MUNICIPAL SECURITIES TRUST MULTI STATE SERIES 15, 485BPOS, 1995-10-26

MUNICIPAL SECURITIES TRUST MULTI STATE SERIES 15
485BPOS, 1995-10-26

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As filed with the Securities and Exchange Commission on October 26, 1995

Registration No. 2-98184*

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,
MULTI-STATE SERIES 15,
MULTI-STATE SERIES 18
and MULTI-STATE SERIES 24

B. Name of depositor:

REICH & TANG DISTRIBUTORS L.P.

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

600 Fifth Avenue
New York, New York 10020

D. Name and complete address of agent for service:

PETER J. DeMARCO Copy of comments to:
Executive Senior MICHAEL R. ROSELLA, ESQ.
Vice President Battle Fowler LLP
Reich & Tang 75 East 55th Street
Distributors L.P. New York, NY 10022
600 Fifth Avenue (212) 856-6858
New York, NY 10020

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

/ / immediately upon filing pursuant to paragraph (b) of Rule 485.

/x/ on (October 31, 1995) pursuant to paragraph (b) of Rule 485.

/ / 60 days after filing pursuant to paragraph (a) of Rule 485.

/ / on ( date ) pursuant to paragraph (a) of Rule 485.

* The Prospectus included in this Registration Statement constitutes a
combined Prospectus as permitted by the provisions of Rule 429 of the
General Rules and Regulations under the Securities Act of 1933. Said
Prospectus covers units of undivided interest in Municipal Securities
Trust, Multi-State Series 15, Multi- State Series 18 and Multi-State Series
24 covered by prospectuses heretofore filed as part of separate
registration statements on Form S-6 (Registration Nos. 2-98184, 33-01565
and 33-06866, respectively) under the Securities Act. This filing
constitutes Post-Effective Amendment No. 10 for each of Multi-State Series
15 and 18 and Post-Effective Amendment No. 9 for Multi-State Series 24.

1718.1
MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 15,
MULTI-STATE SERIES 18,
MULTI-STATE SERIES 24

CROSS-REFERENCE SHEET

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

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

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

I. Organization and General Information

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

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

10. (a) Registered or bearer
securities...................... Certificates
(b) Cumulative or distributive
securities...................... Interest and Principal Distributions
(c) Redemption...................... Trustee Redemption
(d) Conversion, transfer, etc....... Certificates, Sponsor Repurchase,
Trustee Redemption, Exchange
Privilege and Conversion Offer
(e) Periodic payment plan........... Not Applicable
(f) Voting rights................... Trust Agreement, Amendment and
Termination
(g) Notice to certificateholders.... Records, Portfolio, Trust Agreement,
Amendment and Termination, The
Sponsor, The Trustee
(h) Consents required............... Trust Agreement, Amendment and
Termination
(i) Other provisions................ Tax Status
11. Type of securities
comprising units.................. Objectives, Portfolio, Description
of Portfolio
12. Certain information regarding
periodic payment certificates..... Not Applicable

-i-
984.1

<PAGE>

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

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

III. Organization, Personnel and Affiliated Persons of Depositor

25. Organization of depositor........... The Sponsor
26. Fees received by depositor.......... Not Applicable
27. Business of depositor............... The Sponsor

-ii-
984.1

<PAGE>

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

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

IV. Distribution and Redemption of Securities

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

-iii-
984.1

<PAGE>

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

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

V. Information Concerning the Trustee or Custodian

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

VI. Information Concerning Insurance of Holders of Securities

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

VII. Policy of Registrant

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

VIII. Financial and Statistical Information

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

-iv-
984.1

<PAGE>

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

MUNICIPAL SECURITIES TRUST

MULTI-STATE SERIES 15
(MULTIPLIER PORTFOLIO)

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

The Trust consists of one separate unit investment trust
designated Pennsylvania 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 (including where applicable earned original discount) under
existing law. In addition, in the opinion of counsel to the Sponsor, the
interest income of the State Trust is exempt, to the extent indicated, from
state and local taxes when held by residents of the state where the issuers of
bonds in such State Trust are located. Such interest income may, however, be a
specific preference item for purposes of Federal individual and/or corporate
alternative minimum tax. Investors may recognize taxable capital gain or
ordinary income, to the extent of accrued market discount, upon maturity or
the earlier receipt of principal payments with respect to the bonds. (See "Tax
Status" and "The Portfolios--General.") The Sponsor is Reich & Tang
Distributors L.P. (successor Sponsor to Bear, Stearns & Co. 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 State
Trust as of June 30, 1995 (the "Evaluation Date"), a summary of certain
specific information regarding the State Trust and audited financial
statements of the State Trust, including the related portfolio, as of the
Evaluation Date. Part B of this Prospectus contains a general summary of the
State Trust.

Investors Should Read and Retain Both Parts
of This Prospectus for Future Reference.

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

Principal Secondary Market
Number of Amount of Offering Price
Units Bonds per Unit (6/30/95)

Pennsylvania Trust 1,383 $227,000 $128.17

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

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

Prospectus Part A Dated October 31, 1995

82492.1

<PAGE>

THE TRUST. The Trust consists of one separate unit investment
trust designated Pennsylvania Trust (the "State Trust"). The State Trust has
been formed to preserve capital and to provide interest income (including,
where applicable, earned original issue discount) which, in the opinions of
bond counsel to the respective issuers, is, with certain exceptions, currently
exempt from regular federal income tax under existing law through investment
in a fixed, diversified portfolio of long-term 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. A Trust designated as a short/intermediate-term
trust must have a dollar-weighted average portfolio maturity of more than two
years but less than five years; a Trust designated as an intermediate-term
trust must have a dollar-weighted average portfolio maturity of more than
three years but not more than ten years; a Trust designated as an
intermediate/long-term trust must have a dollar-weighted average portfolio
maturity of more than ten years but less than fifteen years; and a Trust
designated as a long-term trust must have a dollar-weighted average portfolio
maturity of more than ten years. Although the Supreme Court has determined
that Congress has the authority to subject interest on bonds such as the Bonds
in the Trust to regular federal income taxation, existing law excludes such
interest from federal income tax. In addition, in the opinion of counsel to
the Sponsor, the interest income of the 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 corporate alternative minimum
tax and to state and local taxes in other jurisdictions. (See "Description of
Portfolio" in this Part A for a description of those Bonds which pay interest
income subject to the federal individual alternative minimum tax. See also
"Tax Status" in Part B of this Prospectus.) The State Trust contains bonds
that 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 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. All of the Bonds in
the State Trust were rated "A" or better by Standard & Poor's Corporation or
Moody's Investors Service, Inc. at the time originally deposited in the State
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". 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. There can be no assurance

A-2
82492.1

<PAGE>

that the Trust's investment objectives will be achieved. Investment in the
Trust should be made with an understanding of the risks which an investment in
long-term fixed rate debt obligations may entail, including the risk that the
value of the underlying portfolio will decline with increases in interest
rates, and that the value of Zero Coupon Bonds is subject to greater
fluctuation than coupon bonds in response to such changes in interest rates.
Each Unit represents a fractional undivided interest in the principal and net
income of the State Trust. The principal amount of Bonds deposited in such
State Trust per Unit is reflected in the Summary of Essential Information. The
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.

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 5.82% of
the Public Offering Price, or 6.179% of the net amount invested in Bonds per
Unit. The sales charge for secondary market purchases is based upon the number
of years remaining to maturity of each bond in the Trust's portfolio. (See
"Public Offering" in Part B of this Prospectus.) In addition, accrued interest
to the expected date of settlement is added to the Public Offering Price. If
Units of the Pennsylvania Trust had been purchased on the Evaluation Date, the
Public Offering Price per Unit would have been $135.63 plus accrued interest
of $8.38 under the monthly distribution plan, $8.80 under the semi-annual
distribution plan and $13.68 under the annual distribution plan, for a total
of $144.01, $144.43 and $149.31, 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 previously described under "Public Offering Price") as
distinguished from a "yield price" basis often used in offerings of tax exempt
bonds (involving the lesser of the yield as computed to maturity of bonds or
to an earlier redemption date). Since they are offered on a dollar price
basis, the rate of return on an investment in Units of each Trust is measured
in terms of "Estimated Current Return" and "Estimated Long Term Return".

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

A-3
82492.1

<PAGE>

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 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.")

SPECIAL FACTORS CONCERNING THE TRUST PORTFOLIO. In March 1992 the
Sponsor notified unitholders of certain events of default reported by the
Trustee for the Delaware County, Pennsylvania, Authority Sacred Heart Medical
Center Hospital Revenue Bonds Refunding Series of 1985 (the "Bonds"), the
Trustee's acceleration of the Bonds, and the formation of an unofficial
bondholder committee.

In October 1992 the Sponsor notified unitholders of additional
developments reported by the Bond Trustee, including the filing of a
bankruptcy petition, the sale of the Medical Center to Crozer-Keystone Health
System, and certain distributions to bondholders. These distributions to
bondholders came from proceeds of the sale of the Medical Center, from sums
held in Medical Center bank accounts and from partial collection of accounts
receivable, all of which were subject to the lien of the Bond Indenture.

Recently the Bond Trustee notified the Sponsor of the U.S.
Bankruptcy Court's confirmation of the Medical Center's Modified Second
Amended Liquidation Plan of Reorganization and of the availability of
additional funds for distribution to Bondholders.

In particular, on February 4, 1994, the Bond Trustee distributed
$400,000 to bondholders. This sum was generated from asset sales and the
collection of Medical Center receivables, after payment of certain expenses,
administrative and priority claims, and unsecured creditor settlements, all as
provided in the Medical Center's Reorganization Plan.

To date and including the February 1994 distribution, the Bond
Trustee has distributed to bondholders an amount equal to 45.5% of the

A-4
82492.1

<PAGE>

outstanding principal of, and accrued unpaid interest on, the Bonds up to the
date of acceleration, November 18, 1991.

The Medical Center has submitted expense reimbursement claims to
the Federal Medicare Program, to the Pennsylvania Medicaid Program, and to
Independence Blue Cross of Philadelphia. The Medical Center has received a
small portion of the allowed claims to date, and it expects to receive
additional payments in 1994 and 1995. It is impossible to predict with any
certainty the amount and timing of additional distributions to bondholders
from these or other sources.

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 5.82% of the Public Offering Price (6.179% 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
and annual plans of distribution have the opportunity to have all their
regular interest distributions, and principal distributions, if any,
reinvested in available series of "Insured Municipal Securities Trust" or
"Municipal Securities Trust." (See "Total Reinvestment Plan" in Part B of this
Prospectus. Residents of Texas, see "Total Reinvestment Plan for Texas
Residents" in Part B of this Prospectus.) The Plan is not designed to be a
complete investment program.

For additional information regarding the Public Offering Price and
Estimated Current Return and Estimated Long Term Return for Units of the State
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 State Trust on
the immediately succeeding page.

A-5
82492.1

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 15

PENNSYLVANIA TRUST

SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1995

Date of Deposit: August 8, 1985 Minimum Principal Distribution:
Principal Amount of Bonds ... $227,000 $1.00 per Unit.
Number of Units ............. 1,383 Weighted Average Life
Fractional Undivided Inter- to Maturity: 20 Years.
est in Trust per Unit ..... 1/1383 Minimum Value of Trust:
Principal Amount of Trust may be terminated if value
Bonds per Unit ............ $164.14 of Trust is less than $800,000
Secondary Market Public in principal amount of Bonds.
Offering Price** Mandatory Termination Date:
Aggregate Bid Price The earlier of December 31, 2034
of Bonds in Trust ....... $177,254+++ or the disposition of the last
Divided by 1,383 Units .... $128.17 Bond in the Trust.
Plus Sales Charge of 5.82% Trustee***: Chase Manhattan Bank,
of Public Offering Price $7.46 N.A.
Public Offering Price Trustee's Annual Fee: Monthly
per Unit ................ $135.63+ plan $1.02 per $1,000; semi-
Redemption and Sponsor's annual plan $.54 per $1,000; and
Repurchase Price annual plan is $.35 per $1,000.
per Unit .................. $128.17+ Evaluator: Kenny S&P Evaluation
+++ Services.
++++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $12 plus
Public Offering Price $.25 per each issue of Bonds in
over Redemption and excess of 50 issues (treating
Sponsor's Repurchase separate maturities as separate
Price per Unit ............ $7.46++++ issues).
Difference between Public Sponsor: Reich & Tang
Offering Price per Unit Distributors L.P.
and Principal Amount per Sponsor's Annual Fee: Maximum of
Unit Premium/(Discount) ... $(28.51) $.15 per $1,000 principal amount
Evaluation Time: 4:00 p.m. of Bonds (see "Trust Expenses
New York Time. and Charges" in Part B of this
Prospectus).

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# ......... $11.86 $11.86 $11.86
Less estimated annual fees and
expenses ............................ 1.41 1.18 1.14
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $10.45 $10.68 $10.72
Estimated interest distribution# ...... .87 5.34 10.72
Estimated daily interest accrual# ..... .0290 .0296 .0297
Estimated current return#++ ........... 7.70% 7.87% 7.90%
Estimated long term return ++ ......... 2.62% 2.79% 2.81%
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-6
82492.1

<PAGE>

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

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

*** The Trustee maintains its corporate office at 770 Broadway, New York,
New York 10003 (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 five
business days after purchase) of $8.38 monthly, $8.80 semi-annually and
$13.68 annually for the Pennsylvania 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.

A-7
82492.1

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF JUNE 30, 1995

DESCRIPTION OF PORTFOLIO*

Pennsylvania Trust

Each Unit in the Pennsylvania Trust consists of a 1/1383rd
undivided interest in the principal and net income of the Trust in the ratio
of one Unit for each $164.14 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 initial aggregate principal amount of the Bonds were acquired. The
portfolio of the Pennsylvania Trust consists of 2 issues of 2 issuers located
in Pennsylvania. None of the Bonds are obligations of state and local housing
authorities; approximately 22.9% are hospital revenue bonds; and none were
issued in connection with the financing of nuclear generating facilities. None
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
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. Two
issues representing $227,000 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: Hospital 1 and Industrial Development 1. For an explanation
of the significance of these factors see "The State Trusts--Portfolios" in
PartB of this Prospectus.

As of June 30, 1995, none of the aggregate principal amount of the
Bonds were original issue discount bonds. Approximately 77% of the aggregate
principal amount of the Bonds in the Trust were purchased at a "market"
discount from par value at maturity, approximately 23% 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 Pennsylvania 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 July 1, 1995 to September 15,
1995, the entire principal amount of the Bond in portfolio no. 2 has
been called for redemption pursuant to pre-refunding provisions and is
no longer contained in the Trust. 52 Units have been redeemed.

A-8
82492.1

<PAGE>

FINANCIAL AND STATISTICAL INFORMATION

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

Pennsylvania Trust

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

June 30, 1993 1,764 $300.47 $28.62 $29.00 $29.96 $ 71.97
June 30, 1994 1,564 127.84 12.30 12.62 23.24 173.64
June 30, 1995 1,383 133.25 9.29 9.56 8.78 15.32

- --------
* 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-9
82492.1

<PAGE>

Independent Auditors' Report

The Sponsor, Trustee and Certificateholders
Municipal Securities Trust, Multi-State Series 15:

We have audited the accompanying statement of net assets, including the
portfolio, of Municipal Securities Trust, Multi-State Series 15, Pennsylvania
Trust as of June 30, 1995, and the related statements of operations, and
changes in net assets for each of the years in the three year period then
ended. These financial statements are the responsibility of the Trustee (see
note 2). Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of June 30, 1995, by
correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Municipal Securities Trust,
Multi-State Series 15 as of June 30, 1995, and the results of their operations
and the changes in its net assets for each of the years in the three year
period then ended, in conformity with generally accepted accounting
principles.

KPMG Peat Marwick LLP

New York, New York
September 15, 1995
except as to Note 7 as to
which the date is
September 28, 1995

<PAGE>

Statement of Net Assets

June 30, 1995

Investments in marketable securities,
at market value (cost $223,192) $ 184,976

Excess of other assets over total liabilities (696)
---------

Net assets 1,383 units of fractional undivided
interest outstanding, $133.25 per unit) $ 184,280
=========

See accompanying notes to financial statements.

<PAGE>

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 15

PENNSYLVANIA TRUST

Statements of Operations

Years ended June 30,
-------- ---- -------- ---- --------
-------- -------- --------
1995 1994 1993
-------- -------- --------

Investment income - interest $ 16,406 22,025 54,498
-------- -------- --------

Expenses:
Trustee's fees 949 712 2,818
Evaluator's fees 1,099 1,194 1,057
Sponsor's advisory fee 43 89 255
-------- -------- --------

Total expenses 2,091 1,995 4,130
-------- -------- --------

Investment income, net 14,315 20,030 50,368
-------- -------- --------

Realized and unrealized gain (loss) on investments:
Net realized gain (loss) loss
on bonds sold or called 942 (6,408) (4,076)
Unrealized appreciation
(depreciation) for the year 30,859 9,620 (28,362)
-------- -------- --------

Net gain (loss)
on investments 31,801 3,212 (32,438)
-------- -------- --------

Net increase in net
assets resulting
from operations $ 46,116 23,242 17,930
======== ======== ========

See accompanying notes to financial statements.

<PAGE>

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 15

PENNSYLVANIA TRUST

Statements of Changes in Net Assets

Years ended June 30,
--------- -- --------- -- ---------
--------- --------- ---------
1995 1994 1993
--------- --------- ---------

Operations:
Investment income, net $ 14,315 20,030 50,368
Net realized gain (loss) on
bonds sold or called 942 (6,408) (4,076)
Unrealized appreciation
(depreciation) for the year 30,859 9,620 (28,362)
--------- --------- ---------

Net increase in net
assets resulting
from operations 46,116 23,242 17,930
--------- --------- ---------

Distributions:
To Certificateholders:
Investment income 14,106 22,293 51,206
Principal 22,980 306,301 123,525

Redemptions:
Interest 1,649 1,658 2,229
Principal 23,038 24,132 43,563
--------- --------- ---------

Total distributions
and redemptions 61,773 354,384 220,523
--------- --------- ---------

Total decrease (15,657) (331,142) (202,593)

Net assets at beginning of year 199,937 531,079 733,672
--------- --------- ---------

Net assets at end of year (including
undistributed net investment
income of $7,026, $8,466 and
$12,387, respectively) $ 184,280 199,937 531,079
========= ========= =========

See accompanying notes to financial statements.

<PAGE>

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 15

Notes to Financial Statements

June 30, 1995, 1994 and 1993

(1) Organization and Financial and Statistical Information

Municipal Securities Trust, Multi-State Series 15 (Trust) was organized on
August 8, 1985 (date of deposit) by Bear, Stearns & Co. Inc. (Sponsor) under
the laws of the State of New York by a Trust Indenture and Agreement, and is
registered under the Investment Company Act of 1940.

(2) Summary of Significant Accounting Policies

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

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

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

(3) Income Taxes

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

(Continued)

<PAGE>

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 15

Notes to Financial Statements

(4) Trust Administration

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

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

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

The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. 181, 200 and 120 units were during the years ended June 30, 1995,
1994 and 1993, respectively.

See "Financial and Statistical Information" in Part A of this Prospectus for
the amounts of per unit distributions during the years ended June 30, 1995,
1994 and 1993.

(Continued)
<PAGE>

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 15

Notes to Financial Statements

(5) Net Assets

At June 30, 1991, the net assets of the Trust represented the interests of
Certificateholders as follows:

Original cost to Certificateholders $ 1,184,946
Less initial gross
underwriting commission (65,180)
-----------
1,119,766

Cost of securities sold or called (896,574)
Net unrealized appreciation (depreciation) (38,216)
Undistributed net investment income 7,026
Undistributed proceeds from bonds sold or (7,722)
Total $ 184,280

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 units of fractional undivided interest as of
the date of deposit.

The New York and Pennsylvania Trusts did not have any accumulated accretion of
the original discount for the year ended June 30, 1995.

(6) Successor Trustee

Effective September 2, 1995, United States Trust Company of New York
was merged into Chase Manhatten Bank (National Association) ("Chase").
Accordingly, Chase is the successor trustee of the unit investment trusts
sponsored by Bear Stearns and Co.

(7) Successor Sponsor

Effective September 28, 1995, Reich & Tang Distributors L.P. ("Reich
& Tang") has become the successor sponsor (the "Sponsor") to certain of the
unit investments trusts previously sponsored by Bear, Stearns & Co. Inc. As
successor Sponsor, Reich & Tang has assumed all of the obligations and rights
of Bear, Stearns & Co. Inc., the previous sponsor.
<PAGE>

<TABLE>
MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 15
PENNSYLVANIA TRUST
Portfolio
June 30, 1995

<CAPTION>
Port- Aggregate Coupon Rate/ Redemption Feature
folio Principal Name of Issuer Ratings Date(s) of S.F.--Sinking Fund Market
No. Amount and Title of Bonds (1) Maturity(2) Ref.--Refunding(2)(8) Value(3)
- -- ---------- ------------------------------ ------- ------------------ ---------------------- ----------

<C> <C> <C> <C> <C> <C> <C>
1 $ 52,000 Delaware County Authority D 9.750% 9/01/2011 9/01/00 @ 100 S.F. $ 5,720
Delaware County, Pennsylvania 9/01/95 @ 102 Ref.
Hospital Revenue Bonds,
Refunding Series of 1985
(Sacred Heart Medical
Center)(7)

2 175,000 Lehigh County Industrial A2* 9.375 7/01/2015 No Sinking Fund 179,256
Development Authority Pollution 7/01/95 @ 102 Ref.
Control Revenue Bonds, 1985
Series A (Pennsylvania Power &
----------
Light Company Project)
----------

$ 227,000 $ 184,976
========== ==========
</TABLE>

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 15

Footnotes to Portfolio

June 30, 1995

(1) All ratings are by Standard & Poor's Corporation, except for those
identified by an asterisk (*) which are by Moody's Investors Service, Inc. A
brief description of the ratings symbols and their meanings is set forth under
"Description of Bond Ratings" in Part B of this Prospectus.

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

(3) At June 30, 1995, the net unrealized depreciation of all the bonds was
comprised of the following:

Gross unrealized appreciation $ 8,194
Gross unrealized depreciation (46,410)
Net unrealized appreciation (depreciation) $ (38,216)

(4) The annual interest income, based upon bonds held at June 30, 1995, to the
Municipal Securities Trust, Multi-State Series 15 is $16,406 for.

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

(6) Bonds sold or called after June 30, 1995 are noted in a footnote "Changes
in Trust Portfolio" under "Description of Portfolio" in Part A of this
Prospectus.

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

(8) Bond # 1 is currently in default as to scheduled payments of principal and
interest and, accordingly, is considered to be non-income producing.

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

<PAGE>

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

MUNICIPAL SECURITIES TRUST

MULTI-STATE SERIES 18
(MULTIPLIER PORTFOLIO)

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

The Trust consists of one separate unit investment trust
designated New York 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 (including where applicable earned original discount) under
existing law. In addition, in the opinion of counsel to the Sponsor, the
interest income of the State Trust is exempt, to the extent indicated, from
state and local taxes when held by residents of the state where the issuers of
bonds in such State Trust are located. Such interest income may, however, be a
specific preference item for purposes of Federal individual and/or corporate
alternative minimum tax. Investors may recognize taxable capital gain or
ordinary income, to the extent of accrued market discount, upon maturity or
the earlier receipt of principal payments with respect to the bonds. (See "Tax
Status" and "The Portfolios--General.") The Sponsor is Reich & Tang
Distributors L.P. (successor Sponsor to Bear, Stearns & Co. Inc.). The value
of the Units of the Trust will fluctuate with the value of the underlying
bonds. Minimum purchase: 1 Unit.

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

Investors Should Read and Retain Both Parts
of This Prospectus for Future Reference.

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

Principal Secondary Market
Number of Amount of Offering Price
Units Bonds per Unit (6/30/95)

New York Trust 5,247 $1,625,000 $311.72
- ------------------------------------------------------------------------------

Prospectus Part A Dated October 31, 1995

82484.1

<PAGE>

THE TRUST. The Trust consists of one separate unit investment
trust designated New York Trust (the "State Trust"). The State Trust has been
formed to preserve capital and to provide interest income (including, where
applicable, earned original issue discount) which, in the opinions of bond
counsel to the respective issuers, is, with certain exceptions, currently
exempt from regular federal income tax under existing law through investment
in a fixed, diversified portfolio of long-term 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. A Trust designated as a short/intermediate-term
trust must have a dollar-weighted average portfolio maturity of more than two
years but less than five years; a Trust designated as an intermediate-term
trust must have a dollar-weighted average portfolio maturity of more than
three years but not more than ten years; a Trust designated as an
intermediate/long-term trust must have a dollar-weighted average portfolio
maturity of more than ten years but less than fifteen years; and a Trust
designated as a long-term trust must have a dollar-weighted average portfolio
maturity of more than ten years. Although the Supreme Court has determined
that Congress has the authority to subject interest on bonds such as the Bonds
in the Trust to regular federal income taxation, existing law excludes such
interest from federal income tax. In addition, in the opinion of counsel to
the Sponsor, the interest income of the 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 corporate alternative minimum
tax and to state and local taxes in other jurisdictions. (See "Description of
Portfolio" in this Part A for a description of those Bonds which pay interest
income subject to the federal individual alternative minimum tax. See also
"Tax Status" in Part B of this Prospectus.) The State Trust contains bonds
that 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 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. All of the Bonds in
the State Trust were rated "A" or better by Standard & Poor's 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". 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.
There can be no assurance that the Trust's investment objectives will be

A-2
82484.1

<PAGE>

achieved. Investment in the Trust should be made with an understanding of the
risks which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline
with increases in interest rates, and that the value of Zero Coupon Bonds is
subject to greater fluctuation than coupon bonds in response to such changes
in interest rates. Each Unit represents a fractional undivided interest in the
principal and net income of the State Trust. The principal amount of Bonds
deposited in such State Trust per Unit is reflected in the Summary of
Essential Information. The 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.

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 3.187% of
the Public Offering Price, or 3.291% of the net amount invested in Bonds per
Unit. The sales charge for secondary market purchases is based upon the number
of years remaining to maturity of each bond in the Trust's portfolio. (See
"Public Offering" in Part B of this Prospectus.) In addition, accrued interest
to the expected date of settlement is added to the Public Offering Price. If
Units of the New York Trust had been purchased on the Evaluation Date, the
Public Offering Price per Unit would have been $321.65 plus accrued interest
of $7.67 under the monthly distribution plan, $9.74 under the semi-annual
distribution plan and $23.88 under the annual distribution plan, for a total
of $329.32, $331.39 and $345.53, 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.)

A-3
82484.1

<PAGE>

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.

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

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 3.187% of the Public Offering Price (3.291% 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.)

A-4
82484.1

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 18

NEW YORK TRUST

SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1995

Date of Deposit: December 5, 1985 Minimum Principal Distribution:
Principal Amount of Bonds ... $1,625,000 $1.00 per Unit.
Number of Units ............. 5,247 Weighted Average Life
Fractional Undivided Inter- to Maturity: 13.5 Years.
est in Trust per Unit ..... 1/5247 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $309.70 value of Trust is less than
Secondary Market Public $2,400,000 in principal amount
Offering Price** of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust ....... $1,635,601+++ The earlier of December 31,
Divided by 5,247 Units .... $311.72 2034 or the disposition of the
Plus Sales Charge of 3.187% last Bond in the Trust.
of Public Offering Price $9.93 Trustee***: Chase Manhattan
Public Offering Price Bank, N.A.
per Unit ................ $321.65+ Trustee's Annual Fee: Monthly
Redemption and Sponsor's plan $1.02 per $1,000; semi-
Repurchase Price annual plan $.54 per $1,000;
per Unit .................. $311.72+ and annual plan is $.35 per
+++ $1,000.
++++ Evaluator: Kenny S&P Evaluation
Excess of Secondary Market Services.
Public Offering Price Evaluator's Fee for Each
over Redemption and Evaluation: Minimum of $12
Sponsor's Repurchase plus $.25 per each issue of
Price per Unit ............ $9.93++++ Bonds in excess of 50 issues
Difference between Public (treating separate maturities
Offering Price per Unit as separate issues).
and Principal Amount per Sponsor: Reich & Tang
Unit Premium/(Discount) ... $11.95 Distributors L.P.
Evaluation Time: 4:00 p.m. Sponsor's Annual Fee: Maximum of
New York Time. $.15 per $1,000 principal
amount of Bonds (see "Trust
Expenses and Charges" in Part B
of this Prospectus).

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# ......... $27.83 $27.83 $27.83
Less estimated annual fees and
expenses ............................ .96 .69 .63
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $26.87 $27.14 $27.20
Estimated interest distribution# ...... 2.23 13.57 27.20
Estimated daily interest accrual# ..... .0746 .0753 .0755
Estimated current return#++ ........... 8.35% 8.44% 8.46%
Estimated long term return ++ ......... 3.32% 3.42% 3.44%
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
82484.1

<PAGE>

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

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

+ Plus accrued interest to expected date of settlement (approximately five
business days after purchase) of $7.67 monthly, $9.74 semi-annually and
$23.88 annually for the New York 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.

A-6
82484.1

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF JUNE 30, 1995

DESCRIPTION OF PORTFOLIO*

New York Trust

Each Unit in the New York Trust consists of a 1/5247th undivided
interest in the principal and net income of the Trust in the ratio of one Unit
for each $309.70 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 New York
Trust consists of 6 issues located in New York. None of the Bonds are
obligations of state and local housing authorities; approximately 15.4% are
hospital revenue bonds; and none were issued in connection with the financing
of nuclear generating facilities. One issue comprising approximately 6.2% of
the aggregate principal amount of the Bonds is a mortgage subsidy bond. All of
the Bonds are subject to redemption prior to their stated maturity dates
pursuant to sinking fund or call provisions. The Bonds may also be subject to
other calls, which may be permitted or required by events which cannot be
predicted (such as destruction, condemnation, termination of a contract, or
receipt of excess or unanticipated revenues). None of the Bonds are general
obligation bonds. Six issues representing $1,625,000 of the principal amount
of the Bonds are payable from the income of a specific project or authority
and are not supported by the issuer's power to levy taxes. The portfolio is
divided for purpose of issue as follows: Convention Center 1, Correctional
Facilities 1, Electric 1, Hospital 1, Pollution Control 1 and Housing 1. For
an explanation of the significance of these factors see "The State
Trusts--Portfolios" in Part B of this Prospectus.

As of June 30, 1995, none of the Bonds were original issue
discount bonds nor Zero Coupon Bonds. Approximately 21.5% of the aggregate
principal amount of the Bonds in the Trust were purchased at a "market"
discount from par value at maturity, approximately 63.1% were purchased at a
premium and approximately 15.4% 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 New York 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 July 1, 1995 to September 15, 1995,
the entire principal amounts of the Bonds in portfolio nos. 2 and 6 have
been called for redemption pursuant to pre-refunding provisions and are
no longer contained in the Trust.

A-7
82484.1

<PAGE>

FINANCIAL AND STATISTICAL INFORMATION

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

New York Trust

June 30, 1993 5,950 $577.17 $46.64 $47.26 $47.52 $15.77
June 30, 1994 5,605 452.09 40.38 40.78 44.65 99.26
June 30, 1995 5,247 322.60 31.80 32.18 38.02 112.78

A-8
82484.1

<PAGE>
Independent Auditors' Report

The Sponsor, Trustee and Certificateholders
Municipal Securities Trust, Multi-State Series 18:

We have audited the accompanying statements of net assets, including the
portfolios, of Municipal Securities Trust, Multi-State Series 18, New York
Trust as of June 30, 1995, and the related statements of operations, and
changes in net assets for each of the years in the three year period then
ended. These financial statements are the responsibility of the Trustee (see
note 2). Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the trust constituting the
Municipal Securities Trust, Multi-State Series 18 as of June 30, 1995, and the
results of their operations and the changes in their net assets for each of
the years in the three year period then ended, in conformity with generally
accepted accounting principles.

KPMG Peat Marwick LLP

New York, New York
September 15, 1995
except as to Note 7 as to
which the date is
September 28, 1995

<PAGE>

Statement of Net Assets

June 30, 1995

Investments in marketable securities,
at market value (cost $1,635,915) $ 1,682,446
----------

Accrued Interest 55,432
Cash --
----------
Other Assets 55,432

Accrued Expenses 1,635
Advance from Trustee 43,569
----------
45,204
----------

Excess of other assets over total liabilities 10,228
-----------

Net assets 5,247 units of fractional undivided
interest outstanding, $322.60 per unit) $ 1,692,674
===========

See accompanying notes to financial statements.

<PAGE>

<TABLE>
MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 18

NEW YORK TRUST

Statements of Operations

<CAPTION>
Years ended June 30,
-------- ---- ---------- ---- --------
-------- ---------- --------
1995 1994 1993
-------- ---------- --------

<S> <C> <C> <C>
Investment income - interest $ 175,922 239,933 294,688
-------- ---------- --------

Expenses:
Trustee's fees 5,404 4,563 6,236
Evaluator's fees 1,095 1,106 1,057
Sponsor's advisory fees 389 656 885
-------- ---------- --------

Total expenses 6,888 6,325 8,178
-------- ---------- --------

Investment income, net 169,034 233,608 286,510
-------- ---------- --------

Realized and unrealized gain (loss) on investments:
Net realized loss
on bonds sold or called (55,999) (20,457) (8,761)
Unrealized depreciation
for the year (29,708) (126,952) (75,256)
-------- ---------- --------

Net loss
on investments (85,707) (147,409) (84,017)
-------- ---------- --------
Net increase in net
assets resulting
from operations $ 83,327 86,199 202,493
======== ========== ========
</TABLE>

See accompanying notes to financial statements.

<PAGE>

<TABLE>
MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 18

NEW YORK TRUST

Statements of Changes in Net Assets

<CAPTION>
Years ended June 30,
---------- -- ---------- -- ----------
---------- ---------- ----------
1995 1994 1993
---------- ---------- ----------

<S> <C> <C> <C>
Operations:
Investment income, net $ 169,034 233,608 286,510
Net realized loss on
bonds sold or called (55,999) (20,457) (8,761)
Unrealized depreciation
for the year (29,708) (126,952) (75,256)
---------- ---------- ----------

Net increase in net
assets resulting
from operations 83,327 86,199 202,493
---------- ---------- ----------

Distributions to Certificateholders:
Investment income 176,119 236,790 281,419
Principal 613,081 581,338 94,620

Redemptions:
Interest 3,406 5,032 551
Principal 132,012 163,247 28,197
---------- ---------- ----------

Total distributions and
redemptions 924,618 986,407 404,787
---------- ---------- ----------

Total decrease (841,291) (900,208) (202,294)

Net assets at beginning of year 2,533,965 3,434,173 3,636,467
---------- ---------- ----------

Net assets at end of year (including
undistributed net investment
income of $57,073, 67,564 and
$75,778, respectively) $ 1,692,674 2,533,965 3,434,173
========== ========== ==========
</TABLE>

See accompanying notes to financial statements.

<PAGE>

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 18

Notes to Financial Statements

June 30, 1995, 1994 and 1993

(1) Organization and Financial and Statistical Information

Municipal Securities Trust, Multi-State Series 18 (Trust) was organized on
December 5, 1985 by Bear, Stearns & Co. Inc. (Sponsor) under the laws of the
State of New York by a Trust Indenture and Agreement, and is registered under
the Investment Company Act of 1940.

(2) Summary of Significant Accounting Policies

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

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

(3) Income Taxes

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

(Continued)

<PAGE>

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 18

Notes to Financial Statements

(4) Trust Administration

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

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

See "Financial and Statistical Information" in Part A of this Prospectus for
the amounts of per unit distributions during the years ended June 30, 1995,
1994 and 1993.

The Trust Indenture and Agreement also requires each state Trust to redeem
units tendered. 358 units were redeemed during the year ended June 30, 1995.
345 units were redeemed during the year ended June 30, 1994. 50 units were
redeemed during the year ended June 30, 1993 .

(5) Net Assets

At June 30, 1995, the net assets of the Trust represented the interests of
Certificateholders as follows:

New York
Trust
Original cost to
Certificateholders $ 3,552,446
Less initial gross
underwriting commission (195,360)
------------
3,357,086
Cost of securities sold (1,721,171)
or called
Net unrealized appreciation 46,531

Undistributed net investment income 57,073
Undistributed proceeds
from bonds sold or call (46,845)
-----------

Total $1,692,674
===========
(Continued)

<PAGE>

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 18

Notes to Financial Statements

(5), 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 6,000 units of fractional undivided interest as of
the date of deposit.

(6) Successor Trustee

Effective September 2, 1995, United States Trust Company of
New York was merged into Chase Manhatten Bank (National Association)
("Chase"). Accordingly, Chase is the successor trustee of the unit investment
trusts sponsored by Bear Stearns and Co.

(7) Successor Sponsor

Effective September 28, 1995, Reich & Tang Distributors L.P.
("Reich & Tang") has become the successor sponsor (the "Sponsor") to certain
of the unit investments trusts previously sponsored by Bear, Stearns & Co.
Inc. As successor Sponsor, Reich & Tang has assumed all of the obligations and
rights of Bear, Stearns & Co. Inc., the previous sponsor.

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 18

NEW YORK TRUST

Portfolio

June 30, 1995

<CAPTION>
Port- Aggregate Coupon Rate/ Redemption Feature
folio Principal Name of Issuer Ratings Date(s) of S.F.--Sinking Fund Market
No. Amount and Title of Bonds (1) Maturity(2) Ref.--Refunding(2)(7) Value(3)
- -- ---------- --------------------- ------- ----------- --------------------- ------------

<C> <C> <C> <C> <C> <C> <C>
1 $ 350,000 New York State Energy Research and BBB- 8.875% No Sinking Fund $ 362,502
Development Authority Pollution 11/01/2025 11/01/95 @ 102 Ref.
Control Revenue Bonds Niagara
Mohawk Power Corporation 1984
Series I

2 275,000 New York State Energy Research and Aa2* 9.000 No Sinking Fund 282,256
Development Authority Electric 8/15/2020 8/15/95 @ 102 Ref.
Facilities Revenue Bonds, 1985
Series A (Consolidated Edison
Company of New York, Inc. Project)

3 100,000 New York State Housing Finance AAA 8.875 5/01/06 @ 100 S.F. 103,738
Agency State University 5/01/2012 11/01/95 @ 102 Ref.
Construction Refunding Bonds, 1985
Series A (5)

4 250,000 New York State Medical Care AAA 8.875 1/15/07 @ 100 S.F. 261,685
Facilities Mt. Sinai Hospital 1/15/2026 1/15/96 @ 102 Ref.
Series C FHA Insured 1985 Series C
(5)

5 350,000 New York State Urban Development AAA 9.200 1/01/09 @ 100 S.F. 366,265
Corporation, Correctional 1/01/2016 1/01/96 @ 102 Ref.
Facilities Revenue Bonds, 1985
Series A (5)

6 300,000 Triborough Bridge and Tunnel AAA 9.000 1/01/03 @ 100 S.F. 306,000
Authority Convention Center 1/01/2011 7/01/95 @ 102 Ref.
Project Bonds, 1985 Series D (5)

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

$ 1,625,000 $ 1,682,446
========== ============
</TABLE>

See accompanying footnotes to portfolios and notes to financial statements.

<PAGE>

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 18

Footnotes to Portfolios

June 30, 1995

(1) All ratings are by Kenny S & P Evaluation Services, except for those
identified by an asterisk (*) which are by Moody's Investors Service, Inc. A
brief description of the ratings symbols and their meanings is set forth under
"Description of Bond Ratings" in Part B of this Prospectus.

(3) At June 30, 1995, the net unrealized appreciation of all
the bonds was comprised of the following:

New York
Trust

Gross unrealized appreciation $ 46,531
Gross unrealized depreciation -
Net unrealized appreciation $ 46,531

(4) The annual interest income, based upon bonds held at June 30, 1995,
(excluding accretion of original issue discount on zero-coupon bonds) to the
Municipal Securities Trust, Multi-State Series 18 is $146,075

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

(6) Bonds sold or called after June 30, 1995 are noted in a footnote "Changes
in Trust Portfolio" under "Description of Portfolio" in Part A of this
Prospectus.

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

MUNICIPAL SECURITIES TRUST

MULTI-STATE SERIES 24
(MULTIPLIER PORTFOLIO)

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

The Trust consists of 2 separate unit investment trusts designated
New York Trust and Pennsylvania 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 (including where applicable earned original discount) under
existing law. 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
bonds in such State Trust are located. Such interest income may, however, be a
specific preference item for purposes of Federal individual and/or corporate
alternative minimum tax. Investors may recognize taxable capital gain or
ordinary income, to the extent of accrued market discount, upon maturity or
the earlier receipt of principal payments with respect to the bonds. (See "Tax
Status" and "The Portfolios--General.") The Sponsor is Reich & Tang
Distributors L.P. (successor Sponsor to Bear, Stearns & Co. 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 June 30, 1995 (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.

Investors Should Read and Retain Both Parts
of This Prospectus for Future Reference.
- ------------------------------------------------------------------------------

Principal Secondary Market
Number of Amount of Offering Price
Units Bonds per Unit (6/30/95)

New York Trust 4,799 $2,080,000 $414.01
Pennsylvania Trust 2,246 $1,685,000 $233.18

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

Prospectus Part A Dated October 31, 1995

82964.1

<PAGE>

THE TRUST. The Trust consists of two separate unit investment
trusts designated New York Trust and Pennsylvania Trust (the "State Trusts").
Each State Trust has been formed to preserve capital and to provide interest
income (including, where applicable, earned original issue discount) which, in
the opinions of bond counsel to the respective issuers, is, with certain
exceptions, currently exempt from regular federal income tax under existing
law through investment in a fixed, diversified portfolio of long-term 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. A Trust designated as a
short/intermediate-term trust must have a dollar-weighted average portfolio
maturity of more than two years but less than five years; a Trust designated
as an intermediate-term trust must have a dollar-weighted average portfolio
maturity of more than three years but not more than ten years; a Trust
designated as an intermediate/long-term trust must have a dollar-weighted
average portfolio maturity of more than ten years but less than fifteen years;
and a Trust designated as a long-term trust must have a dollar-weighted
average portfolio maturity of more than ten years. Although the Supreme Court
has determined that Congress has the authority to subject interest on bonds
such as the Bonds in the Trust to regular federal income taxation, existing
law excludes such interest from 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
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 which pay interest income subject to the federal
individual alternative minimum tax. See also "Tax Status" in Part B of this
Prospectus.) 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. All of the Bonds in each State Trust were rated "A" or better by
Standard & Poor's Corporation 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 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.

A-2
82964.1

<PAGE>

There can be no assurance that the Trusts' investment objectives will be
achieved. Investment in the Trust should be made with an understanding of the
risks which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline
with increases in interest rates, and that the value of Zero Coupon Bonds is
subject to greater fluctuation than coupon bonds in response to such changes
in interest rates. 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.

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 1.939% for
the New York Trust and 3.753% for the Pennsylvania Trust of the Public
Offering Price, or 1.977% for the New York Trust and 3.899% for the
Pennsylvania Trust of the net amount invested in Bonds per Unit. The sales
charge for secondary market purchases is based upon the number of years
remaining to maturity of each bond in the Trust's portfolio. (See "Public
Offering" in Part B of this Prospectus.) In addition, accrued interest to the
expected date of settlement is added to the Public Offering Price. If Units of
the New York Trust had been purchased on the Evaluation Date, the Public
Offering Price per Unit would have been $422.04 plus accrued interest of $7.46
under the monthly distribution plan, $10.20 under the semi-annual distribution
plan and $28.70 under the annual distribution plan, for a total of $429.50,
$432.24 and $450.74, respectively. If Units of the Pennsylvania Trust had been
purchased on the Evaluation Date, the Public Offering Price per Unit would
have been $241.93 plus accrued interest of $7.39 under the monthly
distribution plan, $9.26 under the semi-annual distribution plan and $23.89
under the annual distribution plan, for a total of $249.32, $251.19 and
$265.82, respectively. The Public Offering Price per Unit can vary on a daily
basis in accordance with fluctuations in the aggregate bid price of the Bonds.
(See "Summary of Essential Information" and "Public Offering--Offering Price"
in Part B of this Prospectus.)

A-3
82964.1

<PAGE>

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.

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

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 1.939% for the New York Trust and 3.753% for the
Pennsylvania Trust of the Public Offering Price (1.977% for the New York Trust
and 3.899% for the Pennsylvania 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.)

A-4
82964.1

<PAGE>

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-5
82964.1

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 24

NEW YORK TRUST

SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1995

Date of Deposit: July 31, 1986 Minimum Principal Distribution:
Principal Amount of Bonds ... $2,080,000 $1.00 per Unit.
Number of Units ............. 4,799 Weighted Average Life
Fractional Undivided Inter- to Maturity: 6.2 Years.
est in Trust per Unit ..... 1/4799 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $433.42 value of Trust is less than
Secondary Market Public $2,400,000 in principal amount
Offering Price** of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust ....... $1,986,823+++ The earlier of December 31,
Divided by 4,799 Units .... $414.01 2035 or the disposition of the
Plus Sales Charge of 1.939% last Bond in the Trust.
of Public Offering Price $8.03 Trustee***: Chase Manhattan
Public Offering Price Bank, N.A.
per Unit ................ $422.04+ Company of New York.
Redemption and Sponsor's Trustee's Annual Fee: Monthly
Repurchase Price plan $1.02 per $1,000; semi-
per Unit .................. $414.01+ annual plan $.54 per $1,000;
+++ and annual plan is $.35 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 ............ $8.03++++ 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) ... $(11.38) Sponsor: Reich & Tang
Evaluation Time: 4:00 p.m. Distributors L.P.
New York Time. Sponsor's Annual Fee: Maximum of
$.15 per $1,000 principal
amount of Bonds (see "Trust
Expenses and Charges" in Part B
of this Prospectus).

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# ......... $38.97 $38.97 $38.97
Less estimated annual fees and
expenses ............................ .94 .68 .62
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $38.03 $38.29 $38.35
Estimated interest distribution# ...... 3.16 19.14 38.35
Estimated daily interest accrual# ..... .1056 .1063 .1065
Estimated current return#++ ........... 9.01% 9.07% 9.09%
Estimated long term return ++ ......... 3.21% 3.32% 3.34%
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-6
82964.1

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 24

PENNSYLVANIA TRUST

SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1995

Date of Deposit: July 31, 1986 Minimum Principal Distribution:
Principal Amount of Bonds ... $1,685,000 $1.00 per Unit.
Number of Units ............. 2,246 Weighted Average Life
Fractional Undivided Inter- to Maturity: 27.4 Years.
est in Trust per Unit ..... 1/2246 Minimum Value of Trust:
Principal Amount of Trust may be terminated if value
Bonds per Unit ............ $750.22 of Trust is less than $1,000,000
Secondary Market Public in principal amount of Bonds.
Offering Price** Mandatory Termination Date:
Aggregate Bid Price The earlier of December 31, 2035
of Bonds in Trust ....... $523,713+++ or the disposition of the last
Divided by 2,246 Units .... $233.18 Bond in the Trust.
Plus Sales Charge of 3.753% Trustee***: Chase Manhattan Bank,
of Public Offering Price $8.75 N.A.
Public Offering Price Trustee's Annual Fee: Monthly
per Unit ................ $241.93+ plan $1.02 per $1,000; semi-
Redemption and Sponsor's annual plan $.54 per $1,000; and
Repurchase Price annual plan is $.35 per $1,000.
per Unit .................. $233.18+ Evaluator: Kenny S&P Evaluation
+++ Services.
++++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $12 plus
Public Offering Price $.25 per each issue of Bonds in
over Redemption and excess of 50 issues (treating
Sponsor's Repurchase separate maturities as separate
Price per Unit ............ $8.75++++ issues).
Difference between Public Sponsor: Reich & Tang
Offering Price per Unit Distributors L.P.
and Principal Amount per Sponsor's Annual Fee: Maximum of
Unit Premium/(Discount) ... $(508.29) $.15 per $1,000 principal amount
Evaluation Time: 4:00 p.m. of Bonds (see "Trust Expenses
New York Time. and Charges" in Part B of this
Prospectus).

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# ......... $19.13 $19.13 $19.13
Less estimated annual fees and
expenses ............................ 1.81 1.32 1.16
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $17.32 $17.81 $17.97
Estimated interest distribution# ...... 1.44 8.90 17.97
Estimated daily interest accrual# ..... .0481 .0494 .0499
Estimated current return#++ ........... 7.16% 7.36% 7.43%
Estimated long term return ++ ......... 6.61% 6.88% 6.97%
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-7
82964.1

<PAGE>

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

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

For the Pennsylvania Trust, the proceeds from securities called July 1,
1995 and certain amounts distributable as of June 30, 1995 are 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 five
business days after purchase) of $7.46 monthly, $10.20 semi-annually and
$28.70 annually for the New York Trust, and $7.39 monthly, $9.26
semi-annually and $23.89 annually for the Pennsylvania 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.

A-8
82964.1

<PAGE>

INFORMATION REGARDING THE TRUSTS
AS OF JUNE 30, 1995

DESCRIPTION OF PORTFOLIOS

New York Trust*

Each Unit in the New York Trust consists of a 1/5419th undivided
interest in the principal and net income of the Trust in the ratio of one Unit
for each $459.49 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 New York
Trust consists of 7 issues of 6 issuers located in New York and 1 in Puerto
Rico. None of the Bonds are obligations of state and local housing
authorities; approximately 19.2% are hospital revenue bonds; and none were
issued in connection with the financing of nuclear generating facilities. One
issue comprising approximately 19.2% 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 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 $510,000 of the principal
amount of the Bonds is a general obligation bond. All six of the remaining
issues representing $1,570,000 of the principal amount of the Bonds are
payable from the income of a specific project or authority and are not
supported by the issuer's power to levy taxes. The portfolio is divided for
purpose of issue as follows: Convention Center 1, Electric Power 1, Gas
Facilities 1, Housing 1, Insured Hospital 1 and Municipal Assistance 1. For an
explanation of the significance of these factors see "The State
Trusts--Portfolios" in Part B of this Prospectus.

As of June 30, 1995, none of the aggregate principal amount of the
Bonds were original issue discount bonds nor 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, 100% 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 New York 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 July 1, 1995 to September 15, 1995,
the entire principal amounts of the Bonds in portfolio nos. 2, 5, 6 and
7 have been called for redemption pursuant to pre-refunding provisions
and are no longer contained in the Trust.

A-9
82964.1

<PAGE>

Pennsylvania Trust*

Each Unit in the Pennsylvania Trust consists of a 1/2288th
undivided interest in the principal and net income of the Trust in the ratio
of one Unit for each $874.13 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 Pennsylvania Trust consists of 4 issues of 3 issuers located
in Pennsylvania and 1 in Puerto Rico. Approximately 72.7% of the Bonds are
obligations of state and local housing authorities; approximately 11.9% are
hospital revenue bonds; and none were issued in connection with the financing
of nuclear generating facilities. None of the Bonds in the trust are mortgage
subsidy bonds. All of the Bonds are subject to redemption prior to their
stated maturity dates pursuant to sinking fund or call provisions. The Bonds
may also be subject to other calls, which may be permitted or required by
events which cannot be predicted (such as destruction, condemnation,
termination of a contract, or receipt of excess or unanticipated revenues).
One issue representing $125,000 of the principal amount of the Bonds is a
general obligation bond. All three of the remaining issues representing
$1,560,000 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:
Federally Insured Mortgage 1, Hospital 1 and Water and Sewer 1. For an
explanation of the significance of these factors see "The State
Trusts--Portfolios" in Part B of this Prospectus.

As of June 30, 1995, $1,225,000 (approximately 72.7% of the
aggregate principal amount of the Bonds) were original issue discount bonds.
Of these original issue discount bonds, $1,225,000 (approximately 72.7% 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. None of the aggregate
principal amount of the Bonds in the Trust were purchased at a "market"
discount from par value at maturity, approximately 27.3% 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 Pennsylvania 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 July 1, 1995 to September 15,
1995, the entire principal amount of the Bond in portfolio no. 3 has
been called for redemption pursuant to pre-refunding provisions and is
no longer contained in the Trust.

A-10
82964.1

<PAGE>

FINANCIAL AND STATISTICAL INFORMATION

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

New York Trust

June 30, 1993 5,957 $572.67 $46.37 $47.04 $47.48 $37.40
June 30, 1994 5,419 499.39 44.23 44.71 45.86 42.82
June 30, 1995 4,799 425.64 38.25 38.65 42.75 54.57

Pennsylvania Trust

June 30, 1993 2,500 $540.93 $42.84 $43.56 $43.80 -0-
June 30, 1994 2,288 382.86 36.74 37.34 42.13 $135.28
June 30, 1995 2,246 332.52 29.14 29.76 32.64 41.25

A-11
82964.1

<PAGE>

Independent Auditors' Report

The Sponsor, Trustee and Certificateholders
Municipal Securities Trust, Multi-State Series 24:

We have audited the accompanying statements of net assets, including the
portfolios, of Municipal Securities Trust, Multi-State Series 24 (comprising,
respectively, New York Trust and Pennsylvania Trust) as of June 30, 1995, and
the related statements of operations, and changes in net assets for each of
the years in the three year period then ended. These financial statements are
the responsibility of the Trustee (see note 2). Our responsibility is to
express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective Trusts
constituting the Municipal Securities Trust, Multi State Series 24 as of June
30, 1995, and the results of their operations and the changes in their net
assets for each of the years in the three year period then ended, in
conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

New York, New York
September 15, 1995
except as to Note 7 as to
which the date is
September 28, 1995

<PAGE>

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 24

Notes to Financial Statements

June 30, 1995, 1994 and 1993

(1) Organization and Financial and Statistical Information

Municipal Securities Trust, Multi-State Series 24 (Trust) was organized on
July 31, 1986 by Bear, Stearns & Co. Inc. (Sponsor) under the laws of the
State of New York by a Trust Indenture and Agreement, and is registered under
the Investment Company Act of 1940.

(2) Summary of Significant Accounting Policies

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

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

(3) Income Taxes

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

(Continued)

<PAGE>

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 24

Statements of Net Assets

June 30, 1995

New York Pennsylvania
Trust Trust

Investments in marketable
securities, at market value (cost
$2,250,196 and
$552,506, respectively) $ 2,140,747 523,696
----------- --------

Accrued interest 71,991 16,251
Cash - 207,318
----------- --------

Other assets 71,991 223,569
----------- --------

Accrued expenses 477 422
Advance from trustee 169,622 -
----------- --------
Other liabilities 170,099 422
----------- --------

Excess (deficiency) of other
assets over total liabilities (98,108) 223,147
----------- --------

Net assets (4,799 and
2,246 units of fractional
undivided interest outstanding,
$425.64 and $332.52
per unit, respectively) $ 2,042,639 746,843
=========== ========

See accompanying notes to financial statements.

<PAGE>

<TABLE>
MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 24

NEW YORK TRUST

Statements of Operations

<CAPTION>
Years ended June 30,
-------- ---- --------- ---- --------
-------- --------- --------
1995 1994 1993
-------- --------- --------

<S> <C> <C> <C>
Investment income - interest $ 205,118 269,269 296,701
-------- --------- --------

Expenses:
Trustee's fees 4,574 5,079 6,658
Evaluator's fees 1,190 1,106 1,137
Sponsor's advisory fees 434 654 900
-------- --------- --------

Total expenses 6,198 6,839 8,695
-------- --------- --------

Investment income, net 198,920 262,430 288,006
-------- --------- --------

Realized and unrealized loss on investments:
Realized loss on
bonds sold or called (47,272) (68,364) (17,046)
Unrealized depreciation
for the year (51,706) (112,019) (63,853)
-------- --------- --------

Net loss
on investments (98,978) (180,383) (80,899)
-------- --------- --------

Net increase in net
assets resulting
from operations $ 99,942 82,047 207,107
======== ========= ========
</TABLE>

See accompanying notes to financial statements.

<PAGE>

<TABLE>
MUNICIPAL SECURITIES TRUST, MULT-STATE SERIES 24

PENNSYLVANIA TRUST

Statements of Operations

<CAPTION>
Years ended June 30,
-------- ---- -------- ---- --------
-------- -------- --------
1995 1994 1993
-------- -------- --------

<S> <C> <C> <C>
Investment income - interest $ 74,619 98,373 116,325
-------- -------- --------

Expenses:
Trustee's fees 3,014 2,742 3,229
Evaluator's fees 1,190 1,103 1,137
Sponsor's advisory fees 340 507 360
-------- -------- --------

Total expenses 4,544 4,352 4,726
-------- -------- --------

Investment income, net 70,075 94,021 111,599
-------- -------- --------

Realized and unrealized gain (loss) on investments:
Net realized loss
on bonds sold or called (30,514) (39,594) -
Unrealized appreciation
(depreciation) for the year 6,612 (18,517) (26,588)
-------- -------- --------

Net loss
on investments (23,902) (58,111) (26,588)
-------- -------- --------

Net increase in net
assets resulting
from operations $ 46,173 35,910 85,011
======== ======== ========
</TABLE>
<PAGE>

<TABLE>

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 24

NEW YORK TRUST

Statements of Changes in Net Assets

<CAPTION>
Years ended June 30,
---------- -- ---------- -- ----------
---------- ---------- ----------
1995 1994 1993
---------- ---------- ----------

<S> <C> <C> <C>
Operations:
Investment income, net $ 198,920 262,430 288,006
Realized loss on bonds
sold or called (47,272) (68,364) (17,046)
Unrealized depreciation
for the year (51,706) (112,019) (63,853)
---------- ---------- ----------

Net increase in net
assets resulting
from operations 99,942 82,047 207,107
---------- ---------- ----------

Distributions to Certificateholders:
Investment income 202,216 260,852 279,977
Principal 282,127 241,153 222,792

Redemptions:
Interest 5,842 7,183 356
Principal 273,337 278,018 25,899
---------- ---------- ----------

Total distributions and
redemptions 763,522 787,206 529,024
---------- ---------- ----------

Total decrease (663,580) (705,159) (321,917)

Net assets at beginning of year 2,706,219 3,411,378 3,733,295
---------- ---------- ----------

Net assets at end of year (including
undistributed net investment
income of$55,816, $64,954 and
$111,385 respectively) $ 2,042,639 2,706,219 3,411,378
========== ========== ==========
</TABLE>

See accompanying notes to financial statements.
<PAGE>

<TABLE>
MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 24

PENNSYLVANIA TRUST

Statements of Changes in Net Assets

<CAPTION>
Years ended June 30,
--------- -- ------------- -- ----------
--------- ------------- ----------
1995 1994 1993
--------- ------------- ----------

<S> <C> <C> <C>
Operations:
Investment income, net $ 70,075 94,021 111,599
Net realized loss on
bonds sold or called (30,514) (39,594) -
Unrealized appreciation
(depreciation) for the year 6,612 (18,517) (26,588)
--------- ------------- ----------

Net increase in net
assets resulting
from operations 46,173 35,910 85,011
--------- ------------- ----------

Distributions to Certificateholders:
Investment income 66,788 92,600 107,876
Principal 92,648 338,200 -

Redemptions:
Interest 587 1,967 -
Principal 15,284 79,487 -
--------- ------------- ----------

Total distributions and redemptions 175,307 512,254 107,876
--------- ------------- ----------

Total decrease (129,134) (476,344) (22,865)

Net assets at beginning of year 875,977 1,352,321 1,375,186
--------- ------------- ----------

Net assets at end of year (including
undistributed net investment
income of $47,336, $44,636 and
$45,182 respectively) $ 746,843 875,977 1,352,321
========= ============= ==========
</TABLE>

See accompanying notes to financial statements.
<PAGE>

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 24

Notes to Financial Statements

(4) Trust Administration

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

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

See "Financial and Statistical Information" in Part A of this Prospectus for
the amounts of per unit distributions during the years ended June 30, 1995,
1994 and 1993.

The Trust Indenture and Agreement also requires each state Trust to redeem
units tendered. 158, 620 and 42 units were redeemed during the year ended June
30, 1995 by the New York and Pennsylvania Trusts respectively. 538 and 212
units were redeemed during the year ended June 30, 1994 by the New York and
the Pennsylvania Trusts. 43 units were redeemed by the New York Trust during
the year ended June 30, 1993.

(5) Net Assets

At June 30, 1994, the net assets of the Trust represented the interests of
Certificateholders as follows:
New York Pennsylvania
Trust Trust
Original cost to
Certificateholders $ 3,697,518 $ 1,521,029
Less initial gross
underwriting commission (203,340) (83,650)

3,494,178 1,437,379
Cost of securities sold
or called (1,243,982) (913,084)
Net unrealized depreciation (109,449) (28,810)
Undistributed net
investment income 55,816 47,336
Undistributed proceeds from
bold sold or called (153,924) 204,022

Total $ 2,042,639 $ 746,843

(Continued)
<PAGE>

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 24

Notes to Financial Statements

(5), 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 6,000 and 2,500 units of fractional undivided
interest of the New York Trust and Pennsylvania Trust, respectively, as of the
date of deposit.

Undistributed net investment income includes accumulated accretion of original
issue discount of $28,211 for the Pennsylvania Trusts.

(6) Successor Trustee

Effective September 2, 1995, united States Trust Company of New York was
merged into Chase Manhattan Bank (National Association) ("Chase").
Accordingly, Chase is the successor trustee of the unit investment trusts
sponsored by Bear Stearns and Co.

(7) Successor Sponsor

Effective September 28, 1995, Reich & Tang Distributors L.P. ("Reich &
Tang") has become the successor sponsor (the "Sponsor") to certain of the unit
investments trusts previously sponsored by Bear, Stearns & Co. Inc. As
successor Sponsor, Reich & Tang has assumed all of the obligations and rights
of Bear, Stearns & Co. Inc., the previous sponsor.

<PAGE>

<TABLE>
MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 24
NEW YORK TRUST
Portfolio
June 30, 1995

<CAPTION>
Port- Aggregate Coupon Rates/ Redemption Feature
folio Principal Name of Issuer Ratings Date(s) of S.F.--Sinking Fund Market
No. Amount and Title of Bonds (1) Maturity(2) Ref.--Refunding(2)(7) Value(3)
- -- ---------- ---------------------------------- -------- ----------- -------------------- ---------

<C> <C> <C> <C> <C> <C> <C>
1 $ 200,000 New York State Energy Research and A1* 9.000% No Sinking fund $ 204,860
Development Authority Gas 5/15/2015 7/31/95 @ 102 Ref.
Facilities Refunding Revenue Bonds,
Series 1985A (The Brooklyn Union
Gas Company Project)

2 100,000 New York State Energy Research and Aa2* 9.000 No Sinking Fund 102,639
Development Authority Electric 8/15/2020 8/15/95 @ 102 Ref.
Facilities Revenue Bonds, 1985
Series A (Consolidated Edison
Company of New York, Inc. Project)

3 400,000 New York State Housing Finance AAA 8.875 5/01/06 @ 100 S.F. 414,952
Agency State University 5/01/2012 11/01/95 @ 102 Ref.
Construction Refunding Bonds, 1985
Series A (5)

4 400,000 New York State Medical Care AAA 8.875 1/15/07 @ 100 S.F. 418,696
Facilities Mt. Sinai Hospital 1/15/2026 1/15/96 @ 102 Ref.
Series C FHA Insured 1985 Series C
(5)

5 170,000 Municipal Assistance Corporation AAA 9.875 7/01/00 @ 100 S.F. 173,400
for the City of New York (A Public 7/01/2008 7/01/95 @ 102 Ref.
Benefit Corporation of the State of
New York) 1984 Series 51 Bonds (5)

6 300,000 Triborough Bridge and Tunnel AAA 9.000 1/01/03 @ 100 S.F. 306,000
Authority Convention Center Project (Cond.) 7/01/2012 7/01/95 @ 102 Ref.
Bonds, 1985 Series D (5)

7 510,000 Puerto Rico Public Buildings AAA 8.875 No Sinking Fund 520,200
Authority Public Education and 7/01/2012 7/01/95 @ 102 Ref.
Health Facilities 1985 Series E (5)

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

$ 2,080,000 $ 2,140,747
========== =========
</TABLE>

See accompanying footnotes to portfolios and notes to financial statements.

<PAGE>

<TABLE>
MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 24
PENNSYLVANIA TRUST
Portfolio
June 30, 1995

<C> <C> <C> <C> <C> <C> <C>
1 $ 200,000 Allegheny County (Pennsylvania) A- 9.800% 7/01/00 @ 100 S.F. $ 204,860
Hospital Development Authority 7/01/2010 7/01/95 @ 102 Ref.
Hospital Revenues Refunding Bonds
Series 1985A St. Margaret Memorial
Hospital Project

2 135,000 Philadelphia, Pennsylvania Water AAA 9.100 No Sinking Fund 140,719
and Sewer Refunding Revenue Bonds 12/01/2004 12/01/95 @ 102 Ref.
1985 Eleventh Series (5)

3 125,000 Puerto Rico Public Buildings AAA 8.875 No Sinking Fund 127,500
Authority Public Education and 7/01/2012 7/01/95 @ 102 Ref.
Health Facilities 1985 Series E (5)

4 1,225,000 Urban Redevelopment Authority of Aa* 0.000 6/01/06 @ 11.077 S.F. 50,617
Pittsburgh (Pennsylvania) (Cond.) 12/01/2027 12/01/01 @ 7.198 Ref.
Multi-Family Mortgage Revenue Bonds
(FHA Insured Mortgage Loan) 1985
Series B

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

$ 1,685,000 $ 523,696
========== =========
</TABLE>

See accompanying footnotes to portfolios and notes to financial statements.

<PAGE>

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 24

Footnotes to Portfolios

June 30, 1995

(3) At June 30, 1995, the net unrealized depreciation of all the bonds was
comprised of the following:

New York Pennsylvania
Trust Trust

Gross unrealized appreciation $ - 2,806
Gross unrealized depreciation (109,449) (31,616)

Net unrealized depreciation $ (109,449) (28,810)

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

(6) Bonds sold or called after June 30, 1995 are noted in a footnote "Changes
in Trust Portfolio" under "Description of Portfolio" in Part A of this
Prospectus.

<PAGE>

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

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

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES
(Multiplier Portfolio)

Prospectus Part B

Dated: October 31, 1995

THE TRUST

Organization

"Municipal Securities Trust," Multi-State Series (the "Trust")
consists of several separate "unit investment trusts," which may include
California Trust, Michigan Trust, New York Trust, Pennsylvania 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 a Trust Indenture and Agreement* (collectively, the "Trust
Agreement"), dated the Date of Deposit, among Reich & Tang Distributors L.P.,
as Sponsor, or depending on the particular Trust, among Reich & Tang
Distributors L.P. and Gruntal & Co., Incorporated, as Co-Sponsors (the
Sponsors or Co-Sponsors, if applicable, are referred to herein as the
"Sponsor"), Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc.,
as Evaluator, and, depending on the particular State Trust, either The Bank of
New York or Chase Manhattan Bank, N.A., 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.

82600.3

<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, each one of a series of similar but separate
unit investment trusts formed by the Sponsor, 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 corporate 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 Bonds 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 Corporation or Moody's Investors Service, Inc. 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: (a) the
quality of the Bonds and whether such Bonds were rated "A" or better by
Standard & Poor's Corporation or Moody's Investors Service, Inc., (b) the
yield and price of the Bonds relative to other tax-exempt securities of
comparable quality and maturity, (c) income to the Certificateholders of the
State Trusts, (d) 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

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and price criteria and (e) 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 federal or state programs such as Medicare and
Medicaid which have been revised substantially in recent years and which are
undergoing further review at the state and federal level.

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.

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

Nuclear Power Facility Bonds. Certain Bonds may have been issued
in connection with the financing of nuclear generating facilities. In view of
recent developments in connection with such facilities, legislative and
administrative actions have been taken and proposed relating to the
development and operation of nuclear generating facilities. The 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.

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

Mortgage Revenue Bonds. Certain Bonds may be "mortgage revenue
bonds." Under the Internal Revenue Code of 1986, as amended (the "Code") (and
under similar provisions of the prior tax law) "mortgage revenue bonds" are
obligations the proceeds of which are used to finance owner-occupied
residences under programs which meet numerous statutory requirements relating
to residency, ownership, purchase price and target area requirements, ceiling
amounts for state and local issuers, arbitrage restrictions, and certain
information reporting certification, and public hearing requirements. There
can be no assurance that additional federal legislation will not be introduced
or that existing legislation will not be further amended, revised, or enacted
after delivery of these Bonds or that certain required future actions will be
taken by the issuing governmental authorities, which action or failure to act
could cause interest on the Bonds to be subject to federal income tax. If any
portion of the 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: (1) Bonds for a publicly owned facility which a private entity may
have a right to use or manage to some degree, such as an airport, seaport
facility or water system and (2) facilities deemed owned or beneficially owned
by a private entity but which were financed with tax-exempt bonds of a public
issuer, such as a manufacturing facility or a pollution control facility. In
the case of the first type, bonds are generally payable from a designated
source of revenues derived from the facility and may further receive the
benefit of the legal or moral obligation of one or more political subdivisions
or taxing jurisdictions. In most cases of project financing of the first
type, receipts or revenues of the issuer are derived from the project or the
operator or from the unexpended proceeds of the bonds. Such revenues include
user fees, service charges, rental and lease payments, and mortgage and other
loan payments.

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

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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 following is a
description of the legal proceedings involving the Delaware County,
Pennsylvania Authority, Sacred Heart Medical Center Hospital Revenue Bonds
Refunding Series of 1985 (the "Sacred Heart Bonds") contained in the
Pennsylvania Trust of Multi-State Series 15:

In March 1992 the Sponsor notified unitholders of certain events
of default reported by the Trustee for the Sacred Heart Bonds, the Trustee's
acceleration of the Bonds, and the formation of an unofficial bondholder
committee.

To date and including the February 1994 distribution, the Bond
Trustee has distributed to bondholders an amount equal to 45.5% of the
outstanding principal of, and accrued unpaid interest on, the Sacred Heart
Bonds up to the date of acceleration, November 18, 1991.

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additional payments in 1995 and 1996. It is impossible to predict with any
certainty the amount and timing of additional distributions to bondholders
from these or other sources.

Other than the Sacred Heart Bonds described above, as of the date
of this Prospectus, 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 Trusts other than that which
is discussed relating to the Sacred Heart Bonds or 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

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<PAGE>

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
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
which will be affected by general economic conditions in Puerto Rico. The
economy of Puerto Rico is closely integrated with that of the mainland United
States. During fiscal year 1994, approximately 87% of Puerto Rico's exports
went to the United States mainland, which was also the source of approximately
67% of Puerto Rico's imports. In fiscal 1994, Puerto Rico experienced a $4.3
billion positive adjusted merchandise trade balance. The economy of Puerto
Rico is dominated by the manufacturing and service sectors. The manufacturing
sector has experienced a basic change over the years as a result of increased
emphasis on higher wage, high technology industries such as pharmaceuticals,
electronics, computers, microprocessors, professional and scientific
instruments, and certain high technology machinery and equipment. The service
sector, including finance, insurance and real estate, also plays a major role
in the economy. It ranks second only to manufacturing in contribution to the
gross domestic product and leads all sectors in providing employment. In
recent years, the service sector has experienced significant growth in
response to the expansion of the manufacturing sector. Since fiscal 1985,
personal income, both aggregate and per capita, has increased consistently
each fiscal year. In fiscal 1994, aggregate personal income was $25.7 billion
($21.6 billion in 1987 prices) and personal income per capita was $7,047
($5,902 in 1987 prices). Personal income includes transfer payments to
individuals in Puerto Rico under various social programs. Total federal
payments to Puerto Rico, which include transfers to Commonwealth government
entities and expenditures of federal agencies in Puerto Rico, in addition to
federal transfer payments to individuals, are lower on a per capita basis in
Puerto Rico than in any state. Transfer payments to individuals in fiscal
1994 were $5.7 billion, of which $3.9 billion, or 68.9%, represent
entitlements to individuals who had previously performed services or made
contributions under programs such as Social Security, Veterans' Benefits and
Medicare. The number of persons employed in Puerto Rico during fiscal 1994
averaged 1,011,000. Unemployment, although at a low level compared to the
late 1970s, remains above the average for the United States. In fiscal year
end June 30, 1994, the unemployment rate in Puerto Rico was 16.0%. Puerto
Rico's decade-long economic expansion continued throughout the five-year
period from fiscal 1990 through fiscal 1994. Almost every sector of its
economy was affected and record levels of employment were achieved. Factors
behind this expansion include Commonwealth sponsored economic development
programs, the relatively stable prices of oil imports, the continued growth of
the United States economy, periodic declines in exchange value of the United
States dollar and the relatively low cost of borrowing during the period. The
Planning Board's most recent Gross Product forecast for fiscal 1995 and fiscal

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1996, made in February 1995, shows increases of 2.9% and 2.7%, respectively.
The Puerto Rico Planning Board's economic activity index, a composite index
for thirteen economic indicators, increased 2.7% for the first seven months of
fiscal 1995 compared to the same period of fiscal 1994, which period showed an
increase of 1.3% over the same period of fiscal 1993. Growth in the Puerto
Rico economy in fiscal 1996 depends on several factors, including the state of
the United States economy and the relative stability in the price of oil
imports, the exchange value of the U.S. dollar and the cost of borrowing.

Discount and Zero Coupon Bonds

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 accreted value based on par value at
maturity. Because the issuer is not obligated to make current interest
payments, Zero Coupon Bonds may be less likely to be redeemed than coupon
bonds issued at a similar interest rate. 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
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. 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.

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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

California's economy is the largest among the 50 states and one of
the largest in the world. The State's July 1, 1994 population of almost 32
million represents more than 12.0 percent of the total United States
population. Total employment is about 14.0 million, the majority of which is
in the service, agriculture, entertainment, tourism, high technology, trade
and manufacturing sectors. Total State gross domestic product of about $835
billion in 1994 was larger than all but six nations in the world.

California's population is concentrated in metropolitan areas. As
of the April 1, 1990 census, 96 percent resided in the 23 Metropolitan
Statistical Areas in the State. Overall, California's population per square
mile was 191 in 1990. As of July 1, 1994, 69 percent of the population of the
State was located in the two consolidated Metropolitan Statistical Areas in
California. The 5-county Los Angeles area accounted for 48 percent, with 15.6
million residents. The 10-county San Francisco Bay Area represented 21
percent, with a population of 6.7 million.

Recent studies indicate changes in the State's population
dynamics. Since 1990, population growth has shifted to depend on births and
foreign immigration. Net movements within the U.S. were negative during the
State's economic recession in 1991-94, but domestic in-migration to the State
has increased as the State's economy has improved. The population is expected
to become more ethnically diverse into the next century, with the Latino and
Asian populations growing faster than other groups.

California Economy. Starting in mid-1990, the State entered a
sustained economic recession, somewhat later than the rest of the nation. It
was the most severe recession in the State since the 1930's, with job losses
estimated at over 800,000, particularly in the manufacturing (predominately
aerospace), services and construction sectors. The greatest effects were felt
in Southern California. A significant portion of these losses were linked to
post-Cold War cuts in the federal defense budget and military base closures.
The trough of the recession is estimated to have occurred in late 1993, again
later than for the nation as a whole. Although a steady recovery has been
underway since 1994, pre-recession employment levels are not expected to be
reached until later in the decade.

Northridge Earthquake. On January 17, 1994, a major earthquake
measuring an estimated 6.8 on the Richter Scale struck the Los Angeles
metropolitan area, centered in the Northridge area of the City of Los Angeles.
Significant property damage, estimated at $15-20 billion, occurred to private
and public facilities in a four-county area including northern Los Angeles
County, Ventura County and parts of Orange and San Bernardino Counties. These
counties were declared State and federal disaster areas. Much of this damage
will be compensated by insurance or government aid. The effects of the
earthquake are not expected to have a material impact on the State's overall
economic performance.

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Damage to State-owned facilities included transportation corridors
and facilities such as Interstate Highways 5 and 10 and State Highways 14, 118
and 210. Major highways have now been reopened. The campus of California
State University at Northridge, located very near the epicenter, suffered an
estimated $350 million damage and was closed for a short time, but has been
reopened.

The State and federal governments have committed to providing
assistance to local governments, individuals and businesses suffering damage
as a result of the earthquake, as well as to providing for the repair and
replacement of State-owned facilities. The federal government is providing
substantial earthquake assistance, totaling over $9.5 billion.

The State.

Fiscal Years Prior to 1994-95 . In the years following enactment
of the federal Tax Reform Act of 1986, and conforming changes to the State's
tax laws, taxpayer behavior became much more difficult to predict, and the
State experienced a series of fiscal years in which revenue came in
significantly higher or lower than original estimates. The 1989-90 Fiscal
Year ended with revenues below estimates, so that the State's budget reserve
(the Special Fund for Economic Uncertainties or "SFEU") was fully depleted by
June 30, 1990. This date essentially coincided with the start of the recent
recession, which severely affected State General Fund revenues, and increased
expenditures above initial budget appropriations due to greater health and
welfare costs. The State's budget problems in recent years have also been
caused by a structural imbalance in that the largest General Fund Programs -
K-14 education, health, welfare and corrections -- were increasing faster than
the revenue base, driven by the State's rapid population growth. These
pressures will continue as population trends maintain strong demand for health
and welfare services, as the school age population continues to grow, and as
the State's corrections program responds to a "Three Strikes" law enacted in
1994, which requires mandatory life prison terms for certain third-time felony
offenders.

As a result of these factors and others, from the late 1980's
until 1992-93, the State had a period of budget imbalance. During this
period, expenditures exceeded revenues in four out of six years, and the State
accumulated and sustained a budget deficit in the SFEU approaching $2.8
billion at its peak at June 30, 1993. Starting in the 1990-91 Fiscal Year and
for each fiscal year thereafter, each budget required multibillion dollar
actions to bring projected revenues and expenditures into balance and to close
large "budget gaps" which were identified. The Legislature and Governor
eventually agreed on a number of different steps to produce Budget Acts in the
years 1991-92 to 1993-94.

Despite these budget actions, the effects of the recession led to
large, unanticipated deficits in the budget reserve, the SFEU, as compared to
projected positive balances. By the 1993-94 Fiscal Year, the accumulated
deficit was so large that it was impractical to budget to retire it in one
year, so a two-year program was implemented, using the issuance of revenue
anticipation warrants to carry a portion of the deficit over the end of the
fiscal year. When the economy failed to recover sufficiently in 1993-94, a
second two-year plan was implemented in 1994-95.

Another consequence of the accumulated budget deficits, together
with other factors such as disbursement of funds to local school districts
"borrowed" from future fiscal years and hence not shown in the annual budget,
was to significantly reduce the State's cash resources available to pay its
ongoing obligations. When the Legislature and the Governor failed to adopt a
budget for the 1992-93 Fiscal Year by July 1, 1992, which would have allowed
the State to carry out its normal annual cash flow borrowing to replenish its

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<PAGE>

cash reserves, the State Controller was forced to issue registered warrants to
pay a variety of obligations representing prior years' or continuing appropri-
ations, and mandates from court orders. Available funds were used to make
constitutionally-mandated payments, such as debt service on bonds and
warrants. Between July 1 and September 4, 1992 the State Controller issued a
total of approximately $3.8 billion of registered warrants. After that date,
all remaining outstanding registered warrants (about $2.9 billion) were called
for redemption from proceeds of the issuance of 1992 Interim Notes after the
budget was adopted.

The State's cash condition became so serious in late spring of
1992 that the State Controller was required to issue revenue anticipation
warrants maturing in the following fiscal year in order to pay the State's
continuing obligations. The State was forced to rely increasingly on external
debt markets to meet its cash needs, as a succession of notes and warrants
were issued in the period from June 1992 to July 1994, often needed to pay
previously maturing notes or warrants. These borrowings were used also in
part to spread out the repayment of the accumulated budget deficit over the
end of a fiscal year.

1994-95 Fiscal Year. The 1994-95 Fiscal Year represented the
fourth consecutive year the Governor and Legislature were faced with a very
difficult budget environment to produce a balanced budget. The Governor's
Budget Proposal, as updated in May and June 1994, recognized that the
accumulated deficit could not be repaid in one year, and proposed a two-year
solution designed to eliminate the accumulated budget deficit, estimated at
about $1.8 billion at June 30, 1994, by June 30, 1996.

The 1994-95 Budget Act, signed by the Governor on July 8, 1994,
projected General Fund revenues and transfers of $41.9 billion, $2.1 billion
more than actual revenues received in 1993-94, and expenditures of $40.9
billion, an increase of $1.6 billion from the prior year. The revenue
estimates partly reflected the Administration's forecast of an improving
economy.

Reports by the Department of Finance in May, 1995 indicate that,
with economic recovery well underway in the State, General Fund revenues for
the entire 1994-95 Fiscal Year were above projections, and expenditures were
below projections because of slower than anticipated health-welfare caseload
growth and school enrollments. The aggregate effect improved the budget
picture by about $500 million, leaving an estimated budget deficit of about
$630 million at June 30, 1995.

1995-96 Fiscal Year. For the first time in four years, the State
entered the current fiscal year with strengthening revenues and reduced
caseload growth based on an improving economy. The State entered the 1995-96
Budget negotiations with the smallest nominal "budget gap" to be closed in
many years. Nonetheless, serious policy differences between the Governor and
Legislature prevented timely enactment of the budget. The 1995-96 Budget Act
was signed by the Governor on August 3, 1995, 34 days after the start of the
fiscal year. The Budget Act projects General Fund revenues and transfers of
$44.1 billion, a 3.5 percent increase from the prior year. Expenditures are
budgeted at $43.4 billion, a 4 percent increase. The Department of Finance
projects that, after repaying the last of the carryover budget deficit, there
will be a positive balance of $28 million in the budget reserve, the Special
Fund for Economic Uncertainties, at June 30, 1996. The Budget Act also
projects Special Fund revenues of $12.7 billion and appropriates Special Fund
expenditures of $13.0 billion.

The Department of Finance projects cash flow borrowings in the
1995-96 Fiscal Year will be the smallest in many years, comprising about $2
billion of notes to be issued in April, 1996, and maturing by June 30, 1996.

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With full payment of $4 billion of revenue anticipation warrants on April 25,
1996, the Department sees no further need for borrowing over the end of the
fiscal year. The available internal borrowable cash resources of the General
Fund at June 30, 1996 are projected at almost $2 billion. The State
Controller has announced that the State has not incurred a cash-flow deficit
and that, as a result, no automatic spending cuts will occur.

Local Governments. The primary units of local government in
California are the counties, ranging in population from 1,300 (Alpine) to over
9,000,000 (Los Angeles). Counties are responsible for the provision of many
basic services, including indigent health care, welfare, courts, jails and
public safety in unincorporated areas. There are also about 480 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 other taxes. 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 from
the General Fund to make up some of the loss of property tax moneys, including
taking over the principal responsibility for funding local K-12 schools and
community colleges. Under the pressure of the recent recession, the
Legislature has eliminated the remnants of this post-Proposition 13 aid to
entities other than K-14 education districts, although it has also provided
additional funding sources (such as sales taxes) and reduced mandates for
local services. Many counties continue to be under severe fiscal stress.
While such stress has in recent years most often been experienced by smaller,
rural counties, larger urban counties, such as Los Angeles, have also been
affected.

On December 6, 1994, Orange County, California (the "County"),
together with its pooled investment funds (the "Pools") filed for protection
under Chapter 9 of the federal Bankruptcy Code, after reports that the Pools
had suffered significant market losses in their investments, causing a
liquidity crisis for the Pools and the County. More than 180 other public
entities, most of which, but not all, are located in the County, were also
depositors in the Pools. The County has reported the Pools' loss at about
$1.69 billion, or about 23 percent of their initial deposits of approximately
$7.5 billion. Many of the entities which deposited moneys in the Pools,
including the County, faced interim and/or extended cash flow difficulties
because of the bankruptcy filing and may be required to reduce program or
capital projects.

The State has no existing obligation with respect to any
outstanding obligations or securities of the County or any of the other
participating entities.

Constitutional and Statutory Limitations; Recent Initiatives;
Pending Litigation. Article XIIIA of the California Constitution (which
resulted from the voter-approved Proposition 13 in 1978) limits the taxing
powers of California public agencies. Article XIIIA provides that the maximum
ad valorem tax on real property cannot exceed 1% of the "full cash value" of
the property, and effectively prohibits the levying of any other ad valorem
property tax for general purposes. However, on May 3, 1986, Proposition 46,
an amendment to Article XIIIA, was approved by the voters of the State of
California, creating a new exemption under Article XIIIA permitting an
increase in ad valorem taxes on real property in excess of 1% 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

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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 2%) 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.

Article XIIIB of the California Constitution limits the amount of
appropriations of the State and of local governments to the amount of
appropriations of the entity for the prior year, adjusted for changes in the
cost of living, population and the services that the local government has
financial responsibility for providing. To the extent the revenues of the
state and/or local government exceed its appropriations, the excess revenues
must be rebated to the public either directly or through a tax decrease.
Expenditures for voter-approved debt services are not included in the
appropriations limit.

In 1986, California voters approved an initiative statute known as
Proposition 62. This initiative (i) required that any tax for general
governmental purposes imposed by local governments be approved by a majority
of the electorate of the government entity, (ii) required that any special tax
(defined as taxes levied for other than general government purposes) imposed
by a local government entity be approved by a two-thirds vote of the voters
within that jurisdiction, (iii) restricted the use of revenues from a special
tax to the purposes or for the service for which the special tax is imposed,
(iv) prohibited the imposition of ad valorem taxes on real property by local
government entities except as permitted by Article XIIIA, (v) prohibited the
imposition of transaction taxes and sales taxes on the sale of real property
by local governments, (vi) required that any tax imposed by a local government
on or after August 1, 1985 be ratified by a majority vote of the electorate
within two years of the adoption of the initiative or be terminated by
November 15, 1988, (vii) required that, in the event a local government fails
to comply with the provisions of this measure, a reduction in the amount of
property tax revenues allocated to such local government occur in an amount
equal to the revenues received by such entity attributable to the tax levied
in violation of the initiative, and (viii) permitted those provisions to be
amended exclusively by the voters of the State of California. On September
28, 1995, the California Supreme Court upheld the constitutionality of the
provision requiring a two-thirds vote in order for a local government to
impose a "special tax." Although the Supreme Court has yet to rule on the
provision requiring a majority vote for a "general tax," it appears the
Supreme Court is favorably disposed to uphold that portion of Proposition 62
as well. In that event, a number of taxes currently being collected
(especially by counties and general law cities) would be invalidated. Prior
collection of such taxes may also be subject to claims for refund unless the
Supreme Court chooses to apply its ruling prospectively. The California
Supreme Court has yet to consider the validity of Proposition 62 to charter
cities.

In 1988, California voters approved an initiative known as
Proposition 98. This initiative amends Article XIIIB to require that (i) the
California legislature establish a prudent state reserve fund in an amount as
it shall deem reasonable and necessary and (ii) revenues in excess of amounts
permitted to be spent and which would otherwise be returned pursuant to
Article XIIIB by revision of tax rates or fee schedules, be transferred and
allocated (up to a maximum of 40%) to the State School Fund and be expended
solely for purposes of instructional improvement and accountability.
Proposition 98 also amends Article XVI to require that the State of California
provide a minimum level of funding for public schools and community colleges.
Commencing with the 1988-89 fiscal year, money to be applied by the State for
the support of school districts and community college districts shall not be
less than the greater of: (i) the amount which, as a percentage of the State

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<PAGE>

general fund revenues which may be appropriated pursuant to Article XIIIB,
equals the percentage of such State general fund revenues appropriated for
school districts and community college districts, respectively, in fiscal year
1986-87 or (ii) the amount required to ensure that the total allocations to
school districts and community college districts from the State general fund
proceeds of taxes appropriated pursuant to Article XIIIB and allocated local
proceeds of taxes shall not be less than the total amount from these sources
in the prior year, adjusted for increases in enrollment and adjusted for
changes in the costs of living pursuant to the provisions of Article XIIIB.
The initiative permits the enactment of legislation, by a two-thirds vote, to
suspend the minimum funding requirement for one year. As a result of
Proposition 98, funds that the State might otherwise make available to its
political subdivisions may be allocated instead to satisfy such minimum
funding level.

Proposition 187. On November 8, 1994, California voters approved
a state-wide initiative entitled "Illegal Aliens Ineligibility for Public
Services Verification and Reporting Initiative Statute" ("Proposition 187").
Proposition 187 makes persons with foreign citizenship who have entered
California illegally ineligible for public social services, public health care
services (unless an emergency), and public school education at elementary,
secondary and post-secondary levels. The United States Immigration and
Naturalization Service ("INS") estimates that currently there are over 1.5
million illegal immigrants in California. Further, Proposition 187 requires
every school district to verify the status of every child enrolling for the
first time on and after January 1, 1995. By January 1, 1996, every school
district will be required to have verified the legal status of every child
enrolled in the school district as well as the parents and guardians of those
students. If a district "reasonably suspects" that a student, parent or
guardian is not legally in the United States, such district must report the
student to the United States Immigration and Naturalization Service and
certain other parties. The measure also prohibits a school district from
providing education to a student it does not verify as either a United States
citizen or a person legally admitted to the United States.

The California Legislative Analyst estimates that verification
costs could be in the tens of millions of dollars on a statewide level
(including verification costs incurred by other local governments under
Proposition 187) with first-year costs potentially in excess of $100 million.
The California Legislative Analyst also estimates that approximately 300,000
students in the California public education system are illegal immigrants.

It is possible that for every student a school district would be
forced to exclude under Proposition 187, it may lose a portion of the State
revenues it receives annually. Additionally, school districts must comply
with a variety of federal laws in order to receive federal funds. Both the
exclusion of students and the verification and reporting requirements of
Proposition 187 appear to be at odds with various federal and State laws. The
reporting requirements specifically may violate the Family Educational Rights
and Privacy Act ("FERPA") which generally prohibits schools that receive
federal funds from disclosing information in student records without parental
consent. Compliance with FERPA is a condition of receiving federal education
funds, which total $2.3 billion annually to California school districts. The
Secretary of the U.S. Department of Education has indicated that the reporting
requirement in Proposition 187 could jeopardize the ability of school
districts to receive these funds.

The United States Supreme Court in Plyler v. Doe held that access
to public education must be granted to all children. According to the State
Legislative Analyst, the exclusion of illegal immigrant children as set forth
in Proposition 187 is in direct conflict with Plyler v. Doe. Unless the
Supreme Court alters the position it took in Plyler v. Doe, the provision of

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Proposition 187 mandating the exclusion of illegal immigrant children appears
likely to be struck down. Even assuming an effective challenge regarding
exclusion of students, it is possible that school districts might still bear
the financial burden of verifying the legal status of its students and
reporting that status to the INS as well as a loss of federal funds as
discussed above.

Opponents of Proposition 187 have filed at least eight lawsuits
challenging the constitutionality and validity of the measure. A United
States District Court judge overseeing four of the lawsuits has granted a
injunction enjoining the implementation of most of the provisions of
Proposition 187.

Article XIIIA, Article XIIIB and a number of propositions have
been adopted pursuant to California's constitutional initiative process. From
time to time, other initiative measures could be adopted by California voters.
The adoption of any such initiatives may cause California issuers to receive
reduced revenues, or to increase expenditures, or both.

Pending Litigation. In Hayes v. Commission on State Mandates,
described on page B-63 of Appendix B, the Court of Appeal issued its decision
on December 31, 1992 remanding the case to the Commission on State Mandates.
The court held that the federal law (Education of the Handicapped Act)
constitutes a federal mandate as to the State, and further that federal and
state mandates are not mutually exclusive. The remaining issue is whether new
special education costs were imposed upon local school districts by federal
mandate or by state choice in the implementation of the federal program. The
California Supreme Court has denied review of the Court of Appeal's decision.
The matter has been remanded to the Commission on State Mandates for findings.

In the Yuba River flood litigation in which the State is a
defendant in a coordinated action, the trial court has found liability in
inverse condemnation and awarded damages of $500,000 to 12 sample plaintiffs.
Potential liability to the remaining 3,000 plaintiffs, from claims filed,
ranges from $800 million to $1.5 billion. An appeal has been filed.

In Parr v. State of California, the federal district court issued
an order on March 1, 1995, withdrawing its December 1992 order which found
that payment of wages with registered warrants violated the Fair Labor
Standards Act. Further proceedings are undetermined at this time. The
maximum amount of damages could be approximately $500 million.

In Penny Newman v. J.B. Stringfellow, et al., 17 of the 3,800
plaintiffs have litigated their claims; in half of these cases plaintiffs'
verdicts in the total amount of $159,000 were received and in the remaining
cases verdicts were rendered for the State. The other cases, which have not
been litigated, are in the process of settlement. In a separate suit, United
States, People of the State of California v. J.B. Stringfellow Jr. et al., the
State has been found liable by the District Court on the counterclaim. The
amount of liability is still being litigated.

The State recently lost several tax refund cases concerning the
method of determining gross insurance premiums involving health insurance.
The loss to the State will be approximately $200 million.

Several lawsuits have been filed by Malibu Video Systems in State
and Federal court to challenge the transfer of moneys from special fund
accounts within the State Treasury to the State's General Fund pursuant to the
Budget Acts of 1991, 1992 and 1993. Plaintiffs seek to have the transfers
reversed and the moneys, allegedly totaling approximately $800 million,
returned to the special funds.

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A federal Court of Appeals in the case of Deanna Beno, et al. v.
Donna Shalala, et al., reversing a trial court ruling in favor of the State,
recently determined that the Secretary of the United States Department of
Health and Human Services violated the federal Administrative Procedure Act
when she approved California's Assistance Payment Demonstration Project,
which, in part, granted California a waiver from complying with requirements
for state participation in the federal program for medical assistance
(Medicaid). The waiver had allowed California to reduce payments under the
Aid to Families with Dependent Children program (AFDC) below 1988 payment
levels without jeopardizing Medicaid requirements relating to maintenance of
AFDC payment levels. The Court of Appeals remanded the case to the trial
court with instructions to remand the demonstration project to the Secretary
for additional consideration of objections raised by the plaintiffs. The
State has submitted a renewed waiver request to the Secretary, which is
currently pending. The effect of the court's decision on California is
uncertain at this time.

One of the features of the 1994-95 Budget Act is a 2.3 percent
reduction in AFDC payments. In Welch v. Anderson, on August 19, 1994, the San
Francisco Superior Court issued a preliminary injunction against the
California Director of Social Services to prevent the 2.3 percent AFDC cuts
from becoming effective September 1, 1994. While September cuts were already
in process and could not be halted, the court ordered the cuts to be restored.
The case has been appealed, and the effect of the court's order cannot be
determined until the appellate process is complete.

The State is a respondent/defendant in two consolidated cases
(American Lung Association of California v. Wilson; Americans for Nonsmokers'
Rights v. State of California) challenging the purposes of specific
appropriations of funds totaling approximately $65 million for Fiscal Year
1994-95 and approximately $68 million for Fiscal Year 1995-96 from the
Cigarette and Tobacco Products Surtax Fund created by Proposition 99. The
petitioners/plaintiffs argue that the funds can only used for health education
and tobacco-related disease research programs. The appropriations primarily
fund health care services for low-income persons. On January 23, 1995, the
Superior Court issued an interim order in the consolidated cases prohibiting
the State from further encumbering the specifically appropriated funds and
from issuing or negotiating warrants from the appropriated funds. A final
order is expected to be issued after a further hearing on the remedy to be
granted. The effect on the General Fund is unclear. A third lawsuit
challenging the similar appropriations of Proposition 99 funds for Fiscal
Years 1989-90 through 1995-96 has been filed and is pending.

In the case of Board of Administration, California Public
Employees' Retirement System, et al. v. Pete Wilson, Governor, et al.,
plaintiffs challenged the constitutionality of legislation which deferred
payment of the State's employer contribution to the Public Employees'
Retirement System beginning in fiscal year 1992-93. On January 11, 1995, the
Sacramento County Superior Court entered a judgment finding that the
legislation unconstitutionally impaired the vested contract rights of PERS
members. The judgment provides for issuance of a writ of mandate directing
State defendants to disregard the provisions of the legislation, to implement
the statute governing employer contributions that existed before the changes
in the legislation found to be constitutional, and to transfer to PERS the
1993-94 and 1994-95 contributions that are unpaid to date. The State
defendant has appealed.

In Jernigan & Burleson v. State, filed in federal district court,
the prison inmate plaintiffs claim they are entitled to minimum wages while
working for the Prison Industry Authority. The inmates claim the State has
violated the Fair Labor Standards Act. The district court has ruled that the
inmates are not employees and the plaintiffs have appealed.

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Other California issuers are subject to litigation which may in
the event of an adverse ruling affect the finances of such issuer.

Michigan Trust

Due primarily to the fact that the leading sector of the State's
economy is the manufacturing of durable goods, economic activity tends to be
more cyclical than in the nation as a whole. While the State's efforts to
diversify its economy have proven successful as reflected by the fact that the
share of employment in the State in the durable goods sector fell from 33.1
percent in 1960 to 15.1 percent in 1993, durable goods manufacturing still
represents a sizeable proportion of the State's economy. As a result, any
substantial economic downturn is likely to have an adverse effect on the
State's economy and on the revenues of the State and its municipalities and
school districts. These conditions and other factors described below could
adversely affect the Michigan debt obligations that the Michigan trust
acquires and the value of the Units of the Trust.

Historically, the average monthly unemployment rate in the State
has been higher than the average figures for the United States. More
recently, the State's unemployment rate has remained near the national
average. During 1994 the average monthly unemployment rate in the State was
5.9% as compared to a national average of 6.1% in the United States.

The State's economy could continue to be affected by changes in
the auto industry, notably consolidation, reduction in administrative staff
and plant closings resulting from competitive pressures and overcapacity. The
financial impact on the local units of government in the areas in which plants
are closed could be more severe than on the State as a whole and could
adversely affect State revenues. State appropriations and State economic
conditions in varying degrees affect the cash flow and budgets of local units
and agencies of the State, including school districts and municipalities, as
well as the State of Michigan itself.

The State Constitution limits the amount of total revenues of the
State raised from taxes and certain other sources to a level for each fiscal
year equal to a percentage of State personal income in the prior calendar
year. In the event the State's total revenues exceed the limit by 1% or more,
the Constitution requires that the excess be refunded to taxpayers. The State
Constitution does not prohibit the increasing of taxes so long as revenues are
expected to amount to less than the revenue limit, and authorizes exceeding
the limit for emergencies. The State Constitution further provides that the
proportion of State spending paid to all units of local government to total
State spending may not be reduced below the proportion in effect in the
1978-79 fiscal year. The State Constitution requires that if the spending
does not meet the required level in a given year, an additional appropriation
for local units is required by the following fiscal year. The State
Constitution also requires the State to finance any new or expanded activity
of local units mandated by State law. Any expenditures required by this
provision would be counted as State spending for local units for purposes of
determining compliance with the provisions cited above.

The State Constitution limits the purposes for which State general
obligation debt may be issued. Such debt is limited to short-term debt for
State operating purposes, short and long term debt for the purposes of making
loans to school districts and long term debt for voter approved purposes. In
addition to the foregoing, the State authorizes special purpose agencies and
authorities to issue revenue bonds payable from designated revenues and fees.
Revenue bonds are not obligations of the State and in the event of shortfalls
in self-supporting revenues, the State has no legal obligation to appropriate
money to these service payments. The State's Constitution also directs or
restricts the use of certain revenues.

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The state finances its operations through the State's General Fund
and special revenue funds. The General Fund receives revenues of the State
that are not specifically required to be included in the Special Revenue Fund.
General Fund revenues are obtained approximately 59% from the payment of State
taxes and 41% from federal and non-tax revenue sources. The majority of the
revenues from State taxes are from the State's personal income tax, single
business tax, use tax, sales tax and various other taxes. Approximately 60%
of total General Fund expenditures have been for State support of public
education and for social services programs. Other significant expenditures
from the General Fund provide funds for law enforcement, general State
government, debt service and capital outlay. The State Constitution requires
that any prior year's surplus or deficit in any fund must be included in the
next succeeding year's budget for that fund.

In recent years, the State of Michigan has reported its financial
results in accordance with generally accepted accounting principles. For the
fiscal years ended September 30, 1990 and 1991, the State reported negative
year-end General Fund balances of $310.3 million and $169.4 million,
respectively, but ended the 1992, 1993 and 1994 fiscal years with its General
Fund in balance after transfers in 1993 and 1994 from the General Fund to the
Budget Stabilization Fund of $283 million and $464 million, respectively.
Those transfers raised the balance in the Budget Stabilization Fund to $779
million as of September 30, 1994. A positive cash balance in the combined
General Fund/School Aid Fund was recorded at September 30, 1990. In each of
the three fiscal years ending with the fiscal year ended September 30, 1993,
the State undertook mid-year actions to address projected year-end budget
deficits, including expenditure cuts and deferrals and one-time expenditures
or revenue recognition adjustments. From 1991 through 1993, the State
experienced deteriorating cash balances which have necessitated short-term
borrowings and the deferral of certain scheduled cash payments to local units
of government. The State borrowed between $500 and $900 million for cash flow
purposes in the 1991 to 1993 fiscal years and $500 million in the 1995 fiscal
year. The State did not require any short-term cash flow borrowing for the
1994 fiscal year due to improved cash balances.

Amendments to the Michigan Constitution which place limitations on
increases in State taxes and local ad valorem taxes (including taxes used to
meet debt service commitments on obligations of the taxing unit) were approved
by the voters of the State of Michigan in November 1978 and became effective
on December 23, 1978. To the extent that obligations in the Trust are for
local units and have been issued on or subsequent to December 23, 1978, the
ability of such local units to levy debt service taxes might be affected.

State law provides for distributions of certain State collected
taxes or portions thereof to local units based in part on population as shown
by census figures and authorizes levy of certain local taxes by local units
having a certain level of population as determined by census figures.
Reductions in population in local units resulting from periodic census could
result in a reduction in the amount of State collected taxes returned to those
local units and in reductions in levels of local tax collections for such
local units unless the impact of the census is changed by State law. No
assurance can be given that any such State law will be enacted. In the 1991
fiscal year, the state deferred certain scheduled payments to municipalities,
school districts, universities and community colleges. While such deferrals
were made up at later dates, similar future deferrals could have an adverse
impact on the cash position of some local units. Additionally, the State
reduced revenue sharing payments to municipalities below the level provided
under formulas by $10.9 million in the 1991 fiscal year, $34.4 million in the
1992 fiscal year, $45.5 million in the 1993 fiscal year, $54.5 million in the
1994 fiscal year and $67.0 million (budgeted) in the 1995 fiscal year.

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On March 15, 1994, the electors of the State voted to amend the
State's Constitution to increase the State sales tax rate from 4% to 6% and to
place an annual cap on property assessment increases for all property taxes.
Companion legislation also cut State's income tax rate from 4.6% to 4.4%,
reduced some property taxes for school operating purposes and shifted the
balance of school funding sources among property taxes and state revenues,
some of which are being provided from new or increased State taxes. The
legislation also contains other provisions that may reduce or alter the
revenues of local units of government and tax increment bonds could be
particularly affected. While the ultimate impact of the constitutional
amendment and related legislation cannot yet be accurately predicted,
investors should be alert to the potential effect of such measures upon the
operations and revenues of Michigan local units of government.

The State is a party to various legal proceedings seeking damages
or injunctive or other relief. In addition to routine litigation, certain of
these proceedings could, if unfavorably resolved from the point of view of the
State, substantially affect State or local programs or finances. These
lawsuits involve programs generally in the areas of corrections, highway
maintenance, social services, tax collection, commerce and budgetary
reductions to school districts and governmental units and court funding.

Currently, the State's general obligation bonds are rated "Aa" by
Moody's Investors Service, Inc., "AA" by Fitch Investor's Services, Inc., and
"AA" by Standard & Poor's Corporation.

New York Trust

State Economic Trends.

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

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

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

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New York City.

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

The national economic downturn which began in July 1990 adversely
affected the local economy, which had been declining since late 1989. As a
result, the City experienced job losses in 1990 and 1991 and real Gross City
Product (GCP) fell in those two years. For the 1992 fiscal year, the City
closed a projected budget gap of $3.3 billion in order to achieve a balanced
budget as required by the laws of the State of New York (the "State").
Beginning in calendar year 1992, the improvement in the national economy
helped stabilize conditions in the City. Employment losses moderated toward
year-end and real GCP increased, boosted by strong wage gains. The City's
current four-year financial plan assumes that, after noticeable improvements
in the City's economy during calendar year 1994, economic growth will slow in
calendar years 1995 and 1996 with local employment increasing modestly.
During the 1995 fiscal year, the City experienced substantial shortfalls in
payments of non-property tax revenues from those forecasted.

For each of the 1981 through 1994 fiscal years, the City achieved
balanced operating results as reported in accordance with generally accepted
accounting principles ("GAAP"), and the City's 1995 fiscal year results are
projected to be balanced in accordance with GAAP. The City was required to
close substantial budget gaps in recent years in order to maintain balanced
operating results. For fiscal year 1995, the City adopted a budget which
halted the trend in recent years of substantial increases in City spending
from one year to the next. The adopted budget for fiscal year 1996 reduces
City-funded spending for the second consecutive year. There can be no
assurance that the City will continue to maintain a balanced budget as
required by State law without additional tax or other revenue increases or
reductions in City services, which could adversely affect the City's economic
base.

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

The City depends on the State for State aid 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 or that State budgets in future fiscal years will
be adopted by the April 1 statutory deadline and that such reductions or
delays will not have adverse effects on the City's cash flow or expenditures.

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The Mayor is responsible for preparing the City's four-year
financial plan, including the City's current financial plan for the 1996
through 1999 fiscal years (the "1996-1999 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. Changes in major assumptions could significantly affect the
City's ability to balance its budget as required by State law and to meet its
annual cash flow and financing requirements. Such assumptions and
contingencies include the condition of the regional and local economies, the
impact on real estate tax revenues of the real estate market, wage increases
for City employees consistent with those assumed in the Financial Plan,
employment growth, the results of a pending actuarial audit of the City's
pension system which is expected to significantly increase the City's annual
pension costs, the ability to implement proposed reductions in City personnel
and other cost reduction initiatives, which may require in certain cases the
cooperation of the City's municipal unions, revenue generating transactions
and provision of State and Federal aid and mandate relief.

Implementation of the Financial Plan is also dependent upon the
City's ability to market its securities successfully in the public credit
markets. The City's financing program for fiscal years 1996 through 1999
contemplates the issuance of $9.7 billion of general obligation bonds
primarily to reconstruct and rehabilitate the City's infrastructure and
physical assets and to make other capital investments. In addition, the City
issues revenue and tax anticipation notes to finance its seasonal working
capital requirements. The City expects to issue $1.5 billion of revenue and
tax anticipation notes on or about August 2, 1995 to finance a portion of its
seasonal working capital requirements for the 1996 fiscal year and expects to
issue approximately $900 million of additional revenue anticipation notes in
October, 1995 to finance the remainder of its seasonal working capital
requirements for the 1996 fiscal year. The success of projected public sales
of City bonds and notes will be subject to prevailing market conditions, and
no assurance can be given that such sales will be completed. If the City were
unable to sell its general obligation bonds and notes, it would be prevented
from meeting its planned capital and operating expenditures.

The City submitted to the Control Board on July 21, 1995 a fourth
quarter modification to the City's financial plan for the 1995 fiscal year,
which projects a balanced budget in accordance with GAAP for the 1995 fiscal
year, after taking into account a discretionary transfer of $75 million. On
July 11, 1995, the City submitted to the Control Board the Financial Plan for
the 1996 through 1999 fiscal years, which relates to the City, the Board of
Education ("BOE") and the City University of New York ("CUNY"). The Financial
Plan is based on the City's expense and capital budgets for the City's 1996
fiscal year, which were adopted on June 14, 1995, and sets forth proposed
actions by the City for the 1996 fiscal year to close substantial projected
budget gaps resulting from lower than projected tax receipts and other
revenues and greater than projected expenditures. In addition to substantial
proposed agency expenditure reductions and productivity, efficiency and labor
initiatives negotiated with the City's labor unions, the Financial Plan
reflects a strategy to substantially reduce spending for entitlements for the
1996 and subsequent fiscal years.

1996-1999 Financial Plan. The 1996-1999 Financial Plan projects
revenues and expenditures for the 1996 fiscal year balanced in accordance with
GAAP. The projections for the 1996 fiscal year reflect proposed actions to
close a previously projected gap of approximately $3.1 billion for the 1996
fiscal year. The proposed actions in the Financial Plan for the 1996 fiscal
year include (i) a reduction in spending of $400 million, primarily affecting
public assistance and Medicaid payments by the City; (ii) expenditure
reductions in agencies, totalling $1.2 billion; (iii) transitional labor
savings, totalling $600 million; and (iv) the phase-in of the increased annual

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pension funding cost due to revisions resulting from an actuarial audit of the
City pension systems, which would reduce such costs in the 1996 fiscal year.
Other proposed actions include (i) welfare savings of $100 million from
increased fraud detection; (ii) $170 million of additional expenditure
reductions in agencies and HHC; (iii) a delay in the proposed reduction in the
commercial rent tax, which would increase projected revenues by $62 million in
the 1996 fiscal year; (iv) an increase of $75 million in projected tax
collections for the 1996 fiscal year; (v) $50 million of proposed additional
State aid not included in the adopted State budget and $75 million of proposed
additional Federal aid; (vi) certain revenue initiatives, including the
proposed sale of delinquent tax liens and the U.N. Plaza Hotel for $104
million; and (vii) savings from the proposed refunding of outstanding debt,
totalling $50 million.

The Financial Plan also includes $600 million in the 1996 fiscal
year, $400 million in the 1997 fiscal year and $200 million in the 1998 fiscal
year for transitional savings initiatives developed in conjunction with the
municipal labor unions. On June 30, 1995, the City and union leadership
announced agreement on $440 million in such savings in the 1996 fiscal year,
$400 million in the 1997 fiscal year and $200 million in savings in the 1998
fiscal year. Most of the remaining savings for the 1996 fiscal year have been
committed to and are to be identified by October 1, 1995. Of the $440 million
that has been identified, $200 million will result from health program
savings, $150 million from reduced pension contributions, $50 million from a
one-time reduction of welfare fund contributions which will be paid by the
City in fiscal year 2000 and $40 million from payroll and fringe benefit
savings associated with early retirement.

The proposed agency spending reductions include the reduction of
City personnel through attrition, government efficiency initiatives,
procurement initiatives and labor productivity initiatives. The substantial
agency expenditure reductions proposed in the Financial Plan may be difficult
to implement, and the Financial Plan is subject to the ability of the City to
implement proposed reductions in City personnel and other cost reduction
initiatives. In addition, certain initiatives are subject to negotiation with
the City's municipal unions, and various actions, including proposed
anticipated State aid totalling $50 million are subject to approval by the
Governor and State Legislature.

The City annually prepares a modification to its financial plan in
October or November which amends the financial plan to accommodate any
revisions to forecast revenues and expenditures and to specify any additional
gap-closing initiatives to the extent required to offset decreases in
projected revenues or increases in projected expenditures (the "First Quarter
Modification"). Subsequent to the preparation of the Financial Plan, the City
has agreed to pay for a portion of the cost of student transit passes, which
will result in a $45 million increase in expenditures for the 1996 fiscal
year. In addition, the City is in the process of identifying any additional
spending requirements or revenue losses affecting the 1996 fiscal year. In
October or November, 1995, the Mayor is expected to publish the First Quarter
Modification for the 1996 fiscal year.

The Financial Plan also sets forth projections for the 1997
through 1999 fiscal years and outlines a proposed gap-closing program to
eliminate projected gaps of $888 million, $1.5 billion and $1.4 billion for
the 1997, 1998 and 1999 fiscal years, respectively, after successful
implementation of the $3.1 billion gap-closing program for the 1996 fiscal
year.

The projections and assumptions contained in the 1996-1999
Financial Plan are subject to revision which may involve substantial change,
and no assurance can be given that these estimates and projections, which

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include actions which the City expects will be taken but which are not within
the City's control, will be realized.

Assumptions. The projections for the 1996 through 1999 fiscal
years assume (i) agreement with the City's unions with respect to
approximately $100 million of savings to be derived from efficiencies in
management of employee health insurance programs and other health benefit
related savings for each of the 1996 through 1999 fiscal years to be
negotiated with the City's unions; (ii) $200 million of additional anticipated
State aid and $75 million of additional anticipated Federal aid in each of the
1997 through 1999 fiscal years; (iii) that HHC and BOE will each be able to
identify actions to offset substantial revenue shortfalls reflected in the
Financial Plan, including approximately $254 million annual reduction in
revenues for HHC, which results from the reduction in Medicaid payments
proposed by the State and the City, without any increase in City subsidy
payments to HHC; (iv) the continuation of the current assumption of no wage
increases after fiscal year 1995 for City employees unless offset by
productivity increases; (v) $130 million of additional revenues as a result of
increased rent payments for the City's airports proposed by the City, which is
subject to further discussion with the Port Authority; and (vi) savings of $45
million in each of the 1997 through 1999 fiscal years which would result from
the State Legislature's enactment of proposed tort reform legislation. In
addition, the 1996-1999 Financial Plan anticipates the receipt of substantial
amounts of Federal aid. Certain Federal legislative proposals contemplate
significant reductions in Federal spending, including proposed Federal welfare
reform, which could result in caps on, or block grants of, Federal programs.

Actions to Close the Gaps. The proposed gap-closing actions, a
substantial number of which are not specified in detail, include additional
agency expenditure reductions, primarily resulting from a partial hiring
freeze, totalling between $388 million and $684 million in each of the 1997
through 1999 fiscal years; reductions in expenditures resulting from proposed
procurement initiatives totalling between $50 million and $100 million in each
of the 1997 through 1999 fiscal years; revenue initiatives totalling between
$100 million and $200 million in each of the 1997 through 1999 fiscal years;
the availability in each of the 1997, 1998 and 1999 fiscal years of $100
million of the general reserve appropriated in the prior year; and additional
reduced expenditures resulting from further revisions in entitlement programs
to reduce City expenditures by $250 million, $400 million and $400 million in
the 1997, 1998 and 1999 fiscal years, respectively, which may be subject to
State or Federal approval.

On July 10, 1995, Standard & Poor's revised downward its rating on
City general obligation bonds from A- to BBB+ and removed City bonds from
CreditWatch. Standard & Poor's stated that "structural budgetary balance
remains elusive because of persistent softness in the City's economy,
highlighted by weak job growth and a growing dependence on the historically
volatile financial services sector". Other factors identified by Standard &
Poor's in lowering its rating on City bonds included a trend of using one-time
measures, including debt refinancings, to close projected budget gaps,
dependence on unratified labor savings to help balance the Financial Plan,
optimistic projections of additional federal and State aid or mandate relief,
a history of cash flow difficulties caused by State budget delays and
continued high debt levels. Fitch Investors Service, Inc. ("Fitch") continues
to rate the City general obligation bonds A-. Moody's rating for City general
obligation bonds is Baa1.

Collective Bargaining Agreements. In January 1993, the City
announced a settlement with a coalition of 19 municipal unions for a 39-month
period that extends into fiscal year 1995. The settlement which was ratified
by the Unions, resulted in a total net expenditure increase of 8.25% of
covered employee payroll over a 39-month period, ending March 31, 1995, for

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most of these employees. Subsequently, the City reached agreement with all of
its major bargaining units on terms which are generally consistent with the
coalition agreement.

Contracts with all of the City's municipal unions either expired
in the 1995 fiscal year or will expire in the 1996 fiscal year. The Financial
Plan provides no additional wage increases for City employees after the 1995
fiscal year. Each 1% wage increase for all union contracts commencing in the
1995 or 1996 fiscal year would cost the City an additional $141 million for
the 1996 fiscal year and $161 million each year thereafter above the amounts
provided for in the Financial Plan. The terms of wage settlements could be
determined through the impasse procedure in the New York City Collective
Bargaining Law, which can impose a binding settlement.

Certain Reports. From time to time, the Control Board staff, the
Municipal Assistance Corporation for the City of New York ("MAC"), Office of
the State Deputy Comptroller ("OSDC"), the City Comptroller and others issue
reports and make public statements regarding the City's financial condition,
commencing on, among other matters, the City's financial plans, projected
revenues and expenditures and actions by the City to eliminate projected
operating deficits. Some of these reports and statements have warned that the
City may have underestimated certain expenditures and overestimated certain
revenues and have suggested that the City may not have adequately provided for
future contingencies. Certain of these reports have analyzed the City's
future economic and social conditions and have questioned whether the City has
the capacity to generate sufficient revenues in the future to meet the costs
of its expenditure increases and to provide necessary services. It is
reasonable to expect that such reports and statements will continue to be
issued and to engender public comment.

On July 24, 1995, the City Comptroller issued a report on the
Financial Plan. The report concluded that the Financial Plan includes total
risks of $749 million to $1.034 billion for the 1996 fiscal year. These risks
include (i) possible tax revenue shortfalls of $53 million; (ii) a possible
$20 million to $60 million shortfall in savings resulting from unspecified
improvements in the City's health benefits system; (iii) a potential shortfall
of up to $40 million in projected savings from an early retirement program;
(iv) the receipt of $125 million of unspecified additional Federal and State
assistance; (v) up to $203 million of projected savings from the public
assistance eligibility review and electronic signature program for public
assistance recipients; (vi) $93 million of greater than projected expenditures
for overtime; (vii) $284 million of greater than projected expenditures and
lower than projected revenues at BOE; and (viii) the receipt of $130 million
of lease payments from the Port Authority. Other potential uncertainties
identified in the report include the projected $253.6 million deficit for the
Health and Hospitals Corporation ("HHC"), $160 million of the $600 million in
labor savings for the 1996 fiscal year which are yet to be identified, and the
impact on the City of a possible reduction in Federal entitlement programs.
Subsequently, the City Comptroller stated that an additional $129 million of
anticipated State and Federal assistance for BOE might not be received by BOE.

With respect to the 1997 through 1999 fiscal years, the report
noted that the gap-closing program in the Financial Plan does not include
information about how the City will implement the various gap-closing
programs, and that the entitlement cost containment and revenue initiatives
will require approval of the State legislature. Taking into account the same
categories of risks for the 1997 through 1999 fiscal years as the report
identified for the 1996 fiscal year and the uncertainty concerning the gap-
closing program, the report estimated that the Financial Plan includes total
risks of $2.0 billion to $2.5 billion in the 1997 fiscal year, $2.8 billion to
$3.3 billion in the 1998 fiscal year and $2.9 billion to $3.4 billion in the
1999 fiscal year. The report further noted that the City Comptroller

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continues to oppose the proposed sale of the water system, primarily because
of the unwillingness of the City to guarantee that $1 billion from the $2.3
billion in proceeds of the sale will be used only to fund capital and not
operating expenses, and concerns about the jurisdiction and composition of the
Water Board once title to the Water Board has been transferred.

In early December, 1994, the City Comptroller issued a report
which noted that the City is currently seeking to develop and implement plans
which will satisfy the Federal Environmental Protection Agency that the water
supplied by the City watershed areas does not need to be filtered. The City
Comptroller noted that, if the City is ordered to build filtration plants,
they could cost as much as $4.57 billion to construct, with annual debt
service and operating costs of more than $500 million, leading to a water rate
increase of 45%.

On December 16, 1994, the City Comptroller issued a report noting
that the capacity of the City to issue general obligation debt could be
greatly reduced in future years due to the decline in value of taxable real
property. The report noted that, under the State constitution, the City is
permitted to issue debt in an amount not greater than 10% of the average full
value of taxable real estate for the current year and preceding four years,
that the latest estimates produced by the State Board of Equalization and
Assessment relating to the full value of real property, using data from a 1992
survey, indicate a 19% decline in the market value of taxable real property
from the previous survey in 1990, and that the State Board has decided to use
a projected annual growth rate of 8.84%, as compared to its previous
projection of 14% for estimating full value after 1992. The report concludes
that the City will be within the projected legal debt incurring limit in the
1996 fiscal year. However, the report concluded that, based on the most
likely forecast of full value of real property, the debt incurring power of
the City would be curtailed in the 1997 and 1998 fiscal years substantially.
The City Comptroller recommended, among other things, prioritization of
capital projects to determine which can be delayed or cancelled, and better
maintenance of the City's physical plant and infrastructure, which would
result in less capital spending for repair and replacement of capital
structures.

On July 21, 1995, the staff of the Control Board issued a report
on the Financial Plan which identified risks of $873 million, $2.1 billion,
$2.8 billion and $2.8 billion for the 1996 through 1999 fiscal years,
respectively. With respect to the 1996 fiscal year, the principal risks
included (i) possible shortfalls in projected tax revenues totalling $50
million, (ii) the possibility that revenue actions and expenditure reduction
initiatives for BOE totalling $266 million might not be successfully
implemented, (iii) possible shortfalls totalling $172 million in proposed
welfare savings from increased fraud detection, and (iv) uncertainty
concerning the $50 million of proposed additional State aid and $75 million of
proposed additional Federal aid, the proposed receipt of $130 million of
increased rent payments for the City's airports and the $100 million of
savings to be derived from health benefit-related savings, which are subject
to negotiations with or approvals by other parties. Additional risks
identified for the 1997 through 1999 fiscal years include the possibility of
additional tax revenue shortfalls, uncertainty concerning the ability of the
City to implement the gap-closing actions for such years and uncertainty
concerning the projected receipt of additional anticipated State aid. Other
areas of concern identified in the report included the projected deficit at
HHC of approximately $400 million, reflecting the impact on HHC of the
entitlement reductions contained in the State budget and the City's reduction
in the subsidy provided to HHC, and the assumption in the Financial Plan that
the City will realize the full $400 million of projected savings in public
assistance and Medicaid payments enacted at the State level. The report noted

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that substantially more information is needed concerning the proposed gap-
closing actions for the 1997-1999 fiscal years.

On June 14, 1995, the staff of the OSDC issued a report on the
Financial Plan with respect to the 1995 fiscal year. The report noted that,
during the 1995 fiscal year, the City faced adverse financial developments
totalling over $2 billion resulting from the inability to initiate
approximately 35% of the City's gap-closing program, as well as newly-
identified spending needs and revenue shortfalls resulting from the adverse
impact on the City's personal income, general corporation and other tax
revenues of the policy of the Federal Reserve of increasing short-term
interest rates and the related downturn in the bond market and profits and
bonus income on Wall Street. The report noted that the City relied heavily on
one-time actions to offset these adverse developments, using $2 billion in
one-time resources in the 1995 fiscal year, or nearly double the 1994 amount.

On July 24, 1995, the staff of the OSDC issued a report on the
Financial Plan. The report concluded that there remains a budget gap for the
1996 fiscal year of $392 million, largely because the City and its unions have
yet to reach an agreement on how to achieve $160 million in unspecified labor
savings and the remaining $100 million in recurring health insurance savings
from last year's agreement. The report also identified a number of issues
that present a net potential risk of $409 million to the City's revenue and
expenditure forecasts for the 1996 fiscal year, including risks of (i) $160
million associated with anticipated increases in Federal and State assistance,
(ii) $130 million relating to projected Port Authority airport lease payments,
and (iii) $100 million with respect to unfunded BOE mandates. The report also
identified several other concerns regarding the 1996 fiscal year, including
concerns that (i) detailed programs have not yet been fully developed to meet
the $564 million and $400 million cost-reduction targets established for BOE
and HHC, respectively; (ii) State and City initiatives to reduce public
assistance and Medicaid costs, which are expected to reduce City costs by $745
million in the 1996 fiscal year, will require close monitoring to ensure that
financial targets are met; (iii) the City has not provided sufficient
assurances that the bond proceeds from its proposed sale of the water and
sewer system would be used strictly for capital spending purposes; and (iv)
the Financial Plan makes no provision for wage increases in the collective
bargaining agreements between the City and its unions, which generally will
expire by October, 1995. The report further noted that growth in City
revenues is being constrained by the weak economy in the City, which is likely
to be compounded by the slowing national economy, and that there is a
likelihood of a national recession during the course of the Financial Plan.
Moreover, the report noted that State and Federal budgets are undergoing
tumultuous changes, and that the potential for far-reaching reductions in
intergovernmental assistance is clearly on the horizon, with greater
uncertainty about the impact on City finances and services.

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

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the State or the City. As of June 30, 1995, MAC had outstanding an aggregate
of approximately $4.882 billion of its bonds.

New York State and Its Authorities.

New York State's (the "State") current fiscal year commenced on
April 1, 1995, and ends on March 31, 1996, and is referred to herein as the
State's 1995-96 fiscal year. The prior fiscal year, which commenced on
April 1, 1994 and ended on March 31, 1995, is referred to herein as the
State's 1994-95 fiscal year.

The State's budget for the 1995-96 fiscal year was enacted by the
Legislature on June 7, 1995, more than two months after the start of the
fiscal year. Prior to adoption of the budget, the Legislature enacted
appropriations for disbursements considered to be necessary for State
operations and other purposes, including all necessary appropriations for debt
service. The State Financial Plan for the 1995-96 fiscal year was formulated
on June 20, 1995 and is based on the State's budget as enacted by the
Legislature and signed into law by the Governor. The State Financial Plan
will be updated quarterly pursuant to law in July, October and January.

The 1995-96 budget is the first to be enacted in the
administration of the Governor, who assumed office on January 1. It is the
first budget in over half a century which proposed and, as enacted, projects
an absolute year-over-year decline in General Fund disbursements. Spending
for State operations is projected to drop even more sharply, by 4.6 percent.
Nominal spending from all State funding sources (i.e., excluding Federal aid)
is proposed to increase by only 2.5 percent from the prior fiscal year, in
contrast to the prior decade when such spending growth averaged more than 6.0
percent annually.

In his Executive Budget, the Governor indicated that in the
1995-96 fiscal year, the State Financial Plan, based on then-current law
governing spending and revenues, would be out of balance by almost $4.7
billion, as a result of the projected structural deficit resulting from the
ongoing disparity between sluggish growth in receipts, the effect of prior-
year tax changes, and the rapid acceleration of spending growth; the impact of
unfunded 1994-95 initiatives, primarily for local aid programs; and the use of
one-time solutions, primarily surplus funds from the prior year, to fund
recurring spending in the 1994-95 budget. The Governor proposed additional
tax cuts, to spur economic growth and provide relief for low and middle-income
tax payers, which were larger than those ultimately adopted, and which added
$240 million to the then projected imbalance or budget gap, bringing the total
to approximately $5 billion.

This gap is projected to be closed in the 1995-96 State Financial
Plan based on the enacted budget, through a series of actions, mainly spending
reductions and cost containment measures and certain reestimates that are
expected to be recurring, but also through the use of one-time solutions. The
State Financial Plan projects (i) nearly $1.6 billion in savings from cost
containment, disbursement reestimates, and other savings in social welfare
programs, including Medicaid, income maintenance and various child and family
care program; (ii) $2.2 billion in savings from State agency actions to reduce
spending on the State workforce, State University of New York ("SUNY") and
City University of New York ("CUNY"), mental hygiene programs, capital
projects, the prison system and fringe benefits; (iii) $300 million in savings
from local assistance reforms, including actions affecting school aid and
revenue sharing while proposing program legislation to provide relief from
certain mandates that increase local spending; (iv) over $400 million in
revenue measures, primarily a new Quick Draw Lottery game, changes to tax
payment schedules, and the sale of assets; and (v) $300 million from
reestimates in receipts.

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There are risks and uncertainties concerning the future-year
impact of tax reductions and other measures in 1995-96 budget.

State Financial Plan Background. The economic and financial
condition of the State may be affected by various financial, social, economic
and political factors. Those factors can be very complex, may vary from
fiscal year to fiscal year, and are frequently the result of actions taken not
only by the State and its agencies and instrumentalities, but also by
entities, such as the Federal government, that are not under the control of
the State. For example, various proposals relating to Federal tax and
spending policies that are currently being publicly discussed and debated
could, if enacted, have a significant impact on the State's financial
condition in the current and future fiscal years. Because of the uncertainty
and unpredictability of the changes, their impact cannot, as a practical
matter, be included in the assumptions underlying the State's projections at
this time.

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

Projections of total State receipts in the State Financial Plan
are based on the State tax structure in effect during the fiscal year and on
assumptions relating to basic economic factors and their historical
relationships to State tax receipts. In preparing projections of State
receipts, economic forecasts relating to personal income, wages and employment
have been particularly important. The projection of receipts from most tax or
revenue sources is generally made by estimating the change in yield of such
tax or revenue source caused by economic and other factors, rather than by
estimating the total yield of such tax or revenue source from its estimated
tax base. The forecasting methodology, however, ensures that State fiscal
year estimates for taxes that are based on a computation of annual liability,
such as the business and personal income taxes, are consistent with estimates
of total liability under such taxes.

Projections of total State disbursements are based on assumptions
relating to economic and demographic factors, levels of disbursements for
various services provided by local governments (where the cost is partially
reimbursed by the State), and the results of various administrative and
statutory mechanisms in controlling disbursements for State operations.
Factors that may affect the level of disbursements in the fiscal year include
uncertainties relating to the economy of the nation and the State, the
policies of the Federal government, and changes in the demand for and use of
State services.

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

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Current Economic Outlook. The national economy began the current
expansion in 1991 and has added over 7 million jobs since early 1992.
However, the recession lasted longer in the State and the State's economic
recovery has lagged behind the nation's. Although the State has added
approximately 185,000 jobs since November 1992, employment growth in the State
has been hindered during recent years by significant cutbacks in the computer
and instrument manufacturing, utility, defense, and banking industries.

The State Financial Plan is based on a projection by DOB of
national and State economic activity. DOB forecasts that national economic
growth will weaken, but not turn negative, during the course of 1995 before
beginning to rebound by the end of the year. This dynamic is often described
as a "soft landing". The overall rate of growth of the national economy
during calendar year 1995 will be slightly below the "consensus" of a widely
followed survey of national economic forecasters. Growth in the real gross
domestic product during 1995 is projected to be moderate (3.0 percent), with
declines in defense spending and net exports more than offset by increases in
consumption and investment. Continuing efforts by business and government to
reduce costs are expected to exert a drag on economic growth. Inflation, as
measured by the Consumer Price Index, is projected to remain about 3 percent
due to moderate wage growth and foreign competition. Personal income and
wages are projected to increase by about 6 percent or more.

New York's economy is expected to continue to expand modestly
during 1995, but there will be a pronounced slow-down during the course of the
year. Although industries that export goods and services abroad are expected
to benefit from the lower dollar, growth will be slowed by government cutbacks
at all levels. On an average annual basis, employment growth will be about
the same as 1994. Both personal income and wages are expected to record
moderate gains in 1995. Bonus payments in the securities industry are
expected to increase from last year's depressed level.

1995-96 State Financial Plan. The four governmental fund types
that comprise the State Financial Plan are the General Fund, the Special
Revenue Funds, the Capital Projects Funds, and the Debt Service Funds.

General Fund. The General Fund is the principal operating fund of
the State and is used to account for all financial transactions, except those
required to be accounted for in another fund. It is the State's largest fund
and receives almost all State taxes and other resources not dedicated to
particular purposes. In the State's 1995-96 fiscal year, the General Fund is
expected to account for approximately 49 percent of total governmental-fund
disbursements and 71 percent of total State-funded disbursements. General
Fund moneys are also transferred to other funds, primarily to support certain
capital projects and debt service payments in other fund types.

The General Fund is projected to be balanced on a cash basis for
the 1995-96 fiscal year. Total receipts and transfers from other funds are
projected to be $33.110 billion, a decrease of $48 million from total receipts
in the prior fiscal year. Total General Fund disbursements and transfers to
other funds are projected to be $33.055 billion, a decrease of $344 million
from the total amount disbursed in the prior fiscal year.

In recent years, State actions affecting the level of receipts and
disbursements, as well as the relative strength of the State and regional
economy, actions of the Federal government and other factors, have created
structural budget gaps for the State. These gaps resulted from a significant
disparity between recurring revenues and the costs of maintaining or
increasing the level of support for State programs. The 1995-96 enacted
budget combines significant tax and program reductions which will, in the
current and future years, lower both the recurring receipts base (before the
effect of any economic stimulus from such tax reductions) and the historical

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annual growth in State program spending. Notwithstanding these changes, the
State can expect to continue to confront structural deficits in future years.

The 1995-96 State Financial Plan includes actions that will have
an effect on the budget outlook for State fiscal year 1996-97 and beyond. The
Division of the Budget estimates that the 1995-96 State Financial Plan
contains actions that provide nonrecurring resources or savings totalling
approximately $900 million. These include the use of balances set aside
originally for mass transportation aid ($220 million), the use of a reserve
established to fund pension supplementation costs ($110 million) and the use
of lottery balances ($62 million). The Comptroller believes that the amount
of nonrecurring resources or savings exceeds $1.0 billion. The Division of
the Budget also estimates that the 1995-96 State Financial Plan contains
nonrecurring expenditures totalling nearly $250 million. These include the
payment of social services litigation ($65 million), the deposit to the
Contingency Reserve Fund ($40 million), the payment of 1993-94 pension charges
($56 million) and aid for maintenance costs of local schools ($45 million).
The net amount of nonrecurring resources used in the 1995-96 State Financial
Plan, accordingly, is estimated by the Division of the Budget at over $600
million.

In addition to this use of nonrecurring resources, the 1995-96
State Financial Plan reflects actions that will directly affect the State's
1996-97 fiscal year baseline receipts and disbursements. The three-year plan
to reduce State personal income taxes will decrease State tax receipts by an
estimated $1.7 billion in State fiscal year 1996-97, in addition to the amount
of reduction in State fiscal year 1995-96. Further significant reductions in
the personal income tax are scheduled for the 1997-98 State fiscal year.
Other tax reductions enacted in 1994 and 1995 are estimated to cause an
additional reduction in receipts of over $500 million in 1996-97, as compared
to the level of receipts in 1995-96. Similarly, many actions taken to reduce
disbursements in the State's 1995-96 fiscal year are expected to provide
greater reductions in State fiscal year 1996-97. These include actions to
reduce the State workforce, reduce Medicaid and welfare expenditures and slow
community mental hygiene program development.

The net impact of these and other factors is expected to produce a
potential imbalance in receipts and disbursements in State fiscal year
1996-97. The Governor has indicated that in the 1996-97 Executive Budget he
will propose to close this potential imbalance primarily through General Fund
expenditure reductions and without increases in taxes or deferrals of
scheduled tax reductions.

To address a potential imbalance in any given fiscal year, the
State would be required to take actions to increase receipts and/or reduce
disbursements as it enacts the budget for that year, and under the State
Constitution, the Governor is required to propose a balanced budget each year.
To correct recurring budgetary imbalances, the State would need to take
significant actions to align recurring receipts and disbursement in future
fiscal years. There can be no assurance, however that the Legislature will
enact the Governor's proposals or that the State's actions will be sufficient
to preserve budgetary balance in a given fiscal year or to align recurring
receipts and disbursements in future fiscal years.

Special Revenue Funds. Special Revenue Funds are used to account
for the proceeds of specific revenue sources such as Federal grants that are
legally restricted, either by the Legislature or outside parties, to
expenditures for specified purposes. Although activity in this fund type is
expected to comprise more than 40 percent of total government funds receipts
and disbursements in the 1995-96 fiscal year, about three-quarters of that
activity relates to Federally-funded programs. Projected receipts in this
fund type total $25.547 billion, an increase of $1.316 billion over the prior

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year. Projected disbursements in this fund type total $26.002 billion, an
increase of $1.641 billion over 1994-95 levels. Disbursements from Federal
funds, primarily the Federal share of Medicaid and other social services
programs, are projected to total $19.209 billion in the 1995-96 fiscal year.
Remaining projected spending of $6.793 billion primarily reflects aid to SUNY
supported by tuition and dormitory fees, education aid funded from lottery
receipts, operating aid payments to the Metropolitan Transportation Authority
funded from the proceeds of dedicated transportation taxes, and costs of a
variety of self-supporting programs which deliver services financed by user
fees.

Capital Projects Funds. Capital Projects Funds are used to
account for the financial resources used for the acquisition, construction, or
rehabilitation of major State capital facilities and for capital assistance
grants to certain local governments or public authorities. This fund type
consists of the Capital Projects Fund, which is supported by tax dollars
transferred from the General Fund, and 37 other capital funds established to
distinguish specific capital construction purposes supported by other
revenues. In the 1995-96 fiscal year, activity in these funds is expected to
comprise 7 percent of total governmental receipts and disbursements.
Disbursements from this fund type are projected to increase by $541 million
over prior-year levels, primarily reflecting higher spending for
transportation and mental hygiene projects. The Dedicated Highway and Bridge
Trust Fund is projected to comprise 23 percent of the activity in this fund
type -- $936 million in 1995-96 -- and is the single largest dedicated fund.
Projected disbursements from this dedicated fund reflect an increase of $80
million over 1994-95 levels. Spending for capital projects will be financed
through a combination of sources: Federal grants (25 percent), public
authority bond proceeds (38 percent), general obligation bond proceeds (9
percent), and current revenues (28 percent). Total receipts in this fund type
are projected at $4.170 billion, not including $364 million expected to be
available from the proceeds of general obligation bonds.

Debt Service Funds. Debt Service Funds are used to account for
the payment of principal of, and interest on, long-term debt of the State and
to meet commitments under lease-purchase and other contractual-obligation
financing arrangements. This fund is expected to comprise 4 percent of total
governmental fund receipts and disbursements in the 1995-96 fiscal year.
Receipts in these funds in excess of debt service requirements are transferred
to the General Fund and Special Revenue Funds, pursuant to law. The Debt
Service fund type consists of the General Debt Service Fund, which is
supported primarily by tax dollars transferred from the General Fund, and
seven other funds. In the 1995-96 fiscal year, total disbursements in this
fund type are projected at $2.506 billion, an increase of $303 million or 13.8
percent. The transfer from the General Fund of $1.583 billion is expected to
finance 63 percent of these payments. The remaining payments are expected to
be financed by pledged revenues, including $1.794 billion in taxes, $228
million in dedicated fees, and $2.200 billion in patient revenues, including
transfers of Federal reimbursements.

Discussion and Analysis. New York State's financial operations
have improved during recent fiscal years. During the period 1989-90 through
1991-92, the State incurred General Fund operating deficits that were closed
with receipts from the issuance of tax and revenue anticipation notes
("TRANs"). First, the national recession, and then the lingering economic
slowdown in the New York and regional economy, resulted in repeated shortfalls
in receipts and three budget deficits. For its 1992-93, 1993-94 and 1994-95
fiscal years, the State recorded balanced budgets on a cash basis, with
substantial fund balances in 1992-93 and 1993-94, and a smaller fund balance
in 1994-95 as described below.

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1994-95 Fiscal Year. New York State ended its 1994-95 fiscal year
with the General Fund in balance. The closing fund balance of $158 million
reflects $157 million in the Tax Stabilization Reserve Fund and $1 million in
the Contingency Reserve Fund ("CRF"). The CRF was established in State Fiscal
year 1993-94, funded partly with surplus moneys, to assist the State in
financing the 1994-95 fiscal year costs of extraordinary litigation known or
anticipated at that time; the opening fund balance in State fiscal year
1994-95 was $265 million. The $241 million change in the fund balance
reflects the use of $264 million in the CRF as planned, as well as the
required deposit of $23 million to the Tax Stabilization Reserve Fund. In
addition, $278 million was on deposit in the tax refund reserve account, $250
million of which was deposited at the end of the State's 1994-95 fiscal year
to continue the process of restructuring the State's cash flow as part of the
Local Government Assistance Corporation ("LGAC") program.

Compared to the State Financial Plan for 1994-95 as formulated on
June 16, 1994, reported receipts fell short of original projections by $1.163
billion, primarily in the categories of personal income and business taxes.
Of this amount, the personal income tax accounts for $800 million, reflecting
weak estimated tax collections and lower withholding due to reduced wage and
salary growth, more severe reductions in brokerage industry bonuses than
projected earlier, and deferral of capital gains realizations in anticipation
of potential Federal tax changes. Business taxes fell short by $373 million,
primarily reflecting lower payments from banks as substantial overpayments of
1993 liability depressed net collections in the 1994-95 fiscal year. These
shortfalls were offset by better performance in the remaining taxes,
particularly the user taxes and fees, which exceeded projections by $210
million. Of this amount, $227 million was attributable to certain
restatements for accounting treatment purposes pertaining to the CRF and LGAC;
these restatements had no impact on balance in the General Fund.

Disbursements were also reduced from original projections by $848
million. After adjusting for the net impact of restatements relating to the
CRF and LGAC which raised disbursements by $38 million, the variance is $886
million. Well over two-thirds of this variance is in the category of grants
to local governments, primarily reflecting the conservative nature of the
original estimates of projected costs for social services and other programs.
Lower education costs are attributable to the availability of $110 million in
additional lottery proceeds and the use of LGAC bond proceeds.

The spending reductions also reflect $188 million in actions
initiated in January 1995 by the Governor to reduce spending to avert a
potential gap in the 1994-95 State Financial Plan. These actions included
savings from a hiring freeze, halting the development of certain services, and
the suspension of non-essential capital projects. These actions, together
with $71 million in other measures comprised the Governor's $259 million gap-
closing plan, submitted to the Legislature in connection with the 1995-96
Executive Budget.

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

Of the $1.140 billion deposited in the tax refund reserve account,
$1.026 billion was available for budgetary planning purposes in the 1994-95

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fiscal year. The remaining $114 million was redeposited in the tax refund
reserve account at the end of the State's 1994-95 fiscal year to continue the
process of restructuring the State's cash flow as part of the LGAC program.
The balance in the CRF was reserved to meet the cost of litigation facing the
State in its 1994-95 fiscal year.

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

The higher receipts resulted, in part, because the New York
economy performed better than forecasted. Employment growth started in the
first quarter of the State's 1993-94 fiscal year, and, although this lagged
behind the national economic recovery, the growth in New York began earlier
than forecasted. The New York economy exhibited signs of strength in the
service sector, in construction, and in trade. Long Island and the Mid-Hudson
Valley continued to lag behind the rest of the State in economic growth. The
DOB believes that approximately 100,000 jobs were added during the 1993-94
fiscal year.

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

During the 1993-94 fiscal year, the State also established and
funded the CRF as a way to assist the State in financing the cost of
litigation affecting the State. The CRF was initially funded with a transfer
of $100 million attributable to the positive margin recorded in the 1992-93
fiscal year. In addition, the State augmented this initial deposit with $132
million in debt service savings attributable to the refinancing of State and
public authority bonds during 1993-94. A year-end transfer of $36 million was
also made to the CRF, which, after a disbursement for authorized fund
purposes, brought the CRF balance at the end of 1993-94 to $265 million. This
amount was $165 million higher than the amount originally targeted for this
reserve fund.

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

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

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

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

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challenges to the promulgation of the State's proposed procedure to determine
the eligibility for and nature of home care services for Medicaid recipients;
(15) a challenge to State implementation of a program which reduces Medicaid
benefits to certain home-relief recipients; (16) challenges to the rationality
and retroactive application of State regulations recalibrating nursing home
Medicaid rates; and (17) a challenge by AT&T to New York Tax Law Section 186-
a(2-a) as violative of the Commerce Clause of the U.S. Constitution.

Pennsylvania Trust

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

State Finance

State Economy. The Commonwealth of Pennsylvania is one of the
most populous states, ranking fifth behind California, New York, Texas and
Florida. Pennsylvania is an established yet growing state with a diversified
economy. It is the headquarters for 60 major corporations and the home for
more than 272,764 businesses. Pennsylvania historically has been identified
as a heavy industry state although that reputation has changed recently as the
industrial composition of the Commonwealth diversified when the coal, steel
and railroad industries began to decline. The major new sources of growth in
Pennsylvania are in the service sector, including trade, medical and the
health services, education and financial institutions. Pennsylvania's
agricultural industries are also an important component of the Commonwealth's
economic structure, accounting for more than $3.73 billion in crop and
livestock products annually, while agribusiness and food related industries
support $37 billion in economic activity annually.

Non-agricultural employment in the Commonwealth declined by 5.1
percent during the recessionary period from 1980 to 1983. In 1984, the
declining trend was reversed as employment grew by 2.9 percent over 1983
levels. From 1984 to 1990, non-agricultural employment continued to grow each
year, increasing an additional 14.3 percent during such period. For the last
three years, employment in the Commonwealth increased 2.0 percent. The growth
in employment experienced in Pennsylvania is comparable to the growth in
employment in the Middle Atlantic region which has occurred during this
period. As a percentage of total non-agricultural employment within the
Commonwealth, non-manufacturing employment has increased steadily since 1980

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to its 1994 level of 81.8 percent of total employment. Consequently,
manufacturing employment constitutes a diminished share of total employment
within the Commonwealth. Manufacturing, contributing 18.2 percent of 1994
non-agricultural employment, has fallen behind both the services sector and
the trade sector as the largest single source of employment within the
Commonwealth. In 1994, the services sector accounted for 30.1 percent of all
non-agricultural employment while the trade sector accounted for 22.5 percent.

From 1983 to 1989, Pennsylvania's annual average unemployment rate
dropped from 11.8 percent to 4.5 percent, falling below the national rate in
1986 for the first time in over a decade. Slower economic growth caused the
unemployment rate in the Commonwealth to rise to 6.9 percent in 1991 and 7.5
percent in 1992. The resumption of faster economic growth resulted in a
decrease in the Commonwealth's unemployment rate to 7.1 percent in 1993. As
of August 1995, the seasonally adjusted unemployment rate for the Commonwealth
was 5.5 percent compared to 5.6 percent for the United States as a whole.

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

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

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

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General Fund. Debt service on all bond indebtedness of the Commonwealth,
except that issued for highway purposes or for the benefit of other special
revenue funds, is payable from the General Fund.

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

Financial Results for Recent Fiscal Years (GAAP Basis). The five
year period from fiscal 1990 through fiscal 1994 was marked by public health
and welfare costs growing at a rate double the growth for all the state
expenditures. Rising caseloads, increased utilization of services and rising
prices joined to produce the rapid rise of public health and welfare costs at
a time when a national recession caused tax revenues to stagnate and even
decline. During the period from fiscal 1990 through fiscal 1994, public
health and welfare costs rose by an average annual rate of 9.4 percent while
tax revenues were growing at an average annual rate of 5.8 percent.
Consequently, spending on other budget programs was restrained to a growth
rate of 4.7 percent and sources of revenues other than taxes became larger
components of fund revenues. Among those sources are transfers from other
funds and hospital and nursing home pooling of contributions to use as federal
matching funds.

Tax revenues declined in fiscal 1991 as a result of the recession
in the economy. A $2.7 billion tax increase enacted for fiscal 1992 brought
financial stability to the General Fund. That tax increase included several
taxes with retroactive effective dates which generated some one-time revenues
during fiscal 1992. The absence of those revenues and a reduction in the
personal income tax rate in fiscal 1993 contributed to the decline in tax
revenues shown for fiscal 1993. Fiscal 1994 tax revenues increased by 4.1
percent, but a decline in other revenues caused by the end of medical
assistance pooled financing in fiscal 1993 held total revenues to a 1.8
percent gain. Expenditures for fiscal 1994 rose by 4.3 percent.

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

Budgetary Basis. The 1993 fiscal year closed with revenues higher
than anticipated and expenditures about as projected, resulting in an ending
unappropriated balance surplus (prior to the ten percent transfer to the Tax
Stabilization Reserve Fund) of $242.3 million, slightly higher than estimated.
Cash revenues were $41.5 million above the budget estimate and totaled $14.633
billion representing less than a one percent increase over revenues for the

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1992 fiscal year. A reduction in the personal income tax rate in July 1992
and revenues from retroactive corporate tax increases received in fiscal 1992
were responsible, in part, for the low revenue growth in fiscal 1993.

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

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

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

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

The Commonwealth maintained an operating balance on a budgetary
basis for fiscal 1994 producing a fiscal year ending unappropriated surplus of
$335.8 million. By state statute, ten percent ($33.6 million) of that surplus
was transferred to the Tax Stabilization Reserve Fund and the remaining
balance was carried over into the 1995 fiscal year. The balance in the Tax
Stabilization Reserve Fund as of June 30, 1995 was $66.3 million.

Fiscal 1995 Fiscal Results (Budgetary Basis): Commonwealth
revenues for the fiscal year were above estimate and exceeded fiscal year
expenditures and encumbrances. Fiscal 1995 was the fourth consecutive fiscal
year the Commonwealth reported an increase in the fiscal year-end
unappropriated balance. Prior to reserves for transfer to the Tax
Stabilization Reserve Fund, the fiscal 1995 closing unappropriated surplus was
$540.0 million, an increase of $204.2 million over the fiscal 1994 closing
unappropriated surplus prior to transfers.

Commonwealth revenues were $459.4 million, 2.9 percent, above the
estimate of revenues used at the time the budget was enacted. Corporation
taxes contributed $329.4 million of the additional receipts largely due to

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higher receipts from the corporate net income tax. Fiscal 1995 revenues from
the corporate net income tax were 22.6 percent over collections in fiscal 1994
and include the effects of the reduction of the tax rate from 12.25 percent to
11.99 percent that became effective with tax years beginning on and after
January 1, 1994. The sales and use tax and miscellaneous revenues also showed
strong year-over-year growth that produced above-estimate revenue collections.
Sales and use tax revenues were $5.526.9 million, $128.8 million above the
enacted budget estimate and 7.9 percent over fiscal 1994 collections. Tax
receipts from both motor vehicle and non-motor vehicle sales contributed to
the higher collections. Miscellaneous revenue collections for fiscal 1995
were $183.5 million, $44.9 million above estimate and were largely due to
additional investment earnings, escheat revenues and other miscellaneous
revenues. Personal income tax receipts for fiscal 1995 were slightly above
the budgeted estimate. Receipts totaled $5,083.2 million, $5.1 million above
the estimate and 4.3 percent over collections for fiscal 1994. The higher
than estimated revenues from tax sources were due to faster economic growth in
the national and state economy than had been projected when the budget was
adopted. The higher rate of economic growth for the nation and the state gave
rise to increases in employment, income and sales higher than expected which
translated into above-estimate tax revenues.

Tax revenue refunds were also higher than estimated in the budget.
The reserve for tax refunds was increased during the fiscal year from $410
million to $460 million, a 110 percent increase over refunds budgeted in
fiscal 1994 which were usually low due to a carryover of $160 million of
reserves for tax refunds from fiscal 1993. An acceleration of the tax refund
process for corporation taxes, litigation settlements, and an increase in the
personal income tax poverty exemption contributed to tax refunds being higher
than initially budgeted.

Expenditures from commonwealth revenues (excluding pooled
financing expenditures), including $65.5 million of supplemental
appropriations enacted at the close of the 1995 fiscal year, totaled $15,674.7
million, representing an increase of 5 percent over spending during fiscal
1994.

Funds held in reserve at the end of fiscal 1995 for transfer to
the Tax Stabilization Reserve Fund totaled $111.0 million. Of this total,
$54.0 million represents the 10 percent transfer of the fiscal year-end
balance prescribed in state law. The remaining $57.0 million represents an
additional 5 percent of the year-end balance and an additional $30 million
proposed by the Governor to be transferred to the Tax Stabilization Reserve
Fund. These additional reserves for transfer are authorized in legislation
pending in the General Assembly. Upon approval by the General Assembly of the
additional transfers and the completion of the required and proposed
transfers, the Tax Stabilization Reserve Fund is anticipated to have an
available balance of $177.3 million representing approximately 1.1 percent of
general fund annual commonwealth revenues.

Fiscal 1996 Budget: The enacted fiscal 1996 budget provides for
expenditures from commonwealth revenues of $16,161.7 million, a 2.7 percent
increase over total appropriations from commonwealth revenues in fiscal 1995.
The appropriations increase for fiscal 1996 is one of the lowest rates in
recent years. The fiscal 1996 budget is based on anticipated commonwealth
revenues, net of enacted tax changes but prior to tax refunds, of $16,268.7
million, an increase over actual fiscal 1995 commonwealth revenues of 0.3
percent. Excluding the estimated effects of the tax changes enacted in 1994
and 1995, commonwealth revenues for fiscal 1996 are estimated to increase by
approximately 2.9 percent. The fiscal 1995 revenue estimate is based on a
forecast of the national economy for gross domestic product growth to slow
from 4.1 percent in 1994 to an average annual rate for 1995 of 2.4 percent and
then to 1.3 percent in 1996. The lower rate of growth is a consequence of

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anticipated smaller rates of increases for consumer spending, business fixed
investment and exports. The anticipated decline in the rate of economic
growth is also expected to lead to an increase in the national unemployment
rate to a rate above 6 percent by the end of 1995 and above a rate of 6.5
percent by the end of fiscal 1996.

Tax changes enacted with the fiscal 1996 budget totaled $282.9
million, representing an approximate 1.7 percent of base revenues. The
largest dollar value changes were in the corporate net income tax where the
scheduled 1997 reduction of the tax rate to 9.99 percent was accelerated to
the 1995 tax year; a double-weighting was provided for the sales factor of the
corporate net income apportionment calculation; and the maximum annual
allowance for the net operating loss deduction was increased from $500
thousand to $1 million. The fiscal 1996 cost of these corporate income tax
changes is estimated to be $210.8 million representing approximately 75
percent of the fiscal year's tax reduction. Other major components of the tax
reduction include a $12.1 million decrease for the capital stock and franchise
tax from an increase in the basic exemption; $24.7 million from the repeal of
the tax on annuities; and $27.9 million from an acceleration of the scheduled
phase-out of the inheritance tax on transfers of certain property to a
surviving spouse. A 90-day amnesty program was also authorized in the tax
bill. The amnesty program will be available to taxpayers from October 1995
through January 1996. Tax and interest revenues received from the tax amnesty
program after payment of administration costs are to be credited to the
appropriate fund. Receipts credited to the General Funds in excess of $67
million, plus any shortfall in delinquent tax collection below those in fiscal
1995, will be deposited into a restricted account in the General Fund for
later distribution.

Increases in authorized spending for fiscal 1996 emphasize
education. Appropriations for the basic subsidy for public schools were
increased $143 million, representing a 4.4 percent increase. This increase
reversed a four-year trend of a declining budget share for education. A
limited program to permit certain residents to choose the school district or
private school to provide their children's education was funded in the budget,
but enabling legislation for the program has yet to be enacted. The budget
also contemplates several changes to certain public welfare programs. Changes
made by the General Assembly include the termination of the category of
transitionally needy for cash assistance after June 30, 1995. Newly
qualifying members of this category no longer are eligible for cash payments
for up to two months every two years, but will continue to be eligible for
food stamps and medical assistance benefits. The legislation also eliminated
cash assistance payments for certain other limited recipients. Estimated
savings are approximately $27 million based on a caseload of approximately
90,000 persons per year. The enacted budget also included most of the
Governor's proposed consolidation and elimination of several organizations and
or appropriations. The consolidated programs were absorbed within existing
organizations. Savings of $5.2 million are anticipated to result from these
consolidations and eliminations.

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

Tax and fee proceeds relating to motor fuels and vehicles are
constitutionally dedicated for highway purposes and are deposited into the
Motor License Fund. Lottery ticket sale revenues are deposited into the State
Lottery Fund and are reserved by statute for programs to benefit senior

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<PAGE>

citizens. Revenues, other than those specified to be deposited in a
particular fund, are deposited into the General Fund.

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

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

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

Assets of the Tax Stabilization Reserve Fund may be used only upon
the recommendation by the Governor and approval by the vote of two-thirds of
the members of each house of the General Assembly. In February 1991, in
response to a projected fiscal 1991 General Fund budgetary deficit caused by
lower revenues and higher expenditures than budgeted, the Governor
recommended, and the General Assembly authorized, the available balance of
$133.8 million in the Tax Stabilization Reserve Fund be used to pay medical
assistance and special education costs not covered by budgeted funds. On
June 30, 1995, the balance in the Tax Stabilization Reserve Fund was $66.3
million.
Debt Limits and Outstanding Debt. The Pennsylvania Constitution
permits the Commonwealth to issue the following types of debt: (i) debt to
suppress insurrection or rehabilitate areas affected by disaster, (ii)
electorate approved debt, (iii) debt for capital projects subject to an
aggregate debt limit of 1.75 times the annual average tax revenues of the
preceding five fiscal years, and (iv) tax anticipation notes payable in the
fiscal year of issuance. All debt except tax anticipation notes must be
amortized in substantial and regular amounts.

Outstanding general obligation debt totalled $5,045.4 million on
June 30, 1995, a decrease of $30.4 million from June 30, 1994. Over the
10-year period ending June 30, 1995, total outstanding general obligation debt
increased at an annual rate of 1.1 percent. Within the most recent 5-year
period, outstanding general obligation debt has grown at an annual rate of 1.7
percent.

General obligation debt for non-highway purposes of $4,068.7
million was outstanding on June 30, 1995. Outstanding debt for these purposes
increased $63.1 million since June 30, 1994, in large part due to the recent
emphasis the Commonwealth has placed on infrastructure investment as a means
to spur economic growth and to provide a higher quality of life for
Commonwealth residents. For the period ending June 30, 1995, the 10-year and
5-year average annual compounded growth rate for total outstanding debt for
non-highway purposes has been 3.8 percent and 6.2 percent, respectively. In

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its current debt financing plan, Commonwealth infrastructure investment
projects include improvement and rehabilitation of existing capital
facilities, such as water supply systems and construction of new facilities,
such as roads, prisons and public buildings.

Outstanding general obligation debt for highway purposes was
$976.7 million on June 30, 1995, a decrease of $93.5 million from June 30,
1994. Highway outstanding debt has declined over the most recent 10-year and
5-year periods ending June 30, 1995 by the annual average rates of 5.5 percent
and 9.6 percent, respectively.

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

The Commonwealth has also issued obligations for its advance
construction interstate program (the "ACI Program") to fund the completion of
the interstate highway network in anticipation of the receipt of reimburse-
ments for the federally financed portion of these projects. As of June 30,
1995, all ACI debt had been retired.

The Commonwealth may incur debt to fund capital projects for
community colleges, highways, public improvements, transportation assistance,
flood control, redevelopment assistance, site development and the Pennsylvania
Industrial Development Authority. Before a project may be funded, it must be
itemized in a capital budget bill adopted by the General Assembly. An annual
capital budget bill states the maximum amount of debt for capital projects
that may be incurred during the current fiscal year for projects authorized in
the current or previous years' capital budget bills. Capital projects debt is
subject to a constitutional limit on debt. As of June 30, 1995, $3,936.1
million of capital projects debt was outstanding.

The issuance of electorate approved debt is subject to the
enactment of legislation which places on the ballot the question of whether
debt shall be incurred. Such legislation must state the purposes for which
the debt is to be authorized and, as a matter of practice, includes a maximum
amount of funds to be borrowed. Upon electorate approval and enactment of
legislation implementing the proposed debt-funded program, bonds may be
issued. As of June 30, 1995, the Commonwealth had $62.4 million of electorate
approved debt outstanding.

Debt issued to rehabilitate areas affected by disasters is
authorized by specific legislation. The Commonwealth had $45.1 million of
disaster relief debt outstanding as of June 30, 1995.

Due to the timing of major tax payment dates, the Commonwealth's
cash receipts are generally concentrated in the last four months of the fiscal
year, from March through June. Disbursements are distributed more evenly
throughout the fiscal year. As a result, operating cash shortages can occur
during certain months of the fiscal year. The Commonwealth is in the process
of offering a total of $500.0 million of tax anticipation notes for the
account of the General Fund in fiscal 1996. All such notes will mature on
June 28, 1996 and will be paid from fiscal 1996 General Fund receipts.

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

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

The Pennsylvania Housing Finance Agency ("PHFA"), as of June 30,
1995, had $2,130.0 million of revenue bonds and $24.0 million of notes
outstanding. The statute creating PHFA provides that if there is a potential
deficiency in the capital reserve fund or if funds are necessary to avoid
default on interest, principal or sinking fund payments on bonds or notes of
PHFA, the Governor, upon notification from the PHFA, shall place in the budget
of the Commonwealth for the next succeeding year an amount sufficient to make
up any such deficiency or to avoid any such default. The budget as finally
adopted by the General Assembly may or may not include the amount so placed
therein by the Governor. PHFA is not permitted to borrow additional funds so
long as any deficiency exists in the capital reserve fund.

The Hospitals and Higher Education Facilities Authority of
Philadelphia, as of June 30, 1995, had $21.1 million of bonds outstanding
which benefit from a moral obligation of the Commonwealth's Department of
Public Welfare to request a budget appropriation to make up any deficiency in
the debt service reserve fund for said bonds. The budget as finally adopted
may or may not include the amount requested.

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

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

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Municipal Finance

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

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

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

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

County 300% of Borrowing Base 400% of Borrowing Base

Other 250% of Borrowing Base 350% of Borrowing Base

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

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

Legislation providing for the establishment of the Pennsylvania
Intergovernmental Cooperation Authority ("PICA") to assist first class cities
in remedying fiscal emergencies was enacted by the General Assembly and
approved by the Governor in June 1991. PICA is designed to provide assistance
through the issuance of funding debt to liquidate budget deficits and to make
factual findings and recommendations to the assisted city concerning its
budgetary and fiscal affairs. Philadelphia is operating under a five year

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fiscal plan approved by PICA on April 17, 1995, with the latest update
approved July 18, 1995.

PICA has issued $1,418,680,000 of its Special Tax Revenue Bonds in
the following series: Series of 1992 in the amount of $474,555,000; Series of
1993 in the amount of $643,430,000; and Series of 1993A in the amount of
$178,675,000 (issued to advance refund a portion of the Series of 1992); and
Series of 1994 in the amount of $122,020,000. This financial assistance has
included the refunding of certain city general obligation bonds, the funding
of capital projects and the liquidation of the Cumulative General Fund balance
deficit as of June 30, 1992 of $224.9 million. The audited General Fund
balance as of June 30, 1995 showed a surplus of approximately $15.4 million.
The unaudited preliminary General Fund balance as of June 30, 1995 estimates a
surplus of approximately $59.6 million. Pursuant to restrictions in the Act
establishing PICA, the Authority shall not issue bonds for the purpose of
financing a capital project or deficit on a date later than December 31, 1994,
or financing a cash flow deficit on a date later than December 31, 1996.
PICA's ability to refund existing outstanding debt is unrestricted.

Litigation. According to the Preliminary Official Statement dated
October 4, 1995 describing Tax Anticipation Notes, First Series of 1995-1996
of the Commonwealth of Pennsylvania, the Office of Attorney General and the
Office of General Counsel have reviewed the status of pending litigation
against the Commonwealth, its officers and employees, and have identified the
following cases as ones where an adverse decision could materially affect the
Commonwealth's governmental operations. Listed below are all litigation items
so identified that may have a material effect on government operations of the
Commonwealth and consequently, the Commonwealth's ability to pay debt service
on its obligations.

Under Act No. 1978-152 approved September 28, 1978, as amended,
the General Assembly approved a limited waiver of sovereign immunity. Damages
for any loss are limited to $250,000 for each person and $1,000,000 for each
accident. The Supreme Court of Pennsylvania has held that this limitation is
constitutional. Approximately 3,500 suits against the Commonwealth remain
open. Tort claim payments for the departments and agencies, other than the
Department of Transportation, are paid from departmental and agency operating
and program appropriations. Tort claim payments for the Department of
Transportation are paid from an appropriation from the Motor License Fund.
The Motor License Fund tort claim appropriation for fiscal 1996 is $27.0
million.

Baby Neal v. Commonwealth

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

In January of 1992, the U.S. District Court, per Judge Kelly,
denied the ACLU's motion for class certification and held that the "next
friends" seeking to represent the interests of the 16 minor plaintiffs in the
case were inadequate representatives. The Commonwealth filed a motion for
summary judgment on most of the counts in the ACLU's complaint on the basis

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of, among other things, Suter v. Artist M.. After the motion for summary
judgment was filed, the ACLU filed a renewed motion to certify sub-classes.

In December of 1994, the Third Circuit reversed Judge Kelly's
ruling, finding that he erred in refusing to certify the class. Consistent
with the Third Circuit's ruling, the District Court recently certified the
class, and the parties have resumed discovery.

County of Allegheny v. Commonwealth of Pennsylvania

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

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

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

On December 7, 1992, the State Association of County Commissioners
filed a new action in mandamus seeking to compel the Commonwealth to comply
with the decision in County of Allegheny. The Commonwealth has filed a
response in opposition to the new action. The counties have requested a
continuance until April 30, 1995. The Court has not acted on the new action.

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

Fidelity Bank v. Commonwealth of Pennsylvania

On November 30, 1989, Fidelity Bank, N.A. ("Fidelity") filed a
declaratory judgment action in the Commonwealth Court of Pennsylvania in which
Fidelity raised various challenges to the constitutional validity of the
Amended Bank Shares Act (Act No. 1989-21) and related legislation. After the
Commonwealth Court ruled in favor of the Commonwealth, finding no
constitutional deficiencies, Fidelity, the Commonwealth, and certain
intervenor banks filed Notices of Appeal to the Pennsylvania Supreme Court on
August 5, 1994.

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Pursuant to a Settlement Agreement dated as of April 21, 1995, the
Commonwealth agreed to enter a credit in favor of Fidelity in the amount of
$4,100,000 in settlement of the constitutional and non-constitutional issues,
including interest. This credit represents a credit of approximately five
percent (5%) of the potential claim of Fidelity, had the constitutional issues
been resolved in favor of Fidelity.

Pursuant to a separate Settlement Agreement dated as of April 21,
1995, the Commonwealth settled with the intervening banks, referred to as "New
Banks," in connection with issues concerning the New Bank Tax Credit law which
were raised in the above-referenced Pennsylvania Supreme Court appeal. As
part of the settlement, the Commonwealth agreed neither to assess nor attempt
to recoup any new bank tax credits which had been granted or taken by any of
the intervening banks. No expenditure of Commonwealth funds is required in
order to implement this aspect of the settlement with the intervening banks,
since the credits have already been claimed by said banks.

Although the described settlements have quantified the
Commonwealth's exposure to Fidelity and the intervening banks, other banks
have filed protective Petitions which are currently pending with the Board of
Appeals or Board of Finance and Revenue. Depending upon the outcomes of these
administrative appeals, one or more of these banks may seek to raise the
issues which were advanced by Fidelity, although not brought to final
resolution by the Pennsylvania Supreme Court.

Based upon the favorable decision of the Commonwealth Court on the
constitutional issue(s) and the terms of the settlement with Fidelity, it is
not expected that substantial liability remains under the Amended Bank Shares
Act cases.

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

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

Austin v. Department of Corrections, et al.

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

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

No damages are sought. The ACLU sought injunctive relief which
would modify conditions, change practices and procedures and increase the
number of staff deployment. On August 1, 1994, the parties submitted a
proposed settlement agreement to the Court for its review. The Court held
hearings on the proposed Settlement Agreement in December 1994. The Court
approved the Settlement Agreement with a January 17, 1995 Memorandum. On
February 3, 1995, the Commonwealth paid $1.3 million in attorneys' fees to the
plaintiffs' attorneys in accordance with the Agreement. The remaining

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$100,000 in attorneys' fees will be paid upon dismissal of the preliminary
injunction relating to certain health issues.

The parties are currently complying with monitoring provisions
outlined in the Agreement. The monitoring phase will expire on January 6,
1998. The Attorneys' fees for the 3-year monitoring period will not exceed
$60,000 in any one year.

Scott v. Snider

In 1991, a consortium of public interest law firms filed a class
action suit, Scott v. Snider, against various Commonwealth officers, alleging
that the Commonwealth of Pennsylvania had failed to comply with a 1989 federal
mandate to provide and pay for early and periodic screening, diagnostic, and
treatment services for all Medicaid-eligible children under the age of 21. If
the federal court were to grant all of the relief that plaintiffs are seeking,
the Commonwealth would be obligated, among other things, (1) to substantially
revise the methods by which it presently identifies children in need of
treatment and (2) to expand the scope of services and treatment presently
provided to such children and to increase fees paid to pediatric providers.

In July 1994, the Court denied the plaintiffs' request to proceed
as a class action and dismissed five of the eighteen plaintiff organizations
from the case. The parties have reached a tentative settlement agreement
which they have submitted to the court for approval.

Envirotest/Synterra Partners

On November 11, 1993, the Commonwealth of Pennsylvania, Department
of Transportation and Envirotest/Synterra Partners ("Envirotest"), a
partnership, entered into a "Contract for Centralized Emissions Inspection
Facilities." Thereafter, Envirotest acquired certain land and constructed
approximately 85 automobile emissions inspection facilities throughout various
regions of the Commonwealth.

By Act of the General Assembly in October 1994 (Act No. 1994-95),
the emissions testing program was suspended and the Department of
Transportation was directed to consider other alternatives to the centralized
testing program. Former Governor Robert P. Casey vetoed the legislation and
the General Assembly overrode the veto in November 1994. As a result, the
program was suspended and the Department of Transportation was prohibited from
expending funds to implement the program. Revised regulations from the
Environmental Protection Agency are expected in August 1995.

On April 12, 1995, Envirotest Systems Corporation, Envirotest
Partners (successor to Envirotest/Synterra Partners) and the Commonwealth of
Pennsylvania entered into a Standstill Agreement pursuant to which the parties
will proceed to discuss the resolution of claims which Envirotest might have
against the Commonwealth arising from the suspension of the emissions testing
program. Envirotest filed a Statement of Claim with the Pennsylvania Board of
Claims on May 10, 1995, and filed a complaint with the Commonwealth Court on
May 15, 1995, to preserve its position. In those pleadings, Envirotest
asserted damages in excess of $350 million.

The Office of General Counsel has been informed by representatives
of Envirotest that it has expended approximately $200 million to date to
acquire land and construct and maintain the inspection facilities. The Office
of General Counsel believes it is premature at this time to estimate the
nature and size of Envirotest's potential claim in this matter.

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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.

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),
agriculture, mining and tourism. The Federal Base Closing Commission has
ordered that a number of military facilities in Virginia be closed or reduced.
As a result of recessionary conditions, the Commonwealth experienced for the
past several years severe revenue shortfalls. In 1995 Motorola and IBM each
announced the location of major manufacturing facilities in Virginia. The
Commonwealth ended the fiscal year on June 30, 1995, with general fund
revenues exceeding budget projections by $64.9 million. The preliminary
unaudited results for the fiscal year 1995 show a general fund balance of
$350.7 million.

In Davis v. Michigan (decided March 28, 1989), the United States
Supreme Court ruled unconstitutional Michigan's statute exempting from state
income tax the retirement benefits paid by the state and local governments and
not exempting retirement benefits paid by the federal government. In Harper
v. Virginia Department of Taxation (decided June 18, 1993), the United States
Supreme Court held, in a suit involving claims for refunds by Federal retirees
living in Virginia that Virginia State income tax Statutes violated the
principles of Davis v. Michigan, but remanded for further relief so long as
the relief was consistent with Federal due process. If the courts ultimately
rule that the Commonwealth must make full refunds of taxes imposed prior to
Davis v. Michigan, the State had estimated that the potential financial impact
on the Commonwealth based on its review of claims for refunds by federal
pensioners (including interest payable calculated as of December 31, 1993)
would be approximately $700 million. The Governor and General Assembly of
Virginia authorized a settlement of $340 million, plus interest, payable into
a special trust fund in amounts of $60 million in 1994 and $70 million in each
of the years 1995 through 1998. Approximately 91% of the retirees accepted
the settlement. During the 1995 session of the General Assembly, legislation
was passed authorizing participation in the settlement for certain retirees
who failed to meet the original deadline. The original principal amount of
the claims of the retirees opting out of the settlement has been estimated by
the Commonwealth to be in excess of $47,000,000. On September 15, 1995, the
Supreme Court of Virginia entered its final judgment in the Harper case and
ordered full refunds with statutory interest. The Commonwealth has estimated
that the potential cost of refunding all Virginia income taxes paid on federal
government pensions for taxable years 1985, 1986, 1987 and 1988 to federal

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<PAGE>

government pensioners who opted out of the settlement is approximately $78.4
million, including interest earnings, as of September 18, 1995.

The Governor proposed a plan to the General Assembly to eliminate
or reduce parole for persons convicted of violent crime. In that connection
he proposed the issuance of bonds to finance part of the cost of additional
prisons that would result from the program. The General Assembly approved
part of the plan, with bonds to be issued by the Virginia Public Building
Authority or other entities and leased to the Commonwealth.

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 15.1-227.61 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
(1) revenue bonds payable exclusively from revenue producing governmental
enterprises and (2) 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 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.

Recent amendments to Chapter 9 of the United States Bankruptcy
Code, which applies to bankruptcies by political subdivisions, limit the
filing under that chapter to political subdivisions that have been
specifically authorized to do so under applicable state law. The Sponsors are
not aware of any statute in Virginia that gives any such authorization to
political subdivisions in Virginia. Bonds payable exclusively by private
entities may be subject to the provisions of the United States Bankruptcy Code
other than Chapter 9.

Virginia municipal issuers have generally not been required to
provide ongoing information about their finances and operations to holders of

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<PAGE>

their debt obligations, although a number of cities, counties and other
issuers prepare annual reports. Virginia political subdivisions that sell
bonds after July 3, 1995, will be subject to Rule 15c2-12 of the Securities
and Exchange Commission that requires continuing disclosure, including annual
audited financial statements, with respect to those obligations, unless
exempted by the Rule.

Although revenue obligations of the Commonwealth or its political
subdivisions may be payable from a specific project or source, including lease
rentals, there can be no assurance that future economic difficulties and the
resulting impact on Commonwealth and local government finances will not
adversely affect the market value of the portfolio of the Fund or the ability
of the respective obligors to make timely payments of principal and interest
on such obligations.

The Sponsors believe the information summarized above describes
some of the more significant events relating to the Virginia Trust. Sources
of such information are the official statements of the issuers located in the
Commonwealth of Virginia, as well as other publicly available documents and
information. While the Sponsors have not independently verified such
information, they have no reason to believe it is not correct in all material
respects.

PUBLIC OFFERING

Offering Price

The secondary market Public Offering Price per Unit of each Trust
is computed by adding to the aggregate bid price of the Bonds in such Trust
divided by the number of Units thereof outstanding, an amount equal to 5.820%
of such aggregate offering price of the Bonds per Unit. This amount is equal
to a sales charge of 5-1/2% of the Public Offering Price. 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 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.

Time to Maturity As Percent of Public 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 yrs. 4 1/2%

over 15 years 5 1/2%

A proportionate share of accrued interest on the Bonds to the expected date of
settlement for the Units is added to the Public Offering Price. Accrued
interest is the accumulated and unpaid interest on Bonds from the last day on

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<PAGE>

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. This daily rate is net of estimated fees
and expenses. 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

An amount of accrued interest which represents accumulated unpaid
or uncollected interest on a bond from the last day on which interest was paid
thereon will be added to the Public Offering Price and paid by the Certifi-
cateholder at the time Units are purchased. 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 Certifi-
cateholder 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 Reich & Tang Distributors L.P.
and its affiliates and of any underwriter of any 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 of
$10.00 per Unit. Such arrangements result in less selling effort and selling
expenses than sales to employee groups of other companies. Resales or
transfers of Units purchased under the employee benefit arrangements may only
be made through the 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

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<PAGE>

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.

Participants in the "Total Reinvestment Plan" can designate a
broker as the recipient of a dealer concession (see "Total Reinvestment
Plan").

Comparison of Public Offering Price, Sponsor's
Repurchase Price and Redemption Price

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 5 1/2% sales charge), the amount realized by a
Certificateholder upon any redemption of Units may be less than the price paid
for such Units.

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN

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

Estimated Long Term Return is calculated by: (1) computing the
yield to maturity or to an earlier call date (whichever results in a lower
yield) for each Bond in a Trust's portfolio in accordance with accepted bond
practices, which practices take into account not only the interest payable on
the Bond but also the amortization of premiums or accretion of discounts, if
any; (2) calculating the average of the yields for the Bonds in each Trust's
portfolio by weighing each Bond's yield by the market value of the Bond and by
the amount of time remaining to the date to which the Bond is priced (thus
creating an average yield for the portfolio of each Trust); and (3) reducing

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<PAGE>

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
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

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<PAGE>

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 Certificate-
holders 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 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

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<PAGE>

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 (a) 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;
(b) 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; (c) 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; (d) the Redemption
Price per Unit of such State Trust based upon the last computation thereof
made during such calendar year; and (e) 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 Certificate-
holders, at all reasonable times during usual business hours, books of record
and account of its transactions as Trustee, including records of the names and
addresses of Certificateholders, Certificates issued or held, a current list
of Bonds in the portfolio and a copy of the Trust Agreement.

TAX STATUS

All Bonds acquired by 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
corporate 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.

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

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

The State Trusts are not associations taxable as corporations for
federal income tax purposes under the Internal Revenue Code of 1986 (the
"Code"), and income received by 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 that State Trust under Section 676(a) of
the Code. Thus, each Certificateholder of a State Trust will be
considered to have received his 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 (other than any earned original issue discount) 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, although gain on the disposition of a Bond or a Unit
purchased at a market discount generally will be treated as ordinary
income, rather than capital gain, to the extent of accrued market
discount. (It should be noted in this connection that such gain does
not include any amounts received in respect of accrued interest.) Such
gain may be long or short-term gain depending on the facts and
circumstances. Capital losses are deductible to the extent of capital
gains; in addition, up to $3,000 of capital losses of non-corporate
Certificateholders may be deducted against ordinary income. Capital
assets must be held for more than one year to qualify for long-term
capital gain treatment. Individuals who realize long-term capital gains
will be subject to a reduced maximum tax rate on such gain.

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 Certificate-
holder had directly disposed of his pro rata share of such Bond. The
gain or loss is measured by the difference between (i) the tax cost of
such pro rata share and (ii) the amount received therefor. 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 original issue discount
(limited, in the case of Bonds issued after June 8, 1980, to the portion
earned from the date of acquisition to the date of disposition). Gain
on the disposition of a Bond purchased at a market discount generally
will be treated as ordinary income, rather than capital gain, to the

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extent of accrued market discount. No deduction is allowed for the
amortization of bond premium on tax-exempt bonds such as the Bonds in
computing regular federal income tax.

Discount generally accrues based on the principle of compounding
of accrued interest, not on a straight-line or ratable method, with the
result that the amount of earned original issue discount is less in the
earlier years and more in the later years of a bond term. The tax basis
of a discount bond is increased by the amount of accrued, tax-exempt
original issue discount thus determined. This method of calculation
will produce higher capital gains (or lower losses) to a Certificate-
holder, 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 benefits exceeds a base amount. The base amount
is $25,000 for an individual, $32,000 for a married couple filing a
joint return and zero for married persons filing separate returns.
Interest on tax-exempt bonds is to be added to adjusted gross income for
purposes of computing the amount of Social Security benefits that are
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. For taxable years beginning after December 31,
1993, the amount of Social Security benefits subject to tax has been
increased.

Corporate Certificateholders are required to include in federal
corporate alternative minimum taxable income 75 percent of the amount by
which the adjusted current earnings (which will include tax-exempt
interest) of the corporation exceeds alternative minimum taxable income
(determined without regard to this item). Further, interest on the
Bonds is includible in a 0.12% additional corporate minimum tax imposed
by the Superfund Amendments and Reauthorization Act of 1986 for taxable
years beginning before January 1, 1996. In addition, in certain cases,
Subchapter S corporations with accumulated earnings and profits from
Subchapter C years will be subject to a minimum tax on excess "passive
investment income" which includes tax-exempt interest.

Under federal law, interest on 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

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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 his basis and
holding period for his Units in the same manner for New York State and New
York City tax purposes as for federal tax purposes. For corporations doing
business in New York State, interest earned on state and municipal obligations
that are exempt from federal income tax, including obligations of New York
State, its political subdivisions and instrumentalities, must be included in
calculating New York State and New York City entire net income for purposes of
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, 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 Certificate-
holder'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.

In the opinion of Messrs. Miller, Canfield, Paddock and Stone,
special counsel to the Sponsor on Michigan tax matters, under existing law:

Under the income tax laws of the State of Michigan, the Michigan
Trust is not an association taxable as a corporation; the income of the
Michigan Trust will be treated as the income of the Certificateholders
of the Michigan Trust and be deemed to have been received by them when
received by the Michigan Trust. Interest on the Bonds in the Michigan
Trust which is exempt from tax under the Michigan income tax laws when
received by the Michigan Trust will retain its status as tax-exempt
interest to the Certificateholders of the Michigan Trust.

For purposes of the Michigan income tax laws, each Certificate-
holder of the Michigan Trust will be considered to have received his pro
rata share of interest on each Bond in the Michigan Trust when it is
received by the Michigan Trust, and each Certificateholder will have a
taxable event when the Michigan Trust disposes of a Bond (whether by
sale, exchange, redemption or payment at maturity) or when the
Certificateholder redeems or sells his Certificate, to the extent the
transaction constitutes a taxable event for Federal income tax purposes.
The tax cost of each Unit to a Certificateholder will be established and

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<PAGE>

allocated for purposes of the Michigan income tax laws in the same
manner as such cost is established and allocated for Federal income tax
purposes.

Under the Michigan intangibles tax, the Michigan Trust is not
taxable and the pro rata ownership of the underlying Bonds, as well as
the interest thereon, will be exempt to the Certificateholders to the
extent the Michigan Trust consists of obligations of the State of
Michigan or its political subdivisions or municipalities, or obligations
of the Government of Puerto Rico, or any other possession of the United
States. The Intangibles Tax is being phased out, with reductions of
twenty-five percent (25%) in 1994 and 1995, fifty percent (50%) in 1996,
and seventy-five percent (75%) in 1997, with total repeal effective
January 1, 1998.

The Michigan Single Business Tax replaced the tax on corporate and
financial institution income under the Michigan Income Tax, and the
intangible tax with respect to those intangibles of persons subject to
the Single Business Tax, the income from which would be considered in
computing the Single Business Tax. Persons are subject to the Single
Business Tax only if they are engaged in "business activity," as defined
in the Act. Under the Single Business Tax, both interest received by
the Michigan Trust on the underlying Bonds and any amount distributed
from the Michigan Trust to a Certificateholder, if not included in
determining taxable income for Federal income tax purposes, is also not
included in the adjusted tax base upon which the Single Business Tax is
computed, of either the Michigan Trust or the Certificateholders. If
the Michigan Trust or the Certificateholders have a taxable event for
Federal income tax purposes when the Michigan Trust disposes of a Bond
(whether by sale, exchange, redemption or payment at maturity) or the
Certificateholder redeems or sells his Certificate, an amount equal to
any gain realized from such taxable event which was included in the
computation of taxable income for Federal income tax purposes (plus an
amount equal to any capital gain of an individual realized in connection
with such event but excluded in computing that individual's Federal
taxable income) will be included in the tax base against which, after
allocation, apportionment and other adjustments, the Single Business Tax
is computed. The tax base will be reduced by an amount equal to any
capital loss realized from such a taxable event, whether or not the
capital loss was deducted in computing Federal taxable income in the
year the loss occurred. Certificateholders should consult their tax
advisors as to their "business activity" status under Michigan law.

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

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

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

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<PAGE>

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

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

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

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

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

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

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

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

In the 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:

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<PAGE>

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.

A Certificateholder of the Virginia Trust will realize a taxable
event when the Virginia Trust disposes of a Bond (whether by sale,
exchange, redemption or payment at maturity) or when the
Certificateholder redeems or sells his Units, and taxable gain for
Federal income tax purposes may result in taxable gain for Virginia
income tax purposes. Certain Bonds, however, may have been issued under
Acts of the Virginia General Assembly which provide that all income from
such Bonds, including any profit from the sale thereof, shall be free
from all taxation by the Commonwealth of Virginia. To the extent that
any such profit is exempt from Virginia income tax, any such profit
received by the Virginia Trust will retain its tax exempt status in the
hands of the Certificateholders of the Virginia Trust.

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

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<PAGE>

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

In South Carolina v. Baker, the U.S. Supreme Court held that the
federal government may constitutionally require states to register bonds they
issue and subject the interest on such bonds to federal income tax if not
registered, and that there is no constitutional prohibition against the
federal government's taxing the interest earned on state or other municipal
bonds. The Supreme Court decision affirms the authority of the federal
government to regulate and control bonds such as the Bonds in the Trust and to
tax interest on such bonds in the future. The decision does not, however,
affect the current exemption from taxation of the interest earned on the Bonds
in the Trust in accordance with 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.") Certifi-
cateholders 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, Reich & Tang
Distributors L.P. (successor Sponsor to Bear, Stearns & Co. Inc.), 600 Fifth
Avenue, New York, N.Y. 10020. 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.

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<PAGE>

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 a 5 1/2% sales charge (5.820% of the net amount
invested) plus net accrued interest. Any Units that are purchased by the
Sponsor in the secondary market also may be redeemed by the Sponsor if it
determines such redemption to be in its best interest.

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

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

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

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<PAGE>

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 (1) on
the basis of current bid prices of the Bonds obtained from dealers or brokers
who customarily deal in bonds comparable to those held by such State Trust,
(2) on the basis of bid prices for bonds comparable to any Bonds for which bid
prices are not available, (3) by determining the value of the Bonds by
appraisal, or (4) by any combination of the above.

The 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 Certificate-
holder 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.

TOTAL REINVESTMENT PLAN

Under the Total Reinvestment Plan (the "Plan"), semi-annual and
annual Certificateholders may elect to have all interest and principal
distributions, if any, with respect to their Units reinvested either in units
of various series of "Municipal Securities Trust"* which will have been
created shortly before each semi-annual or annual Payment Date (a "Primary
Series") or, if units of a Primary Series are not available, in units of a
previously formed series of the Trust which have been repurchased by the
Sponsor in the secondary market, including the Units being offered hereby (a
"Secondary Series") (Primary Series and Secondary Series are hereafter
collectively referred to as "Available Series"). June 15 and December 15 of
- --------
* Certificateholders of a particular State Trust of the Multi-State Trust
who participate in the Plan will have reinvestments made in Units from
the same State Trust of a similar Multi-State Trust if such Units are
available. If no such Units are available for reinvestment,
distributions to Certificateholders will be reinvested in Units of
regular series of Municipal Securities Trust, the income earned on which
may not be exempt from state and local income taxes.

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<PAGE>

each year in the case of semi-annual Certificateholders and December 15 of
each year in the case of annual Certificateholders are "Plan Reinvestment
Dates."

Under the Plan (subject to compliance with applicable blue sky
laws), fractional units ("Plan Units") will be purchased from the Sponsor at a
price equal to the aggregate offering price per Unit of the bonds in the
Available Series portfolio during the initial offering of the Available Series
or at the aggregate bid price per Unit of the Available Series if its initial
offering has been completed, plus a sales charge equal to 3.627% of the net
amount invested in such bonds or 3 1/2% of the Reinvestment Price per Plan Unit,
plus accrued interest, divided by one hundred (the "Reinvestment Price per
Plan Unit"). All Plan Units will be sold at this reduced sales charge of 3 1/2%
in comparison to the regular sales charge levied on primary and secondary
market sales of Units in any series of "Municipal Securities Trust."
Participants in the Plan will have the opportunity to designate, in the
Authorization Form for the Plan, the name of a broker to whom the Sponsor will
allocate a sales commission of 1 1/2% of the Reinvestment Price per Plan Unit,
payable out of the 3 1/2% sales charge. If no such designation is made, the
Sponsor will retain the sales commission.

Under the Plan, the entire amount of a participant's income and
principal distributions will be reinvested. For example, a Certificateholder
who is entitled to receive $130.50 interest income from the Trust would
acquire 13.05 Plan Units assuming that the Reinvestment Price per Plan Unit,
plus accrued interest, approximated $10 (Ten Dollars).

A semi-annual or annual Certificateholder may join the Plan at the
time he invests in Units of the State Trust or any time thereafter by
delivering to the Trustee an Authorization Form which is available from
brokers or the Sponsor. In order that distributions may be reinvested on a
particular Plan Reinvestment Date, the Authorization Form must be received by
the Trustee not later than the 15th day of the month preceding such date.
Authorization Forms not received in time for a particular Plan Reinvestment
Date will be valid only for the second succeeding Plan Reinvestment Date.
Similarly, a participant may withdraw from the program at any time by
notifying the Trustee (see below). However, if written confirmation of
withdrawal is not given to the Trustee prior to a particular distribution, the
participant will be deemed to have elected to participate in the Plan with
respect to that particular distribution and his withdrawal would become
effective for the next succeeding distribution.

Once delivered to the Trustee, an Authorization Form will
constitute a valid election to participate in the Plan with respect to Units
purchased in the Trust (and with respect to Plan Units purchased with the
distributions from the Units purchased in the State Trust) for each subsequent
distribution as long as the Certificateholder continues to participate in the
Plan. However, if an Available Series should materially differ from the Trust
in the opinion of the Sponsor, the authorization will be voided and
participants will be provided with both a notice of the material change and a
new Authorization Form which would have to be returned to the Trustee before
the Certificateholder would again be able to participate in the Plan. The
Sponsor anticipates that a material difference which would result in a voided
authorization would include such facts as the inclusion of bonds in the
Available Series portfolio, the interest income on which was not exempt from
all Federal income tax, or the inclusion of bonds which were not rated "A" or
better by either Standard & Poor's Corporation or Moody's Investors Service,
Inc. on the date such bonds were initially deposited in the Available Series
portfolio.

The Sponsor has the option at any time to use units of a Secondary
Series to fulfill the requirements of the Plan in the event units of a Primary

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Series are not available either because a Primary Series is not then in
existence or because the registration statement relating thereto is not
declared effective in sufficient time to distribute final prospectuses to Plan
participants (see below). It should be noted that there is no assurance that
the quality and diversification of the Bonds in any Available Series or the
estimated current return thereon will be similar to that of this Trust.

It is the Sponsor's intention that Plan Units will be offered on
or about each semi-annual and annual Record Date for determining who is
eligible to receive distributions on the related Payment Date. Such Record
Dates are June 1 and December 1 of each year for semi-annual Certificate-
holders, and December 1 of each year for annual Certificateholders. On each
Record Date the Sponsor will send a current Prospectus relating to the
Available Series being offered for the next Plan Reinvestment Date along with
a letter which reminds each participant that Plan Units are being purchased
for him as part of the Plan unless he notifies the Trustee in writing by that
Plan Reinvestment Date that he no longer wishes to participate in the Plan.
In the event a Primary Series has not been declared effective in sufficient
time to distribute a final Prospectus relating thereto and there is no
Secondary Series as to which a registration statement is currently effective,
it is the Sponsor's intention to suspend the Plan and distribute to each
participant his regular semi-annual or annual distribution. If the Plan is so
suspended, it will resume in effect with the next Plan Reinvestment Date,
assuming units of an Available Series are then being offered.

To aid a participant who might desire to withdraw either from the
Plan or from a particular distribution, the Trustee has established a toll
free number (see below) for participants to use for notification of
withdrawal, which must be confirmed in writing prior to the Plan Reinvestment
Date. Should the Trustee be so notified, it will make the appropriate cash
disbursement. Unless the withdrawing participant specifically indicates in
his written confirmation that (a) he wishes to withdraw from the Plan for that
particular distribution only, or (b) he wishes to withdraw from the Plan for
less than all units of each series of "Municipal Securities Trust" which he
might then own (and specifically identifies which series are to continue in
the Plan), he will be deemed to have withdrawn completely from the Plan in all
respects. Once a participant withdraws completely, he will only be allowed to
again participate in the Plan by submitting a new Authorization Form. A sale
or redemption of a portion of a participant's Plan Units will not constitute a
withdrawal from the Plan with respect to the remaining Plan Units owned by
such participant.

Unless a Certificateholder notifies the Trustee in writing to the
contrary, each semi-annual and annual Certificateholder who has acquired Plan
Units will be deemed to have elected the semi-annual and annual plan of
distribution, respectively, and to participate in the Plan with respect to
distributions made in connection with such Plan Units. (Should the Available
Series from which Plan Units are purchased for the account of an annual
Certificateholder fail to have an annual distribution plan, such Certificate-
holder will be deemed to have elected the semi-annual plan of distribution,
and to participate in the Plan with respect to distributions made, in
connection with such Plan Units.) A participant who subsequently desires to
have distributions made with respect to Plan Units delivered to him in cash
may withdraw from the Plan with respect to such Plan Units and remain in the
Plan with respect to units acquired other than through the Plan. Assuming a
participant has his distributions made with respect to Plan Units reinvested,
all such distributions will be accumulated with distributions generated from
the Units of the Trust used to purchase such additional Plan Units. However,
distributions related to units in other series of "Municipal Securities Trust"
will not be accumulated with the foregoing distributions for Plan purchases.
Thus, if a person owns units in more than one series of "Municipal Securities

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Trust" (which are not the result of purchases under the Plan), distributions
with respect thereto will not be aggregated for purchases under the Plan.

Although not obligated to do so, the Sponsor intends to maintain a
market for the Plan Units and continuously to offer to purchase Plan Units at
prices based upon the aggregate offering price of the Bonds in the Available
Series portfolio during the initial offering of the Available Series, or at
the aggregate bid price of the Bonds of the Available Series of its initial
offering has been completed. The Sponsor may discontinue such purchases at
any time. The aggregate bid price of the underlying bonds may be expected to
be less than the aggregate offering price. In the event that a market is not
maintained for Plan Units, a participant desiring to dispose of his Plan Units
may be able to do so only by tendering such Plan Units to the Trustee for
redemption at the Redemption Price of the full units in the Available Series
corresponding to such Plan Units, which is based upon the aggregate bid price
of the underlying bonds as described in the "Municipal Securities Trust"
Prospectus for the Available Series in question. If a participant wishes to
dispose of his Plan Units, he should inquire of the Sponsor as to current
market prices prior to making a tender for redemption to the Trustee.

Any participant may tender his Plan Units for redemption to the
Available Series Trust. Participants may redeem Plan Units by making a
written request to the Trustee at the address set forth in Part A, on the
Redemption Form supplied by the Trustee. The redemption price per Plan Unit
will be determined as set forth in the "Municipal Securities Trust" Prospectus
of the Available Series from which such Plan Unit was purchased following
receipt of the request and adjusted to reflect the fact that it relates to a
Plan Unit. There is no charge for the redemption of Plan Units.

The Trust Agreement requires that the Trustee notify the Sponsor
of any tender of Plan Units for redemption. So long as the Sponsor is
maintaining a bid in the secondary market, the Sponsor will purchase any Plan
Units tendered to the Trustee for redemption by making payment therefor to the
Certificateholder in an amount not less than the redemption price for such
Plan Units on the date of tender not later than the day on which such Plan
Units otherwise would have been redeemed by the Trustee.

Participants in the Plan will not receive individual certificates
for their Plan Units unless the amount of Plan Units accumulated represents
the principal amount of bonds per Unit for the Available Series and, in such
case, a written request for certificates is made to the Trustee. All Plan
Units will be accounted for by the Trustee on a book entry system. Each time
Plan Units are purchased under the Plan, a participant will receive a
confirmation stating his cost, number of Units purchased and estimated current
return. Questions regarding a participant's statements should be directed to
the Trustee by calling the Trustee at the number set forth under "Summary of
Essential Information" in Part A of this Prospectus.

All expenses relating to the operation of the Plan are borne by
the Sponsor. Both the Sponsor and the Trustee reserve the right to suspend,
modify or terminate the Plan at any time for any reason, including the right
to suspend the Plan if the Sponsor is unable or unwilling to establish a
Primary Series or is unable to provide Secondary Series Units. All
participants will receive notice of any such suspension, modification or
termination.

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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.

Trust Agreement, Amendment and Termination

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

The Trust Agreement may also be amended in any respect, or
performance of any of the provisions thereof may be waived, with the consent
of the holders of Certificates evidencing 66-2/3% of the Units then
outstanding 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

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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

For certain of the Trusts as set forth in the "Summary of
Essential Information" in Part A, the Sponsor is Reich & Tang Distributors
L.P. ("Reich & Tang"). Effective September 28, 1995, Reich & Tang has become
the successor sponsor to certain of the unit investment trusts previously
sponsored by Bear, Stearns & Co. Inc. As successor Sponsor, Reich & Tang has
assumed all of the obligations and rights of Bear, Stearns & Co. Inc., the
previous sponsor.

Reich & Tang, a Delaware limited partnership, is engaged in the
brokerage business and is a member of the National Association of Securities
Dealers, Inc. Reich & Tang maintains its principal business offices at 600
Fifth Avenue, New York, New York 10020. Reich & Tang Asset Management L.P.
("RTAM LP"), a registered investment adviser, is the 99% limited partner of
the Sponsor. RTAM LP is 99.5% owned by New England Investment Companies, LP
("NEIC LP") and Reich & Tang Asset Management, Inc., a wholly owned subsidiary
of NEIC LP, owns the remaining .5% interest of RTAM LP and is its general
partner. NEIC LP's general partner is New England Investment Companies, Inc.
("NEIC"), a holding company offering a broad array of investment styles across
a wide range of asset categories through ten investment advisory/management
affiliates and two distribution affiliates. These affiliates in the aggregate
are investment advisers or managers to over 57 registered investment
companies. Reich & Tang is the sponsor for numerous series of unit investment
trusts, including: A Corporate Trust, Series 1, New York Municipal Trust,
Series 1 (and Subsequent Series), Discount & Zero Coupon Fund, 1st Series (and
Subsequent Series); Municipal Series Trust, Series 1 (and Subsequent Series),
1st Discount Series (and Subsequent Series), High Income Series 1 (and
Subsequent Series), Multi-State Series 1 (and Subsequent Series) Short-
Intermediate Term Series 1 (and Subsequent Series); Insured Municipal
Securities Trust, Series 1 (and Subsequent Series), Series 1-4 (Multiplier
Portfolio), 5th Discount Series (and Subsequent Series), Navigator Series (and
Subsequent Series); Mortgage Securities Trust, CMO Series 1 (and Subsequent
Series) and Equity Securities Trust, Series 1, Signature Series, Gabelli
Communications Income Trust (and Subsequent Series). The information included
herein is only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations. The information contained in the Prospectus concerning
governmental entities and authorities, including the various issuers of the
Bonds in the Trust, was gathered from sources deemed to be reliable by the
Sponsor. The Sponsor has not independently verified the information contained
in such sources.

For certain other Trusts as set forth in the "Summary of Essential
Information" in Part A, the Company Sponsors are Reich & Tang and Gruntal &
Co., Incorporated, both of whom have entered into an Agreement Among Co-

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<PAGE>

Sponsors pursuant to which both parties have agreed to act as Co-Sponsors for
the Trust.

Reich & Tang has been appointed by Gruntal & Co., Incorporated as
agent for purposes of taking nay action required or permitted to be taken by
the Sponsors under the Trust Agreement. If the Sponsors are unable to agree
with respect to action to be taken jointly by them under the Trust Agreement
and they cannot agree as to which Sponsor shall act as sole Sponsor, then
Reich & Tang shall act as sole Sponsor. If one of the Sponsors fails to
perform its duties under the Trust Agreement or becomes incapable of acting or
becomes bankrupt or its affairs are taken over by public authorities, that
Sponsor may be discharged under the Trust Agreement and a new Sponsor may be
appointed or the remaining Sponsor(s) may continue to act as Sponsor(s).

Gruntal & Co., Incorporated, a Delaware corporation, operates a
regional securities broker/dealer from its main office in New York City and
branch offices in nine states and the District of Columbia. The firm is very
active in the marketing of investment companies and has signed dealer
agreements with every mutual fund group, as well as being the managing
distributor for The Home Group Money Market and Mutual Funds. Further,
through its Syndicate Department, Gruntal & Co. Incorporated has underwritten
a large number of Closed-End Funds and has been Co-Manager on the following
offerings: Cigna High Income Shares; Dreyfus New York Municipal Income, Inc.,
Franklin Principal Maturity Trust and Van Kampen Merritt Limited Term High
Income Trust.

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

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

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

The Trustee

For certain of the State Trusts, as set forth in the "Summary of
Essential Information" in Part A, the Trustee is The Chase Manhattan Bank
(National Association), a national banking association with its principal
executive office located at 1 Chase Manhattan Plaza, New York, New York 10081
and its unit investment trust office at 770 Broadway, New York, New York 10003
(800) 882-9898. The Trustee is subject to the supervision by the Comptroller
of the Currency, 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 (1-800-431-8002). 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

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<PAGE>

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

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<PAGE>

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.

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, the fees
of the Evaluator during the initial public offering, 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."

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. Both fees may be increased without approval of the Certificate-
holders 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: 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; fees of the Trustee for any extraordinary services
performed under the Trust Agreement; indemnification of the Trustee for any
loss or liability accruing to it without gross negligence, bad faith or
willful misconduct on its part, arising out of or in connection with its
acceptance or administration of a State Trust; indemnification of the Sponsor

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<PAGE>

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 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, 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.

EXCHANGE PRIVILEGE AND CONVERSION OFFER

Exchange Privilege

Certificateholders may elect to exchange any or all of their Units
of these Trusts for Units of one or more of any available series of Insured
Municipal Securities Trust, Municipal Securities Trust, New York Municipal
Trust, Mortgage Securities Trust, A Corporate Trust or Equity Securities Trust
(the "Exchange Trusts") at a reduced sales charge as set forth below. Under
the Exchange Privilege, the Sponsor's repurchase price of the Units being
surrendered, and only after the initial offering period has been completed,
will be based on the aggregate bid price of the Bonds in the particular Trust
portfolio. Units in an Exchange Trust will be sold to Certificateholders at a
price based on the aggregate offer price of the Bonds in the Exchange Trust
portfolio during the initial public offering period of the Exchange Trust; or
based on the aggregate bid price of the Bonds in the Exchange Trust portfolio
if its initial public offering has been completed, plus accrued interest (or
for units of the Equity Securities Trust, based on the market value of the
underlying securities in the Equity Trust portfolio), and a reduced sales
charge as set forth below.

Except for Certificateholders who wish to exercise the Exchange
Privilege within the first five months of their purchase of Units of Trust,
the sales charge applicable to the purchase of units of an Exchange Trust
shall be 1.5% per unit (or per 1,000 Units for the Mortgage Securities Trust
or per 100 Units for the Equity Securities Trust). For Certificateholders who
wish to exercise the Exchange Privilege within the first five months of their
purchase of Units of Trust, the sales charge applicable to the purchase of
units of an Exchange Trust shall be the greater of (i) 1.5% per unit (or per
1,000 Units for the Mortgage Securities Trust or per 100 Units for the Equity
Securities Trust), or (ii) an amount which when coupled with the sales charge
paid by the unitholder upon his original purchase of Units of the Trust at
least equals the sales charge applicable in the direct purchase of units of an
Exchange Trust. The Exchange Privilege is subject to the following
conditions:

(1) The Sponsor must be maintaining a secondary market in both
the Units of the Trust held by the Certificateholder and the Units of
the available Exchange Trust. While the Sponsor has indicated its
intention to maintain a market in the Units of all Trusts sponsored by
it, the Sponsor is under no obligation to continue to maintain a
secondary market and therefore there is no assurance that the Exchange
Privilege will be available to a Certificateholder at any specific time
in the future. At the time of the Certificateholder's election to
participate in the Exchange Privilege, there also must be Units of the
Exchange Trust available for sale, either under the initial primary
distribution or in the Sponsor's secondary market.

(2) Exchanges will be effected in whole units only. Any excess
proceeds from the Units surrendered for exchange will be remitted and
the selling Certificateholder will not be permitted to advance any new

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<PAGE>

funds in order to complete an exchange. Units of the Mortgage
Securities Trust may only be acquired in blocks of 1,000 Units. Units
of the Equity Securities Trust may only be acquired in blocks of 100
units.

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

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

Example: Assume that after the initial public offering has been
completed, a Certificateholder has five units of a Trust with a current value
of $700 per unit which he has held for more than 5 months and the Certificate-
holder wishes to exchange the proceeds for units of a secondary market
Exchange Trust with a current price of $725 per unit. The proceeds from the
Certificateholder's original units will aggregate $3,500. Since only whole
units of an Exchange Trust may be purchased under the Exchange Privilege, the
Certificateholder would be able to acquire four units (or 4,000 Units of the
Mortgage Securities Trust or 400 Units of the Equity Securities Trust) for a
total cost of $2,943.50 ($2,900 for unit and $43.50 for the sales charge).
The remaining $556.50 would be remitted to the Certificateholder in cash. If
the Certificateholder acquired the same number of units at the same time in a
regular secondary market transaction, the price would have been $3,059.80
($2,900 for units and $159.50 for the sales charge, assuming a 5 1/2% sales
charge times the public offering price).

The Conversion Offer

Certificateholders of any registered unit investment trust for
which there is no active secondary market in the units of such trust (a

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<PAGE>

"Redemption Trust") may elect to redeem such units and apply the proceeds of
the redemption to the purchase of available Units of one or more series of A
Corporate Trust, Municipal Securities Trust, Insured Municipal Securities
Trust, Mortgage Securities Trust, New York Municipal Trust or Equity
Securities Trust sponsored by Reich & Tang Distributors L.P. or the Sponsor
(the "Conversion Trusts") at the Public Offering Price for units of the
Conversion Trust based on a reduced sales charge as set forth below. Under
the Conversion Offer, units of the Redemption Trust must be tendered to the
trustee of such trust for redemption at the redemption price, which is based
upon the aggregate bid side evaluation of the underlying bonds in such trust
and is generally about 1-1.2% to 2% lower than the offering price for such
bonds (or for units of the Equity Securities Trust, based on the market value
of the underlying securities in the Equity Trust portfolio). The purchase
price of the units will be based on the aggregate offer price of bonds in the
Conversion Trust portfolio (or for units of the Equity Securities Trust, based
on the market value of the underlying securities in the Equity Trust
portfolio) during its initial offering period; or, at a price based on the
aggregate bid price of the underlying bonds if the initial public offering of
the Conversion Trust has been completed, plus accrued interest (or for units
of the Equity Securities Trust, based on the market value of the underlying
securities in the Equity Trust portfolio), and a sales charge as set forth
below.

Except for Certificateholders who wish to exercise the Conversion
Offer within the first five months of their purchase of units of a Redemption
Trust, the sales charge applicable to the purchase of Units of the Conversion
Trust shall be 1.5% per Unit (or per 1,000 Units for the Mortgage Securities
Trust or per 100 Units for the Equity Securities Trust). For Certificate-
holders who wish to exercise the Conversion Offer within the first five months
of their purchase of units of a Redemption Trust, the sales charge applicable
to the purchase of Units of a Conversion Trust shall be the greater of
(i) 1.5% per Unit (or per 1,000 Units for the Mortgage Securities Trust or per
100 Units for the Equity Securities Trust) or (ii) an amount which when
coupled with the sales charge paid by the unitholder upon his original
purchase of units of the Redemption Trust at least equals the sales charge
applicable in the direct purchase of Units of a Conversion Trust. The
Conversion Offer is subject to the following limitations:

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

(2) Exchanges under the Conversion Offer will be effected in
whole units only. Certificateholders will not be permitted to advance
any new funds in order to complete an exchange under the Conversion
Offer. Any excess proceeds from units being redeemed will be returned
to the unit owner. Units of the Mortgage Securities Trust may only be
acquired in blocks of 1,000 units. Units of the Equity Securities Trust
may only be acquired in blocks of 100 units.

(3) The Sponsor reserves the right to modify, suspend or
terminate the Conversion Offer at any time without notice to
Certificateholders of Redemption Trusts. In the event the Conversion
Offer is not available to a unit owner at the time he wishes to exercise
it, the unit owner will be notified immediately and no action will be
taken with respect to his units without further instruction from the
unit owner. The Sponsor also reserves the right to raise the sales
charge based on actual increases in the Sponsor's costs and expenses in

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82600.3

<PAGE>

connection with administering the program, up to a maximum sales charge
of $20 per unit (or per 1,000 units for the Mortgage Securities Trust or
per 100 units for the Equity Securities Trust).

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

Example: Assume a unit owner has five units of a Redemption Trust
which has held for more than 5 months with a current redemption price of $675
per unit based on the aggregate bid price of the underlying bonds and the unit
owner wishes to participate in the Conversion Offer and exchange the proceeds
for units of a secondary market Conversion Trust with a current price of $750
per Unit. The proceeds from the unit owner's redemption of units will
aggregate $3,375. Since only whole units of a Redemption Trust may be
purchased under the Conversion Offer, the unit owner will be able to acquire
four units of the Conversion Trust (or 4,000 units of the Mortgage Securities
Trust or 400 units of the Equity Securities Trust) for a total cost of $3,045
($3,000 for units and $45 for the sales charge). The remaining $330 would be
remitted to the unit owner in cash. If the unit owner acquired the same
number of Conversion Trust units at the same time in a regular secondary
market transaction, the price would have been $3,165.00 ($3,000 for units and
$165.00 sales charge, assuming a 5 1/2% sales charge times the public offering
price).

Description of the Exchange Trusts and the Conversion Trusts

A Corporate Trust may be an appropriate investment vehicle for an
investor who is more interested in a higher current return on his investment
(although taxable) than a tax-exempt return (resulting from the fact that the
current return from taxable fixed income securities is normally higher than
that available from tax-exempt fixed income securities). Municipal Securities
Trust and New York Municipal Trust may be appropriate investment vehicles for
an investor who is more interested in tax-exempt income. The interest income
from New York Municipal Trust is, in general, also exempt from New York State
and local New York income taxes, while the interest income from Municipal
Securities Trust is subject to applicable New York State and local New York
taxes, except for that portion of the income which is attributable to New York
and Puerto Rico obligations in the Trust portfolio, if any. The interest
income from each State Trust of the Municipal Securities Trust, Multi-State
Series is, in general, exempt from state and local taxes when held by
residents of the state where the issuers of bonds in such State Trusts are
located. The Insured Municipal Securities Trust combines the advantages of
providing interest income free from regular federal income tax under existing
law with the added safety of irrevocable insurance. Insured Navigator Series

-77-
82600.3

<PAGE>

further combines the advantages of providing interest income free from regular
federal income tax and state and local taxes when held by residents of the
state where issuers of bonds in such state trusts are located with the added
safety of irrevocable insurance. Mortgage Securities Trust offers an
investment vehicle for investors who are interested in obtaining safety of
capital and a high level of current distributions of interest income through
investment in a fixed portfolio of collateralized mortgage obligations.
Equity Securities Trust offers investors an opportunity to achieve capital
appreciation together with a high level of income.

Tax Consequences of the Exchange Privilege and the Conversion Offer

A surrender of units pursuant to the Exchange Privilege or the
Conversion Offer will constitute a "taxable event" to the Certificateholder
under the Code. The Certificateholder will recognize a tax gain or loss that
will be of a long or short-term capital or ordinary income nature depending on
the length of time the units have been held and other factors. A Certificate-
holder'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 California tax law have been passed
upon by Brown & Wood, as special California counsel to the Sponsor. Certain
matters relating to Michigan tax law have been passed upon by Miller,
Canfield, Paddock and Stone, as special Michigan counsel to the Sponsor.
Certain matters relating to Pennsylvania tax law have been passed upon by
Saul, Ewing, Remick & Saul, as special Pennsylvania 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
Chase Manhattan Bank, N.A. Booth & Baron, 122 East 42nd Street, New York, New
York 10168, have acted as counsel for The Bank of New York.

Independent Auditors

The financial statements of the Trusts included in Part A of this
Prospectus as of the dates set forth in Part A have been examined by KPMG Peat
Marwick LLP, independent certified public accountants for the periods
indicated in its reports appearing herein. The financial statements of KPMG
Peat Marwick LLP have been so included in reliance on its reports given upon
the authority of said firm as expert in accounting and auditing.

-78-
82600.3

<PAGE>

DESCRIPTION OF BOND RATINGS*

Standard & Poor's Corporation

A brief description of the applicable Standard & Poor's Corpora-
tion 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:

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.

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

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

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

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

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

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

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

-79-
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<PAGE>

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
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
(1) designate the bonds which offer the maximum in security within their
quality group, (2) designate bonds which can be bought for possible upgrading
in quality and (3) additionally afford the investor an opportunity to gauge
more precisely the relative attractiveness of offerings in the 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 (a) earnings of projects under construction,
(b) earnings of projects unseasoned in operating experience, (c) rentals which
begin when facilities are completed, or (d) payments to which some other
limiting condition attaches. Rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.

* * *

-80-
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<PAGE>

FOR USE WITH MUNICIPAL SECURITIES TRUST

MULTISTATE SERIES

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

AUTHORIZATION FOR INVESTMENT IN MUNICIPAL SECURITIES TRUST,
MULTI-STATE SERIES

TRP PLAN - TOTAL REINVESTMENT PLAN

I hereby elect to participate in the TRP Plan and am the owner of ____ units
of __________ Trust.

I hereby authorize The Bank of New York, Trustee, to pay all semi-annual or
annual distributions of interest and principal (if any) with respect to such
units to The Bank of New York, Wall Street Trust Division, as TRP Plan Agent,
who shall immediately invest the distributions in units of the available
series of The State Trust above or, if unavailable, of other available series
of regular Municipal Securities Trust.

The foregoing authorization is subject in Date ____________, 19__
all respects to the terms and conditions
of participation set forth in the pros
pectus relating to such available series.

- ------------------------------------ ------------------------------------
Registered Holder (print) Registered Holder (print)

- ------------------------------------ ------------------------------------
Registered Holder Signature Registered Holder Signature
(Two signatures if joint tenancy)

My Brokerage Firm's Name

Street Address

City, State and Zipcode

Salesman's Name ___________________ Salesman's No.

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

UNIT HOLDERS NEED ONLY DATE AND SIGN THIS FORM.

MAIL TO YOUR BROKER
OR
THE BANK OF NEW YORK
ATTN: UNIT INVESTMENT TRUST DIVISION
101 BARCLAY STREET
NEW YORK, NEW YORK 10286

82600.3

<PAGE>

FOR USE WITH MUNICIPAL SECURITIES TRUST

MULTISTATE SERIES

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

AUTHORIZATION FOR INVESTMENT IN MUNICIPAL SECURITIES TRUST,
MULTI-STATE SERIES ____

TRP PLAN - TOTAL REINVESTMENT PLAN

I hereby elect to participate in the TRP Plan and am the owner of ____ units
of __________ Trust.

I hereby authorize the Chase Manhattan Bank, N.A., Trustee, to pay all
semi-annual or annual distributions of interest and principal (if any) with
respect to such units to the Chase Manhattan Bank, N.A., as TRP Plan Agent,
who shall immediately invest the distributions in units of the available
series of The State Trust above or, if unavailable, of other available series
of regular Municipal Securities Trust.

The foregoing authorization is subject in Date ____________, 19__
all respects to the terms and conditions
of participation set forth in the pros
pectus relating to such available series.

- ------------------------------------ ------------------------------------
Registered Holder (print) Registered Holder (print)

- ------------------------------------ ------------------------------------
Registered Holder Signature Registered Holder Signature
(Two signatures if joint tenancy)

My Brokerage Firm's Name

Street Address

City, State and Zip Code

Salesman's Name ___________________ Salesman's No.

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

UNIT HOLDERS NEED ONLY DATE AND SIGN THIS FORM.

MAIL TO YOUR BROKER
OR
CHASE MANHATTAN BANK, N.A.
ATTN: THE UIT REINVESTMENT UNIT A
770 BROADWAY
NEW YORK, NEW YORK 10003

82600.3

<PAGE>

INDEX MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES
Title Page
(A Unit Investment Trust)
Summary of Essential Information............... A-5
Information Regarding the Trust................ A-9
Financial and Statistical Information..........A-12 Prospectus
Audit and Financial Information
Report of Independent Accountants............ F-1 Dated: October 31, 1995
Statement of Net Assets...................... F-2
Statement of Operations...................... F-3 Sponsor:
Statement of Changes in Net Assets........... F-6
Notes to Financial Statements................F-10 Reich & Tang
Portfolio....................................F-13 Distributors L.P.
The Trust...................................... 1 600 Fifth Avenue
The State Trusts............................... 9 New York, N.Y. 10020
Public Offering................................ 52 212-830-5200
Estimated Long Term Return and Estimated
Current Return............................... 54 Trustee:
Rights of Certificateholders................... 55
Tax Status..................................... 57 Chase Manhattan Bank, N.A.
Liquidity...................................... 64 770 Broadway
Total Reinvestment Plan........................ 66 New York, N.Y. 10003
Trust Administration........................... 69 1-800-882-9898
Trust Expenses and Charges..................... 74 or
Exchange Privilege and Conversion Offer........ 75 The Bank of New York
Other Matters.................................. 79 101 Barclay Street
Description of Bond Ratings.................... 79 New York, N.Y. 10286
1-800-431-8002
Parts A and B of this Prospectus do
not contain all of the information set forth in Evaluator:
the registration statement and exhibits relating
thereto, filed with the Securities and Exchange Kenny S&P
Commission, Washington, D.C., under the Evaluation Services
Securities Act of 1933, and to which reference is 65 Broadway
made. New York, N.Y. 10006

* * *
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.

82600.3

<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.
The Prospectus consisting of pages.
Signatures.
Consent of Independent Auditors.
Consent of Counsel (included in Exhibit 99.3.1).
Consent of Special California Counsel (included in Exhibit 99.3.2).
Consent of Special Pennsylvania Counsel (included in Exhibit 99.3.3).
Consents of the Evaluator including Confirmation of Ratings (included in
Exhibit 99.5.1).

The following exhibits:

99.1.1 -- Reference Trust Agreement including certain Amendments to the
Trust Indenture and Agreement referred to under Exhibit 1.1.1
below (filed as Exhibit 1.1 to Amendments No. 1 to Form S-6
Registration Statements Nos. 2-98184, 33-01565 and 33-06866 of
Municipal Securities Trust, Multi-State Series 15, Multi-State
Series 18 and Multi-State Series 24, respectively, on August 8,
1985, December 5, 1985 and July 31, 1986, respectively, and
incorporated herein by reference).

99.1.1.1 -- Trust Indenture and Agreement for Municipal Securities Trust,
Multi-State Series 12 and Subsequent Series (filed as
Exhibit 1.1.1 to Amendment No. 1 to Form S-6 Registration
Statement No. 2-96226 of Municipal Securities Trust, Multi-
State Series 12 on April 3, 1985 and incorporated herein by
reference).

99.1.3.4 -- Certificate of Formation and Agreement among Limited Partners,
as amended, of Reich & Tang Distributors L.P. (filed as Exhibit
99.1.3.4 to Post-Effective Amendment No. 10 to Form S-6
Registration Statements Nos. 2-98914, 33-00376, 33-00856 and
33-01869 of Municipal Securities Trust, Series 28, 39th
Discount Series, Series 29 & 40th Discount Series and Series 30
& 41st Discount Series, respectively, on October 31, 1995 and
incorporated herein by reference).

99.1.4 -- Form of Agreement Among Underwriters (filed as Exhibit 1.4 to
Amendment No. 1 to Form S-6 Registration Statement No. 2-98117
of Municipal Securities Trust, 37th Discount Series on June 19,
1985 and to Amendment No. 1 to Form S-6 Registration Statement
No. 2-97191 of Insured Municipal Securities Trust, 10th
Discount Series and Series 3 on May 8, 1985, respectively, and
incorporated herein by reference).

99.2.1 -- Forms of Certificates (filed as Exhibit 2.1 to Amendment No. 1
to Form S-6 Registration Statement No. 33-1313 of Insured
Municipal Securities Trust, 16th Discount Series on
November 27, 1985, to Amendment No. 1 to Form S-6 Registration
Statement No. 33-00335 of Municipal Securities Trust, Multi-

II-1
1718.1

<PAGE>

State Series 17 on October 30, 1985 and to Amendment No. 1 to
Registration Statement No. 2-96226 of Municipal Securities
Trust, Multi-State Series 12 on April 3, 1985 and incorporated
herein by reference.

99.3.1 -- Opinion of Berger Steingut Tarnoff & Stern (formerly Berger &
Steingut) as to the legality of the securities being
registered, including their consent to the filing thereof and
to the use of their name under the headings "Tax Status" and
"Legal Opinions" in the Prospectus, and to the filing of their
opinion regarding tax status of the Trust (filed as Exhibit 3.1
to Amendment No. 1 to Form S-6 Registration Statement No. 33-
06860 of Municipal Securities Trust, Multi-State Series 24 on
July 31, 1986 and incorporated herein by reference).

Opinion of Battle Fowler LLP (formerly Battle, Fowler, Jaffin &
Kheel) as to the legality of the securities being registered,
including their consent to the filing thereof and to the use of
their name under the headings "Tax Status" and "Legal Opinions"
in the Prospectus, and to the filing of their opinion regarding
tax status of the Trust (filed as Exhibit 3.1 to Amendments
No. 1 to Form S-6 Registration Statements Nos. 2-98184 and
33-01565 of Municipal Securities Trust, Multi-State Series 15
and Multi-State Series 18, respectively, on August 8, 1985 and
December 5, 1985, respectively, and incorporated herein by
reference).

99.3.1.1 -- Opinion of Battle Fowler LLP (formerly Battle, Fowler, Jaffin &
Kheel) as to tax status of securities being registered (filed
as Exhibit 3.1.1 to Amendments No. 1 to Form S-6 Registration
Statements Nos. 2-98184, 2-99603, 33-00335 and 33-01565 of
Municipal Securities Trust, Multi-State Series 15 and Multi-
State Series 18, respectively, on August 8, 1985 and
December 5, 1985, respectively, and incorporated herein by
reference).

99.3.1.2 -- Opinion of Battle Fowler LLP as to the tax status of securities
being registered including their consent to the filing thereof
and to the use of their name under the heading "Tax Status" in
the Prospectus (filed as Exhibit 3.1.2 to Post-Effective
Amendment No. 1 to Registration Statement No. 33-06860 of
Municipal Securities Trust, Multi-State Series 24 on
October 15, 1987 and incorporated herein by reference).

99.3.2 -- 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 3.2 to Post-Effective
Amendment No. 4 to Registration Statements Nos. 2-98184 and
33-01565 of Municipal Securities Trust, Multi-State Series 15
and 18, respectively, on October 31, 1989 and Exhibit 3.2 to
Post-Effective Amendment No. 3 to Registration Statement
No. 33-06860 of Municipal Securities Trust, Multi-State
Series 24 on October 31, 1989 and incorporated herein by
reference).

99.3.3 -- Opinion of Saul, Ewing, Remick & Saul as Special Pennsylvania
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 Post-Effective Amendment No. 9 and No. 8 to
Registration Statements Nos. 2-98184 and 33-06866,
respectively, of Municipal Securities Trust, Multi-State Series

II-2
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<PAGE>

15 and 24, respectively, on October 28, 1994 and incorporated
herein by reference.

*99.5.1 -- Consents of the Evaluator including Confirmation of Ratings.

99.6.0 -- Power of Attorney of Reich & Tang Distributors L.P., the
Depositor, by its Officers and a majority of its Directors
(filed as Exhibit 99.6.0 to Post-Effective Amendment No. 10 to
Form S-6 Registration Statements Nos. 2-98914, 33-00376, 33-
00856 and 33-01869 of Municipal Securities Trust, Series 28,
39th Discount Series, Series 29 & 40th Discount Series and
Series 30 & 41st Discount Series, respectively, on October 31,
1995 and incorporated herein by reference).

*27 -- Financial Data Schedule(s) (for EDGAR filing only).
- --------
* Being filed by this Amendment.

II-3
1718.1

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrants, Municipal Securities Trust, Multi-State Series 15, Multi-State
Series 18 and Multi-State Series 24 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 26th day of October, 1995.

MUNICIPAL SECURITIES TRUST,
MULTI-STATE SERIES 15,
MULTI-STATE SERIES 18
and MULTI-STATE SERIES 24
(Registrants)

REICH & TANG DISTRIBUTORS L.P.
(Depositor)

By: Reich & Tang Asset Management, Inc.,
as general partner

By: /s/Lorraine C. Hylsler
Lorraine C. Hylsler
(Authorized Signatory)

Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons who constitute the principal officers and a majority of the
directors of Reich & Tang Asset Management, Inc., the general partner of Reich
& Tang Distributors L.P., the Depositor, in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>
Name Title Date

<S> <C> <C>
PETER S. VOSS President, Chief Executive Officer )
and Director )
G. NEAL RYLAND Executive Vice President, Treasurer ) October 26, 1995
and Chief Financial Officer )
EDWARD N. WADSWORTH Clerk )
RICHARD E. SMITH III Director ) By: /s/Lorraine C. Hylsler
-------------------
STEVEN W. DUFF Director ) Lorraine C. Hylsler
BERNADETTE N. FINN Vice President ) Attorney-in-Fact*
LORRAINE C. HYLSLER Secretary )
RICHARD DE SANCTIS Vice President and Treasurer )
</TABLE>

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

* An executed power of attorney was filed as Exhibit 99.6.0 to Post-
Effective Amendment No. 10 to Form S-6 Registration Statements Nos.
2-98914, 33-00376, 33-00856 and 33-01869 of Municipal Securities Trust,
Series 28, 39th Discount Series, Series 29 & 40th Discount Series and
Series 30 & 41st Discount Series, respectively, on October 31, 1995.

II-4
1718.1

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

We consent to the use in these Post-Effective Amendments to the Registration
Statements of our reports on the financial statements of Municipal Securities
Trust, Multi-State Series 15; Municipal Securities Trust, Multi-State Series 18;
and Municipal Securities Trust, Multi-State Series 24 included herein and to the
reference to our firm under the heading "Independent Auditors" in the Prospectus
which is part of this Registration Statement.

KPMG Peat Marwick LLP

New York, New York
October 16, 1995

II-5
1718.1

<PAGE>

EXHIBIT INDEX

Exhibit Description Page No.

99.1.1 Reference Trust Agreement including certain Amendments
to the Trust Indenture and Agreement referred to under
Exhibit 1.1.1 below (filed as Exhibit 1.1 to
Amendments No. 1 to Form S-6 Registration Statements
Nos. 2-98184, 33-01565 and 33-06866 of Municipal
Securities Trust, Multi-State Series 15, Multi-State
Series 18 and Multi-State Series 24, respectively, on
August 8, 1985, December 5, 1985 and July 31, 1986,
respectively, and incorporated herein by reference).

99.1.1.1 Trust Indenture and Agreement for Municipal Securities
Trust, Multi-State Series 12 and Subsequent Series
(filed as Exhibit 1.1.1 to Amendment No. 1 to Form S-6
Registration Statement No. 2-96226 of Municipal
Securities Trust, Multi-State Series 12 on April 3,
1985 and incorporated herein by reference).

99.1.3.4 Certificate of Formation and Agreement among Limited
Partners, as amended, of Reich & Tang Distributors
L.P. (filed as Exhibit 99.1.3.4 to Post-Effective
Amendment No. 10 to Form S-6 Registration Statements
Nos. 2-98914, 33-00376, 33-00856 and 33-01869 of
Municipal Securities Trust, Series 28, 39th Discount
Series, Series 29 & 40th Discount Series and Series 30
& 41st Discount Series, respectively, on October 31,
1995 and incorporated herein by reference).

99.1.4 Form of Agreement Among Underwriters (filed as
Exhibit 1.4 to Amendment No. 1 to Form S-6
Registration Statement No. 2-98117 of Municipal
Securities Trust, 37th Discount Series on June 19,
1985 and to Amendment No. 1 to Form S-6 Registration
Statement No. 2-97191 of Insured Municipal Securities
Trust, 10th Discount Series and Series 3 on May 8,
1985, respectively, and incorporated herein by
reference).

99.2.1 Forms of Certificates (filed as Exhibit 2.1 to
Amendment No. 1 to Form S-6 Registration Statement
No. 33-1313 of Insured Municipal Securities Trust,
16th Discount Series on November 27, 1985, to
Amendment No. 1 to Form S-6 Registration Statement
No. 33-00335 of Municipal Securities Trust, Multi-
State Series 17 on October 30, 1985 and to Amendment
No. 1 to Registration Statement No. 2-96226 of
Municipal Securities Trust, Multi-State Series 12 on
April 3, 1985 and incorporated herein by reference).

99.3.1 Opinion of Berger Steingut Tarnoff & Stern (formerly
Berger & Steingut) as to the legality of the
securities being registered, including their consent
to the filing thereof and to the use of their name
under the headings "Tax Status" and "Legal Opinions"
in the Prospectus, and to the filing of their opinion
regarding tax status of the Trust (filed as
Exhibit 3.1 to Amendment No. 1 to Form S-6
Registration Statement No. 33-06860 of Municipal
Securities Trust, Multi-State Series 24 on July 31,
1986 and incorporated herein by reference).

1
1718.1

<PAGE>

Exhibit Description Page No.

Opinion of Battle Fowler LLP (formerly Battle, Fowler,
Jaffin & Kheel) as to the legality of the securities
being registered, including their consent to the
filing thereof and to the use of their name under the
headings "Tax Status" and "Legal Opinions" in the
Prospectus, and to the filing of their opinion
regarding tax status of the Trust (filed as Exhibit
3.1 to Amendments No. 1 to Form S-6 Registration
Statements Nos. 2-98184 and 33-01565 of Municipal
Securities Trust, Multi-State Series 15 and Multi-
State Series 18, respectively, on August 8, 1985 and
December 5, 1985, respectively, and incorporated
herein by reference).

99.3.1.1 Opinion of Battle Fowler LLP (formerly Battle, Fowler,
Jaffin & Kheel) as to tax status of securities being
registered (filed as Exhibit 3.1.1 to Amendments No. 1
to Form S-6 Registration Statements Nos. 2-98184,
2-99603, 33-00335 and 33-01565 of Municipal Securities
Trust, Multi-State Series 15 and Multi-State
Series 18, respectively, on August 8, 1985 and
December 5, 1985, respectively, and incorporated
herein by reference).

99.3.1.2 Opinion of Battle Fowler LLP as to the tax status of
securities being registered including their consent to
the filing thereof and to the use of their name under
the heading "Tax Status" in the Prospectus (filed as
Exhibit 3.1.2 to Post-Effective Amendment No. 1 to
Registration Statement No. 33-06860 of Municipal
Securities Trust, Multi-State Series 24 on October 15,
1987 and incorporated herein by reference).

99.3.2 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 3.2 to Post-Effective Amendment No. 4 to
Registration Statements Nos. 2-98184 and 33-01565 of
Municipal Securities Trust, Multi-State Series 15 and
18, respectively, on October 31, 1989 and Exhibit 3.2
to Post-Effective Amendment No. 3 to Registration
Statement No. 33-06860 of Municipal Securities Trust,
Multi-State Series 24 on October 31, 1989 and
incorporated herein by reference).

99.3.3 Opinion of Saul, Ewing, Remick & Saul as Special
Pennsylvania 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 Post-Effective
Amendment No. 9 and No. 8 to Registration Statements
Nos. 2-98184 and 33-06866, respectively, of Municipal
Securities Trust, Multi-State Series 15 and 24,
respectively, on October 28, 1994 and incorporated
herein by reference.

99.5.1 Consents of the Evaluator including Confirmation of
Ratings...............................................

99.6.0 Power of Attorney of Reich & Tang Distributors L.P.,
the Depositor, by its Officers and a majority of its
Directors (filed as Exhibit 99.6.0 to Post-Effective
Amendment No. 10 to Form S-6 Registration Statements
Nos. 2-98914, 33-00376, 33-00856 and 33-01869 of

2
1718.1

<PAGE>

Exhibit Description Page No.

Municipal Securities Trust, Series 28, 39th Discount
Series, Series 29 & 40th Discount Series and Series 30
& 41st Discount Series, respectively, on October 31,
1995 and incorporated herein by reference).

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

3
1718.1

<ARTICLE> 6
<LEGEND> The schedule contains summary financial
information extracted from the financial
statements and supporting schedules as of the
end of the most current period and is qualified
in its entirety by reference to such financial
statements.

</LEGEND>
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<NAME> MST, MULTISTATE SERIES 15
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<NAME> MST, MULTISTATE SERIES 15

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<ARTICLE> 6
<LEGEND> The schedule contains summary financial
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statements and supporting schedules as of the
end of the most current period and is
qualified in its entirety by reference to such
financial statements.

</LEGEND>
<CIK> 0000783405
<NAME> MST, MULTISTATE SERIES 18
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<NUMBER> 1
<NAME> MST, MULTISTATE SERIES 18

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</TABLE>

<ARTICLE> 6
<LEGEND> The schedule contains summary financial
information extracted from the financial
statements and supporting schedules as of the
end of the most current period and is
qualified in its entirety by reference to such
financial statements.

</LEGEND>
<CIK> 0000796287
<NAME> MST, MULTISTATE SERIES 24
<SERIES>
<NUMBER> 1
<NAME> NEW YORK

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</LEGEND>
<CIK> 0000796287
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</TABLE>

J.J KENNY STANDARD & POOR'S
65 Broadway A Division of The McGraw-Hill Companies
New York, NY 10006-2551
Tel (212) 770-4422
Fax (212) 797-8681

October 31, 1995

Reich & Tang Distributors L.P.
600 Fifth Avenue
New York, New York 10020

Re: Municipal Securites Trust Multi-State Series 15

Gentlemen:

We have examined the post-effective Amendment to the Registration Statement
File No.2-98184 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 currently 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>
J.J KENNY STANDARD & POOR'S
65 Broadway A Division of The McGraw-Hill Companies
New York, NY 10006-2551
Tel (212) 770-4422
Fax (212) 797-8681

October 31, 1995

Reich & Tang Distributors L.P.
600 Fifth Avenue
New York, New York 10020

Re: Municipal Securites Trust Multi-State Series 18

Gentlemen:

We have examined the post-effective Amendment to the Registration Statement
File No.33-01565 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>
J.J KENNY STANDARD & POOR'S
65 Broadway A Division of The McGraw-Hill Companies
New York, NY 10006-2551
Tel (212) 770-4422
Fax (212) 797-8681

October 31, 1995

Reich & Tang Distributors L.P.
600 Fifth Avenue
New York, New York 10020

Re: Municipal Securites Trust Multi-State Series 24

Gentlemen:

We have examined the post-effective Amendment to the Registration Statement
File No.33-06866 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>