduled for hearing on May 8, 2000. The potential
fiscal impact of an adverse ruling is largely unknown, but could exceed the full
amount of the settlement (estimated to be $1 billion annually, of which 50
percent will go directly to the State's General Fund and the other 50 percent
directly to the State's 58 counties and 4 largest cities).

In FORCES Action Project, et al. v. State of California, et al.,
various smokers' rights groups challenge the tobacco settlement as it pertains
to California, Utah and the City and County of San Francisco. Plaintiffs assert
a variety of constitutional challenges, including that the settlement represents
an unlawful tax on smokers. Motions to dismiss by all defendants, including the
tobacco companies, were eventually converted to summary judgment motions by the
court and heard on September 17, 1999. On January 5, 2000, the court dismissed
the complaint for lack of subject matter jurisdiction because the plaintiffs
lacked standing to sue. The court also concluded that the plaintiffs' claims
against the State and its officials are barred by the 11th Amendment. Plaintiffs
have filed a timely appeal.

Louis Bolduc, et al. v. State of California, et al. is a class action
filed on July 13, 1999 by six Medi-Cal beneficiaries who have received medical
treatment for smoking-related diseases. Plaintiffs allege the State owes them an
unspecified portion of the tobacco settlement monies under a federal regulation
that requires a state to turn over to an injured Medicaid beneficiary any monies
the State recovers from a third-party tortfeasor in excess of the costs of the
care provided. The State moved to dismiss the complaint on September 8, 1999.

Arnett v. California Public Employees Retirement System, et. al. was
filed by seven former employees of the State of California and local agencies,
seeking back wages, damages and injunctive relief. Plaintiffs are former public
safety members who began employment after the age of 40 and are recipients of
Industrial Disability Retirement ("IDR") benefits. Plaintiffs contend that the
formula that determines the amount of IDR benefits violates the federal Age
Discrimination in Employment Act of 1967 ("ADEA"). Plaintiffs contend that, but
for their ages at hire, they would receive increased monthly

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IDR benefits similar to their younger counterparts who began employment before
the age of 40. The California Public Employees' Retirement System has estimated
the liability to the State as approximately $315.5 million, if plaintiffs
prevail. The district court dismissed the complaint for failure to state a
claim. On August 17, 1999, the Ninth Circuit Court of Appeals reversed the
district court's dismissal of the complaint. The State sought further review in
the United States Supreme Court. On January 11, 2000, the United States Supreme
Court in Kimel v. Florida Board of Regents, held that Congress did not abrogate
the sovereign immunity of the states when it enacted the ADEA. Thereafter, on
January 18, 2000, the Supreme Court granted the petition for writ of certiorari
in Arnett, vacated the judgment of the Ninth Circuit, and remanded the case to
the Ninth Circuit for further proceedings consistent with Kimel. It now appears
that the District Court will dismiss the State defendants from the lawsuit.

The Sponsor believes the information summarized above describes some
of the more significant aspects relating to the California Trust. The sources of
such information are Preliminary Official Statements and Official Statements
relating to the State's general obligation bonds and the State's revenue
anticipation notes, or obligations of other issuers located in the State of
California, or other publicly available documents. The State has indicated that
its discussion of budgetary information is based on estimates and projections of
revenues and expenditures for the current Fiscal Year and must not be construed
as statements of fact; the estimates and projections are based upon various
assumptions that May be affected by numerous factors, including future economic
conditions in the State and the nation, and there can be no assurance that the
estimates will be achieved. Although the Sponsor has not independently verified
this information, it has no reason to believe that such information is not
correct in all material respects.

Florida Trust

Florida Risk Factors. The Portfolio of the Florida Trust contains
different issues of long-term debt obligations issued by or on behalf of the
State of Florida (the "State") and counties, municipalities and other political
subdivisions and public authorities thereof or by the Government of Puerto Rico
or the Government of Guam or by their respective authorities, all rated in the
category A or better by at least one national rating organization (see
Investment Summary in Part I). Investment in the Florida Trust should be made
with an understanding that the value of the underlying Portfolio may decline
with increases in interest rates.

The State Economy. In 1980 Florida ranked seventh among the fifty
states with a population of 9.7 million people. The State has grown dramatically
since then and, as of April 1, 1998, ranked fourth with an estimated population
of 15 million. Since the beginning of the eighties, Florida has surpassed Ohio,
Illinois and Pennsylvania in total population. Because of the national
recession, Florida's net in-migration declined to 140,000 in 1992, but migration
has since recovered and reached 232,000 in 1998. In recent years the prime
working age population (18-64) has grown at an average annual rate of more than
2.0%. The share of Florida's total working age population (18-64) to total State
population is about 60%. Non-farm employment has grown by over 24.6% since 1992.
Total non-farm employment in Florida is expected to increase by 4.0% in State
Fiscal Year 1999-2000 and by 3.5% in State Fiscal Year 2000-01. By the end of
State Fiscal Year 2000-01, non-farm employment in the State is expected to reach
more than 7.0 million jobs. The State is gradually becoming less dependent on
employment related to construction, agriculture and manufacturing, and more
dependent on employment related to

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trade and services. Presently services constitute 36% and trade 25.5% of the
State's total non-farm jobs. Manufacturing jobs in Florida are concentrated in
the area of high-tech and high value-added sectors, such as electrical and
electronic equipment, as well as printing and publishing. While both the State
and national proportion of manufacturing jobs has declined over time, Florida's
proportion of manufacturing jobs has been about half the nation's for many
years. Foreign Trade has contributed significantly to Florida's employment
growth. Trade jobs are expected to grow by 2.5% in State Fiscal Year 1999-2000
and by 2.9% in State Fiscal Year 2000-01. Florida's dependence on highly
cyclical construction and construction-related manufacturing has declined. Total
contract construction employment as a share of total non-farm employment reached
a peak of 10% in 1973. Before the recession of the early 1980's the share was
7.7%. In the late 80's construction's share was 7.5% and in 1998 it was 5.3%.
The job creation rate for the State of Florida is almost twice the rate for the
nation as a whole. Throughout most of the 1980's the unemployment rate for the
State tracked below that of the nation. In the nineties, the trend was reversed
until 1995, when the state's unemployment rate again tracked below or about the
same as that of the U.S. In 1998 Florida's unemployment rate was 4.3% while the
nation's was 4.5%. Florida's unemployment rate is forecasted at 4.2% in State
Fiscal Year 1999-2000 and 4.4% in State Fiscal Year 2000-01. Because Florida has
a proportionately greater retirement age population, property income (dividends,
interest and rent) and transfer payments (Social Security and pension benefits)
are a relatively more important source of income. From 1992 to 1997, Florida's
total nominal personal income grew by 35.2% and per capita income expanded by
approximately 24.8%. For the nation, total and per capita personal income
increased by 32.3% and 25.9%, respectively. Real personal income in Florida is
forecasted to increase by 4.5% in State Fiscal Year 1999-2000 and by 3.6% in
State Fiscal Year 2000-01. During this time real personal income per capita is
expected to grow at 2.5% in 1999-2000 and 1.6% in 2000-2001.

The ability of the State and its local units of government to satisfy
the Debt Obligations may be affected by numerous factors which impact on the
economic vitality of the State in general and the particular region of the State
in which the issuer of the Debt Obligation is located. South Florida is
particularly susceptible to international trade and currency imbalances and to
economic dislocations in Central and South America, due to its geographical
location and its involvement with foreign trade, tourism and investment capital.
The central and northern portions of the State are impacted by problems in the
agricultural sector, particularly with regard to the citrus and sugar
industries. Short-term adverse economic conditions may be created in these
areas, and in the State as a whole, due to crop failures, severe weather
conditions or other agriculture-related problems. The State economy also has
historically been somewhat dependent on the tourism and construction industries
and is sensitive to trends in those sectors.

The State Budget. Florida prepares an annual budget which is
formulated each year and presented to the Governor and Legislature. Under the
State Constitution and applicable statutes, the State budget as a whole, and
each separate fund within the State budget, must be kept in balance from
currently available revenues during each State fiscal year (the State's fiscal
year runs from July 1 through June 30). The Governor and the Comptroller of the
State are charged with the responsibility of ensuring that sufficient revenues
are collected to meet appropriations and that no deficit occurs in any State
fund.

The financial operations of the State covering all receipts and
expenditures are maintained through the use of four types of funds: the General
Revenue Fund, Trust Funds, the Working Capital Fund and the Budget

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Stabilization Fund. The majority of the State's tax revenues are deposited in
the General Revenue Fund and monies for all funds are expended pursuant to
appropriations acts. In State Fiscal Year 1999-2000, appropriations from the
General Revenue Fund for education, health and welfare and public safety
amounted to approximately 55%, 24% and 16%, respectively, of total General
Revenue Funds available. The Trust Funds consist of monies received by the State
which under law or trust agreement are segregated for a purpose authorized by
law. Revenues in the General Revenue Fund which are in excess of the amount
needed to meet appropriations may be transferred to the Working Capital Fund.

State Revenues. For State Fiscal Year 1999-2000 the estimated General
Revenue plus Working Capital and Budget Stabilization Funds available total
$20,455.9 million, a 4.4% increase over State Fiscal Year 1998-99. The $18,592.1
million in Estimated Revenues represent an increase of 4.0% over the analogous
figure in State Fiscal Year 1998-99. With combined General Revenue, Working
Capital and Budget Stabilization Funds appropriations at $18,808.9 million,
unencumbered reserves at the end of State Fiscal Year 1999-2000 are estimated at
$1,707.1 million. For State Fiscal Year 2000-01, the estimated General Revenue
plus Working Capital and Budget Stabilization Funds available total $21,253.4
million, a 3.9% increase over 1999-2000. The $19,484.7 million in Estimated
Revenues represent a 4.6% increase over the analogous figure in 1999-2000.

In State Fiscal Year 1998-99, the State derived approximately 67% of
its total direct revenues for deposit in the General Revenue Fund, Trust Funds,
Working Capital Fund and Budget Stabilization Fund from State taxes and fees.
Federal funds and other special revenues accounted for the remaining revenues.
The largest single source of tax receipts in the State is the 6% sales and use
tax. For the fiscal year ended June 30, 1999, receipts from the sales and use
tax totaled $13,918 million, an increase of 7.3% from the prior fiscal year. The
second largest source of State tax receipts is the tax on motor fuels including
the tax receipts distributed to local governments. Receipts from the taxes on
motor fuels are almost entirely dedicated to trust funds for specific purposes
or transferred to local governments and are not included in the General Revenue
Fund. Preliminary data for the fiscal year ended June 30, 1999, show collections
of this tax totaled $2,215.7 million.

The State currently does not impose a personal income tax. However,
the State does impose a corporate income tax on the net income of corporations,
organizations, associations and other artificial entities for the privilege of
conducting business, deriving income or existing within the State. For the
fiscal year ended June 30, 1999, receipts from the corporate income tax totaled
$472.2 million, an increase of 5.5% from fiscal year 1997-98. The Documentary
Stamp Tax collections totaled $1,185.1 million during fiscal year 1998-99,
posting an 13.4% increase from the previous fiscal year. The Alcoholic Beverage
Tax, an excise tax on beer, wine and liquor totaled $466.3 million in fiscal
year ending June 30, 1999. The Florida Lottery produced gross sales of $2.11
billion in fiscal year 1998-99 of which $802.9 million was used for education
purposes.

While the State does not levy ad valorem taxes on real property or
tangible personal property, counties, municipalities and school districts are
authorized by law, and special districts may be authorized by law, to levy ad
valorem taxes. Under the State Constitution, ad valorem taxes may not be levied
by counties, municipalities, school districts and water management districts in
excess of the following respective millages upon the assessed value of real
estate and tangible personal property: for all county, municipal

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or school purposes, ten mills, and for water management districts, no more than
0.05 mill or 1.0 mill, depending upon geographic location. These millage
limitations do not apply to taxes levied for payment of bonds and taxes levied
for periods not longer than two years when authorized by a vote of the electors.
(Note: one mill equals one-tenth of one cent.)

The State Constitution and statutes provide for the exemption of
homesteads from certain taxes. The homestead exemption is an exemption from all
taxation, except for assessments for special benefits, up to a specific amount
of the assessed valuation of the homestead. This exemption is available to every
person who has the legal or equitable title to real estate and maintains thereon
his or her permanent home. All permanent residents of the State are currently
entitled to a $25,000 homestead exemption from levies by all taxing authorities,
however, such exemption is subject to change upon voter approval.

The property valuations for homestead property are subject to a growth
cap of the lesser of 3% or the change in the Consumer Price Index during the
relevant year, except in the event of a sale thereof during such year, and
except as to improvements thereto during such year. If the property changes
ownership or homestead status, it is to be re-valued at full just value on the
next tax roll.

Since municipalities, counties, school districts and other special
purpose units of local governments with power to issue general obligation bonds
have authority to increase the millage levy for voter approved general
obligation debt to the amount necessary to satisfy the related debt service
requirements, the property valuation growth cap is not expected to adversely
affect the ability of these entities to pay the principal of or interest on such
general obligation bonds. However, in periods of high inflation, those local
government units whose operating millage levies are approaching the
constitutional cap and whose tax base consists largely of residential real
estate, may, as a result of the above-described property valuation growth cap,
need to place greater reliance on non-ad valorem revenue sources to meet their
operating budget needs.

The State Constitution limits the amount of taxes, fees, licenses and
charges imposed by the Legislature and collected during any fiscal year to the
amount of revenues allowed for the prior fiscal year, plus an adjustment for
growth. The revenue limit is determined by multiplying the average annual rate
of growth in Florida personal income over the previous five years times the
maximum amount of revenues permitted under the cap for the prior fiscal year.
The revenues allowed for any fiscal year can be increased by a two- thirds vote
of the Legislature. Any excess revenues generated will be deposited in the
Budget Stabilization Fund. Included among the categories of revenues which are
exempt from the proposed revenue limitation, however, are revenues pledged to
state bonds.

State General Obligation Bonds and State Revenue Bonds. The State
Constitution does not permit the State to issue debt obligations to fund
governmental operations. Generally, the State Constitution authorizes State
bonds pledging the full faith and credit of the State only to finance or
refinance the cost of State fixed capital outlay projects, upon approval by a
vote of the electors, and provided that the total outstanding principal amount
of such bonds does not exceed 50% of the total tax revenues of the State for the
two preceding fiscal years. Revenue bonds may be issued by the State or its
agencies without a vote of the electors only to finance or refinance the

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cost of State fixed capital outlay projects which are payable solely from funds
derived directly from sources other than State tax revenues.

Exceptions to the general provisions regarding the full faith and
credit pledge of the State are contained in specific provisions of the State
Constitution which authorize the pledge of the full faith and credit of the
State, without electorate approval, but subject to specific coverage
requirements, for: certain road projects, county education projects, State
higher education projects, State system of Public Education and construction of
air and water pollution control and abatement facilities, solid waste disposal
facilities and certain other water facilities.

Local Bonds. The State Constitution provides that counties, school
districts, municipalities, special districts and local governmental bodies with
taxing powers may issue debt obligations payable from ad valorem taxation and
maturing more than 12 months after issuance, only (i) to finance or refinance
capital projects authorized by law, provided that electorate approval is
obtained, or (ii) to refund outstanding debt obligations and interest and
redemption premium thereon at a lower net average interest cost rate.

Counties, municipalities and special districts are authorized to issue
revenue bonds to finance a variety of self-liquidating projects pursuant to the
laws of the State, such revenue bonds to be secured by and payable from the
rates, fees, tolls, rentals and other charges for the services and facilities
furnished by the financed projects. Under State law, counties and municipalities
are permitted to issue bonds payable from special tax sources for a variety of
purposes, and municipalities and special districts may issue special assessment
bonds.

Bond Ratings. General obligation bonds of the State are currently
rated Aa2 by Moody's, AA+ by Standard & Poor's, and AA by Fitch Investors
Services, Inc.

Litigation. Due to its size and its broad range of activities, the
State (and its officers and employees) are involved in numerous routine
lawsuits. The managers of the departments of the State involved in such routine
lawsuits believe that the results of such pending litigation would not
materially affect the State's financial position. In addition to the routine
litigation pending against the State, its officers and employees, the following
lawsuits and claims are also pending:

A. In a case involving the issue of whether Florida's refund statute
for dealer repossessions authorizes the Department of Revenue to grant a refund
to a financial institution as the assignee of numerous security agreements
governing the sale of automobiles and other property sold by dealers, the
question turned on whether the Legislature intended the statute only to provide
a refund or credit to the dealer who actually sold the tangible personal
property and collected and remitted the tax or intended that right to be
assignable. Judgment was granted in the Plaintiff's favor, however, the First
District Court of Appeal overturned the trial court's decision in favor of the
Department.

B. In a taxpayer challenge of the imposition of interest on additional
amounts of corporate income tax due as a result of Federal audit adjustments
reported to Florida, the taxpayer contended that interest should

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be accrued from the date the Federal audit adjustments were due to be reported
to Florida. An Order was issued adopting the position asserted by the Department
of Revenue; however, the taxpayer filed and won on appeal. Potential refunds or
lost revenue are estimated to be approximately $12 to $20 million per year.

C. This was a class action suit on behalf of clients of residential
placement for the developmentally disabled seeking refunds for services where
children are entitled to free education under the Education for Handicapped Act.
The District Court ruled in favor of the plaintiffs and ordered repayment of the
maintenance fees. The Department of Health and Rehabilitative Services repaid
the $217,694 in maintenance fees paid by the parents; however, amounts due to
various third parties estimated up to $42 million have not been paid since the
affected parties have not been identified.

D. A class action suit, among other similar suits, wherein the
plaintiffs challenge the constitutionality of the Public Medical Assistance
Trust Fund (PMATF) annual assessment on net operating revenue of free-standing
out-patient facilities offering sophisticated radiology services is now in the
discovery process. If the State is unsuccessful the potential refund liability
for all such suits could total approximately $116.8 million.

E. In a case against the Agency for Healthcare Administration seeking
retroactive and prospective relief on behalf of a class of Medicaid providers
(doctors) demanding reimbursement of differential between Medicare and Medicaid
rates for dual-enrolled eligibles, plaintiffs' motion for summary judgment is
under advisement by the court. If the Plaintiffs prevail, the State's potential
liability could be up to $270 million.

F. Tower Environmental has sued the State of Florida and the Florida
Department of Environmental Protection (FDEP) alleging that both the State and
FDEP "breached" contracts with them by changing the petroleum contamination
reimbursement program. Alternatively, Tower claims that these actions constitute
torts or impairment of contractual obligations. Tower also alleges that the
termination of the reimbursement program pursuant to Section 376.3071, F.S., is
a breach of contract. In addition to damages, Tower seeks recovery of attorneys'
fees and costs. There has been a ruling that the statute was a written contract
and that the State's sovereign immunity defense was thereof invalid. If
attorney's fees and costs are awarded, the potential liability could amount to
approximately $49 million, however, the parties are currently negotiating a
settlement.

G. Where the plaintiff claims that the Florida Department of
Transportation has been responsible for construction of roads and attendant
drainage facilities in Hillsborough County and, as a result of its construction,
has caused the plaintiff's property to become subject to flooding, thereby
amount to an uncompensated taking the Court granted the State's Motion for More
Definite Statement as to certain portions of the Plaintiff's complaint. An
amended complaint was filed, and trial is scheduled to begin this summer. If the
State is unsuccessful, potential losses could exceed $10 million.

H. The Florida Department of Transportation used a Value Engineering
Change Proposal (VECP) design submitted by State Contracting and Engineering
Corp. (SCEC) for the construction of a barrier sound-wall in Broward County and
several subsequent Department projects. Subsequent to the initial use of the
VECP design, SCEC patented the design. SCEC claims that the Department owes SCES
royalties and compensation for other damages involving the Department's use of
the VECP design on subsequent projects. The case is

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pending a ruling as to the application of recent U.S. Supreme Court cases to
certain legal issues in this lawsuit. If the State is unsuccessful, potential
losses could range from $30 to $60 million.

I. Pursuant to Section 440.51, F.S., the Department of Labor and
Employment Security, collects assessments on "net premiums collected" and "net
premiums written" from carriers of workers' compensation insurance and by
self-insurers in the State. Claimants allege that there is no statutory
definition of "net premiums" and the Department does not currently have a rule
providing guidance as to how "net premiums" are calculated. Claimants allege
that industry standards would allow them to deduct various costs of doing
business in calculating "net premiums." The litigation arose from the
Department's denial of claims for refunds totaling approximately $27 million. In
addition, at least 20 other carriers have filed similar claims for refund which,
in the aggregate, total more than $39 million. The Department cannot anticipate
how many additional claims will be filed. The Department has answered the
complaint and discovery is in progress.

J. In an action brought by the US Environmental Protection Agency
against the Florida Department of Transportation title to contaminated land is
in dispute. The Department maintains that it is not the owner of the
contaminated land. The U.S. Environmental Protection Agency (EPA) is conducting
additional tests at the site for pollution and has asserted a cost recovery
claim against the Department of approximately $25.5 million. The Department's
Motion for Declaratory Judgment on the Department's ownership of the property
was denied and upheld on appeal.

New York Trust

Special Factors Affecting New York. 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

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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 with projected budget gaps. The City's current
financial plan projects a surplus in the 2000 fiscal year, before discretionary
transfers, and budget gaps for each of the 2001, 2002 and 2003 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 2003 fiscal
years (the "2000-2003 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

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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 2000 through 2003 contemplates the issuance of
$7.449 billion of general obligation bonds and $3.35 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 in financing capacity of Tobacco Settlement Asset Securitization
Corporation, Inc. ("TSASC"), which will issue 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 a 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 balanced operating
results, after discretionary and other transfers.

Changes since adoption of the City's Expense Budget for the 1999
fiscal year in June 1998, prior to the financial plan submitted to the Control
Board on June 26, 1998 include: (i) an increase in projected tax revenues of
$762 million, $558 million, $417 million and $1.4 billion in fiscal years 2000
through 2003, respectively; (ii) $300 million, $250 million, $300 million and
$300 million of projected resources in fiscal years 2000 through 2003,
respectively, from the receipt by the City of funds from the settlement of
litigation with the leading cigarette companies; (iii) a reduction in the
assumed collection of $350 million of projected rent payments for the City's
airports to $210 million and a delay in the receipt of such payments from fiscal
year 2000 to fiscal year 2001; (iv) anticipated proceeds from the proposed sale
of the Coliseum in fiscal year 2001 totaling $345 million; and (v) net increases
in spending of $817 million, $739 million, $713 million and $1.05 billion in
fiscal years 2000 through 2003, including spending for Medicaid, education
initiatives, anti-smoking programs, employee fringe benefit costs, and other
agency programs. The Financial Plan includes a discretionary transfer in the
1999 fiscal year of $2.6 billion primarily to pay debt service due in fiscal
year 2000, for budget stabilization purposes, a discretionary transfer in fiscal
year 2000 to pay debt service due in fiscal

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<PAGE>

year 2001 totaling $429 million, and a proposed discretionary transfer in fiscal
year 2001 to pay debt service due in fiscal year 2002 totaling $345 million.

On June 14, 1999, the City released the Financial Plan for the 2000
through 2003 fiscal years, which relates to the City and certain entities which
receive funds from the City. The Financial Plan reflects changes as a result of
the City's expense and capital budgets for fiscal year 2000, which were adopted
on June 7, 1999. The Financial Plan projects revenues and expenditures for the
2000 fiscal year balanced in accordance with GAAP and projects gaps of $1.8
billion, $1.9 billion and $1.8 billion for fiscal years 2001 through 2003,
respectively.

In addition, the Financial Plan sets forth gap-closing actions to
eliminate a previously projected gap for the 2000 fiscal year and to reduce
projected gaps for fiscal years 2001 through 2003. The gap-closing actions for
the 2000 through 2003 fiscal years include: (i) additional agency actions
totaling $502 million, $371 million, $293 million and $283 million for fiscal
years 2000 through 2003, respectively; (ii) additional Federal aid of $75
million in each of fiscal years 2000 through 2003, which include the proposed
restoration of $25 million of Federal revenue sharing and $50 million of
increased Federal Medicaid aid; and (iii) additional State actions totaling
approximately $125 million in each of fiscal years 2000 through 2003. The
Financial Plan also reflects a tax reduction program, which includes the
elimination of the City's non-residents earning tax, the proposed extension of
current tax reductions for owners of cooperative and condominium apartments and
a proposed income tax credit for low income wage earners.

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 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 2003 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 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.
The Financial Plan provides no additional wage increases for City employees
after their contracts expire in fiscal years 2000 and 2001. In addition, the
economic and financial condition of the City may be affected by various
financial, social, economic and political factors which could have a material
effect on the City.

On June 7, 1999, the City Council adopted a budget for fiscal year
2000. The adopted budget includes lower estimated debt service expenditures in
fiscal year 2000 resulting from a $456 million increase, from

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$2.1 billion to $2.6 billion, in the proposed discretionary transfer in the 1999
fiscal year to pay debt service due in fiscal year 2000. The $456 million
increase in the discretionary transfer reflects increased tax revenues and
decreased expenditures in the 1999 fiscal year. The adopted budget also includes
$220 million of spending initiatives proposed by the City Council, other
increased spending and the net cost of revised tax reduction proposals, which
reflect the repeal of all of the City non-resident earnings tax and the
elimination of certain of the previously proposed tax reduction initiatives.

On July 16, 1998, Standard & Poor's revised its rating of City bonds
upward from BBB+ to A-. Moody's rating of City bonds was revised in February
1998 to A3 from Baa1. On March 8, 1999, Fitch revised its rating of City bonds
upward to A. Moody's, Standard & Poor's and Fitch currently rate the City's
outstanding general obligation bonds A3, A- and A, respectively.

New York State and its Authorities

The State ended the 1998-1999 fiscal year in balance on a cash basis
for the 1998-1999 fiscal year, with a reported closing balance in the General
Fund of $892 million, after reserving a projected $1.8 billion surplus for use
in future years. The State ended the 1998-1999 fiscal year in balance on a cash
basis, with a reported closing balance in the General Fund of $892 million,
after reserving a projected $1.8 billion surplus for use in future years. The
State Financial Plan for the 1999-2000 fiscal year, which was released on August
20, 1999, projects balance on a cash basis for the 1999-2000 fiscal year, with a
closing balance in the General Fund of $2.85 billion, including a projected tax
reduction reserve of $1.82 billion for use in future fiscal years. The State
Division of the Budget ("DOB") has projected a potential imbalance in the
2000-2001 fiscal year of approximately $1.9 billion. DOB's estimate includes an
assumption for the projected costs of new collective bargaining agreements, $500
million in assumed unspecified operating efficiencies and the planned
application of approximately $615 million of the $1.82 billion tax reduction
reserve in fiscal year 2000-2001. DOB has noted that, despite recent budgetary
surpluses recorded by the State, actions affecting the level of receipts and
disbursements, the relative strength of the State and regional economy and
actions by the Federal government could impact projected budget gaps of the
State.

The State revised the cash-basis 1999-2000 State Financial Plan on
January 11, 2000, with the release of the 2000-01 Executive Budget. The State
updated the Financial Plan on January 31, 2000 to reflect the Governor's
amendments to his Executive Budget. After these changes, the DOB now expects the
State to close the 1999-2000 fiscal year with an available cash surplus of $758
million in the General Fund, an increase of $733 million over the surplus
estimate in the Mid-Year Update. The larger projected surplus derives from $499
million in net higher projected receipts and $259 million in net lower estimated
disbursements. DOB revised both its projected receipts and disbursements based
on a review of actual operating results through December 1999, as well as an
analysis of underlying economic and programmatic trends it believes may affect
the Financial Plan for the balance of the year.

The State plans to use the entire $758 million surplus to make
additional deposits to reserve funds. At the close of the current fiscal year,
the State expects to deposit $75 million from the surplus into the State's Tax
Stabilization Reserve Fund -- the fifth consecutive annual deposit. In the
2000-01 Executive budget, as amended, the Governor is proposing to use the
remaining $683 million from the 1999-2000 surplus to fully finance the

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estimated 2001-02 and 2002-03 costs of his proposed tax reduction package ($433
million) and to increase the Debt Reduction Reserve Fund ($250 million).

Through the first nine months of 1999-2000, General Fund receipts,
including transfers from other funds, have totaled $30.07 billion. General fund
disbursements, including transfers to other funds, totaled $25.19 billion over
the same period. The updated Financial Plan projections incorporate these
results to date.

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 1999 Modification and 2000-2003 Financial Plan.

The City has estimated that its potential future liability on account
of outstanding claims against it as of June 30, 1998 amounted to approximately
$3.5 billion.

Virginia Trust

Virginia Risk Factors. Investors should be aware of certain factors
that might affect the financial condition of issuers of Virginia municipal
securities.

Bonds in the Virginia Trust may include primarily debt obligations of
the subdivisions of the Commonwealth of Virginia issued to obtain funds for
various public purposes, including the construction of a wide range of public
facilities such as airports, bridges, highways, schools, streets and water and
sewer works. Other purposes for which bonds may be issued include the obtaining
of funds to lend to public or private institutions for the construction of
facilities such as educational, hospital, housing, and solid waste disposal
facilities. The latter are generally payable from private sources which, in
varying degrees, may depend on local economic conditions, but are not
necessarily affected by the ability of the Commonwealth of Virginia and its
political subdivisions to pay their debts. Therefore, the general risk factors
as to the credit of the State or its political subdivision discussed herein may
not be relevant to the Virginia Trust.

To the extent bonds of the Commonwealth of Virginia are included in
the Virginia Issues, information on the financial condition of the Commonwealth
is noted. The Constitution of Virginia limits the ability of the Commonwealth to
create debt. The Constitution requires a balanced budget. The Commonwealth has
maintained a high level of fiscal stability for many years due in large part to
conservative financial operations and diverse sources of revenue. The economy of
the Commonwealth of Virginia is based primarily on manufacturing, the government
sector (including defense),

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agriculture, mining and tourism. Defense installations are concentrated in
Northern Virginia, the location of the Pentagon, and the Hampton Roads area,
including the Cities of Newport News, Hampton, Norfolk and Virginia Beach, the
locations of, among other installations, the Army Transportation Center (Ft.
Eustis), the Langley Air Force Base, Norfolk Naval Base and the Oceana Naval Air
Station, respectively. Any substantial reductions in defense spending generally
or in particular areas, including base closings, could adversely affect the
state and local economies.

The Commonwealth currently has a Standard & Poor's rating of AAA and a
Moody's rating of Aaa on its general obligation bonds. There can be no assurance
that the economic conditions on which these ratings are based will continue or
that particular bond issues may not be adversely affected by changes in economic
or political conditions. Further, the credit of the Commonwealth is not material
to the ability of political subdivisions and private entities to make payments
on the obligations described below.

General obligations of cities, towns and counties in Virginia are
payable from the general revenues of the entity, including ad valorem tax
revenues on property within the jurisdiction. The obligation to levy taxes could
be enforced by mandamus, but such a remedy may be impracticable and difficult to
enforce. Under section 15.2-2659 of the Code of Virginia of 1950, as amended, a
holder of any general obligation bond in default may file an affidavit setting
forth such default with the Governor. If, after investigating, the Governor
determines that such default exists, he is directed to order the State
Comptroller to withhold State funds appropriated and payable to the entity and
apply the amount so withheld to unpaid principal and interest. The Commonwealth,
however, has no obligation to provide any additional funds necessary to pay such
principal and interest.

Revenue bonds issued by Virginia political subdivisions include (i)
revenue bonds payable exclusively from revenue producing governmental
enterprises and (ii) industrial revenue bonds, college and hospital revenue
bonds and other "private activity bonds" which are essentially non-governmental
debt issues and which are payable exclusively by private entities such as
non-profit organizations and business concerns of all sizes. State and local
governments have no obligation to provide for payment of such private activity
bonds and in many cases would be legally prohibited from doing so. The value of
such private activity bonds may be affected by a wide variety of factors
relevant to particular localities or industries, including economic developments
outside of Virginia.

Virginia municipal securities that are lease obligations are
customarily subject to "non-appropriation" clauses which allow the municipality,
or other public entity, to terminate its lease obligations if moneys to make the
lease payments are not appropriated for that purpose. See "Objectives". Legal
principles may restrict the enforcement of provisions in lease financing
limiting the municipal issuer's ability to utilize property similar to that
leased in the event that debt service is not appropriated.

PUBLIC OFFERING

Offering Price. The secondary market Public Offering Price per Unit of
each Trust is computed by adding a sales charge to the aggregate bid price of
the Bonds in such Trust divided by the number of Units thereof outstanding. The
method used by the Evaluator for computing the sales charge for secondary market
purchases shall be based upon the number of years remaining to maturity of each
Bond in the portfolio. Bonds will be deemed to

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mature on their stated maturity dates unless bonds have been called for
redemption, funds have been placed in escrow to redeem them on an earlier call
date or are subject to a "mandatory put," in which case the maturity will be
deemed to be such other date.

The table below sets forth the various sales charges based on the
length of maturity of each Bond:

As Percent of Public
Time to Maturity Offering Price

less than 6 months 0%
6 mos. to 1 year 1%
over 1 yr. to 2 yrs. 1 1/2%
over 2 yrs. to 4 yrs. 2 1/2%
over 4 yrs. to 8 yrs. 3 1/2%
over 8 yrs. to 15 4 1/2%
yrs.
over 15 years 5 1/2%

The secondary market Public Offering Price can vary on a daily basis
from the amount stated on the cover of Part A of this Prospectus in accordance
with fluctuations in the prices of the Bonds. The price to be paid by each
investor will be computed on the basis of an evaluation made as of the day the
Units are purchased. The aggregate bid price evaluation of the Bonds is
determined in the manner set forth under "Trustee Redemption."

The Evaluator may obtain current prices for the Bonds from investment
dealers or brokers (including the Sponsors) that customarily deal in tax-exempt
obligations or from any other reporting service or source of information which
the Evaluator deems appropriate.

Accrued Interest. A proportionate share of accrued interest on the
Bonds to the expected date of settlement for the Units is added to the Public
Offering Price and paid by the Certificateholder at the time Units are
purchased. Accrued interest is the accumulated and unpaid interest on Bonds from
the last day on which interest was paid and is initially accounted for daily by
each Trust at the daily rate set forth under "Summary of Essential Information"
for each Trust in Part A of this Prospectus. Since each Trust normally receives
the interest on the Bonds twice a year and the interest on the Bonds is accrued
on a daily basis (this daily rate is net of estimated fees and expenses), each
Trust will always have an amount of interest earned but uncollected by, or
unpaid to, the Trustee. A Certificateholder will not recover his proportionate
share of accrued interest until the Units of a Trust are sold or redeemed, or
such Trust is terminated. At that time, the Certificateholder will receive his
proportionate share of the accrued interest computed to the settlement date in
the case of sale or termination and to the date of tender in the case of
redemption.

Employee Discounts. Employees (and their families) of ING Funds
Distributor, Inc. (and its affiliates) and of any underwriter of any

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Trust, pursuant to employee benefit arrangements, may purchase Units of a State
Trust at a price equal to the bid side evaluation of the underlying securities
in such State Trust divided by the number of Units outstanding plus a reduced
sales charge. Such arrangements result in less selling effort and selling
expenses than sales to employee groups of other companies. Resales or transfers
of Units purchased under the employee benefit arrangements may only be made
through the Sponsor's secondary market, so long as it is being maintained.

Distribution of Units. Certain banks and thrifts will make Units of
the Trust available to their customers on an agency basis. A portion of the
sales charge paid by their customers is retained by or remitted to the banks.
Under the Glass-Steagall Act, banks are prohibited from underwriting Units;
however, the Glass-Steagall Act does permit certain agency transactions and the
banking regulators have indicated that these particular agency transactions are
permitted under such Act. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law.

The Sponsor intends to qualify the Units of each State Trust for sale
in only the State for which such Trust is named and certain other states through
dealers who are members of the National Association of Securities Dealers, Inc.
Units may be sold to dealers at prices which represent a concession of up to
$33.00 per Unit, subject to the Sponsor's right to change the dealers'
concession from time to time. In addition, for transactions of 1,000,000 Units
or more, the Sponsor intends to negotiate the applicable sales charge and such
charge will be disclosed to any such purchaser. Such Units may then be
distributed to the public by the dealers at the Public Offering Price then in
effect. The Sponsor reserves the right to reject, in whole or in part, any order
for the purchase of Units. The Sponsor reserves the right to change the
discounts from time to time.

Sponsor's Profits. The Sponsor will receive a gross commission on all
Units sold in the secondary market equal to the applicable sales charge in each
transaction (see "Offering Price"). In addition, in maintaining a market for the
Units (see "Sponsor Repurchase"), the Sponsor will realize profits or sustain
losses in the amount of any difference between the price at which it buys Units
and the price at which it resells such Units.

Comparison of Public Offering Price, Sponsor's Repurchase Price and
Redemption Price. The secondary market Public Offering Price of Units of each
State Trust will be determined on the basis of the current bid prices of the
Bonds in such State Trust plus the applicable sales charge. Value at which Units
may be resold in the secondary market or redeemed will be determined on the
basis of the current bid prices of such Bonds without any sales charge. On the
Evaluation Date, the Public Offering Price per Unit of each State Trust (based
on the bid price of the Bonds in such State Trust plus the sales charge) each
exceeded the Repurchase and Redemption Price per Unit (based upon the bid price
of the Bonds in each State Trust without the sales charge) by the amounts shown
under "Summary of Essential Information" for each State Trust in Part A of this
Prospectus. For this reason, among others (including fluctuations in the market
prices of such Bonds and the fact that the Public Offering Price includes the
applicable sales charge), the amount realized by a Certificateholder upon any
redemption of Units may be less than the price paid for such Units.

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ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN

The rate of return on an investment in Units of each Trust is measured
in terms of "Estimated Current Return" and "Estimated Long Term Return".

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

Estimated Current Return is computed by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price per Unit. In
contrast to the Estimated Long Term Return, the Estimated Current Return does
not take into account the amortization of premium or accretion of discount, if
any, on the Bonds in the portfolios of each Trust. Moreover, because interest
rates on Bonds purchased at a premium are generally higher than current interest
rates on newly issued bonds of a similar type with comparable rating, the
Estimated Current Return per Unit may be affected adversely if such Bonds are
redeemed prior to their maturity. On the day prior to the Evaluation Date, the
Estimated Net Annual Interest Income per Unit divided by the Public Offering
Price resulted in the Estimated Current Return stated for each Trust under
"Summary of Essential Information" in Part A.

The Estimated Net Annual Interest Income per Unit of each Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to each Trust and with the redemption, maturity, sale or other
disposition of the Bonds in each Trust. The Public Offering Price will vary with
changes in the bid prices of the Bonds. Therefore, there is no assurance that
the present Estimated Current Return or Estimated Long Term Return will be
realized in the future.

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

RIGHTS OF CERTIFICATEHOLDERS

Certificates. Ownership of Units of each State Trust is evidenced by
registered Certificates executed by the Trustee and the Sponsor. Certificates
may be issued in denominations of one or more Units and will bear appropriate
notations on their faces indicating which plan of distribution has been selected
by the Certificateholder. Certificates are transferable by presentation and
surrender to the Trustee properly endorsed and/or accompanied by a written
instrument or instrument of transfer. Although no such charge is presently made
or contemplated, the Trustee may require a Certificateholder to

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pay $2.00 for each Certificate reissued or transferred and any governmental
charge that may be imposed in connection with each such transfer or interchange.
Mutilated, destroyed, stolen or lost Certificates will be replaced upon delivery
of satisfactory indemnity and payment of expenses incurred.

Interest and Principal Distributions. Interest received by each State
Trust is credited by the Trustee to the Interest Account of such Trust and a
deduction is made to reimburse the Trustee without interest for any amounts
previously advanced. Proceeds representing principal received by each State
Trust from the maturity, redemption, sale or other disposition of Bonds are
credited to the Principal Account of such State Trust.

Distributions to each Certificateholder of each State Trust from the
Interest Account of such State Trust are computed as of the close of business on
each Record Date for the following Payment Date and consist of an amount
substantially equal to one-twelfth, one-half or all of such Certificateholder's
pro rata share of the Estimated Net Annual Interest Income in such Interest
Account, depending upon the applicable plan of distribution. Distributions from
the Principal Account of each State Trust will be computed as of each
semi-annual Record Date, and will be made to the Certificateholders of such
State Trust on or shortly after the next semi-annual Payment Date. Proceeds
representing principal received from the disposition of any of the Bonds between
a Record Date and a Payment Date which are not used for redemptions of Units
will be held in the appropriate Principal Account and not distributed until the
second succeeding semi-annual Payment Date. No distributions will be made to
Certificateholders electing to participate in the Total Reinvestment Plan,
except as provided thereunder. Persons who purchase Units between a Record Date
and a Payment Date will receive their first distribution on the second Payment
Date after such purchase.

Because interest payments are not received by the State Trust at a
constant rate throughout the year, interest distributions may be more or less
than the amount credited to the Interest Account as of a given Record Date. For
the purpose of minimizing fluctuations in the distributions from the Interest
Account, the Trustee will advance sufficient funds as may be necessary to
provide interest distributions of approximately equal amounts. The Trustee shall
be reimbursed, without interest, for these advances to the Interest Account.
Funds which are available for future distributions, investment in the Total
Reinvestment Plan, payments of expenses and redemptions are in accounts which
are non-interest bearing to Certificateholders and are available for use by the
Trustee pursuant to normal banking procedures.

As of the first day of each month, the Trustee will deduct from the
Interest Account and, to the extent funds are not sufficient therein, from the
Principal Account, amounts necessary to pay the expenses of the Trust (as
determined on the basis set forth under "Trust Expenses and Charges"). The
Trustee also may withdraw from said accounts such amounts, if any, as it deems
necessary to establish a reserve for any applicable taxes or other governmental
charges that may be payable out of the Trust. Amounts so withdrawn shall not be
considered a part of the Trust's assets until such time as the Trustee shall
return all or any part of such amounts to the appropriate accounts. In addition,
the Trustee may withdraw from the Interest and Principal Accounts such amounts
as may be necessary to cover redemptions of Units by the Trustee.

The estimated monthly, semi-annual or annual interest distribution per
Unit of each State Trust initially will be in the amounts

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shown under "Summary of Essential Information" in Part A and will change and be
reduced as Bonds mature or are redeemed, exchanged or sold, or as expenses of
each State Trust fluctuate. No distribution need be made from a Principal
Account until the balance therein is an amount sufficient to distribute $1.00
per Unit.

Distribution Elections. Interest is distributed monthly, semi-annually
or annually, depending upon the distribution applicable to the Unit Purchased.
Record Dates for interest distributions will be the first day of each month for
monthly distributions, the first day of each June and December for semi-annual
distributions and the first day of each December for annual distributions.
Payment Dates will be the fifteenth day of each month following the respective
Record Dates. Certificateholders purchasing Units in the secondary market will
initially receive distributions in accordance with the election of the prior
owner. Every October each Certificateholder may change his distribution election
by notifying the Trustee in writing of such change between October 1 and
November 1 of each year. (Certificateholders deciding to change their election
should contact the Trustee by calling the number listed on the back cover hereof
for information regarding the procedures that must be followed in connection
with this written notification of the change of election.) Failure to notify the
Trustee on or before November 1 of each year will result in a continuation of
the plan for the following 12 months.

Records. The Trustee shall furnish Certificateholders, in connection
with each distribution, a statement of the amount of interest, if any, and the
amount of other receipts, if any, which are being distributed, expressed in each
case as a dollar amount per Unit. Within a reasonable time after the end of each
calendar year, the Trustee will furnish to each person who at any time during
the calendar year was a Certificateholder of record of a State Trust, a
statement showing (i) as to the Interest Account of such State Trust: interest
received (including any earned original issue discount and amounts representing
interest received upon any disposition of Bonds and earned original discount, if
any), amounts paid for redemption of Units, if any, deductions for applicable
taxes and fees and expenses of such State Trust, and the balance remaining after
such distributions and deductions, expressed both as a total dollar amount and
as a dollar amount representing the pro rata share of each Unit outstanding on
the last business day of such calendar year; (ii) as to such State Trust's
Principal Account: the dates of disposition of any Bonds and the net proceeds
received therefrom (including any unearned original issue discount but excluding
any portion representing accrued interest), deductions for payments of
applicable taxes and fees and expenses of such State Trust, amounts paid for
redemption of Units, if any, and the balance remaining after such distributions
and deductions, expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last business
day of such calendar year; (iii) a list of the Bonds held in such State Trust
and the number of Units thereof outstanding on the last business day of such
calendar year; (iv) the Redemption Price per Unit of such State Trust based upon
the last computation thereof made during such calendar year; and (v) amounts
actually distributed to Certificateholders of such State Trust during such
calendar year from the Interest and Principal Accounts, separately stated,
expressed both as total dollar amounts and as dollar amounts representing the
pro rata share of each Unit outstanding on the last business day of such
calendar year.

The Trustee shall keep available for inspection by Certificateholders,
at all reasonable times during usual business hours, books of record and account
of its transactions as Trustee, including records of the

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names and addresses of Certificateholders, Certificates issued or held, a
current list of Bonds in the portfolio and a copy of the Trust Agreement.

TAX STATUS

All Bonds acquired by the State Trusts were accompanied by copies of
opinions of bond counsel to the issuing governmental authorities given at the
time of original delivery of the Bonds to the effect that the interest thereon
is exempt from regular Federal income tax and from the respective State income
taxes. Such interest may, however, be subject to the federal alternative minimum
tax and to state and local taxes in other jurisdictions. Neither the Sponsor nor
the Trustee nor their respective counsel have made any review of the proceedings
relating to the issuance of the Bonds or the bases for such opinions and express
no opinion as to these matters, and neither the Trustee nor the Sponsor nor
their respective counsel have made an independent examination or verification
that the federal income tax status of the Bonds has not been altered since the
time of the original delivery of those opinions.

In rendering the opinion set forth below, counsel has examined the
Agreement, the final form of Prospectus dated the date hereof and the documents
referred to therein, among others, and has relied on the validity of said
documents and the accuracy and completeness of the facts set forth therein.

In the opinion of Battle Fowler LLP, counsel for the Sponsor, under
existing law:

The State Trusts will be classified as grantor trusts
and not as associations taxable as corporations for federal
income tax purposes under the Internal Revenue Code. Income
received by each State Trust that consists of interest
excludable from federal gross income under the Code will be
excludable from the federal gross income of the
Certificateholders of such State Trust.

Each Certificateholder of a State Trust will be
considered the owner of a pro rata portion of the assets of
that State Trust. Thus, each Certificateholder of a State
Trust will be considered to have received its pro rata share
of Bond interest when it is received by the State Trust, and
the entire amount of net income distributable to
Certificateholders of a State Trust that is exempt from
federal income tax when received by that State Trust will
constitute tax-exempt income when received by the
Certificateholders.

Gain realized on sale or redemption of the Bonds or on sale of a Unit
is, however, includible in gross income for federal income tax purposes,
generally as capital gain. Such gain does not include any amount received in
respect to accrued interest, earned original issue discount and accrued market
discount. Gain on the disposition of a Bond or a Unit purchased at a market
discount generally will be treated as ordinary income, rather than capital gain,
to the extent of accrued market discount. Such gain may be long- or short-term
gain depending on the holding period of the Bond or the Unit, assuming that the
Bond or Unit is held as a capital asset. Capital losses are deductible to the
extent of capital gains; in addition, up to $3,000 of capital losses of
non-corporate Certificateholders ($1,500 for married persons filing separately)
may be deducted against ordinary income. Capital assets held by individuals will
qualify for long-term capital gain

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treatment if held for more than one year and will be subject to a reduced tax
rate of 20% rather than the regular maximum tax rate of 39.6%.

Each Certificateholder of a State Trust will realize taxable gain or
loss when that State Trust disposes of a Bond (whether by sale, exchange,
redemption or payment at maturity), as if the Certificateholder had directly
disposed of its pro rata share of such Bond. The gain or loss is measured by the
difference between (i) the tax cost of such pro rata share and (ii) the amount
received therefor. The Certificateholder's tax cost for each Bond is determined
by allocating the total tax cost of each Unit among all the Bonds held in the
State Trust (in accordance with the portion of the State Trust comprised by each
Bond). In order to determine the amount of taxable gain or loss, the
Certificateholder's amount received is similarly allocated at that time. The
Certificateholder may exclude from the amount received any amounts that
represent accrued interest or the earned portion of any original issue discount
but may not exclude amounts attributable to market discount. Thus, when a Bond
is disposed of by State Trust at a gain, taxable gain will equal the difference
between (i) the amount received and (ii) the amount paid plus any accrued
original issue discount. Gain on the disposition of a Bond purchased at a market
discount generally will be treated as ordinary income, rather than capital gain,
to the extent of accrued market discount. No deduction is allowed for the
amortization of bond premium on tax-exempt bonds, such as the Bonds, in
computing regular federal income tax.

Original issue discount generally accrues based on the principle of
compounding of accrued interest, not on a straight-line or ratable method, with
the result that the amount of earned original issue discount is less in the
earlier years and more in the later years of a bond term. The tax basis of an
original issue discount bond is increased by the amount of accrued, tax-exempt
original issue discount thus determined. This method of calculation will produce
higher capital gains (or lower losses) to a Certificateholder, as compared to
the results produced by the straight-line method of accounting for original
issue discount, upon an early disposition of a Bond by a State Trust or of a
Unit by a Certificateholder.

A Certificateholder may also realize taxable income or loss when a
Unit of a State Trust is sold or redeemed. The amount received is allocated
among all the Bonds in that State Trust in the same manner as when the State
Trust disposes of Bonds, and the Certificateholder may exclude accrued interest
and the earned portion of any original issue discount (but not amounts
attributable to market discount). The return of a Certificateholder's tax cost
is otherwise a tax-free return of capital.

A portion of Social Security benefits is includible in gross 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 taxable year and
$25,000 for all others. Interest on tax-exempt bonds is to be added to adjusted
gross income for purposes of computing the amount of Social Security benefits
that are includible in gross income and determining whether an individual's
income exceeds the base amount above which a portion of the benefits would be
subject to tax.

Corporate Certificateholders are required to include in federal
corporate alternative minimum taxable income 75% of the amount by which the
adjusted current earnings (which will include tax-exempt interest) of the
corporation exceeds alternative minimum taxable income (determined without
regard to this item). In addition, in certain cases, Subchapter S

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corporations with accumulated earnings and profits from Subchapter C years will
be subject to a tax on tax-exempt interest.

Under federal law, interest on Bonds in each State Trust issued by
authority of the Government of Puerto Rico is exempt from regular Federal income
tax and state and local income taxes in the United States and Puerto Rico.

The State Trusts are not subject to the New York State Franchise Tax
on Business Corporations or the New York City General Corporation Tax.

Battle Fowler LLP is also of the opinion that under the personal
income tax laws of the State and City of New York, the income of each State
Trust will be treated as the income of the Certificateholders. Interest on the
Bonds that is exempt from tax under the laws of the State and City of New York
when received by the New York Trust will retain its status as tax- exempt
interest of the Certificateholders. In addition, non-residents of New York City
will not be subject to the City personal income tax on gains derived with
respect to their Units. Non-residents of New York State will not be subject to
New York State personal income tax on such gains unless the Units are employed
in a business, trade or occupation carried on in New York State. A New York
State or New York City resident should determine its basis and holding period
for its Units in the same manner for New York State and New York City tax
purposes as for federal tax purposes. For corporations doing business in New
York State, interest earned on state and municipal obligations that are exempt
from federal income tax, including obligations of New York State, its political
subdivisions and instrumentalities, must be included in calculating New York
State and New York City entire net income for purposes of computing New York
State and New York City franchise (income) tax.

The exemption of interest on municipal obligations for federal income
tax purposes does not necessarily result in exemption under the income tax laws
of any state or local government. The laws of such states and local governments
vary with respect to the taxation of such obligations. See "Rights of
Certificateholders" in this Part B.

In the opinion of Brown & Wood LLP, special counsel to the Sponsor for
California tax matters, under existing California law applicable to individuals
who are California residents:

The California Trust will not be treated as an
association taxable as a corporation, and the income of the
California Trust will be treated as the income of the
Certificateholders. Accordingly, interest on Bonds received by
the California Trust that is exempt from personal income taxes
imposed by or under the authority of the State of California
will be treated for California income tax purposes in the same
manner as if received directly by the Certificateholders.

Each Certificateholder of the California Trust will
recognize gain or loss when the California Trust disposes of a
Bond (whether by sale, exchange, redemption or payment at
maturity) or upon the Certificateholder's sale or other
disposition of a Unit. The amount of gain or loss for
California income tax purposes will generally be calculated
pursuant to the Internal Revenue Code of 1986, as amended,
certain provisions of which are incorporated by reference
under California law.

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In the opinion of Greenberg Traurig, P.A., special counsel to the
Sponsors for Florida tax matters, under existing Florida law:

1. The Florida Trust will not be subject to income, franchise or other
taxes of a similar nature imposed by the State of Florida or its subdivisions,
agencies or instrumentalities.

2. Because Florida does not impose a personal income tax, noncorporate
Certificateholders of Units of the Florida Trust will not be subject to any
Florida income taxes with respect to (i) amounts received by the Florida Trust
on the Bonds it holds; (i.e., amounts which are distributed by the Florida Trust
to non-corporate Certificateholders of the Florida Trust; or (iii) any gain
realized on the sale or redemption of Bonds by the Florida Trust or of a Unit of
the Florida Trust by a noncorporate Certificateholder. However, corporations
(including limited liability companies that are taxed as corporations for
federal income tax purposes) as defined in Chapter 220, Florida Statutes (1997),
as amended, which are otherwise subject to Florida income taxation will be
subject to tax on their respective share of any income and gain realized by the
Florida Trust and on any gain realized on the sale or redemption of Units of the
Florida Trust by the corporate Certificateholder.

3. The Units will be subject to Florida estate taxes if held by
Florida residents, or if held by non-residents deemed to have business situs in
Florida. The Florida estate tax is limited to the amount of the credit for state
death taxes provided for in Section 2011 of the Internal Revenue Code of 1986,
as amended.

4. Bonds issued by the State of Florida or its political subdivisions
are exempt from Florida intangible personal property taxation under Chapter 199,
Florida Statutes (1997), as amended. Bonds issued by the Government of Puerto
Rico or by the Government of Guam, or by their authority, are exempt by Federal
statute from taxes such as the Florida intangible personal property tax. Thus,
the Florida Trust will not be subject to Florida intangible personal property
tax on any Bonds in the Florida Trust issued by the State of Florida or its
political subdivisions, by the Government of Puerto Rico or by its authority or
by, the Government of Guam or by its authority. In addition, the Units of the
Florida Trust will not be subject to the Florida intangible personal property
tax if at least 90 percent of the net asset value of the portfolio of assets
corresponding to the Florida Trust is invested in such Florida, Puerto Rico or
Guam debt obligations.

In the opinion of Hunton & Williams, special counsel to the Sponsors
for Virginia tax matters, under existing Virginia law applicable to individuals
who are Virginia residents and assuming that the Virginia Trust is a grantor
trust under the grantor trust rules of Sections 671-679 of the Code:

The Virginia Trust will be taxable as a grantor trust
for Virginia income tax purposes with the result that income
of the Virginia Trust will be treated as income of the
Certificateholders of the Virginia Trust. Consequently, the
Virginia Trust will not be subject to any income or corporate
franchise tax imposed by the Commonwealth of Virginia, or its
subdivisions, agencies or instrumentalities.

Interest on the Bonds in the Virginia Trust that is
exempt from Virginia income tax when received by the Virginia
Trust will retain its tax exempt status in the hands of the
Certificateholders of the Virginia Trust.

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A Certificateholder of the Virginia Trust will not
recognize gain or loss for Virginia income tax purposes when
the Virginia Trust disposes (whether by sale, exchange,
redemption or payment at maturity) of any Bonds of (i)
Virginia or any of its political subdivisions or
instrumentalities or (ii) the United States or any of its
authorities, commissions or instrumentalities. A
Certificateholder of the Virginia Trust will recognize gain or
loss for Virginia income tax purposes, to the same extent that
he will for federal income tax purposes, when the Virginia
Trust disposes of any other Bond or when the Certificateholder
redeems or sells his Units.

In the case of Bonds that are industrial revenue bonds ("IRBs") or
certain types of private activity bonds, the opinions of bond counsel to the
respective issuing authorities indicate that interest on such Bonds is exempt
from regular federal income tax. However, interest on such Bonds will not be
exempt from regular federal income tax for any period during which such Bonds
are held by a substantial user of the facilities financed by the proceeds of
such Bonds or by a related person thereof within the meaning of the Code.
Therefore, interest on any such Bonds allocable to a Certificateholder who is
such a substantial user or related person thereof will not be tax-exempt.
Furthermore, in the case of IRBs that qualify for the small issue exemption, the
small issue exemption will not be available or will be lost if, at any time
during the three-year period beginning on the later of the date the facilities
are placed in service or the date of issue, all outstanding tax-exempt IRBs,
together with a proportionate share of any present issue, of an owner or
principal user (or related person) of the facilities exceeds $40,000,000. In the
case of IRBs issued under the $10,000,000 small issue exemption, interest on
such IRBs will become taxable if the face amount of such IRBs plus certain
capital expenditures exceeds $10,000,000.

In addition, a Bond can lose its tax-exempt status as a result of
other subsequent but unforeseeable events such as prohibited arbitrage
activities by the issuer of the Bond or the failure of the Bond to continue to
satisfy the conditions required for the exemption of interest thereon from
regular federal income tax. No investigation has been made as to the current or
future owners or users of the facilities financed by the Bonds, the amount of
such persons' outstanding tax-exempt IRBs, or the facilities themselves, and no
assurance can be given that future events will not affect the tax-exempt status
of the Bonds. Investors should consult their tax advisors for advice with
respect to the effect of these provisions on their particular tax situation.

Interest on indebtedness incurred or continued to purchase or carry
the Units is not deductible for regular federal income tax purposes. In
addition, under rules used by the Internal Revenue Service for determining when
borrowed funds are considered used for the purpose of purchasing or carrying
particular assets, the purchase of Units may be considered to have been made
with borrowed funds even though the borrowed funds are not directly traceable to
the purchase of Units. Also, in the case of certain financial institutions that
acquire Units, in general no deduction is allowed for interest expense allocable
to the Units.

From time to time, proposals have been introduced before Congress to
restrict or eliminate the federal income tax exemption for interest on debt
obligations similar to the Bonds in the State Trusts, and it can be expected
that similar proposals may be introduced in the future. In

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particular, Congress may consider the adoption of some form of flat tax which
could have an adverse impact on the value of tax-exempt bonds.

The U.S. Supreme Court has held that there is no constitutional
prohibition against the federal government's taxing the interest earned on state
or other municipal bonds. The decision does not, however, affect the current
exemption from taxation of the interest earned on the Bonds in the Trust in
accordance with Section 103 of the Code.

The opinions of bond counsel to the issuing governmental authorities
to the effect that interest on the Bonds is exempt from regular federal income
tax may be limited to law existing at the time the Bonds were issued, and may
not apply to the extent that future changes in law, regulations or
interpretations affect such Bonds. Investors are advised to consult their own
tax advisors for advice with respect to the effect of any legislative changes.

LIQUIDITY

Sponsor Repurchase. The Sponsor, although not obligated to do so,
intends to maintain a secondary market for the Units of each State Trust and
continuously to offer to repurchase the Units of the Trusts. The Sponsor's
secondary market repurchase price will be based on the aggregate bid price of
the Bonds in each State Trust portfolio, determined by the Evaluator on a daily
basis, and will be the same as the redemption price. (See "Trustee Redemption.")
Certificateholders who wish to dispose of their Units should inquire of the
Sponsor as to current market prices prior to making a tender for redemption. The
Sponsor may discontinue repurchases of Units of a State Trust if the supply of
Units exceeds demand, or for other business reasons. The date of repurchase is
deemed to be the date on which Certificates representing Units of a State Trust
are physically received in proper form by the Sponsor, ING Funds Distributor,
Inc.,1475 Dunwoody Drive, West Chester, P.A. 19380. Units received after 4:00
p.m., New York Time, will be deemed to have been repurchased on the next
business day. In the event a market is not maintained for the Units of a State
Trust, a Certificateholder may be able to dispose of Units only by tendering
them to the Trustee for redemption.

Prospectuses relating to certain other bond trusts indicate an
intention by the Sponsor, subject to change, to repurchase units of those funds
on the basis of a price higher than the bid prices of the Bonds in the Trusts.
Consequently, depending upon the prices actually paid, the secondary market
repurchase price of other trusts may be computed on a somewhat more favorable
basis than the repurchase price offered by the Sponsor for Units of these State
Trusts, although in all bond trusts, the purchase price per unit depends
primarily on the value of the bonds in the trust portfolio.

Units purchased by the Sponsor in the secondary market may be
re-offered for sale by the Sponsor at a price based on the aggregate bid price
of the Bonds in a State Trust plus the applicable sales charge plus net accrued
interest. Any Units that are purchased by the Sponsor in the secondary market
also may be redeemed by the Sponsor if it determines such redemption to be in
its best interest.

The Sponsor may, under certain circumstances, as a service to
Certificateholders, elect to purchase any Units tendered to the Trustee for
redemption (see "Trustee Redemption"). For example, if in order to meet
redemptions of Units the Trustee must dispose of Bonds, and if such disposition
cannot be made by the redemption date (seven calendar days after

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tender), the Sponsor may elect to purchase such Units. Such purchase shall be
made by payment to the Certificateholder not later than the close of business on
the redemption date of an amount equal to the Redemption Price on the date of
tender.

Trustee Redemption. Units may also be tendered to the Trustee for
redemption at its corporate trust office as set forth in Part A of this
Prospectus, upon proper delivery of Certificates representing such Units and
payment of any relevant tax. At the present time there are no specific taxes
related to the redemption of Units. No redemption fee will be charged by the
Sponsor or the Trustee. Units redeemed by the Trustee will be canceled.

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

Within three business days following a tender for redemption, the
Certificateholder will be entitled to receive in cash an amount for each Unit
tendered equal to the Redemption Price per Unit computed as of the Evaluation
Time on the date of tender. The "date of tender" is deemed to be the date on
which Units are received by the Trustee, except that, with respect to Units
received after the close of trading on the New York Stock Exchange, the date of
tender is the next day on which such Exchange is open for trading, and such
Units will be deemed to have been tendered to the Trustee on such day for
redemption at the Redemption Price computed on that day.

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

The Redemption Price per Unit of a State Trust is the pro rata share
of each Unit in such State Trust determined by the Trustee on the basis of (i)
the cash on hand in such Trust or monies in the process of being collected, (ii)
the value of the Bonds in such State Trust based on the bid prices of such Bonds
and (iii) interest accrued thereon, less (a) amounts representing taxes or other
governmental charges payable out of such State Trust, (b) the accrued expenses
of such State Trust and (c) cash allocated for distribution to
Certificateholders of record of such State Trust as of the business day prior to
the evaluation being made. The Evaluator may determine the value of the Bonds in
such State Trust for purposes of redemption (i) on the basis of current bid
prices of the Bonds obtained from dealers or brokers who customarily deal in
bonds comparable to those held by such State Trust, (ii) on the basis of bid
prices for bonds comparable to any Bonds for which

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bid prices are not available, (iii) by determining the value of the Bonds by
appraisal, or (iv) by any combination of the above.

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

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

A Certificateholder who wishes to dispose of his Units should inquire
of his bank or broker in order to determine if there is a current secondary
market price in excess of the Redemption Price.

TRUST ADMINISTRATION

Portfolio Supervision. The Sponsor may direct the Trustee to dispose
of Bonds in a State Trust upon (i) default in payment of principal or interest
on such Bonds, (ii) institution of certain legal proceedings with respect to the
issuers of such Bonds, (iii) default under other documents adversely affecting
debt service on such Bonds, (iv) default in payment of principal or interest on
other obligations of the same issuer or guarantor, (v) with respect to revenue
Bonds, decline in revenues and income of any facility or project below the
estimated levels calculated by proper officials charged with the construction or
operation of such facility or project, or (vi) decline in price or the
occurrence of other market or credit factors that in the opinion of the Sponsor
would make the retention of such Bonds in such State Trust detrimental to the
interests of the Certificateholders. If a default in the payment of principal or
interest on any of the Bonds occurs and if the Sponsor fails to instruct the
Trustee to sell or hold such Bonds, the Trust Agreement provides that the
Trustee may sell such Bonds.

The Sponsor is authorized by the Trust Agreement to direct the Trustee
to accept or reject certain plans for the refunding or refinancing of any of the
Bonds. Any bonds received in exchange or substitution will be held by the
Trustee subject to the terms and conditions of the Trust Agreement to the same
extent as the Bonds originally deposited. Within five days after such deposit in
a State Trust, notice of such exchange and deposit shall be given by the Trustee
to each Certificateholder of such Trust registered on the books of the Trustee,
including an identification of the Bonds eliminated and the Bonds substituted
therefor. Except as previously stated in the discussion regarding Failed Bonds,
the acquisition by a State Trust of any securities other than the Bonds
initially deposited is prohibited.

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In determining whether to direct the Trustee to accept or reject
certain plans for the refunding or refinancing of any of the Bonds, the Sponsor
may be advised by the Portfolio Supervisor.

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

The Trust Agreement may also be amended in any respect, or performance
of any of the provisions thereof may be waived, with the consent of the holders
of Certificates evidencing 66-2/3% of the Units then outstanding of each State
Trust affected by such amendment for the purpose of modifying the rights of
Certificateholders; provided that no such amendment or waiver shall reduce any
Certificateholder's interest in a State Trust without his consent or reduce the
percentage of Units required to consent to any such amendment or waiver without
the consent of the holders of all Certificates. The Trust Agreement may not be
amended, without the consent of the holders of all Certificates in a State Trust
then outstanding, to increase the number of Units issuable by such State Trust
or to permit the acquisition of any bonds in addition to or in substitution for
those initially deposited in such State Trust, except in accordance with the
provisions of the Trust Agreement. The Trustee shall promptly notify
Certificateholders, in writing, of the substance of any such amendment.

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

The Sponsor. Effective February 9, 2000, ING Funds Distributor, Inc.
has become the successor to Reich & Tang Distributors, Inc., as Sponsor to the
Trusts. In addition, Gruntal & Co., L.L.C. has resigned as co-sponsor for those
particular Trusts for which it acted in that capacity. ING Funds Distributor,
Inc., an Iowa corporation, is a wholly owned indirect subsidiary of ING Group.
ING Group, among the leading global financial services organizations, is engaged
in asset management, banking and insurance activities in 60 countries worldwide
with over 82,000 employees. The Sponsor is a member of the National Association
of Securities Dealers, Inc.

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The information included herein is only for the purpose of informing
investors as to the financial responsibility of the Sponsor and its ability to
carry out its contractual obligations. The Sponsor will be under no liability to
Unitholders for taking any action, or refraining from taking any action, in good
faith pursuant to the Trust Agreement, or for errors in judgment except in cases
of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.

The Sponsor may resign at any time by delivering to the Trustee an
instrument of resignation executed by the Sponsor. If at any time the Sponsor
shall resign or fail to perform any of its duties under the Trust Agreement or
become incapable of acting or become bankrupt or their affairs are taken over by
public authorities, then the Trustee may either (i) appoint a successor sponsor;
(ii) terminate the Trust Agreement and liquidate the Trust; or (iii) continue to
act as Trustee without terminating the Trust Agreement. Any successor sponsor
appointed by the Trustee shall be satisfactory to the Trustee and, at the time
of appointment, shall have a net worth of at least $1,000,000.

The Trustee. For certain of the State Trusts, as set forth in the
"Summary of Essential Information" in Part A, the Trustee is The Chase Manhattan
Bank with its principal executive office located at 270 Park Avenue, New York,
New York 10017 (800) 428-8890 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
Corporation and the Board of Governors of the Federal Reserve System.

For certain other State Trusts as set forth in the "Summary of
Essential Information" in Part A, the Trustee is The Bank of New York, a trust
company organized under the laws of New York, having its offices at 101 Barclay
Street, New York, New York 10286. The Bank of New York is subject to supervision
and examination by the Superintendent of Banks of the State of New York and the
Board of Governors of the Federal Reserve System, and its deposits are insured
by the Federal Deposit Insurance Corporation to the extent permitted by law. The
Trustee must be a banking corporation organized under the laws of the United
States or any state which is authorized under such laws to exercise corporate
trust powers and must have at all times an aggregate capital, surplus and
undivided profits of not less than $5,000,000. The duties of the Trustee are
primarily ministerial in nature. The Trustee did not participate in the
selection of Securities for the portfolio of the Trust.

The Trustee must be a banking corporation organized under the laws of
the United States or any state which is authorized under such laws to exercise
corporate trust powers and must have at all times an aggregate capital, surplus
and undivided profits of not less than $5,000,000. The duties of the Trustee are
primarily ministerial in nature. The Trustee did not participate in the
selection of Securities for the portfolio of the Trust.

The Trustee shall not be liable or responsible in any way for taking
any action, or for refraining from taking any action, in good faith pursuant to
the Trust Agreement, or for errors in judgment; or for any disposition of any
moneys, Bonds or Certificates in accordance with the Trust Agreement, except in
cases of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties; provided, however, that the Trustee
shall not in any event be liable or responsible for any evaluation made by the
Evaluator. In addition, the Trustee shall not be liable for any taxes or other
governmental charges imposed upon or in respect

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of the Bonds or the Trusts which it may be required to pay under current or
future law of the United States or any other taxing authority having
jurisdiction. The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the Bonds pursuant to the Trust
Agreement.

For further information relating to the responsibilities of the
Trustee under the Trust Agreement, reference is made to the material set forth
under "Rights of Certificateholders."

The Trustee may resign by executing an instrument in writing and
filing the same with the Sponsor, and mailing a copy of a notice of resignation
to all Certificateholders. In such an event, the Sponsor is obligated to appoint
a successor Trustee as soon as possible. In addition, if the Trustee becomes
incapable of acting or becomes bankrupt or its affairs are taken over by public
authorities, the Sponsor may remove the Trustee and appoint a successor as
provided in the Trust Agreement. Notice of such removal and appointment shall be
mailed to each Certificateholder by the Sponsor. If upon resignation of the
Trustee no successor has been appointed and has accepted the appointment within
thirty days after notification, the retiring Trustee may apply to a court of
competent jurisdiction for the appointment of a successor. The resignation or
removal of the Trustee becomes effective only when the successor Trustee accepts
its appointment as such or when a court of competent jurisdiction appoints a
successor Trustee. Upon execution of a written acceptance of such appointment by
such successor Trustee, all the rights, powers, duties and obligations of the
original Trustee shall vest in the successor.

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

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

The Trustee, the Sponsor and Certificateholders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Trust Agreement
shall be made in good faith upon the basis of the best information available to
it, provided, however, that the Evaluator shall be under no liability to the
Trustee, the Sponsor, or Certificateholders for errors in judgment, except in
cases of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.

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

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TRUST EXPENSES AND CHARGES

At no cost to the State Trusts, the Sponsor has borne the expenses of
creating and establishing the State Trusts, including the cost of initial
preparation and execution of the Trust Agreement, registration of the State
Trusts and the Units under the Investment Company Act of 1940 and the Securities
Act of 1933, preparation and printing of the Certificates, legal and auditing
expenses, advertising and selling expenses, initial fees and expenses of the
Trustee and other out-of-pocket expenses. The fees of the Evaluator, however,
incurred during the initial public offering, are paid directly by the Trustee.

The Sponsor will not charge the State Trust a fee for its services as
such. See "Sponsor's Profits."

ING Mutual Funds Management Co. LLC, an affiliate of ING Funds
Distributor, Inc., will receive, for portfolio supervisory services to the
Trust, an annual fee in the amount set forth under "Summary of Essential
Information" in Part A. This fee may exceed the actual cost of providing
portfolio supervisory services for the Trust, but at no time will the total
amount received for portfolio supervisory services rendered to all series of the
Municipal Securities Trust in any calendar year exceed the aggregate cost to ING
Mutual Funds Management Co. LLC of supplying such services in such year. (See
"Trust Administration--Trust Supervision.")

The Trustee will receive for its ordinary recurring services to each
State Trust an annual fee in the amount set forth under "Summary of Essential
Information" in Part A. For a discussion of the services performed by the
Trustee pursuant to its obligations under the Trust Agreement, see "Trust
Administration" and "Rights of Certificateholders."

The Evaluator will receive for each daily evaluation of the Bonds in
the Trust a fee in the amount set forth under "Summary of Essential Information"
in Part A, which fee shall be allocated pro rata among each State Trust.

The Trustee's and Evaluator's fees applicable to a State Trust are
payable monthly as of the Record Date from such State Trust's Interest Account
to the extent funds are available and then from such Trust's Principal Account.
The Trustee's fees, the Evaluator's fees and the Portfolio Supervisor's fees may
be increased without approval of the Certificateholders by amounts not exceeding
proportionate increases in consumer prices for services as measured by the
United States Department of Labor's Consumer Price Index entitled "All Services
Less Rent."

The following additional charges are or may be incurred by any or all
of the State Trusts: (i) all expenses (including counsel and auditing fees) of
the Trustee incurred in connection with its activities under the Trust
Agreement, including the expenses and costs of any action undertaken by the
Trustee to protect a State Trust and the rights and interests of the
Certificateholders; (ii) fees of the Trustee for any extraordinary services
performed under the Trust Agreement; (iii) 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 State Trust; (iv) indemnification of the
Sponsor for any loss, liabilities and expenses incurred in acting as Sponsor of
a State Trust without gross negligence, bad faith or willful misconduct on its
part; and (v) all taxes and other governmental charges imposed upon the Bonds or
any part of a State Trust (no such taxes or charges are being levied,

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made or, to the knowledge of the Sponsor, contemplated). The above expenses,
including the Trustee's fees, when paid by or owing to the Trustee, are secured
by a first lien on the State Trust to which such expenses are allocable. In
addition, the Trustee is empowered to sell Bonds of a State Trust in order to
make funds available to pay all expenses of such State Trust.

Unless the Sponsor otherwise directs, the accounts of the Trust shall
be audited not less than annually by independent public accountants selected by
the Sponsor. The expenses of the audit shall be an expense of the Trust. So long
as the Sponsor maintains a secondary market, the Sponsor will bear any audit
expense which exceeds $.50 per 1,000 Units. Certificateholders covered by the
audit during the year may receive a copy of the audited financials upon request.

EXCHANGE PRIVILEGE AND CONVERSION OFFER

Certificateholders will be able to elect to exchange any or all of
their Units of this Trust for Units of one or more of any available series of
Equity Securities Trust, Insured Municipal Securities Trust, Municipal
Securities Trust, New York Municipal Trust or Mortgage Securities Trust (the
"Exchange Trusts") subject to a reduced sales charge as set forth in the
prospectus of the Exchange Trust (the "Exchange Privilege"). Unit owners of any
registered unit investment trust for which there is no active secondary market
in the units of such trust (a "Redemption Trust") will be able to elect to
redeem such units and apply the proceeds of the redemption to the purchase of
available Units of one or more series of an Exchange Trust (the "Conversion
Trusts") at the Public Offering Price for units of the Conversion Trust subject
to a reduced sales charge as set forth in the prospectus of the Conversion Trust
(the "Conversion Offer"). Under the Exchange Privilege, the Sponsor's repurchase
price during the initial offering period of the Units being surrendered will be
based on the market value of the Securities in the Trust portfolio or on the
aggregate offer price of the Bonds in the other Trust Portfolios; and, after the
initial offering period has been completed, will be based on the aggregate bid
price of the securities in the particular Trust portfolio. Under the Conversion
Offer, units of the Redemption Trust must be tendered to the trustee of such
trust for redemption at the redemption price determined as set forth in the
relevant Redemption Trust's prospectus. Units in an Exchange or Conversion Trust
will be sold to the Certificateholder at a price based on the aggregate offer
price of the securities in the Exchange or Conversion trust portfolio (or for
units of Equity Securities Trust, based on the market value of the underlying
securities in the trust portfolio) during the initial public offering period of
the Exchange or Conversion Trust; and after the initial public offering period
has been completed, based on the aggregate bid price of the securities in the
Exchange or Conversion Trust Portfolio if its initial offering has been
completed plus accrued interest (or for units of Equity Securities Trust, based
on the market value of the underlying securities in the trust portfolio) and a
reduced sales charge.

Except for Certificateholders who wish to exercise the Exchange
Privilege or Conversion Offer within the first five months of their purchase of
Units of the Exchange or Redemption Trust, any purchaser who purchases Units
under the Exchange Privilege or Conversion Offer will pay a lower sales charge
than that which would be paid for the Units by a new investor. For
Certificateholders who wish to exercise the Exchange Privilege or Conversion
Offer within the first five months of their purchase of Units of the Exchange or
Redemption Trust, the sales charge applicable to the purchase

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of units of an Exchange or Conversion Trust shall be the greater of (i) the
reduced sales charge or (ii) an amount which when coupled with the sales charge
paid by the Certificateholder upon his original purchase of Units of the
Exchange or Redemption Trust would equal the sales charge applicable in the
direct purchase of units of an Exchange Trust.

In order to exercise the Exchange Privilege the Sponsor must be
maintaining a secondary market in the units of the available Exchange Trust. The
Conversion Offer is limited only to unit owners of any Redemption Trust.
Exercise of the Exchange Privilege and the Conversion Offer by
Certificateholders is subject to the following additional conditions: (i) at the
time of the Certificateholder's election to participate in the Exchange
Privilege or Conversion Offer, there must be units of the Exchange or Conversion
Trust available for sale, either under the initial primary distribution or in
the Sponsor's secondary market, (ii) exchanges will be effected in whole units
only, (iii) Units of the Mortgage Securities Trust may only be acquired in
blocks of 1,000 Units and (iv) Units of the Equity Securities Trust may only be
acquired in blocks of 100 Units. Certificate holders will not be permitted to
advance any funds in excess of their redemption in order to complete the
exchange. Any excess proceeds received from a Certificateholder for exchange or
from units being redeemed per conversion will be remitted to such
Certificateholder.

The Sponsor reserves the right to suspend, modify or terminate the
Exchange Privilege and/or the Conversion Offer. The Sponsor will provide
Certificateholders of the Trust with 60 days' prior written notice of any
termination or material amendment to the Exchange Privilege and/or the
Conversion Offer, provided that no notice need be given if (i) the only material
effect of an amendment is to reduce or eliminate the sales charge payable at the
time of the exchange, to add one or more series of the Trust eligible for the
Exchange Privilege or the Conversion Offer, to add any new unit investment trust
sponsored by ING or a sponsor controlled by or under common control with ING, or
to delete a series which has been terminated from eligibility for the Exchange
Privilege and/or the Conversion Offer, (ii) there is a suspension of the
redemption of units of an Exchange or Conversion Trust under Section 22(e) of
the Investment Company Act of 1940, or (iii) an Exchange Trust temporarily
delays or ceases the sale of its units because it is unable to invest amounts
effectively in accordance with its investment objectives, policies and
restrictions. During the 60-day notice period prior to the termination or
material amendment of the Exchange Privilege described above, the Sponsor will
continue to maintain a secondary market in the units of all Exchange Trusts that
could be acquired by the affected Certificateholders. Certificateholders may,
during this 60-day period, exercise the Exchange Privilege in accordance with
its terms then in effect.

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

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charge. The conversion transaction will be handled entirely through the unit
owner's retail broker. The retail broker must tender the units to the trustee of
the Redemption Trust for redemption and then apply the proceeds to the
redemption toward the purchase of units of a Conversion Trust at a price based
on the aggregate offer or bid side evaluation per Unit of the Conversion Trust,
depending on which price is applicable, plus accrued interest and the applicable
sales charge. The certificates must be surrendered to the broker at the time the
redemption order is placed and the broker must specify to the Sponsor that the
purchase of Conversion Trust Units is being made pursuant to the Conversion
Offer. The unit owner's broker will be entitled to retain a portion of the sales
charge.

Tax Consequences of the Exchange Privilege and the Conversion Offer. A
surrender of Units pursuant to the Exchange Privilege or the Conversion Offer
will constitute a taxable event to the Certificateholder under the Internal
Revenue Code. The Certificateholder will realize a tax gain or loss that will be
of a long- or short-term capital or ordinary income nature dependent on the
length of time the Units have been held and other factors. (See "Tax Status".) A
Certificateholder's tax basis in the Units acquired pursuant to the Exchange
Privilege or Conversion Offer will be equal to the purchase price of such Units.
Investors should consult their own tax advisors as to the tax consequences to
them of exchanging or redeeming units and participating in the Exchange
Privilege or Conversion Offer.

OTHER MATTERS

Legal Opinions. The legality of the Units originally offered and
certain matters relating to federal and New York tax law have been passed upon
by Battle Fowler LLP, 75 East 55th Street, New York, New York 10022, or Berger
Steingut Tarnoff & Stern, 600 Madison Avenue, New York, New York 10022, as
counsel for the Sponsor. Certain matters relating to Florida tax law have been
passed upon by Greenberg Traurig, A.A., as special Florida counsel to the
Sponsor. Certain matters relating to California tax law have been passed upon by
Brown & Wood LLP, as special California counsel to the Sponsor. Certain matters
relating to Virginia tax law have been passed upon by Hunton & Williams, as
special Virginia counsel to the Sponsor. Carter, Ledyard & Milburn, Two Wall
Street, New York, New York 10005 have acted as counsel for The Chase Manhattan
Bank. Messrs. Booth & Baron, 122 East 42nd Street, New York, New York 10168,
have acted as counsel for The Bank of New York.

Independent Accountants/Auditors. The financial statements of the
Trusts for the years ended December 31, 1999 included in Part A of this
Prospectus have been examined by Ernst & Young LLP, independent auditors. The
financial statements have been so included in reliance on their report given
upon the authority of said firm as experts in accounting and auditing.
PricewaterhouseCoopers LLP has consented to the incorporation by reference of
their report on the statements of operations changes in net assets and financial
highlights for the Trusts included in Part A of this Prospectus for the periods
ended December 31, 1997 and December 31, 1998, respectively.

Portfolio Supervisor. ING Mutual Funds Management Co. LLC, a Delaware
limited liability company, is a wholly-owned indirect subsidiary of ING Group
and is an affiliate of the Sponsor.

Performance Information. Total returns, average annualized returns or
cumulative returns for various periods of this Trust may be included from time
to time in advertisements, sales literature and reports to current or
prospective investors. Total return shows changes in Unit price during the
period plus reinvestment of dividends and capital gains, divided by

82600.12
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<PAGE>

the original public offering price as of the date of calculation. Average
annualized returns show the average return for stated periods of longer than a
year. Sales material may also include an illustration of the cumulative results
of like annual investments during an accumulation period and like annual
withdrawals during a distribution period. Figures for actual portfolios will
reflect all applicable expenses and, unless otherwise stated, the maximum sales
charge. No provision is made for any income taxes payable. Returns may also be
shown on a combined basis. Trust performance may be compared to performance on a
total return basis of the Dow Jones Industrial Average, the S&P 500 Composite
Price Stock Index, or performance data from Lipper Analytical Services, Inc. and
Morningstar Publications, Inc. or from publications such as Money, The New York
Times, U.S. News and World Report, Business Week, Forbes or Fortune. As with
other performance data, performance comparisons should not be considered
representative of a Trust's relative performance for any future period.

DESCRIPTION OF BOND RATINGS*

Standard & Poor's Ratings Services. A brief description of the
applicable Standard & Poor's Corporation rating symbols and their meanings is as
follows:

A Standard & Poor's corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to a specific debt
obligation. This assessment of creditworthiness may take into consideration
obligors such as guarantors, insurers, or lessees.

The bond rating is not a recommendation to purchase or sell a
security, inasmuch as it does not comment as to market price.

The ratings are based on current information furnished to Standard &
Poor's by the issuer and obtained by Standard & Poor's from other sources it
considers reliable. The ratings may be changed, suspended or withdrawn as a
result of changes in, or unavailability of, such information.

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

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

(ii)Nature of and provisions of the obligation.

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

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

- --------
* As described by the rating agencies.

82600.12
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<PAGE>

AA -- Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and they differ from AAA
issues only in small degrees.

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

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

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

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

Moody's Investors Service. A brief description of the applicable
Moody's Investors Service, Inc.'s rating symbols and their meanings is as
follows:

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

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

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<PAGE>

unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

Those bonds in the A and Baa group which Moody's believes possess the
strongest investment attributes are designated by the symbol A 1 and Baa 1.
Other A bonds comprise the balance of the group. These rankings (i) designate
the bonds which offer the maximum in security within their quality group, (ii)
designate bonds which can be bought for possible upgrading in quality and (iii)
additionally afford the investor an opportunity to gauge more precisely the
relative attractiveness of offerings in the market place.

Moody's applies numerical modifiers, 1, 2, and 3 in each generic
rating classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

Con-Bonds for which the security depends upon the completion of some
act or the fulfillment of some condition are rated conditionally. These are debt
obligations secured by (i) earnings of projects under construction, (ii)
earnings of projects unseasoned in operating experience, (iii) rentals which
begin when facilities are completed, or (iv) payments to which some other
limiting condition attaches. Rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.

NR: Indicates that no rating has been requested, that there is
insufficient information on which to base a rating or that S&P does not rate a
particular type of obligation as a matter of policy.

* * *

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<PAGE>

<TABLE>

INDEX * * *
-----
MUNICIPAL SECURITIES
Title Page TRUST
----- ----
MULTI-STATE SERIES
Summary of Essential Information........................... A-5
Financial and Statistical Information...................... A-6 (A Unit Investment
Information Regarding the Trust............................ A-7 Trust)
Audit and Financial Information............................ F-1
Prospectus
The Trust.................................................. 1
The State Trusts........................................... 8 Dated: April 30, 2000
Public Offering............................................ 36
Estimated Long Term Return and Estimated Sponsor:
Current Return........................................... 39
Rights of Certificateholders............................... 39 ING Funds Distributor,
Tax Status................................................. 42 Inc.
Liquidity.................................................. 47 1475 Dunwoody Drive
Trust Administration....................................... 49 West Chester, P.A.
Trust Expenses and Charges................................. 53 19380
Exchange Privilege and Conversion Offer.................... 54 1-877-463-6464
Other Matters.............................................. 56
Description of Bond Ratings................................ 58 Trustee:

Parts A and B of this Prospectus The Chase Manhattan
do not contain all of the information set forth Bank
in the registration statement and exhibits 4 New York Plaza
relating thereto, filed with the Securities and New York, N.Y. 10004
Exchange Commission, Washington, D.C., under the 800-882-9898
Securities Act of 1933, and to which reference is
made. (or for certain
Trusts)
The Bank of New York
101 Barclay Street
New York, N.Y. 10286
800-431-8002

Evaluator:

Kenny S&P Evaluation
Services
65 Broadway
New York, N.Y. 10006
</TABLE>

This Prospectus does not constitute an offer to sell, or a
solicitation of any offer to buy securities in any state to any person to whom
it is not lawful to make such offer in such state.

* * *

No person is authorized to give any information or to make any
representations not contained in Parts A and B of this Prospectus; and any
information or representation not contained herein must not be relied upon as
having been authorized by the Trust, the Trustee, the Evaluator, or the Sponsor.
The Trust is registered as a unit investment trust under the Investment Company
Act of 1940. Such registration does not imply that the Trust or any of its Units
have been guaranteed, sponsored, recommended or approved by the United States or
any state or any agency or officer thereof.

82600.12
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<PAGE>

PART II

ADDITIONAL INFORMATION NOT REQUIRED
IN PROSPECTUS

CONTENTS OF REGISTRATION STATEMENT

This Post-Effective Amendment to the Registration Statements on Form S-6
comprises the following papers and documents:

The facing sheet on Form S-6.
The Cross-Reference Sheet (incorporated by reference to the Post- Effective
Amendment to Form S-6 Registration Statement Nos. 2-73986 and 33-55996,
filed on April 25, 1996 and April 29, 1996, respectively.
The Prospectus consisting of pages.
Signatures.
Consent of Independent Accountants/Auditors.
Consent of Counsel (included in Exhibits 99.3.1 and 99.3.1.1).
Consent of the Evaluator (included in Exhibit 99.5.1).

The following exhibits:

99.1.1 -- Form of Reference Trust Agreement, as amended (filed as
Exhibit 99.1.1 to Post-Effective Amendment No. 8 to
Form S-6 Registration Statement No. 33-26426 on April
25, 1997; and as Exhibit 1.1 to Amendment No. 1 to Form
S-6 Registration Statements Nos. 33-52397 and 33-58167
of Municipal Securities Trust, Series 55 (Intermediate)
& Multi-State Series 45 and Multi-State Series 46 on
April 14, 1994 and April 6, 1995, respectively, and
incorporated herein by reference).

99.1.1.1 -- Trust Indenture and Agreement for Municipal Securities
Trust, Series 12 (and Subsequent Series) (filed as
Exhibit 99.1.1.1 to the Post-Effective Amendment to
Form S-6 Registration Statement No. 2-73986, on April
26, 1996 and incorporated herein by reference).

99.1.1.2 -- Trust Indenture and Agreement for Municipal Securities
Trust, Series 45 and 73rd Discount Series (and
Subsequent Series) (filed as Exhibit 99.1.1.1 to Post
Effective Amendment No. 6 to Form S-6 Registration
Statement No. 33-33606 of Municipal Securities Trust,
Multi-State Series 39 on April 26, 1996 and
incorporated herein by reference).

99.1.3.4 -- Articles of Incorporation and Articles of Amendment of
ING Funds Distributor, Inc. (filed as Exhibit 99.1.3.5
to Amendment No. 2 to Form S-6 Registration Statement
No. 333- 31048 on March 28, 2000 and incorporated
herein by reference).

99.1.3.5 -- By-Laws of ING Funds Distributor, Inc. (filed as
Exhibit 99.1.3.6 to Amendment No. 2 to Form S-6
Registration Statement No. 333-31048 on March 28, 2000
and incorporated herein by reference).

99.2.1 -- Form of Certificate dated June 16, 1989 (filed as
Exhibit 99.2.1 to Post-Effective Amendment No. 8 to
Form S-6

175584.1
II-1

<PAGE>

Registration No. 33-26426 on April 25, 1997 and filed
as Exhibit 99.2.1 to Post-Effective Amendment No. 7 to
Registration Statement Nos. 33-29313 and 33-30144 of
Municipal Securities Trust, Series 45 and Series 46 on
October 25, 1996 and incorporated herein by reference).

99.3.1 -- Form of Opinion of Berger Steingut & Stern as to the
legality of the securities being registered, including
their consent to the filing thereof and to the use of
their name under the headings "Tax Status" and "Legal
Opinions" in the Prospectus, and to the filing of their
opinion regarding tax status of the Trust (filed as
Exhibit 99.3.1 to Post-Effective Amendment No. 10 to
Form S-6 Registration Statement No. 33-10963 on April
28, 1997 and incorporated herein by reference) and
opinion of Battle Fowler LLP as to the legality of the
securities being registered, including their consent to
the delivery thereof and to the use of their name under
the headings "Tax Status" and "Legal Opinions" in the
Prospectus, and to the filing of their opinion
regarding the tax status (filed as Exhibit 3.1 to
Amendment No. 1 to Form S-6 Registration Statements
Nos. 33-52397 and 33-58167 of Municipal Securities
Trust, Multi-State Series 45 and Multi- State Series 46
on April 14, 1994 and April 6, 1995, respectively, and
incorporated herein by reference).

99.3.1.1 -- Opinion of Battle Fowler LLP as to tax status of
Securities being registered including their consent to
the delivery thereof and to the use of their name under
the heading "Tax Status" in the Prospectus (filed as
Exhibit 99.3.1.1 to Post- Effective Amendment No. 18 to
Form S-6 Registration Statement No. 33-62605 on April
28, 1997 and as Exhibit 3.1.1 to Post- Effective
Amendment No. 1 of Municipal Securities Trust,
Multi-State Series 43 (Long) on April 29, 1994 and
incorporated herein by reference).

99.3.3 -- Opinion of Brown & Wood as Special California Counsel
including their consent to the filing thereof and to
the use of their name in the Prospectus (filed as
Exhibit 99.3.3 to Amendment No. 1 to Registration
Statement No. 33-58167 of Municipal Securities Trust,
Multi-State Series 46, on April 6, 1995, and
incorporated herein by reference).

99.3.4 -- Opinion of Greenberg Traurig Special Florida Counsel
including their consent to the filing thereof and to
the use of their name in the Prospectus (filed as
Exhibit 99.3.4 to Amendment No. 1 to Registration
Statement No. 33-58167 of Municipal Securities Trust,
Multi-State Series 46, on April 6, 1995, and
incorporated herein by reference).

99.3.5 -- Form of Opinion of Hunton & Williams as Special
Virginia Counsel including their consent to the filing
thereof and to the use of their name in the Prospectus
(filed as Exhibit 3.5 to Post-Effective Amendment No. 4
to Registration Statement No. 33-55996 on April 28,
1997; and as Exhibits 3.3 and 3.5, respectively, to
Amendment No. 1 to Registration Statements Nos.
33-52397 and 33-58167 of Municipal Securities Trust,
Multi-State Series 45 and Multi-State Series 46 on
April 14,

175584.1
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<PAGE>

1994 and April 6, 1995, respectively, and incorporated
herein by reference).

*99.5.1 -- Consent of the Evaluator.

99.6.0 -- Powers of Attorney of ING Funds Distributor, Inc., by
its officers and a majority of its Directors (filed as
Exhibit 99.6.0 to Form S-6 Registration Statement No.
333-31048 on February 24, 2000 and incorporated herein
by reference).

- --------
* Being filed by this Amendment.

175584.1
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<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrants, Municipal Securities Trust, 1st Discount Series, Multi-State Series
43 (Long), Multi-State Series 45 and Multi-State Series 46 certify that they
have met all of the requirements for effectiveness of this Post-Effective
Amendment to the Registration Statements pursuant to Rule 485(b) under the
Securities Act of 1933. The registrants have duly caused this Post-Effective
Amendment to the Registration Statements to be signed on their behalf by the
undersigned, thereunto duly authorized, in the City of New York and State of New
York on the 19th day of April, 2000.

MUNICIPAL SECURITIES TRUST,
1ST DISCOUNT SERIES
MULTI-STATE SERIES 43
(LONG), MULTI-STATE SERIES 45 and
MULTI-STATE SERIES 46
(Registrants)

ING FUNDS DISTRIBUTOR, INC.
(Depositor)

By: /s/ PETER J. DeMARCO
Peter J. DeMarco
(Senior Vice President)

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statements has been signed below by
the following persons, who constitute the principal officers and a majority of
the directors of ING Funds Distributor, Inc., the Depositor, in the capacities
and on the dates indicated.

<S> <C> <C>
Name Title Date

JOHN J. PILEGGI Chief Executive Officer and Director )
MITCHELL J. MELLEN President and Director ) April 19, 2000
DONALD E. BROSTROM Chief Financial Officer, Treasurer )
and Director
ERIC M. RUBIN Director ) By:/s/ PETER J. DeMARCO
--------------------
Peter J. DeMarco
as Senior Vice
President and
Attorney-in-Fact*

</TABLE>

- --------

* Executed copies of Powers of Attorney were filed as Exhibit 99.6.0 to Form
S-6 Registration Statement No. 333-31048 on February 24, 2000.

175584.1
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<PAGE>

INDEPENDENT AUDITORS' CONSENT

We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated April 15, 2000, in the Registration Statement
and related Prospectus of Municipal Securities Trust, 1st Discount Series;
Municipal Securities Trust, Multi-State Series 43, Virginia Trust; Municipal
Securities Trust, Multi-State 45, Virginia Trust; and Municipal Securities
Trust, Multi-State Series 46 (comprising, respectively, the California Trust,
Florida Trust and Virginia Trust).

ERNST & YOUNG LLP

New York, New York
April 25, 2000

<PAGE>

Consent of Independent Accountants

We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Post-Effective Amendment to the registration statement
on Form S-6 of our report dated March 19, 1999, relating to the financial
statements and financial highlights for the two years ended December 31, 1998 of
the Municipal Securities Trust, 1st Discount Series; Municipal Securities Trust,
Multi-State Series 43, (Virginia Trust); Municipal Securities Trust, Multi-State
Series 45, (Virginia Trust); and Municipal Securities Trust, Multi-State Series
46, (California Trust, Florida Trust, Virginia Trust) which appear in such
Prospectus. We also consent to the reference to us under the heading
"Independent Accountants" in the Prospectus.

PricewaterhouseCoopers LLP
Boston, MA
April 24, 2000

175584.1
II-5

Standard & Poor's J.J. Kenny Frank A. Ciccotto, Jr.
55 Water Street, 45th Floor Senior Vice President and
New York, NY 10041 General Manager
Tel 212 438 4417/Office Evaluation Department
212 438 4422/Desk
Fax 212 438 7747
[email protected] Standard & Poor's
A Division of The McGraw Hill Companies

April 28, 2000

ING Funds Distributors, Inc.
230 Park Avenue
New York, NY 10169

Re: Municipal Securities Trust,
1st Discount Series

Gentlemen:

We have examined the post-effective Amendment to the Registration Statement
File No. 2-73986 for the above-captioned trust. We hereby acknowledge that Kenny
S&P Evaluation Services, a division of J.J. Kenny Co., Inc. is currently acting
as the evaluator for the trust. We hereby consent to the use in the Amendment of
the reference to Kenny S&P Evaluation Services, a division of J.J. Kenny Co.,
Inc. as evaluator.

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

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

Sincerely,

Frank A. Ciccotto

FAC/trh

<PAGE>

April 28, 2000

ING Funds Distributors, Inc.
230 Park Avenue
New York, NY 10169

Re: Municipal Securities Trust,
Multi-State Series 43 Long (VA)

Gentlemen:

We have examined the post-effective Amendment to the Registration Statement
File No. 33-55996 for the above-captioned trust. We hereby acknowledge that
Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc. is currently
acting as the evaluator for the trust. We hereby consent to the use in the
Amendment of the reference to Kenny S&P Evaluation Services, a division of J.J.
Kenny Co., Inc. as evaluator.

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

Sincerely,

Frank A. Ciccotto

FAC/trh

<PAGE>

April 28, 2000

ING Funds Distributors, Inc.
230 Park Avenue
New York, NY 10169

Re: Municipal Securities Trust,
Multi-State Series 45 (VA)

Gentlemen:

We have examined the post-effective Amendment to the Registration Statement
File No. 33-52829 for the above-captioned trust. We hereby acknowledge that
Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc. is currently
acting as the evaluator for the trust. We hereby consent to the use in the
Amendment of the reference to Kenny S&P Evaluation Services, a division of J.J.
Kenny Co., Inc. as evaluator.

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

Sincerely,

Frank A. Ciccotto

FAC/trh

<PAGE>

April 28, 2000

ING Funds Distributors, Inc.
230 Park Avenue
New York, NY 10169

Re: Municipal Securities Trust,
Multi-State Series 46(CA, FL, VA)

Gentlemen:

We have examined the post-effective Amendment to the Registration Statement
File No. 33-58167 for the above-captioned trust. We hereby acknowledge that
Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc. is currently
acting as the evaluator for the trust. We hereby consent to the use in the
Amendment of the reference to Kenny S&P Evaluation Services, a division of J.J.
Kenny Co., Inc. as evaluator.

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

Sincerely,

Frank A. Ciccotto

FAC/trh

<PAGE>