MUNICIPAL SECURITIES TRUST SERIES 36 & 53RD DISCOUNT SERIES, 485BPOS, 1998-04-29

MUNICIPAL SECURITIES TRUST SERIES 36 & 53RD DISCOUNT SERIES
485BPOS, 1998-04-29

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As filed with the Securities and Exchange Commission on April 29, 1998
Registration No. 33-10963*

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, SERIES 36,
SERIES 43, SERIES 47 and SERIES 51

B. Name of depositors**: REICH & TANG DISTRIBUTORS, INC.
GRUNTAL & CO., L.L.C.

C. Complete address of depositors' principal executive offices:

REICH & TANG DISTRIBUTORS, INC. GRUNTAL & CO., L.L.C.
600 Fifth Avenue 14 Wall Street
New York, NY 10020 New York, NY 10005

D. Name and complete address of agent for service:

PETER J. DeMARCO LEE FENSTERSTOCK Copy of comments to:
Executive President MICHAEL R. ROSELLA, ESQ.
Vice President Gruntal & Co., Battle Fowler LLP
Reich & Tang L.L.C. 75 East 55th Street
Distributors, Inc. 14 Wall Street New York, NY 10022
600 Fifth Avenue New York, NY 10005 (212) 856-6858
New York, NY 10020
</TABLE>

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

/ / immediately upon filing pursuant to paragraph (b) of Rule 485
/x/ on April 30, 1998 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / on ( date ) pursuant to paragraph (a) of Rule 485

* The Prospectus included in this Registration Statement constitutes a
combined Prospectus as permitted by the provisions of Rule 429 of the
General Rules and Regulations under the Securities Act of 1933 (the
"Act"). Said Prospectus covers units of undivided interest in Municipal
Securities Trust, Series 36, Series 43, Series 47 and Series 51 covered
by prospectuses heretofore filed as part of separate registration
statements on Form S-6 (Registration Nos. 33-10963, 33-27108, 33-33606
and 33-40625, respectively) under the Act. This filing constitutes Post
Effective Amendment No. 11 for Series 36, Post-Effective Amendment No.
9 for Series 43, Post-Effective Amendment No. 8 for Series 47 and
Post-Effective Amendment No. 7 for Series 51.

Each of the Registrants filed a Rule 24f-2 Notice for its fiscal year
ended December 31, 1997 on or about February 28, 1998, except Series 36
which was filed on March 13, 1998.

** Gruntal & Co., L.L.C. acted as Co-Sponsor to all of the
above-referenced trusts, except Series 36 and Series 43.

<PAGE>

Prospectus Part A Dated April 30, 1998

MUNICIPAL SECURITIES TRUST

SERIES 36

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

The Trust is a unit investment trust designated Series 36
("Municipal Trust") with an underlying portfolio of long-term tax-exempt bonds
issued by or on behalf of states, municipalities and public authorities, and was
formed to preserve capital and to provide interest income (including, where
applicable, earned original issue discount) which, in the opinions of bond
counsel to the respective issuers, is, with certain exceptions, currently exempt
from regular Federal income tax under existing law but may be subject to state
and local taxes. There can be no assurance that the Trust's objectives will be
achieved. Although the Supreme Court has determined that Congress has the
authority to subject interest on bonds such as the Bonds in the Trust to federal
income taxation, existing law excludes such interest from regular federal income
tax. Such interest income may, however, be subject to the federal individual and
corporate alternative minimum tax and to state and local taxes. (See
"Description of Portfolio" in this Part A for a description of those Bonds, if
any, which pay interest income subject to the federal individual alternative
minimum tax.) In addition, capital gains are subject to tax. (See "Tax Status"
and "The Trust--Portfolio" in Part B of this Prospectus.) The Sponsor is Reich &
Tang Distributors, Inc. The value of the Units of the Trust will fluctuate with
the value of the underlying bonds. Minimum purchase: 1 Unit.

This Prospectus consists of two parts. Part A contains the
Summary of Essential Information as of December 31, 1997 (the "Evaluation
Date"), a summary of certain specific information regarding the Trust and
audited financial statements of the Trust, including the related portfolio, as
of the Evaluation Date. Part B of this Prospectus contains a general summary of
the Trust. Part A of this Prospectus may not be distributed unless accompanied
by Part B. Investors should retain both parts of this Prospectus for future
reference. The Securities and Exchange Commission ("SEC") maintains a website
that contains reports, proxy and information statements and other information
regarding the Trust which is filed electronically with the SEC. The SEC's
Internet address is http:www.sec.gov. Offering materials for the sale of these
units available through the Internet are not being offered directly or
indirectly to residents of a particular state nor is an offer of these units
through the Internet specifically directed to any person in a state by, or on
behalf of, the issuer.

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

THE TRUST. The Trust seeks to achieve its investment objectives
through investment in a fixed, diversified portfolio of long-term bonds (the
"Bonds") issued by or on behalf of states, municipalities and public
authorities. All of the Bonds in the Trust were rated "A" or better by Standard
& Poor's Rating Services, a division of The McGraw-Hill Companies, or Moody's
Investors Service, Inc. at the time originally deposited in the Trust. For a
discussion of the significance of such ratings see "Description of Bond Ratings"
in Part B of this Prospectus and for a list of ratings on the Evaluation Date
see the "Portfolio". Some of the Bonds in the portfolio may be "Zero Coupon
Bonds", which are original issue discount bonds that provide for payment at
maturity at par value, but do not provide for the payment of any current
interest.

111423.1

<PAGE>

maturity date (and other than pursuant to sinking fund provisions) and to issue
new bonds ("Refunding Bonds") in order to finance the redemption. Issuers
typically utilize refunding calls in order to take advantage of lower interest
rates in the marketplace. Some of these Refunded Bonds may be called for
redemption pursuant to pre-refunding provisions ("Pre-Refunded Bonds") whereby
the proceeds from the issue of the Refunding Bonds are typically invested in
government securities in escrow for the benefit of the holders of the
Pre-Refunded Bonds until the refunding call date. Usually, Pre-Refunded Bonds
will bear a triple-A rating because of this escrow. The issuers of Pre-Refunded
Bonds must call such Bonds on their refunding call date. Therefore, as of such
date, the Trust will receive the call price for such bonds but will cease
receiving interest income with respect to them. For a list of those Bonds which
are Pre-Refunded Bonds, if any, as of the Evaluation Date, see "Notes to
Financial Statements" in this Part A. The payment of interest and preservation
of capital are, of course, dependent upon the continuing ability of the issuers
of the Bonds to meet their obligations.

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

Each Unit in the Trust represents a 1/1738th undivided
interest in the principal and net income of the Trust. The principal amount of
Bonds deposited in the Trust per Unit is reflected in the Summary of Essential
Information. (See "The Trust--Organization" in Part B of this Prospectus.) The
Units being offered hereby are issued and outstanding Units which have been
purchased by the Sponsor in the secondary market.

PUBLIC OFFERING PRICE. The secondary market Public Offering
Price of each Unit is equal to the aggregate bid price of the Bonds in the Trust
divided by the number of Units outstanding, plus a sales charge of 3.84% of the
Public Offering Price, which is the same as 3.993% of the net amount invested in
Bonds per Unit. In addition, accrued interest to expected date of settlement is
added to the Public Offering Price. If Units had been purchased on the
Evaluation Date, the Public Offering Price per Unit would have been $502.15 plus
accrued interest of $5.81 under the monthly distribution plan, $8.33 under the
semi-annual distribution plan and $8.37 under the annual distribution plan, for
a total of $507.96, $510.48 and $510.52, respectively. The Public Offering Price
per Unit can vary on a daily basis in accordance with fluctuations in the
aggregate bid price of the Bonds. (See the "Summary of Essential Information"
and "Public Offering--Offering Price" in Part B of this Prospectus.)

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

A-2
111423.1

<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.

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

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

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

MARKET FOR UNITS. The Sponsor, although not obligated to do
so, presently maintains and intends to continue to maintain a market for the
Units at prices based upon the aggregate bid price of the Bonds in the portfolio
of the Trust. The Secondary Market repurchase price is based on the aggregate
bid price of the Bonds in the Trust portfolio, and the reoffer price is based on
the aggregate bid price of the Bonds plus a sales charge of 3.84% of the Public
Offering Price (3.993% of the net amount invested) plus net accrued interest. If
such a market is not maintained, a Certificateholder will be able to redeem his
or her Units with the Trustee at a price also based upon the aggregate bid price
of the Bonds. (See "Sponsor Repurchase" and "Public Offering--Offering Price" in
Part B of this Prospectus.)

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

A-3
111423.1

<PAGE>

MUNICIPAL SECURITIES TRUST
SERIES 36

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1997

Date of Deposit*: January 8, 1987 Minimum Principal Distribution:
Principal Amount of Bonds ... $820,000 $1.00 per Unit.
Number of Units ............. 1,738 Weighted Average Life
Fractional Undivided Inter- to Maturity: 11.5 Years.
est in Trust per Unit ..... 1/1738 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $471.81 value of Trust is less than
Secondary Market Public $800,000 in principal amount of
Offering Price** Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust ...... $839,261+++ The earlier of December 31,
Divided by 1,738 Units .... $482.89 2036 or the disposition of the
Plus Sales Charge of 3.84% last Bond in the Trust.
of Public Offering Price $19.26 Trustee***: The Chase Manhattan
Public Offering Price Bank.
per Unit ................ $502.15+ 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 .................. $482.89+ 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 ............ $19.26++++ 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) ... $30.34 Distributors, Inc.
Evaluation Time: 4:00 p.m. Sponsor's Annual Fee: Maximum of
New York Time. $.25 per $1,000 principal
amount of Bonds (see "Trust
Expenses and Charges" in Part B
of this Prospectus).

</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

<TABLE>
<CAPTION>
Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# ......... $31.57 $31.57 $31.57
Less estimated annual fees and
expenses ............................ 1.79 1.37 1.02
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $29.78 $30.20 $30.55
Estimated interest distribution# ...... 2.48 15.10 30.55
Estimated daily interest accrual# ..... .0827 .0838 .0848
Estimated current return#++ ........... 5.93% 6.01% 6.08%
Estimated long term return++ .......... 4.34% 4.42% 4.49%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15
</TABLE>

A-4
111423.1

<PAGE>

Footnotes to Summary of Essential Information

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

** 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.

Certain amounts distributable as of December 31, 1997, may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.

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

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $5.81 monthly, $8.33
semi-annually and $8.37 annually.

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

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

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

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

FINANCIAL AND STATISTICAL INFORMATION

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

<TABLE>
<CAPTION>
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)
- ------------ ---------- ---------- ------- ------ ------ ----------

December 31, 1995 1,850 $608.95 $43.66 $44.16 $44.38 $ 55.96
December 31, 1996 1,790 586.51 38.15 38.70 39.10 -0-
December 31, 1997 1,738 491.24 30.76 31.12 31.56 101.21
</TABLE>

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

A-5
111423.1

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1997

DESCRIPTION OF PORTFOLIO

The portfolio of the Trust consists of 5 issues representing
obligations of issuers located in 5 states. 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. Approximately 24.3% of the Bonds are obligations of state and local
housing authorities; approximately 6.1% are hospital revenue bonds; none are
issued in connection with the financing of nuclear generating facilities; and
none are "mortgage subsidy" bonds. All of the Bonds in the Trust are subject to
redemption prior to their stated maturity dates pursuant to sinking fund or
optional call provisions. The Bonds may also be subject to other calls, which
may be permitted or required by events which cannot be predicted (such as
destruction, condemnation, termination of a contract, or receipt of excess or
unanticipated revenues). One issue representing $200,000 of the principal amount
of the Bonds is a general obligation bond. All four of the remaining issues
representing $620,000 of the principal amount of the Bonds are payable from the
income of a specific project or authority and are not supported by the issuer's
power to levy taxes. The portfolio is divided for purpose of issue as follows:
Coal Power 1, Hospital 1, Local Development 1 and Sales Tax 1. For an
explanation of the significance of these factors see "The Trust--Portfolio" in
Part B of this Prospectus.

As of December 31, 1997, none of the Bonds were original issue
discount bonds. Approximately 48.8% of the aggregate principal amount of the
Bonds in the Trust were purchased at a "market" discount from par value at
maturity, approximately 51.2% were purchased at a premium and none were
purchased at par. For an explanation of the significance of these factors see
"Discount and Zero Coupon Bonds" in Part B of this Prospectus.

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

A-6
111423.1

<PAGE>

Report of Independent Accountants

To the Sponsor, Trustee and Certificateholders of
Municipal Securities Trust, Series 36

In our opinion, the accompanying statement of net assets, including the
portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Municipal Securities Trust, Series
36 (the "Trust") at December 31, 1997, the results of its operations, the
changes in its net assets and the financial highlights for the two years then
ended, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1997 by correspondence with the Trustee, provide a reasonable basis
for the opinion expressed above. The financial statements for the year ended
December 31, 1995 were audited by other independent accountants whose report
dated March 31, 1996 expressed an unqualified opinion on those financial
statements.

PRICE WATERHOUSE LLP
Boston, MA
March 18, 1998

<PAGE>

Municipal Securities Trust, Series 36
Portfolio
December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------

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

<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 50,000 Regional Medical Center Board A 7.700% 1/01/00 @ 100 S.F. $ 50,621
(Anniston, Alabama) Hospital Revenue 7/01/2008 1/31/98 @ 101 Ref.
Refunding Bonds (Northeast Alabama
Regional Medical Center Project)
Series A

2 170,000 Jefferson Sales Tax District (Jefferson AAA 8.250 7/01/98 @ 100 S.F. 177,183
Parish, Louisiana) Special Sales Tax 7/01/2002 7/01/99 @ 100 Ref.
Revenue Bonds of 1986 Series B

3 200,000 Tennessee Local Development A2* 5.000 3/01/12 @ 100 S.F. 197,715
Authority State Loan Program Revenue 3/01/2015 1/31/98 @ 100.5 Ref.
Refunding Bonds, 1986 Series A

4 200,000 City of New Braunfels, Texas (Comal NR 8.500 No Sinking Fund 221,222
and Guadalupe Counties) General 8/01/2002 8/01/00 @ 100 Ref.
Obligation Bonds, Series 1985

5 200,000 Intermountain Power Agency (a political A1* 5.000 7/01/18 @ 100 S.F. 192,510
subdivision of the State of Utah) Power 7/01/2021 1/31/98 @ 100 Ref.
Supply Revenue Bonds Series A

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

$ 820,000 Total Investments (Cost $758,333) $ 839,251
========= ===========
</TABLE>

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

Municipal Securities Trust, Series 36
Footnotes to Portfolio
- --------------------------------------------------------------------------------

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

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

3. At December 31, 1997, the net unrealized appreciation of all the bonds
was comprised of the following:

Gross unrealized appreciation $ 93,619
Gross unrealized depreciation (12,701)
---------------

Net unrealized appreciation $ 80,918
===============

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

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

<PAGE>

Municipal Securities Trust, Series 36

Statement of Net Assets
December 31, 1997

Investments in Securities,
at Market Value (Cost $758,333) $839,251
--------

Other Assets
Accrued Interest 24,356
--------
Total Other Assets 24,356
--------

Liabilities
Advance from Trustee 9,840
--------
Total Liabilities 9,840
--------

Excess of Other Assets over Total Liabilities 14,516
--------

Net Assets (1,738 Units of Fractional Undivided
Interest Outstanding, $491.24 per Unit) $853,767
========

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

<PAGE>

Municipal Securities Trust, Series 36

Statement of Operations

For the Years Ended December 31,
1997 1996 1995

Investment Income
Interest $57,359 $73,001 $78,908
------- ------- --------

Expenses
Trustee's Fees 2,107 2,356 2,394
Evaluator's Fee 1,241 890 750
Sponser's Advisory Fee 212 294 319
------- ------- --------

Total Expenses 3,560 3,540 3,463
------- ------- --------

Net Investment Income 53,799 69,461 75,445
------- ------- --------

Realized and Unrealized Gain (Loss)
Realized (Loss) on
Investments (3,239) (13,436) (12,568)

Change in Unrealized Appreciation
(Depreciation) on Investments 14,658 (27,363) 90,706
------- ------- --------

Net Gain (Loss) on Investments 11,419 (40,799) 78,138
------- ------- --------

Net Increase
in Net Assets
Resulting From Operations $65,218 $28,662 $153,583
======= ======= ========

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

<PAGE>

Municipal Securities Trust, Series 36

Statement of Changes in Net Assets

For the Years Ended December 31,
1997 1996 1995

Operations
Net Investment Income $53,799 $69,461 $75,445
Realized (Loss)
on Investments (3,239) (13,436) (12,568)
Change in Unrealized Appreciation
(Depreciation) on Investments 14,658 (27,363) 90,706
---------- ---------- ----------

Net Increase in
Net Assets Resulting
From Operations 65,218 28,662 153,583
---------- ---------- ----------

Distributions to Certificateholders
Investment Income 59,637 70,248 81,049
Principal 176,223 ---- 103,526

Redemptions
Interest 381 456 ----
Principal 25,064 34,662 ----
---------- ---------- ----------

Total Distributions
and Redemptions 261,305 105,366 184,575
---------- ---------- ----------

Total (Decrease) (196,087) (76,704) (30,992)

Net Assets
Beginning of Year 1,049,854 1,126,558 1,157,550
---------- ---------- ----------

End of Year (Including
Undistributed Net Investment
Income of $14,506, $20,725
and $21,968, Respectively) $ 853,767 $1,049,854 $1,126,558
========== ========== ==========

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

<PAGE>

Municipal Securities Trust, Series 36

Notes to Financial Statements

1. Organization

Municipal Securities Trust, Series 36 (the "Trust") was organized on
January 8, 1987 by Bear, Stearns & Co. Inc. under the laws of the State
of New York by a Trust Indenture and Agreement, and is registered under
the Investment Company Act of 1940. The Trust was formed to preserve
capital and to provide interest income.

Effective September 28, 1995, Reich & Tang Distributors L.P. ("Reich &
Tang") has become the successor sponsor (the "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. Effective September 2, 1995, United States Trust Company of
New York was merged into The Chase Manhattan Bank ("Chase" or the
"Trustee"). Accordingly, Chase is the successor trustee of the Trust.

2. Summary of Significant Accounting Policies

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

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

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

<PAGE>

Municipal Securities Trust, Series 36

Notes to Financial Statements

3. Income Taxes

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

4. Trust Administration

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

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

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

The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. For the years ended December 31, 1997 and 1996, 52 and
60 units were redeemed, respectively. No units were redeemed during the
period ended December 31, 1995.

The Trust pays an annual fee for trustee services rendered by the
Trustee that ranges from $.35 to $1.02 per $1,000 of outstanding
investment principal. In addition, a minimum fee of $12.00 is paid to a
service bureau for each portfolio valuation. A maximum fee of $.25 per
$1,000 of outstanding investment principal is paid to the Sponsor. For
the year ended December 31, 1997, the "Trustee's Fees" are comprised of
Trustee fees of $806 and other expenses of $1,301. For the year ended
December 31, 1996, the "Trustee's Fees" are comprised of Trustee fees
of $1,076 and other expenses of $1,280. The other expenses include
professional, printing and miscellaneous fees.

<PAGE>

Municipal Securities Trust, Series 36

Notes to Financial Statements

5. Net Assets

At December 31, 1997, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $2,070,525
Less Initial Gross Underwriting Commission 101,440
----------
1,969,085
Accumulated Cost of Securities Sold,
Matured or Called (1,210,752)
Net Unrealized Appreciation 80,918
Undistributed Net Investment Income 14,506
Undistributed Proceeds From Investments 10
----------

Total $853,767
==========

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 of the Trust as of the date of deposit.

6. Concentration of Credit Risk

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

<PAGE>

Municipal Securities Trust, Series 36

Notes to Financial Statements

7. Financial Highlights (per unit)*
Selected data for a unit of the Trust outstanding:
For the years ended December 31,
1997 1996

Net Asset Value, Beginning of Year** $586.51 $608.95
------- -------

Interest Income 32.52 40.11
Expenses (2.02) (1.95)
------- -------
Net Investment Income 30.50 38.16
------- -------
Net Gain or Loss on Investments(1) 8.16 (21.75)
------- -------

Total from Investment Operations 38.66 16.41
------- -------

Less Distributions
to Certificateholders
Income 33.81 38.60
Principal 99.90 ----
for Redemptions
Interest .22 .25
------- -------

Total Distributions 133.93 38.85
------- -------

Net Asset Value, End of Year** $491.24 $586.51
======= =======

(1) Net gain or loss on investments is a result of changes in outstanding
units since January 1, 1997 and 1996, respectively, and the dates of
net gain and loss on investments.

- ----------
* Unless otherwise stated, based upon average units outstanding during
the year of 1,764 ([1,738 + 1,790]/2) for 1997 and of 1,820 ([1,790 +
1,850]/2) for 1996.

** Based upon actual units outstanding
<PAGE>

Prospectus Part A Dated April 30, 1998

MUNICIPAL SECURITIES TRUST

SERIES 43

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

The Trust is a unit investment trust designated Series 43
("Municipal Trust") with an underlying portfolio of long-term tax-exempt bonds
issued by or on behalf of states, municipalities and public authorities, and was
formed to preserve capital and to provide interest income (including, where
applicable, earned original issue discount) which, in the opinions of bond
counsel to the respective issuers, is, with certain exceptions, currently exempt
from regular Federal income tax under existing law but may be subject to state
and local taxes. There can be no assurance that the Trust's objectives will be
achieved. Although the Supreme Court has determined that Congress has the
authority to subject interest on bonds such as the Bonds in the Trust to federal
income taxation, existing law excludes such interest from regular federal income
tax. Such interest income may, however, be subject to the federal individual and
corporate alternative minimum tax and to state and local taxes. (See
"Description of Portfolio" in this Part A for a description of those Bonds, if
any, which pay interest income subject to the federal individual alternative
minimum tax.) In addition, capital gains are subject to tax. (See "Tax Status"
and "The Trust--Portfolio" in Part B of this Prospectus.) The Sponsor is Reich &
Tang Distributors, Inc. The value of the Units of the Trust will fluctuate with
the value of the underlying bonds.
Minimum purchase: 1 Unit.

THE TRUST. The Trust seeks to achieve its investment
objectives through investment in a fixed, diversified portfolio of long-term
bonds (the "Bonds") issued by or on behalf of states, municipalities and public
authorities. All of the Bonds in the Trust were rated "A" or better by Standard
& Poor's Rating Services, a division of The McGraw-Hill Companies, or Moody's
Investors Service, Inc. at the time originally deposited in the Trust. For a
discussion of the significance of such ratings see "Description of Bond Ratings"
in Part B of this Prospectus and for a list of ratings on the Evaluation Date
see the "Portfolio". Some of the Bonds in the portfolio may be "Zero Coupon
Bonds", which are original issue discount bonds that provide for payment at
maturity at par value, but do not provide for the payment of any current
interest.

A-1
112995.1

<PAGE>

Each Unit in the Trust represents a 1/5747th undivided
interest in the principal and net income of the Trust. The principal amount of
Bonds deposited in the Trust per Unit is reflected in the Summary of Essential
Information. (See "The Trust--Organization" in Part B of this Prospectus.) The
Units being offered hereby are issued and outstanding Units which have been
purchased by the Sponsor in the secondary market.

PUBLIC OFFERING PRICE. The secondary market Public Offering
Price of each Unit is equal to the aggregate bid price of the Bonds in the Trust
divided by the number of Units outstanding, plus a sales charge of 4.66% of the
Public Offering Price, which is the same as 4.888% of the net amount invested in
Bonds per Unit. In addition, accrued interest to expected date of settlement is
added to the Public Offering Price. If Units had been purchased on the
Evaluation Date, the Public Offering Price per Unit would have been $385.08 plus
accrued interest of $3.81 under the monthly distribution plan, $5.43 under the
semi-annual distribution plan and $5.47 under the annual distribution plan, for
a total of $388.89, $390.51 and $390.55, respectively. The Public Offering Price
per Unit can vary on a daily basis in accordance with fluctuations in the
aggregate bid price of the Bonds. (See the "Summary of Essential Information"
and "Public Offering--Offering Price" in Part B of this Prospectus.)

A-2
112995.1

<PAGE>

Long Term Return to Certificateholders under the monthly, semi-annual and annual
distribution plans, see "Summary of Essential Information".)

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

MARKET FOR UNITS. The Sponsor, although not obligated to do
so, presently maintains and intends to continue to maintain a market for the
Units at prices based upon the aggregate bid price of the Bonds in the portfolio
of the Trust. The Secondary Market repurchase price is based on the aggregate
bid price of the Bonds in the Trust portfolio, and the reoffer price is based on
the aggregate bid price of the Bonds plus a sales charge of 4.66% of the Public
Offering Price (4.888% of the net amount invested) plus net accrued interest. If
such a market is not maintained, a Certificateholder will be able to redeem his
or her Units with the Trustee at a price also based upon the aggregate bid price
of the Bonds. (See "Sponsor Repurchase" and "Public Offering--Offering Price" in
Part B of this Prospectus.)

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

A-3
112995.1

<PAGE>

MUNICIPAL SECURITIES TRUST
SERIES 43

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1997
<TABLE>
<S> <C> <C>
Date of Deposit*: April 27, 1989 Minimum Principal Distribution:
Principal Amount of Bonds ... $2,145,000 $1.00 per Unit.
Number of Units ............. 5,747 Weighted Average Life
Fractional Undivided Inter- to Maturity: 15.1 Years.
est in Trust per Unit ..... 1/5747 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $373.24 value of Trust is less than
Secondary Market Public $2,800,000 in principal amount
Offering Price** of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust ....... $2,109,890+++ The earlier of December 31,
Divided by 5,747 Units .... $367.13 2038 or the disposition of the
Plus Sales Charge of 4.66% last Bond in the Trust.
of Public Offering Price $17.95 Trustee***: The Chase Manhattan
Public Offering Price Bank.
per Unit ................ $385.08+ Trustee's Annual Fee: Monthly
Redemption and Sponsor's plan $.96 per $1,000; semi-
Repurchase Price annual plan $.50 per $1,000;
per Unit .................. $367.13+ and annual plan is $.32 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 $15
Sponsor's Repurchase plus $.25 per each issue of
Price per Unit ........... $17.95++++ 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) .. $11.84 Distributors, Inc.
Evaluation Time: 4:00 p.m. Sponsor's Annual Fee: Maximum of
New York Time. $.25 per $1,000 principal
amount of Bonds (see "Trust
Expenses and Charges" in Part B
of this Prospectus).

</TABLE>

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

Monthly Semi-Annual Annual
Option Option Option

<S> <C> <C> <C>
Gross annual interest income# ......... $20.16 $20.16 $20.16
Less estimated annual fees and
expenses ............................ .93 .73 .29
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $19.23 $19.43 $19.87
Estimated interest distribution# ...... 1.60 9.71 19.87
Estimated daily interest accrual# ..... .0534 .0539 .0551
Estimated current return#++ ........... 4.99% 5.04% 5.16%
Estimated long term return++ .......... 4.28% 4.34% 4.45%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15
</TABLE>

A-4
112995.1

<PAGE>

Footnotes to Summary of Essential Information

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

** 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.

Certain amounts distributable as of December 31, 1997, may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $3.81 monthly, $5.43
semi-annually and $5.47 annually.

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

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

FINANCIAL AND STATISTICAL INFORMATION

Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>

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)
- ------------ ---------- ---------- ------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>

December 31, 1995 6,769 $627.60 $56.49 $56.99 $57.25 $154.54
December 31, 1996 6,407 362.27 29.89 30.16 30.57 246.55
December 31, 1997 5,747 372.44 19.79 20.04 20.48 5.07

</TABLE>

A-5
112995.1

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1997

DESCRIPTION OF PORTFOLIO*

The portfolio of the Trust consists of 5 issues representing
obligations of issuers located in 5 states. 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. None of the Bonds are obligations of state and local housing
authorities; approximately 1.2% are hospital revenue bonds; approximately
32.6%** are issued in connection with the financing of nuclear generating
facilities; and none are "mortgage subsidy" bonds. All of the Bonds in the Trust
are subject to redemption prior to their stated maturity dates pursuant to
sinking fund or optional call provisions. The Bonds may also be subject to other
calls, which may be permitted or required by events which cannot be predicted
(such as destruction, condemnation, termination of a contract, or receipt of
excess or unanticipated revenues). None of the Bonds are general obligation
bonds. Five issues representing $2,145,000 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: Fair and Exposition 1, Hospital 1, Nuclear Power 1,
Toll Roads 1 and Turnpike 1. For an explanation of the significance of these
factors see "The Trust--Portfolio" in Part B of this Prospectus.

As of December 31, 1997, $1,900,000 (approximately 88.6% of
the aggregate principal amount of the Bonds) were original issue discount bonds.
Of these original issue discount bonds, none are Zero Coupon Bonds. None of the
Bonds in the Trust were purchased at a "market" discount from par value at
maturity, approximately 11.4% were purchased at a premium and none were
purchased at par. For an explanation of the significance of these factors see
"Discount and Zero Coupon Bonds" in Part B of this Prospectus.

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

- --------

* Changes in the Trust Portfolio: From January 1, 1998 to March 20, 1998,
$25,000 of the principal amount of the Bond in portfolio no. 3 was sold
and is no longer contained in the Trust. 92 Units were redeemed from
the Trust.

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

A-6
112995.1

<PAGE>

Report of Independent Accountants

To the Sponsor, Trustee and Certificateholders of
Municipal Securities Trust, Series 43

In our opinion, the accompanying statement of net assets, including the
portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Municipal Securities Trust, Series
43 (the "Trust") at December 31, 1997, the results of its operations, the
changes in its net assets and the financial highlights for the two years then
ended, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1997 by correspondence with the Trustee, provide a reasonable basis
for the opinion expressed above. The financial statements for the year ended
December 31, 1995 were audited by other independent accountants whose report
dated March 31, 1996 expressed an unqualified opinion on those financial
statements.

PRICE WATERHOUSE LLP
Boston, MA
March 18, 1998

<PAGE>

Municipal Securities Trust, Series 43
Portfolio
December 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Aggregate Coupon Rate/
Portfolio Principal Name of Issuer and Ratings Date(s) of
No. Amount Title of Bonds (1) Maturity (2)
<S> <C> <C> <C> <C>

1 $ 500,000 Chicago Ill. Metropolitan Fair & Expo. AAA 5.000%
Auth. Dedicated State Tax Rev. Bonds 6/01/2015
Series 1986 (BIG)

2 700,000 Tnpke. Auth. of Ky. Toll Road Rev. A 5.500
Bonds Series 1986 A 7/01/2007

3 25,000 Mich. State Hosp. Finc. Auth. Hosp. A 10.500
Rev. & Rfndg. Bonds (Srs. of Mercy 7/01/2014
Hlth. Corp.) Series E

4 700,000 N.C. Eastern Muni. Pwr. Agncy. Pwr. Aaa* 4.500
Sys. Rev. Rfndg. Bonds Series 1987 A 1/01/2024

5 220,000 Harris Cnty. Tx. Toll Rd. Multimode AAA 8.300
Rev. Bonds Senior Lien Series 1985 C 8/15/2017
------------
$ 2,145,000 Total Investments (Cost $1,649,149)
============

</TABLE>

Redemption
Feature (2)(4)
Portfolio S.F.-Sinking Fund Market
No. Ref.-Refunding Value (3)

1 6/01/12 @ 100 S.F. $ 492,890
1/31/98 @ 100 Ref.

2 1/01/05 @ 100 S.F. 703,941
7/01/98 @ 100 Ref.

3 7/01/03 @ 100 S.F. 31,065
None

4 1/01/21 @ 100 S.F. 652,974
1/01/22 @ 100 Ref.

5 8/15/08 @ 100 S.F. 232,661
8/15/98 @ 103 Ref.
----------------
$ 2,113,531
================

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

Municipal Securities Trust, Series 43
Footnotes to Portfolio
- -------------------------------------------------------------------------------

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

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

3. At December 31, 1997, the net unrealized appreciation of all the bonds was
comprised of the following:

Gross unrealized appreciation $ 464,382
Gross unrealized depreciation -
---------------

Net unrealized appreciation $ 464,382
===============

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

<PAGE>

Municipal Securities Trust, Series 43

Statement of Net Assets
December 31, 1997
- -------------------------------------------------------------------------------

Investments in Securities,
at Market Value (Cost $1,649,149) $ 2,113,531
--------------
Other Assets
Accrued Interest 45,293
--------------
Total Other Assets 45,293
--------------

Liabilities
Advance from Trustee 18,429
--------------
Total Liabilities 18,429
--------------

Excess of Other Assets over Total Liabilities 26,864
--------------

Net Assets (5,747 Units of Fractional Undivided
Interest Outstanding, $372.44 per Unit) $ 2,140,395
==============

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

<PAGE>

Municipal Securities Trust, Series 43

Statement of Operations
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
For the Years Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Investment Income
Interest $ 122,470 $ 155,426 $ 359,671
----------- ----------- ----------
Expenses
Trustee's Fees 5,609 4,656 6,172
Evaluator's Fee 942 251 1,799
Sponser's Advisory Fee 572 731 1,319
----------- ----------- ----------

Total Expenses 7,123 5,638 9,290
----------- ----------- ----------

Net Investment Income 115,347 149,788 350,381
----------- ----------- ----------

Realized and Unrealized Gain (Loss)
Realized Gain (Loss) on
Investments 2,347 (43,917) (212,006)

Change in Unrealized Appreciation
(Depreciation) on Investments 89,197 (36,876) 397,882
----------- ----------- ----------

Net Gain (Loss) on Investments 91,544 (80,793) 185,876
----------- ----------- ----------

Net Increase
in Net Assets
Resulting From Operations $ 206,891 $ 68,995 $ 536,257
=========== =========== ==========
</TABLE>

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

<PAGE>

Municipal Securities Trust, Series 43

Statement of Changes in Net Assets
- -------------------------------------------------------------------------------

For the Years Ended December 31,
1997 1996 1995
<S> <C> <C> <C>

Operations
Net Investment Income $ 115,347 $ 149,788 $ 350,381
Realized Gain (Loss)
on Investments 2,347 (43,917) (212,006)
Change in Unrealized Appreciation
(Depreciation) on Investments 89,197 (36,876) 397,882
------------ ------------ -------------
Net Increase in
Net Assets Resulting
From Operations 206,891 68,995 536,257
------------ ------------ -------------

Distributions to Certificateholders
Investment Income 117,472 190,473 383,439
Principal 29,464 1,650,404 1,058,010

Redemptions
Interest 1,551 10,764 2,858
Principal 108,681 274,894 101,296
------------ ------------ -------------

Total Distributions
and Redemptions 257,168 2,126,535 1,545,603
------------ ------------ -------------

Total (Decrease) (50,277) (2,057,540) (1,009,346)

Net Assets
Beginning of Year 2,190,672 4,248,212 5,257,558
------------ ------------ -------------

End of Year (Including
Undistributed Net Investment
Income of $30,504, $34,180
and $85,629, Respectively) $ 2,140,395 $ 2,190,672 $ 4,248,212
============ ============ =============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Series 43

Notes to Financial Statements
- -------------------------------------------------------------------------------

1. Organization

Municipal Securities Trust, Series 43 (the "Trust") was organized on
April 27, 1989 by Bear, Stearns & Co. Inc. under the laws of the State
of New York by a Trust Indenture and Agreement, and is registered under
the Investment Company Act of 1940. The Trust was formed to preserve
capital and to provide interest income.

2. Summary of Significant Accounting Policies

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

<PAGE>

Municipal Securities Trust, Series 43

Notes to Financial Statements
- -------------------------------------------------------------------------------

3. Income Taxes

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

The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. For the years ended December 31, 1997, 1996 and 1995,
300, 722 and 148 units were redeemed, respectively.

The Trust pays an annual fee for trustee services rendered by the
Trustee that ranges from $.32 to $.96 per $1,000 of outstanding
investment principal. In addition, a minimum fee of $15.00 is paid to a
service bureau for each portfolio valuation. A maximum fee of $.25 per
$1,000 of outstanding investment principal is paid to the Sponsor. For
the year ended December 31, 1997, the "Trustee's Fees" are comprised of
Trustee fees of $1,995 and other expenses of $3,614. For the year ended
December 31, 1996, the "Trustee's Fees" are comprised of Trustee fees
of $2,413 and other expenses of $2,243. The other expenses include
professional, printing and miscellaneous fees.

<PAGE>

Municipal Securities Trust, Series 43

Notes to Financial Statements
- -------------------------------------------------------------------------------

5. Net Assets

At December 31, 1997, the net assets of the Trust represented the
interest of Certificateholders as follows:

<TABLE>
<S> <C>
Original cost to Certificateholders $ 7,058,287
Less Initial Gross Underwriting Commission 345,856
-----------------
6,712,431
Accumulated Cost of Securities Sold,
Matured or Called (5,063,282)
Net Unrealized Appreciation 464,382
Undistributed Net Investment Income 30,504
Distributions in Excess of Proceeds From Investments (3,640)
----------------

Total $ 2,140,395
================
</TABLE>

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

6. Concentration of Credit Risk

<PAGE>

Municipal Securities Trust, Series 43

Notes to Financial Statements
- -------------------------------------------------------------------------------

7. Financial Highlights (per unit)*
Selected data for a unit of the Trust outstanding:
<TABLE>
<CAPTION>

For the years ended December 31,
1997 1996
<S> <C> <C>

Net Asset Value, Beginning of Year** $ 362.27 $ 627.60
------------- -------------

Interest Income 20.77 24.25
Expenses (1.21) (.88)
------------- -------------

Net Investment Income 19.56 23.37
------------- -------------

Net Gain or Loss on Investments(1) 15.79 .25
------------- -------------

Total from Investment Operations 35.35 23.62
------------- -------------

Less Distributions
to Certificateholders
Income 19.92 29.72
Principal 5.00 257.55
for Redemptions
Interest .26 1.68
------------- -------------

Total Distributions 25.18 288.95
------------- -------------

Net Asset Value, End of Year** $ 372.44 $ 362.27
============= =============

</TABLE>

(1) Net gain or loss on investments is a result of changes in outstanding
units since January 1, 1997 and 1996, respectively, and the dates of
net gain and loss on investments.

- -------------------
* Unless otherwise stated, based upon average units outstanding during
the year of 5,897 ([5,747 + 6,047]/2) for 1997 and of 6,408 ([6,047 +
6,769]/2) for 1996.

** Based upon actual units outstanding
<PAGE>

Prospectus Part A Dated April 30, 1998

MUNICIPAL SECURITIES TRUST

SERIES 47

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

The Trust is a unit investment trust designated Series 47
("Municipal Trust") with an underlying portfolio of long-term tax-exempt bonds
issued by or on behalf of states, municipalities and public authorities, and was
formed to preserve capital and to provide interest income (including, where
applicable, earned original issue discount) which, in the opinions of bond
counsel to the respective issuers, is, with certain exceptions, currently exempt
from regular Federal income tax under existing law but may be subject to state
and local taxes. There can be no assurance that the Trust's objectives will be
achieved. Although the Supreme Court has determined that Congress has the
authority to subject interest on bonds such as the Bonds in the Trust to federal
income taxation, existing law excludes such interest from regular federal income
tax. Such interest income may, however, be subject to the federal individual and
corporate alternative minimum tax and to state and local taxes. (See
"Description of Portfolio" in this Part A for a description of those Bonds, if
any, which pay interest income subject to the federal individual alternative
minimum tax.) In addition, capital gains are subject to tax. (See "Tax Status"
and "The Trust--Portfolio" in Part B of this Prospectus.) The Sponsors are Reich
& Tang Distributors, Inc. and Gruntal & Co., L.L.C. (sometimes referred to as
the "Sponsor" or the "Sponsors"). The value of the Units of the Trust will
fluctuate with the value of the underlying bonds. Minimum purchase: 1 Unit.

THE TRUST. The Trust seeks to achieve its investment
objectives through investment in a fixed, diversified portfolio of long-term
bonds (the "Bonds") issued by or on behalf of states, municipalities and public
authorities. All of the Bonds in the Trust were rated "A" or better by Standard
& Poor's Rating Services, a division of The McGraw-Hill Companies, or Moody's
Investors Service, Inc. at the time originally deposited in the Trust. For a
discussion of the significance of such ratings see "Description of Bond Ratings"
in Part B of this Prospectus and for a list of ratings on the Evaluation Date
see the "Portfolio". Some of the Bonds in the portfolio may be "Zero Coupon
Bonds", which are original issue discount bonds that provide for payment at
maturity at par value, but do not provide for the payment of any current
interest.

110862.1

<PAGE>

Some of the Bonds in the portfolio may have been purchased at
an aggregate premium over par. Some of the Bonds in the Trust have been issued
with optional refunding or refinancing provisions ("Refunded Bonds") whereby the
issuer of the Bond has the right to call such Bond prior to its stated maturity
date (and other than pursuant to sinking fund provisions) and to issue new bonds
("Refunding Bonds") in order to finance the redemption. Issuers typically
utilize refunding calls in order to take advantage of lower interest rates in
the marketplace. Some of these Refunded Bonds may be called for redemption
pursuant to pre-refunding provisions ("Pre-Refunded Bonds") whereby the proceeds
from the issue of the Refunding Bonds are typically invested in government
securities in escrow for the benefit of the holders of the Pre-Refunded Bonds
until the refunding call date. Usually, Pre-Refunded Bonds will bear a triple-A
rating because of this escrow. The issuers of Pre-Refunded Bonds must call such
Bonds on their refunding call date. Therefore, as of such date, the Trust will
receive the call price for such bonds but will cease receiving interest income
with respect to them. For a list of those Bonds which are Pre-Refunded Bonds, if
any, as of the Evaluation Date, see "Notes to Financial Statements" in this Part
A. The payment of interest and preservation of capital are, of course, dependent
upon the continuing ability of the issuers of the Bonds to meet their
obligations.

Each Unit in the Trust represents a 1/4651st undivided
interest in the principal and net income of the Trust. The principal amount of
Bonds deposited in the Trust per Unit is reflected in the Summary of Essential
Information. (See "The Trust--Organization" in Part B of this Prospectus.) The
Units being offered hereby are issued and outstanding Units which have been
purchased by the Sponsor in the secondary market.

PUBLIC OFFERING PRICE. The secondary market Public Offering
Price of each Unit is equal to the aggregate bid price of the Bonds in the Trust
divided by the number of Units outstanding, plus a sales charge of 3.29% of the
Public Offering Price, which is the same as 3.402% of the net amount invested in
Bonds per Unit. In addition, accrued interest to expected date of settlement is
added to the Public Offering Price. If Units had been purchased on the
Evaluation Date, the Public Offering Price per Unit would have been $613.97 plus
accrued interest of $7.71 under the monthly distribution plan, $11.04 under the
semi-annual distribution plan and $11.08 under the annual distribution plan, for
a total of $621.68, $625.01 and $625.05, respectively. The Public Offering Price
per Unit can vary on a daily basis in accordance with fluctuations in the
aggregate bid price of the Bonds. (See the "Summary of Essential Information"
and "Public Offering--Offering Price" in Part B of this Prospectus.)

A-2
110862.1

<PAGE>

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

MARKET FOR UNITS. The Sponsor, although not obligated to do
so, presently maintains and intends to continue to maintain a market for the
Units at prices based upon the aggregate bid price of the Bonds in the portfolio
of the Trust. The Secondary Market repurchase price is based on the aggregate
bid price of the Bonds in the Trust portfolio, and the reoffer price is based on
the aggregate bid price of the Bonds plus a sales charge of 3.29% of the Public
Offering Price (3.402% of the net amount invested) plus net accrued interest. If
such a market is not maintained, a Certificateholder will be able to redeem his
or her Units with the Trustee at a price also based upon the aggregate bid price
of the Bonds. (See "Sponsor Repurchase" and "Public Offering--Offering Price" in
Part B of this Prospectus.)

A-3
110862.1

<PAGE>

MUNICIPAL SECURITIES TRUST
SERIES 47

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1997

<TABLE>

Date of Deposit*: March 30, 1990 Minimum Principal Distribution:
Principal Amount of Bonds ... $2,810,000 $1.00 per Unit.
Number of Units ............. 4,651 Weighted Average Life
Fractional Undivided Inter- to Maturity: 9.6 Years.
est in Trust per Unit ..... 1/4651 Minimum Value of Trust:
Principal Amount of Trust may be terminated if value
Bonds per Unit ............ $604.18 of Trust is less than $2,000,000
Secondary Market Public in principal amount of Bonds.
Offering Price** Mandatory Termination Date:
Aggregate Bid Price The earlier of December 31, 2039
of Bonds in Trust ....... $2,761,628+++ or the disposition of the last
Divided by 4,651 Units .... $593.77 Bond in the Trust.
Plus Sales Charge of 3.29% Trustee***: The Chase Manhattan
of Public Offering Price $20.20 Bank.
Public Offering Price Trustee's Annual Fee: Monthly
per Unit ................ $613.97+ plan $.96 per $1,000; semi-annual
Redemption and Sponsor's plan $.50 per $1,000; and annual
Repurchase Price plan is $.32 per $1,000.
per Unit .................. $593.77+ Evaluator: Kenny S&P Evaluation
+++ Services.
++++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $15 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 ............ $20.20++++ issues).
Difference between Public Sponsors: Reich & Tang
Offering Price per Unit Distributors, Inc. and Gruntal &
and Principal Amount per Co., L.L.C.
Unit Premium/(Discount) ... $9.79 Sponsors' Annual Fee: Maximum of
Evaluation Time: 4:00 p.m. $.25 per $1,000 principal amount
New York Time. of Bonds (see "Trust Expenses and
Charges" in Part B of this
Prospectus).
</TABLE>

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

<CAPTION>
Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# ......... $40.90 $40.90 $40.90
Less estimated annual fees and
expenses ............................ 1.43 1.07 .63
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $39.47 $39.83 $40.27
Estimated interest distribution# ...... 3.28 19.91 40.27
Estimated daily interest accrual# ..... .1096 .1106 .1118
Estimated current return#++ ........... 6.43% 6.49% 6.56%
Estimated long term return++ .......... 3.75% 3.81% 3.89%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15
</TABLE>

A-4
110862.1

<PAGE>

Footnotes to Summary of Essential Information

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

** 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.

Certain amounts distributable as of December 31, 1997, may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $7.71 monthly, $11.04
semi-annually and $11.08 annually.

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

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

FINANCIAL AND STATISTICAL INFORMATION

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

December 31, 1995 4,777 $657.99 $54.96 $55.46 $55.78 $199.15
December 31, 1996 4,651 605.54 42.18 42.61 43.31 35.16
December 31, 1997 4,651 604.41 39.70 40.06 39.85 -0-
</TABLE>

A-5
110862.1

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1997

DESCRIPTION OF PORTFOLIO

The portfolio of the Trust consists of 7 issues representing
obligations of issuers located in 5 states and 1 in the District of Columbia.
The Sponsors have 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. Approximately 8.9% of the Bonds are
obligations of state and local housing authorities; approximately 51.6%* are
hospital revenue bonds; none are issued in connection with the financing of
nuclear generating facilities; and none are "mortgage subsidy" bonds. All of the
Bonds in the Trust are subject to redemption prior to their stated maturity
dates pursuant to sinking fund or optional call provisions. The Bonds may also
be subject to other calls, which may be permitted or required by events which
cannot be predicted (such as destruction, condemnation, termination of a
contract, or receipt of excess or unanticipated revenues). None of the Bonds are
general obligation bonds. Seven issues representing $2,810,000 of the principal
amount of the Bonds are payable from the income of a specific project or
authority and are not supported by the issuer's power to levy taxes. The
portfolio is divided for purpose of issue as follows: Coal Power 1, Federally
Assisted Housing 1, Higher Education 1, Hospital 3 and Resource Recovery 1. For
an explanation of the significance of these factors see "The Trust--Portfolio"
in Part B of this Prospectus.

As of December 31, 1997, $450,000 (approximately 16.0% of the
aggregate principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, $250,000 (approximately 8.9% of the
aggregate principal amount of the Bonds) were Zero Coupon Bonds. Zero Coupon
Bonds do not provide for payment of any current interest and provide for payment
at maturity at par value unless sooner sold or redeemed. The market value of
Zero Coupon Bonds is subject to greater fluctuations than coupon bonds in
response to changes in interest rates. Approximately 48.4% of the aggregate
principal amount of the Bonds in the Trust were purchased at a "market" discount
from par value at maturity, approximately 14.6% were purchased at a premium and
approximately 21.0% were purchased at par. For an explanation of the
significance of these factors see "Discount and Zero Coupon Bonds" in Part B of
this Prospectus.

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

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

A-6
110862.1

<PAGE>

Report of Independent Accountants

To the Sponsor, Trustee and Certificateholders of
Municipal Securities Trust, Series 47

In our opinion, the accompanying statement of net assets, including the
portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Municipal Securities Trust, Series
47 (the "Trust") at December 31, 1997, the results of its operations, the
changes in its net assets and the financial highlights for the two years then
ended, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1997 by correspondence with the Trustee, provide a reasonable basis
for the opinion expressed above. The financial statements for the year ended
December 31, 1995 were audited by other independent accountants whose report
dated March 31, 1996 expressed an unqualified opinion on those financial
statements.

PRICE WATERHOUSE LLP
Boston, MA
March 18, 1998

<PAGE>

Municipal Securities Trust, Series 47
Portfolio
December 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Aggregate Coupon Rate/
Portfolio Principal Name of Issuer and Ratings Date(s) of
No. Amount Title of Bonds (1) Maturity (2)
<S> <C> <C> <C> <C>

1 $ 500,000 D.C. Assoc. of America Med. Collgs. AA- 7.500%
Issue Rev. Bonds Series 1990 2/15/2010

2 410,000 Broward Cnty. Fla. Rcvry. Rev. A* 7.950
Bonds (SES Broward Co., L.P. So. Prjt.) 12/01/2008
Series 1984

3 450,000 Ill. Hlth. Facs. Auth. Rev. Rfndg. Bonds Aaa* 7.700
(Ill. Masonic Med. Cntr.) Series 1989 A 10/01/2015

4 500,000 Mass. Hlth. & Ed. Facs. Auth. Rev. A+ 7.500
Bonds Baystate Med. Cntr. Issue 1989 7/01/2020
Series C

5 500,000 Flint Mich. Hosp. Bldg. Auth. Genesee Baa1* 7.800
Cnty. Bldg. Auth. Rev. Rental Bonds 7/01/2014
(Hurley Med. Cntr.) Series 1990

6 200,000 N.C. Eastern Muni. Pwr. Agncy. Pwr. Aaa* 4.500
Sys. Rev. Rfndg. Bonds Series 1987A 1/01/2024

7 250,000 Ill. Hsg. Dev. Auth. Multi-Fam. Hsg. A+ 0.000
Rev. Bonds 1983 Series A 7/01/2025
------------
$ 2,810,000 Total Investments (Cost $2,511,393)
============

</TABLE>

Redemption
Feature (2)(4)
Portfolio S.F.-Sinking Fund Market
No. Ref.-Refunding Value (3)

1 2/15/05 @ 100 S.F. $ 543,410
2/15/00 @ 102 Ref.

2 Currently @ 100 S.F. 446,970
12/01/99 @ 103 Ref.

3 10/01/08 @ 100 S.F. 486,468
10/01/99 @ 102 Ref.

4 7/01/09 @ 100 S.F. 534,885
7/01/99 @ 102 Ref.

5 7/01/00 @ 100 S.F. 537,075
7/01/00 @ 102 Ref.

6 1/01/21 @ 100 S.F. 186,564
1/01/22 @ 100 Ref.

7 7/01/06 @ 13.676 S.F. 16,043
None
----------------
$ 2,751,415
================

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

Municipal Securities Trust, Series 47
Footnotes to Portfolio
- -------------------------------------------------------------------------------

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

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

3. At December 31, 1997, the net unrealized appreciation of all the bonds was
comprised of the following:

Gross unrealized appreciation $ 243,544
Gross unrealized depreciation (3,522)
---------------

Net unrealized appreciation $ 240,022
================

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

<PAGE>

Municipal Securities Trust, Series 47

Statement of Net Assets
December 31, 1997
- -------------------------------------------------------------------------------

Investments in Securities,
at Market Value (Cost $2,511,393) $ 2,751,415
--------------
Other Assets
Accrued Interest 68,296
--------------
Total Other Assets 68,296
--------------

Liabilities
Advance from Trustee 8,612
--------------
Total Liabilities 8,612
--------------

Excess of Other Assets over Total Liabilities 59,684
--------------

Net Assets (4,651 Units of Fractional Undivided
Interest Outstanding, $604.41 per Unit) $ 2,811,099
==============

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

<PAGE>

Municipal Securities Trust, Series 47

Statement of Operations
- -------------------------------------------------------------------------------

For the Years Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Investment Income
Interest $ 192,799 $ 195,523 $ 260,675
----------- ----------- ----------
Expenses
Trustee's Fees 5,323 4,478 4,977
Evaluator's Fee 1,637 1,650 1,501
Sponser's Advisory Fee 706 723 1,001
----------- ----------- ----------

Total Expenses 7,666 6,851 7,479
----------- ----------- ----------

Net Investment Income 185,133 188,672 253,196
----------- ----------- ----------

Realized and Unrealized Gain (Loss)
Realized Gain (Loss) on
Investments (544) 4,880 (42,813)

Change in Unrealized Appreciation
(Depreciation) on Investments (4,838) (76,653) 189,795
----------- ----------- ----------

Net Gain (Loss) on Investments (5,382) (71,773) 146,982
----------- ----------- ----------

Net Increase
in Net Assets
Resulting From Operations $ 179,751 $ 116,899 $ 400,178
=========== =========== ==========
</TABLE>

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

<PAGE>

Municipal Securities Trust, Series 47

Statement of Changes in Net Assets
- -------------------------------------------------------------------------------

For the Years Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Operations
Net Investment Income $ 185,133 $ 188,672 $ 253,196
Realized Gain (Loss)
on Investments (544) 4,880 (42,813)
Change in Unrealized Appreciation
(Depreciation) on Investments (4,838) (76,653) 189,795
------------ ------------ ------------

Net Increase in
Net Assets Resulting
From Operations 179,751 116,899 400,178
------------ ------------ ------------

Distributions to Certificateholders
Investment Income 185,017 197,764 268,682
Principal ---- 167,959 956,508
------------ ------------ ------------

Redemptions
Interest ---- 3,047 2,878
Principal ---- 74,977 156,071
------------ ------------ ------------

Total Distributions
and Redemptions 185,017 443,747 1,384,139
------------ ------------ ------------

Total (Decrease) (5,266) (326,848) (983,961)

Net Assets
Beginning of Year 2,816,365 3,143,213 4,127,174
------------ ------------ ------------

End of Year (Including
Undistributed Net Investment
Income of $59,230, $59,114
and $71,253, Respectively) $ 2,811,099 $ 2,816,365 $ 3,143,213
============ ============ ============

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

</TABLE>

<PAGE>

Municipal Securities Trust, Series 47

Notes to Financial Statements
- -------------------------------------------------------------------------------

1. Organization

Municipal Securities Trust, Series 47 (the "Trust") was organized on
March 30, 1990 by Bear, Stearns & Co. Inc. and Gruntal & Co.,
Incorporated under the laws of the State of New York by a Trust
Indenture and Agreement, and is registered under the Investment Company
Act of 1940. The Trust was formed to preserve capital and to provide
interest income.

2. Summary of Significant Accounting Policies

<PAGE>
Municipal Securities Trust, Series 47

Notes to Financial Statements
- -------------------------------------------------------------------------------

3. Income Taxes

4. Trust Administration

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

The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. No units were redeemed during the year ended December
31, 1997. For the years ended December 31, 1996 and 1995, 126 and 194
units were redeemed, respectively.

The Trust pays an annual fee for trustee services rendered by the
Trustee that ranges from $.32 to $.96 per $1,000 of outstanding
investment principal. In addition, a minimum fee of $15.00 is paid to a
service bureau for each portfolio valuation. A maximum fee of $.25 per
$1,000 of outstanding investment principal is paid to the Sponsor. For
the year ended December 31, 1997, the "Trustee's Fees" are comprised of
Trustee fees of $2,523 and other expenses of $2,800. For the year ended
December 31, 1996, the "Trustee's Fees" are comprised of Trustee fees
of $2,555 and other expenses of $1,923. The other expenses include
professional, printing and miscellaneous fees.

<PAGE>

Municipal Securities Trust, Series 47

Notes to Financial Statements
- -------------------------------------------------------------------------------

5. Net Assets

At December 31, 1997, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $ 5,035,774
Less Initial Gross Underwriting Commission 246,753
---------------
4,789,021
Accumulated Cost of Securities Sold,
Matured or Called (2,287,388)
Net Unrealized Appreciation 240,022
Undistributed Net Investment Income 59,230
Undistributed Proceeds From Investments 10,214
---------------

Total $ 2,811,099
===============

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 5,000 units of
fractional undivided interest of the Trust as of the date of deposit.

Undistributed net investment income includes accumulated accretion of
original issue discount of $9,760.

6. Concentration of Credit Risk

<PAGE>

Municipal Securities Trust, Series 47

Notes to Financial Statements
- -------------------------------------------------------------------------------

7. Financial Highlights (per unit)*
Selected data for a unit of the Trust outstanding:
<TABLE>
<CAPTION>

For the years ended December 31,
1997 1996
<S> <C> <C>
Net Asset Value, Beginning of Year** $ 605.54 $ 657.99
------------- -------------
Interest Income 41.45 41.48
Expenses (1.65) (1.45)
------------- -------------
Net Investment Income 39.80 40.03
------------- -------------
Net Gain or Loss on Investments(1) (1.15) (14.25)
------------- -------------

Total from Investment Operations 38.65 25.78
------------- -------------

Less Distributions
to Certificateholders
Income 39.78 41.95
Principal ---- 35.63
for Redemptions
Interest ---- .65
------------- -------------

Total Distributions 39.78 78.23
------------- -------------

Net Asset Value, End of Year** $ 604.41 $ 605.54
============= =============
</TABLE>

(1) Net gain or loss on investments is a result of changes in outstanding
units since January 1, 1997 and 1996, respectively, and the dates of
net gain and loss on investments.

- ---------------
* Unless otherwise stated, based upon average units outstanding during
the year of 4,651 ([4,651 + 4,651]/2) for 1997 and of 4,714 ([4,651 +
4,777]/2) for 1996.

** Based upon actual units outstanding
<PAGE>

Prospectus Part A Dated April 30, 1998

MUNICIPAL SECURITIES TRUST

SERIES 51

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

The Trust is a unit investment trust designated Series 51
("Municipal Trust") with an underlying portfolio of long-term tax-exempt bonds
issued by or on behalf of states, municipalities and public authorities, and was
formed to preserve capital and to provide interest income (including, where
applicable, earned original issue discount) which, in the opinions of bond
counsel to the respective issuers, is, with certain exceptions, currently exempt
from regular Federal income tax under existing law but may be subject to state
and local taxes. There can be no assurance that the Trust's objectives will be
achieved. Although the Supreme Court has determined that Congress has the
authority to subject interest on bonds such as the Bonds in the Trust to federal
income taxation, existing law excludes such interest from regular federal income
tax. Such interest income may, however, be subject to the federal individual and
corporate alternative minimum tax and to state and local taxes. (See
"Description of Portfolio" in this Part A for a description of those Bonds, if
any, which pay interest income subject to the federal individual alternative
minimum tax.) In addition, capital gains are subject to tax. (See "Tax Status"
and "The Trust--Portfolio" in Part B of this Prospectus.) The Sponsors are Reich
& Tang Distributors, Inc. and Gruntal & Co., L.L.C. (sometimes referred to as
the "Sponsor" or the "Sponsors"). The value of the Units of the Trust will
fluctuate with the value of the underlying bonds. Minimum purchase: 1 Unit.

This Prospectus consists of two parts. Part A contains the
Summary of Essential Information as of December 31, 1997 (the "Evaluation
Date"), a summary of certain specific information regarding the Trust and
audited financial statements of the Trust, including the related portfolio, as
of the Evaluation Date. Part B of this Prospectus contains a general summary of
the Trust. Part A of this Prospectus may not be distributed unless accompanied
by Part B. Investors should retain both parts of this Prospectus for future
reference. The Securities and Exchange Commission ("SEC") maintains a website
that contains reports, proxy and information statements and other information
regarding the Trust which is filed electronically with the SEC. The SEC's
Internet address is http:www.sec.gov. Offering materials for the sale of these
units available through the internet are not being offered directly or
indirectly to residents of a particular state nor is an offer of these units
through the Internet specifically directed to any person in a state by, or on
behalf of, the issuer.

THE TRUST. The Trust seeks to achieve its investment
objectives through investment in a fixed, diversified portfolio of long-term
bonds (the "Bonds") issued by or on behalf of states, municipalities and public
authorities. All of the Bonds in the Trust were rated "A" or better by Standard
& Poor's Rating Services, a division of The McGraw-Hill Companies, or Moody's
Investors Service, Inc. at the time originally deposited in the Trust. For a
discussion of the significance of such ratings see "Description of Bond Ratings"
in Part B of this Prospectus and for a list of ratings on the Evaluation Date
see the "Portfolio". Some of the Bonds in the portfolio may be "Zero Coupon
Bonds", which are original issue discount bonds that provide for payment at
maturity at par value, but do not provide for the payment of any current
interest.

111486.1

<PAGE>

Some of the Bonds in the portfolio may have been purchased at
an aggregate premium over par. Some of the Bonds in the Trust have been issued
with optional refunding or refinancing provisions ("Refunded Bonds") whereby the
issuer of the Bond has the right to call such Bond prior to its stated maturity
date (and other than pursuant to sinking fund provisions) and to issue new bonds
("Refunding Bonds") in order to finance the redemption. Issuers typically
utilize refunding calls in order to take advantage of lower interest rates in
the marketplace. Some of these Refunded Bonds may be called for redemption
pursuant to pre-refunding provisions ("Pre-Refunded Bonds") whereby the proceeds
from the issue of the Refunding Bonds are typically invested in government
securities in escrow for the benefit of the holders of the Pre-Refunded Bonds
until the refunding call date. Usually, Pre-Refunded Bonds will bear a triple-A
rating because of this escrow. The issuers of Pre- Refunded Bonds must call such
Bonds on their refunding call date. Therefore, as of such date, the Trust will
receive the call price for such bonds but will cease receiving interest income
with respect to them. For a list of those Bonds which are Pre-Refunded Bonds, if
any, as of the Evaluation Date, see "Notes to Financial Statements" in this Part
A. The payment of interest and preservation of capital are, of course, dependent
upon the continuing ability of the issuers of the Bonds to meet their
obligations.

Each Unit in the Trust represents a 1/4493rd undivided
interest in the principal and net income of the Trust. The principal amount of
Bonds deposited in the Trust per Unit is reflected in the Summary of Essential
Information. (See "The Trust--Organization" in Part B of this Prospectus.) The
Units being offered hereby are issued and outstanding Units which have been
purchased by the Sponsor in the secondary market.

PUBLIC OFFERING PRICE. The secondary market Public Offering
Price of each Unit is equal to the aggregate bid price of the Bonds in the Trust
divided by the number of Units outstanding, plus a sales charge of 4.30% of the
Public Offering Price, which is the same as 4.493% of the net amount invested in
Bonds per Unit. In addition, accrued interest to expected date of settlement is
added to the Public Offering Price. If Units had been purchased on the
Evaluation Date, the Public Offering Price per Unit would have been $990.19 plus
accrued interest of $10.84 under the monthly distribution plan, $16.35 under the
semi-annual distribution plan and $16.35 under the annual distribution plan, for
a total of $1,001.03, $1,006.54 and $1,006.54, respectively. The Public Offering
Price per Unit can vary on a daily basis in accordance with fluctuations in the
aggregate bid price of the Bonds. (See the "Summary of Essential Information"
and "Public Offering--Offering Price" in Part B of this Prospectus.)

A-2
111486.1

<PAGE>

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

MARKET FOR UNITS. The Sponsors, although not obligated to do
so, presently maintain and intend to continue to maintain a market for the Units
at prices based upon the aggregate bid price of the Bonds in the portfolio of
the Trust. The Secondary Market repurchase price is based on the aggregate bid
price of the Bonds in the Trust portfolio, and the reoffer price is based on the
aggregate bid price of the Bonds plus a sales charge of 4.30% of the Public
Offering Price (4.493% of the net amount invested) plus net accrued interest. If
such a market is not maintained, a Certificateholder will be able to redeem his
or her Units with the Trustee at a price also based upon the aggregate bid price
of the Bonds. (See "Sponsor Repurchase" and "Public Offering--Offering Price" in
Part B of this Prospectus.)

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

A-3
111486.1

<PAGE>

MUNICIPAL SECURITIES TRUST
SERIES 51

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1997

Date of Deposit*: June 5, 1991 Minimum Principal Distribution:
Principal Amount of Bonds ... $4,250,000 $1.00 per Unit.
Number of Units ............. 4,493 Weighted Average Life to Maturity:
Fractional Undivided Inter- 13.0 Years.
est in Trust per Unit ..... 1/4493 Minimum Value of Trust: Trust may
Principal Amount of be terminated if value of Trust
Bonds per Unit ............ $945.92 is less than $2,000,000 in
Secondary Market Public principal amount of Bonds.
Offering Price** Mandatory Termination Date: The
Aggregate Bid Price earlier of December 31, 2040 or
of Bonds in Trust ....... $4,257,670+++ the disposition of the last Bond
Divided by 4,493 Units .... $947.62 in the Trust.
Plus Sales Charge of 4.30% Trustee***: The Chase Manhattan
of Public Offering Price $42.57 Bank.
Public Offering Price Trustee's Annual Fee: Monthly
per Unit ................ $990.19+ plan $.96 per $1,000; semi-
Redemption and Sponsors' annual plan $.50 per $1,000; and
Repurchase Price annual plan is $.32 per $1,000.
per Unit .................. $947.62+ Evaluator: Kenny S&P Evaluation
+++ Services.
++++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $7.50
Public Offering Price plus $.25 per each issue of
over Redemption and Bonds in excess of 50 issues
Sponsors' Repurchase (treating separate maturities as
Price per Unit ............ $42.57++++ separate issues).
Difference between Public Sponsors: Reich & Tang
Offering Price per Unit Distributors, Inc. and Gruntal &
and Principal Amount per Co., L.L.C.
Unit Premium/(Discount) ... $44.27 Sponsors' Annual Fee: Maximum of
Evaluation Time: 4:00 p.m. $.25 per $1,000 principal amount
New York Time. of Bonds (see "Trust Expenses
and Charges" in Part B of this
Prospectus).
</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Monthly Semi-Annual Annual
Option Option Option
------ ------ ------

Gross annual interest income# ......... $67.48 $67.48 $67.48
Less estimated annual fees and
expenses ............................ 1.96 1.47 1.49
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $65.52 $66.01 $65.99
Estimated interest distribution# ...... 5.46 33.00 65.99
Estimated daily interest accrual# ..... .1820 .1833 .1833
Estimated current return+## ........... 6.62% 6.67% 6.66%
Estimated long term return++ .......... 2.69% 2.74% 2.74%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15
</TABLE>

A-4
111486.1

<PAGE>

Footnotes to Summary of Essential Information

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

** 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.

Certain amounts distributable as of December 31, 1997, may be reported
in the Summary of Essential Information as if they had been distributed
at year-end.

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $10.84 monthly, $16.35
semi-annually and $16.35 annually.

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

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

FINANCIAL AND STATISTICAL INFORMATION

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

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

December 31, 1995 5,000 $1,059.32 $71.91 $72.52 $72.60 -0-
December 31, 1996 4,854 975.13 66.49 67.04 66.96 $63.40
December 31, 1997 4,493 963.14 65.57 66.11 66.08 -0-

</TABLE>

A-5
111486.1

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1997

DESCRIPTION OF PORTFOLIO*

The portfolio of the Trust consists of 11 issues representing
obligations of issuers located in 5 states. The Sponsors have 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. Approximately 17.6% of the Bonds are obligations of state and
local housing authorities; approximately 30.6%** are hospital revenue bonds;
approximately 4.7% are issued in connection with the financing of nuclear
generating facilities; and none are "mortgage subsidy" bonds. All of the Bonds
in the Trust are subject to redemption prior to their stated maturity dates
pursuant to sinking fund or optional call provisions. The Bonds may also be
subject to other calls, which may be permitted or required by events which
cannot be predicted (such as destruction, condemnation, termination of a
contract, or receipt of excess or unanticipated revenues). None of the Bonds are
general obligation bonds. Eleven issues representing $4,570,000 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: Capital Improvement 1,
Federally Assisted Housing 1, Hospital 3, Nuclear Power 1, Pollution Control 1,
Single Family Mortgage Revenue 1, Special Obligation 1 and University 2. For an
explanation of the significance of these factors see "The Trust--Portfolio" in
Part B of this Prospectus.

As of December 31, 1997, $1,200,000 (approximately 28.2% of
the aggregate principal amount of the Bonds) were original issue discount bonds.
Of these original issue discount bonds $250,000 (approximately 5.9% of the
aggregate principal amount of the Bonds) are Zero Coupon Bonds. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at par value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. Approximately 9.8% of the aggregate
principal amount of the Bonds in the Trust were purchased at a "market" discount
from par value at maturity, approximately 62.0% were purchased at a premium and
none were purchased at par. For an explanation of the significance of these
factors see "Discount and Zero Coupon Bonds" in Part B of this Prospectus.

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

- --------

* Changes in the Trust Portfolio: From January 1, 1998 to March 20, 1998,
$55,000 of the principal amount of the Bond in portfolio no. 7 was sold
and $300,000 of the principal amount of the Bond in portfolio no. 10
was called and are no longer contained in the Trust. 66 Units were
redeemed from the Trust.

A-6
111486.1

<PAGE>
Report of Independent Accountants

To the Sponsor, Trustee and Certificateholders of
Municipal Securities Trust, Series 51

In our opinion, the accompanying statement of net assets, including the
portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Municipal Securities Trust, Series
51 (the "Trust") at December 31, 1997, the results of its operations, the
changes in its net assets and the financial highlights for the two years then
ended, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1997 by correspondence with the Trustee, provide a reasonable basis
for the opinion expressed above. The financial statements for the year ended
December 31, 1995 were audited by other independent accountants whose report
dated March 31, 1996 expressed an unqualified opinion on those financial
statements.

PRICE WATERHOUSE LLP
Boston, MA
March 18, 1998

<PAGE>

<TABLE>

Municipal Securities Trust, Series 51
Portfolio
December 31, 1997
- --------------------------------------------------------------------------------

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

1 $ 500,000 Tampa Fla. Cap. Imprvmnt. Prog. Rev. BB+ 8.375% 10/01/03 @ 100 S.F. $ 512,470
Bonds Series 1988B 10/01/2018 10/01/98 @ 100 Ref.

2 500,000 Ill. Hlth. Facs. Auth. Rev. Rfndg. Bonds A 6.750 11/01/01 @ 100 S.F. 507,410
(Riverside Med. Cntr.) Series 1989A 11/01/2015 11/01/99 @ 100 Ref.

3 450,000 Mass. Hlth. & Ed. Facs. Auth. Rev. A1* 7.250 7/01/02 @ 100 S.F. 496,593
Bonds Charlton Mem. Hosp. Issue 7/01/2007 7/01/01 @ 102 Ref.
Series B

4 500,000 Mass Hsg. Finc. Agncy. Sngle. Fam. Aa* 7.350 6/01/04 @ 100 S.F. 531,419
Hsg. Rev. Bonds Series 18 12/01/2016 6/01/01 @ 102 Ref.

5 455,000 N.Y. State Dorm. Auth. State Univ. Ed. Aaa* 7.700 5/15/06 @ 100 S.F. 501,210
Facs. Rev. Bonds Series 1990A 5/15/2012 5/15/00 @ 102 Ref.

6 330,000 N.Y. State Dorm Auth. City Univ. Baa1* 8.125 7/01/01 @ 100 S.F. 343,547
Rfndg. Rev. Bonds 1988A Issue 7/01/2007 7/01/98 @ 102 Ref.

7 415,000 N.Y. State Urban Dev. Corp. State Facs. Aaa* 7.500 4/01/12 @ 100 S.F. 465,576
Rev. Bonds Series 1991 4/01/2020 4/01/01 @ 102 Ref.

8 350,000 Brazos Cnty. Tx. Hlth. Facs. Dev. Corp. NR 7.750 1/01/02 @ 100 S.F. 370,104
Franciscan Servs. Corp. Rev. Bonds (St. 1/01/2019 1/01/99 @ 102 Ref.
Joseph Hosp. & Hlth. Cntr. of Bryan
Tx.) Series 1989

9 200,000 Matagorda Cnty. Tx. Navgtion. Dstrct. A 7.500 No Sinking Fund 217,496
No. One Colltzd. Poll. Cntrl. Rev. Bonds 12/15/2014 12/15/99 @ 103 Ref.
(Central Pwr. & Lt. Co. Prjt.) Series 1984A

10 300,000 Matagorda Cnty. Tx Navgtion. Dstrct. A- 7.700 No Sinking Fund 306,729
No. One Colltzd. Rev. Rfndg. Bonds 2/01/2019 2/01/98 @ 102 Ref.
(Houston Ltg. & Pwr. Co. Prjt.)
Series 1989B

11 250,000 Ill. Hsg. Dev. Auth. Multi-Fam. Hsg. A+ 0.000 7/01/06 @ 13.676 S.F. 16,043
----------- Rev. Bonds 1983 Series A 7/01/2025 None ----------

$ 4,250,000 Total Investments (Cost $4,051,654) $ 4,268,597
=========== ===========
</TABLE>

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

<TABLE>

Municipal Securities Trust, Series 51
Footnotes to Portfolio
- --------------------------------------------------------------------------------

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

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

3. At December 31, 1997, the net unrealized appreciation of all the bonds was comprised of the
following:

Gross unrealized appreciation $ 243,209
Gross unrealized depreciation (26,266)
---------------

Net unrealized appreciation $ 216,943
---------------

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

The accompanying notes form an integral part of the financial statements.
</TABLE>

<PAGE>

Municipal Securities Trust, Series 51

Statement of Net Assets
December 31, 1997
- -------------------------------------------------------------------------------

Investments in Securities,
at Market Value (Cost $4,051,654) $ 4,268,597
--------------

Other Assets
Accrued Interest 84,987
--------------
Total Other Assets 84,987
--------------

Liabilities
Advance from Trustee 26,196
--------------
Total Liabilities 26,196
--------------

Excess of Other Assets over Total Liabilities 58,791
--------------

Net Assets (4,493 Units of Fractional Undivided
Interest Outstanding, $963.14 per Unit) $ 4,327,388
==============

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

<PAGE>

Municipal Securities Trust, Series 51

Statement of Operations
- --------------------------------------------------------------------------------

For the Years Ended December 31,
1997 1996 1995
<S> <C> <C> <C>

Investment Income
Interest $ 319,290 $ 334,815 $ 366,954
----------- ----------- ----------

Expenses
Trustee's Fees 6,364 5,665 5,717
Evaluator's Fee 2,182 2,200 2,000
Sponser's Advisory Fee 1,136 1,175 1,250
----------- ----------- ----------

Total Expenses 9,682 9,040 8,967
----------- ----------- ----------

Net Investment Income 309,608 325,775 357,987
----------- ----------- ----------

Realized and Unrealized Gain (Loss)
Realized Gain (Loss) on
Investments 8,420 17,325 (24,240)

Change in Unrealized Appreciation
(Depreciation) on Investments (66,110) (118,384) 282,182
----------- ----------- ----------

Net Gain (Loss) on Investments (57,690) (101,059) 257,942
----------- ----------- ----------

Net Increase
in Net Assets
Resulting From Operations $ 251,918 $ 224,716 $ 615,929
=========== =========== ==========

</TABLE>

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

<PAGE>

Municipal Securities Trust, Series 51

Statement of Changes in Net Assets
- --------------------------------------------------------------------------------

For the Years Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Operations
Net Investment Income $ 309,608 $ 325,775 $ 357,987
Realized Gain (Loss)
on Investments 8,420 17,325 (24,240)
Change in Unrealized Appreciation
(Depreciation) on Investments (66,110) (118,384) 282,182
------------- ------------- ------------

Net Increase in
Net Assets Resulting
From Operations 251,918 224,716 615,929
------------- ------------- ------------

Distributions to Certificateholders
Investment Income 309,489 325,820 360,807
Principal ---- 316,692 ----

Redemptions
Interest 5,416 4,372 ----
Principal 342,890 141,184 ----
------------ ------------ ------------

Total Distributions
and Redemptions 657,795 788,068 360,807
------------ ------------ ------------

Total Increase (Decrease) (405,877) (563,352) 255,122

Net Assets
Beginning of Year 4,733,265 5,296,617 5,041,495
------------ ------------ ------------

End of Year (Including
Undistributed Net Investment
Income of $77,794, $83,091
and $87,508, Respectively) $ 4,327,388 $ 4,733,265 $ 5,296,617
============ ============ ============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Series 51

Notes to Financial Statements
- -------------------------------------------------------------------------------

1. Organization

Municipal Securities Trust, Series 51 (the "Trust") was organized on
June 5, 1991 by Bear, Stearns & Co. Inc. and Gruntal & Co.,
Incorporated under the laws of the State of New York by a Trust
Indenture and Agreement, and is registered under the Investment Company
Act of 1940. The Trust was formed to preserve capital and to provide
interest income.

2. Summary of Significant Accounting Policies

<PAGE>

Municipal Securities Trust, Series 51

Notes to Financial Statements
- -------------------------------------------------------------------------------

3. Income Taxes

4. Trust Administration

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

The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. For the years ended December 31, 1997 and 1996, 361 and
146 units were redeemed respectively. No units were redeemed during the
year ended December 31, 1995.

The Trust pays an annual fee for trustee services rendered by the
Trustee that ranges from $.32 to $.96 per $1,000 of outstanding
investment principal. In addition, a minimum fee of $7.50 is paid to a
service bureau for each portfolio valuation. A maximum fee of $.25 per
$1,000 of outstanding investment principal is paid to the Sponsor. For
the year ended December 31, 1997, the "Trustee's Fees" are comprised of
Trustee fees of $3,640 and other expenses of $2,724. For the year ended
December 31, 1996, the "Trustee's Fees" are comprised of Trustee fees
of $3,833 and other expenses of $1,832. The other expenses include
professional, printing and miscellaneous fees.

<PAGE>

Municipal Securities Trust, Series 51

Notes to Financial Statements
- -------------------------------------------------------------------------------

5. Net Assets

At December 31, 1997, the net assets of the Trust represented the
interest of Certificateholders as follows:

<TABLE>
<S> <C>
Original cost to Certificateholders $ 5,080,875
Less Initial Gross Underwriting Commission 248,963
---------------
4,831,912
Accumulated Cost of Securities Sold,
Matured or Called (788,334)
Net Unrealized Appreciation 216,943
Undistributed Net Investment Income 77,794
Distributions in Excess of Proceeds From Investments (10,927)
---------------

Total $ 4,327,388
===============
</TABLE>

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 5,000 units of
fractional undivided interest of the Trust as of the date of deposit.

Undistributed net investment income includes accumulated accretion of
original issue discount of $8,076.

6. Concentration of Credit Risk

<PAGE>

Municipal Securities Trust, Series 51

Notes to Financial Statements
- -------------------------------------------------------------------------------

7. Financial Highlights (per unit)*
Selected data for a unit of the Trust outstanding:

<TABLE>
<CAPTION>
For the years ended December 31,
1997 1996
<S> <C> <C>

Net Asset Value, Beginning of Year** $ 975.13 $ 1,059.32
------------- -------------
Interest Income 68.31 67.96
Expenses (2.07) (1.83)
------------- -------------
Net Investment Income 66.24 66.13
------------- -------------
Net Gain or Loss on Investments(1) (10.85) (19.02)
------------- -------------

Total from Investment Operations 55.39 47.11
------------- -------------

Less Distributions
to Certificateholders
Income 66.22 66.13
Principal ---- 64.28
for Redemptions
Interest 1.16 .89
------------- -------------

Total Distributions 67.38 131.30

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

Net Asset Value, End of Year** $ 963.14 $ 975.13
============= =============

</TABLE>

(1) Net gain or loss on investments is a result of changes in outstanding
units since January 1, 1997 and 1996, respectively, and the dates of
net gain and loss on investments.

- ------------------
* Unless otherwise stated, based upon average units outstanding during
the year of 4,674 ([4,493 + 4,854]/2) for 1997 and of 4,927 ([4,854 +
5,000]/2) for 1996.

** Based upon actual units outstanding
<PAGE>

This module replaces an
earlier one

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

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

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES
(Multiplier Portfolio)

Prospectus Part B

Dated: April 30, 1998

THE TRUST

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

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

Each "Unit" outstanding on the Evaluation Date represented an
undivided interest or pro rata share in the principal and interest of each

- ----------------------------
* 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.

82600.8
-1-

<PAGE>

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

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

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

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

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

When selecting Bonds for the State Trusts, the following
factors, among others, were considered by the Sponsor on the Date of Deposit:
(a) the quality of the Bonds and whether such Bonds were rated "A" or better by
Standard & Poor's or Moody's, (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

82600.8
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<PAGE>

Trust's quality, rating, yield 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
third-party payors and government programs such as Medicare and Medicaid. Both
private third-party payors and government programs have undertaken cost
containment measures designed to limit payments. Furthermore, government
programs are subject to statutory and regulatory changes, retroactive rate
adjustments, administrative rulings and government funding restrictions, all of
which may materially decrease the rate of program payments for health care
facilities. There can be no assurance that payments under governmental programs
will remain at levels comparable to present levels or will, in the future, be
sufficient to cover the costs allocable to patients participating in such
programs. In addition, there can be no assurance that a particular hospital or
other health care facility will continue to meet the requirements for
participation in such programs.

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

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

82600.8
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<PAGE>

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

Mortgage Subsidy Bonds. Certain Bonds may be "mortgage subsidy
bonds" which are obligations of which all or a significant portion of the
proceeds are to be used directly or indirectly for mortgages on owner-occupied
residences. Section 103A of the Internal Revenue Code of 1986, 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 amounts for state and local issuers, arbitrage
restrictions and (for bonds issued after December 31, 1984) certain information
reporting, certification, public hearing and policy statement requirements. In
the opinions of bond counsel to the issuing governmental authorities, interest
on all the Bonds in a Trust that might be deemed "mortgage subsidy bonds" will
be exempt from Federal income tax when issued. See "Description of Portfolio" in
Part A for the amount of mortgage subsidy Bonds contained therein.

Mortgage Revenue Bonds. Certain Bonds may be "mortgage revenue
bonds." Under the Internal Revenue Code of 1954, as amended (the "Code") (and
under similar provisions of the prior tax law) "mortgage revenue bonds" are
obligations the proceeds of which are used to finance owner-occupied residences
under programs which meet numerous statutory requirements relating to residency,
ownership, purchase price and target area requirements, ceiling amounts for
state and local issuers, arbitrage restrictions, and certain information
reporting certification, and public hearing requirements. There can be no
assurance that additional federal legislation will not be introduced or that
existing legislation will not be further amended, revised, or enacted

82600.8
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<PAGE>

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

Private Activity Bonds. The portfolio of the Trust may contain
other Bonds which are "private activity bonds" (often called Industrial Revenue
Bonds ("IRBs") if issued prior to 1987) which would be primarily of two types:
(1) Bonds for a publicly owned facility which a private entity may have a right
to use or manage to some degree, such as an airport, seaport facility or water
system and (2) facilities deemed owned or beneficially owned by a private entity
but which were financed with tax-exempt bonds of a public issuer, such as a
manufacturing facility or a pollution control facility. In the case of the first
type, bonds are generally payable from a designated source of revenues derived
from the facility and may further receive the benefit of the legal or moral
obligation of one or more political subdivisions or taxing jurisdictions. In
most cases of project financing of the first type, receipts or revenues of the
issuer are derived from the project or the operator or from the unexpended
proceeds of the bonds. Such revenues include user fees, service charges, rental
and lease payments, and mortgage and other loan payments.

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

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

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

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

82600.8
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<PAGE>

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

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

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

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

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

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

82600.8
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<PAGE>

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

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

Puerto Rico Bonds. Certain of the Bonds in the Trust may be
general obligations and/or revenue bonds of issuers located in Puerto Rico which
will be affected by general economic conditions in Puerto Rico. The economy of
Puerto Rico is fully integrated with that of the United States mainland. During
fiscal 1997, approximately 88% of Puerto Rico's exports went to the United
States mainland, which was also the source of approximately 62% of Puerto Rico's
imports. In fiscal 1997, Puerto Rico experienced a $2.7 billion positive
adjusted merchandise trade balance. The dominant sectors of the Puerto Rico
economy are manufacturing and services. 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 services sector, including finance,
insurance, real estate, wholesale and retail trade, and hotel and related
services, 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 services sector has
experienced significant growth in response to the expansion of the manufacturing
sector. Puerto Rico's more than decade- long economic expansion continued
throughout the five-year period from fiscal 1993 through fiscal 1997. Almost
every sector of the economy participated and record levels of employment were
achieved. Factors behind this expansion included government-sponsored economic
development programs, periodic declines in the exchange value of the United
States dollar, increases in the level of federal transfers, and the relatively
low cost of borrowing. Gross product in fiscal 1993 was $25.1 billion ($24.5
billion in 1992 prices) and gross product in fiscal 1997 was $32.1 billion
($27.7 billion in 1992 prices). This represents an increase in gross product of
27.7% from fiscal 1993 to 1997 (13.0% in 1992 prices). Since fiscal 1985,
personal income, both aggregate and per capita, has increased consistently each
fiscal year. In fiscal 1997, aggregate personal income was $32.1 billion ($30.0
billion in 1992 prices) and personal income per capita was $8,509 ($7,957 in
1992 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 local 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 1997 were $7.3 billion, of which $5.2
billion, or 71.6%, represented entitlements to individuals who had previously
performed services or made contributions under programs such as Social Security,
Veterans' Benefits, Medicare and U.S. Civil Service retirement pensions. Average
employment increased from 999,000 in fiscal 1993, to 1,128,300 in fiscal 1997.
Average unemployment decreased from 16.8% in fiscal 1993, to 13.1% in fiscal
1997. According to the Labor Department's Household

82600.8
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<PAGE>

Employment Survey, during the first eight months of fiscal 1998, total
employment increased 0.4% over the same period in fiscal 1997. Total monthly
employment averaged 1,129,000 during the first eight months of fiscal 1998,
compared to 1,124,500 in the same period of fiscal 1997. The Planning Board's
gross product forecast for fiscal 1998 projected an increase of 3.0% over fiscal
1997.

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

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

Year 2000 Issue. The Trust, like other businesses and
entities, could be adversely affected if the computer systems used by the
Sponsor and Trustee or other service providers to the Trust do not properly
process and calculate date-related information and data from and after January
1, 2000. This is commonly known as the "Year 2000 Problem." The Sponsor and
Trustee are taking steps that they believe are reasonably designed to address
the Year

82600.8
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<PAGE>

2000 Problem with respect to computer systems that they use and to obtain
reasonable assurances that comparable steps are being taken by the Trusts' other
service providers. However, there can be no assurance that the Year 200 Problem
will be properly or timely resolved so to avoid any adverse impact to the Trust.

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 Economy. California's economy is the largest among
the 50 states and one of the largest in the world. This diversified economy has
major components in agriculture, manufacturing, high technology, trade,
entertainment, tourism, construction and services.

After suffering through a severe recession between 1990 and
1994, California's economy has been performing strongly. 400,000 nonfarm jobs
were added in the State in 1997. In 1996, personal income grew by more than $55
billion. California's economic expansion is being fueled by strong growth in
high-technology industries, including computer software, electronics
manufacturing and motion picture production, all of which have offset the
recession-related losses which were heaviest in aerospace and defense-related
industries (which accounted for two-thirds of the job losses), finance and
insurance.

California's July 1, 1997 population of 32.9 million
represented over 12% of the United States' population and is concentrated in
metropolitan areas. As of the April 1, 1990 census, 96% resided in the 23
Metropolitan Statistical Areas in the State. As of July 1, 1994, the 5-county
Los Angeles area accounted for 48% of the State's population with 15.6 million
residents, and the 10-county San Francisco Bay Area represented 21 percent, with
a population of 6.6 million.

California has a large and diverse labor force. The following
table presents civilian labor force data for the resident population, age 16 and
over, for the years 1992 to 1997.

82600.8
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<PAGE>

LABOR FORCE
1991-97
Labor Force Trends Unemployment Rate
(thousands)
-------------------------------- ----------------------
Labor United
<S> <C> <C> <C> <C>
Year Force Employment California States
- ---- ----- ---------- ---------- ------
1991................ 15,118 13,978 7.5 6.7
1992................ 15,335 13,939 9.1 7.4
1993................ 15,205 13,995 9.2 6.8
1994................ 15,462 14,133 8.6 6.1
1995................ 15,416 14,206 7.8 5.6
1996................ 15,508 14,383 7.3 5.4
1997(e)............. 15,879 14,870 6.4 4.9
SOURCE: State of California, Employment Development Department.
</TABLE>

- -------------------------------
(e) Estimate
SOURCE: State of California, Employment Development Department and State of
California, Department of Finance.

The following table shows California's nonagricultural
employment distribution and growth for 1990 and 1997.

<TABLE>
<CAPTION>
Payroll Employment By Major Sector
1990 and 1997
Employment
(thousands)
<S> <C> <C> <C> <C>
Industry Sector 1990 1997(e) 1990 1997(e)
--------------- ---- ------- ---- -------
Mining................................. 39 29 0.3 0.2
Construction........................... 605 559 4.8 4.3
Manufacturing
Nondurable goods.................. 721 729 5.7 5.5
High Technology................... 786 514 5.4 3.9
Other Durable Goods............... 690 651 5.4 5.0
Transportation and
Utilities......................... 624 657 4.9 5.0
Wholesale and Retail
Trade............................. 3,002 3,022 23.7 23.0
Finance, Insurance
and Real Estate................... 825 735 6.5 5.6
Services............................... 3,395 4,089 26.8 31.1
Government
Federal........................... 362 290 2.9 2.2
State and Local................... 1,713 1,862 13.5 14.2
----- ----- ---- ----
TOTAL
NONAGRICULTURAL........................ 12,662 13,137 100 100
====== ====== === ===
</TABLE>
- -------------------------------
(e) Estimate
SOURCE: State of California, Employment Development Department and State of
California, Department of Finance.

82600.8
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<PAGE>

The State.
---------

Fiscal Years Prior to 1995-96. Pressures on the State's budget
in the late 1980's and early 1990's were caused by a combination of external
economic conditions (including a recession which began in 1990) and growth of
the largest State General Fund (the "General Fund") Programs -- K-14 education,
health, welfare and corrections - at rates faster than the revenue base. During
this period, expenditures exceeded revenues in four out of six years up to
1992-93, and the State accumulated and sustained a budget deficit approaching
$2.8 billion at its peak at June 30, 1993. Between the 1991-92 and 1994-95
Fiscal Years, each budget required multibillion dollar actions to bring
projected revenues and expenditures into balance, including significant cuts in
health and welfare program expenditures; transfers of program responsibilities
and funding from the State to local governments; transfer of about $3.6 billion
in annual local property tax revenues from other local governments to local
school districts, thereby reducing State funding for schools under Proposition
98; and revenue increases (particularly in the 1991- 92 Fiscal Year budget),
most of which were for a short duration.

Despite these budget actions, the effects of the recession led
to large, unanticipated budget deficits. 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, again using cross- fiscal year
revenue anticipation warrants to partly finance the deficit into the 1995-96
fiscal year.

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 State Legislature and the Governor of the
State (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 cash reserves, the State Controller issued
registered warrants to pay a variety of obligations representing prior years' or
continuing appropriations, 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, when the budget was adopted,
the State Controller issued a total of approximately $3.8 billion of registered
warrants.

For several fiscal years during the recession, the State was
forced to rely on external debt markets to meet its cash needs, as a succession
of notes and revenue anticipation 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, as noted earlier. The
last and largest of these borrowings was $4.0 billion of revenue anticipation
warrants which were issued in July, 1994 and matured on April 25, 1996.

1995-96 and 1996-97 Fiscal Years. The State's financial
condition improved markedly during the 1995-96 and 1996-97 fiscal years, with a
combination of better than expected revenues, slowdown in growth of social
welfare programs, and continued spending restraint based on the actions taken

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in earlier years. The State's cash position also improved, and no external
deficit borrowing has occurred over the end of these two fiscal years.

The economy grew strongly during these fiscal years, and as a
result, the General Fund took in substantially greater tax revenues (around $2.2
billion in 1995-96 and $1.6 billion in 1996-97) than were initially planned when
the budgets were enacted. These additional funds were largely directed to school
spending as mandated by Proposition 98, and to make up shortfalls from reduced
federal health and welfare aid. The accumulated budget deficit from the
recession years was finally eliminated. In the Governor's 1998-99 Budget
Proposal, released January 9, 1998, the Department of Finance reported that the
State's budget reserve (the "SFEU") totaled $461 million as of June 30, 1997.

1997-98 Fiscal Year. Background. On January 9, 1997, the
Governor released his proposed budget for the 1997-98 Fiscal Year (the "Proposed
Budget"). The Proposed Budget estimated General Fund revenues and transfers of
about $50.7 billion, and proposed expenditures of $50.3 billion. In May 1997,
the Department of Finance increased its revenue estimate for the upcoming fiscal
year by $1.3 billion, in response to the continued strong growth in the State's
economy.

In May, 1997, action was taken by the California Supreme Court
in an ongoing lawsuit, PERS v. Wilson, discussed below, which made final a
judgment against the State requiring an immediate payment from the General Fund
to the Public Employees Retirement Fund ("PERF") to make up certain deferrals in
annual retirement fund contributions which had been legislated in earlier years
for budget savings, and which the courts found to be unconstitutional. On July
30, 1997, following a direction from the Governor, the Controller transferred
$1.228 billion from the General Fund to the PERF in satisfaction of the
judgment, representing the principal amount of the improperly deferred payments
from 1995-96 and 1996-97.

In late 1997, the plaintiffs filed a claim with the State
Board of Control for payment of interest under the Court rulings in an amount of
$308 million. The Department of Finance has recommended approval of this claim.
If approved by the Board of Control, the claim would become part of an annual
claims bill in the 1998-99 Budget.

Fiscal Year 1997-98 Budget Act. Once the pension payment of
$1.228 billion eliminated essentially all the "increased" revenue in the budget,
final agreement was reached within a few weeks on a welfare reform package and
the remainder of the budget. The Legislature passed the Budget Bill on August
11, 1997, along with numerous related bills to implement its provisions. On
August 18, 1997, the Governor signed the Budget Act, but vetoed approximately
$314 million of specific spending items, primarily in health and welfare and
education areas from both the General Fund and Special Funds. Most of this
spending (approximately $200 million) was restored in later legislation passed
before the end of the Legislative session.

The Budget Act anticipated General Fund revenues and transfers
of $52.5 billion (a 6.8 percent increase over the final 1996-97 amount), and
expenditures of $52.8 billion (an 8.0 percent increase from the 1996-97 levels).
The Budget Act also included Special Fund expenditures of $14.4 billion (as
against estimated Special Fund revenues of $14.0 billion), and $2.1 billion of
expenditures from various Bond Funds. Following enactment of the Budget Act, the
State implemented its normal annual cash flow borrowing program, issuing $3.0
billion of notes which mature on June 30, 1998.

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<PAGE>

The following were major features of the 1997-98 Budget Act:

1. For the second year in a row, the Budget contained a large increase in
funding for K-14 education under Proposition 98, reflecting revenues
which exceeded initial budgeted amounts. Part of the nearly $1.75
billion in increased spending was allocated to prior fiscal years.
Funds were provided to fully pay for the cost-of-living-increase
component of Proposition 98, and to extend the class size reduction and
reading initiatives.

2. The Budget Act reflected the $1.228 billion pension case judgment
payment, and brought funding of the State's pension contribution back
to the quarterly basis which existed prior to the deferral actions
which were invalidated by the courts.

3. Funding from the General Fund for the University of California and
California State University was increased by about 6 percent ($121
million and $107 million, respectively), and there was no increase in
student fees.

4. Because of the effect of the pension payment, most other State programs
were continued at 1996-97 levels, adjusted for caseload changes.

5. Health and welfare costs were contained, continuing generally the grant
levels from prior years, as part of the initial implementation of the
new CalWORKs program.

6. Unlike prior years, this Budget Act did not depend on uncertain federal
budget actions. About $300 million in federal funds, already included
in the federal FY 1997 and 1998 budgets, was included in the Budget
Act, to offset incarceration costs for illegal aliens.

7. The Budget Act contained no tax increases, and no tax reductions. The
Renters Tax Credit was suspended for another year, saving approximately
$500 million.

At the end of the Legislative Session on September 13, 1997,
the Legislature passed and the Governor later signed several bills encompassing
a coordinated package of fiscal reforms, mostly to take effect after the 1997-98
Fiscal Year. Included in the package are a variety of phased-in tax cuts,
conformity with certain provisions of the federal tax reform law passed earlier
in the year, and reform of funding for county trial courts, with the State to
assume greater financial responsibility. The Department of Finance estimates
that the major impact of these fiscal reforms will occur in Fiscal Year 1998-99
and subsequent years.

The Department of Finance released updated estimates for the
1997- 98 Fiscal Year on January 9, 1998 as part of the Governor's 1998-99 Fiscal
Year Budget Proposal. Total revenues and transfers are projected at $52.9
billion, up approximately $360 million from the Budget Act projection.
Expenditures for the fiscal year are expected to rise approximately $200 million
above the original Budget Act, to $53.0 billion. The balance in the budget
reserve, the SFEU, is projected to be $329 million at June 30, 1998, compared to
$461 million at June 30, 1997.

Proposed 1998-99 Fiscal Year Budget. On January 9, 1998, the
Governor released his Budget Proposal for the 1998-99 Fiscal Year (the
"Governor's Budget"). The Governor's Budget projects total General Fund

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<PAGE>

revenues and transfers of $55.4 billion, a $2.5 billion increase (4.7 percent)
over revised 1997-98 revenues. This revenue increase takes into account reduced
revenues of approximately $600 million from the 1997 tax cut package, but also
assumes approximately $500 million additional revenues primarily associated with
capital gains realizations. The Governor's Budget notes, however, that capital
gains activity and the resultant revenues derived from it are very hard to
predict.

Total General Fund expenditures for 1998-99 are recommended at
$55.4 billion, an increase of $2.4 billion (4.5 percent) above the revised
1997-98 level. The Governor's Budget includes funds to pay the interest claim
relating to the court decision on pension fund payments, PERS v. Wilson (see
"1997-98 Fiscal Year" above). The Governor's Budget projects that the State will
carry out its normal intra-year cash flow external borrowing in 1998-99, in an
estimated amount of $3.0 billion. The Governor's Budget projects that the budget
reserve, the SFEU, will be $296 million at June 30, 1999, slightly lower than
the projected level at June 30, 1998, PERS liability.

The Governor's Budget projects Special Fund revenues of $14.7
billion, and Special Fund expenditures of $15.2 billion, in the 1998-99 Fiscal
Year. A total of $3.2 billion of bond fund expenditures are also proposed.

The revenue and expenditure assumptions upon which the
Governor's Budget for 1998-99 was developed have been based upon certain
estimates of the performance of the California and national economies in
calendar years 1997 and 1998. In the Governor's Budget released on January 9,
1998, the Department of Finance projects that the California economy will
continue to show robust growth through 1998, although at a slower pace than in
1997. The economic expansion is marked by strong growth in high technology
manufacturing and services, including computer software, electronic
manufacturing and motion picture/television production; growth is also strong in
other business services, both nonresidential and residential construction and
local education. The Asian economic crisis developing in late 1997 is expected
to have some dampening effects on the State's economy, as exports to the region
will be reduced further (declines had appeared already in the first half of
1997) and the trade deficit will increase. However, some impacts of the Asian
situation could benefit the State, as services will be needed to handle imports,
and lower interest rates should help the construction industry. Furthermore,
exports to other regions, such as Mexico and elsewhere in Latin America, have
grown rapidly, taking up some of the slack from Asia. The Department set out the
following estimates for California economic performance which were used in
predicting revenues and expenditures for the 1997-98 and 1998-99 Fiscal Year
Budgets; also set forth are the Department's most recent previous estimates as
set forth in the May Revision to the 1997-98 Governor's Budget, released May 14,
1997.

82600.8
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<PAGE>

<TABLE>
<CAPTION>
Economic Assumptions

For 1997 For 1998
-------- --------
May Governor's May Governor's
Revision Budget Revision Budget
<S> <C> <C> <C> <C>
Nonfarm wage and salary
employment (000) 13,154 13,141 13,450 13,506
Percent Change 3.0 3.1 2.3 2.8
Personal income
($ billions) 865.2 866.0 917.7 920.6
Percent Change 6.8 7.2 6.1 6.3
Housing Permits (Units 110 110 122 130
000)
Consumer Price Index 2.3 2.2 2.3 2.6
Percent Change
</TABLE>

SOURCE: State of California, Department of Finance, January 9, 1998 (for
"Governor's Budget") and May 14, 1997 (for "May Revision").

Federal Welfare Reform. Following enactment of the 1996-97
Budget Act, Congress passed and the President signed (on August 22, 1996) the
Personal Responsibility and Work Opportunity Act of 1996 (the "Law") making a
fundamental reform of the current welfare system. Among many provisions, the Law
includes: (i) conversion of Aid to Families with Dependent Children from an
entitlement program to a block grant titled Temporary Assistance for Needy
Families (TANF), with lifetime time limits on TANF recipients, work requirements
and other changes; (ii) provisions denying certain federal welfare and public
benefits to legal non-citizens, allowing states to elect to deny additional
benefits (including TANF) to legal non-citizens, and generally denying almost
all benefits to illegal immigrants; and (iii) changes in the Food Stamp program,
including reducing maximum benefits and imposing work requirements.

As part of the 1997-98 Budget Act legislative package, the
State Legislature and Governor agreed on a comprehensive reform of the State's
public assistance programs to implement the new federal Law. The new basic State
welfare program is called California Work Opportunity and Responsibility to Kids
Act ("CalWORKs"), which replaces the former Aid to Families with Dependent
Children (AFDC) and Greater Avenues to Independence (GAIN) programs effective
January 1, 1998. Consistent with the federal Law, CalWORKs contains new time
limits on receipt of welfare aid, both lifetime as well as for any current time
on aid. The centerpiece of CalWORKs is the linkage of eligibility to work
participation requirements. Administration of the new Welfare-to-Work programs
will be largely at the county level, and counties are given financial incentives
for success in this program.

Although the longer-term impact of the new federal Law and
CalWORKs cannot be determined until there has been some experience, the State
does not presently anticipate that these new programs will have any adverse
financial impact on the General Fund. Overall TANF grants from the federal
government are expected to equal or exceed the amounts the State would have
received under the old AFDC program.

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<PAGE>

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 and limited the ability of local governments
to impose "special taxes" (those devoted to a specific purpose) without
two-thirds voter approval. Counties, in particular, have had fewer options to
raise revenues than many other local government entities, and have been required
to maintain many services.

The entire statewide welfare system has been changed in
response to the change in federal welfare law enacted in 1996. Under the
CalWORKs program, counties are given flexibility to develop their own plans,
consistent with State law, to implement the program and to administer many of
its elements, and their costs for administrative and supportive services are
capped at the 1996-97 levels. Counties are also given financial incentives if,
at the individual county level or statewide, the CalWORKs program produces
savings associated with specified standards. Counties will still be required to
provide "general assistance" aid to certain persons who cannot obtain welfare
from other programs.

Historically, funding for the State's trial court system was
divided between the State and the counties. However, legislation executed in
1997 implements a restructuring of the State's trial court funding system. In
1997-98, funding for the courts, with the exception of costs for facilities,
local judicial benefits, and revenue collection, was consolidated at the State
level. The county contribution for both their general fund and fine and penalty
amounts is capped at the 1994-95 level and becomes part of the Trial Court Trust
Fund, which supports all trial court operations. The State assumes
responsibility for future growth in trial court funding. This consolidation is
intended to streamline the operation of the courts, provide a dedicated revenue
source, and relieve fiscal pressure on the counties.

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
Legislation 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 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. Orange
County implemented significant reductions in services and personnel, and
continues to face fiscal constraints in the aftermath of its bankruptcy, which
had been caused by large investment losses in its pooled investment funds.

On November 5, 1996, voters approved Proposition 218, entitled
the "Right to Vote on Taxes Act," which incorporates new Articles XIIIC and
XIIID into the California Constitution. These new provisions enact limitations
on the ability of local government agencies to impose or raise various taxes,
fees, charges and assessments without voter approval. Certain "general taxes"
imposed after January 1, 1995 must be approved by voters in order to remain in

82600.8
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<PAGE>

effect. In addition, Article XIIIC clarifies the right of local voters to reduce
taxes, fees, assessments or charges through local initiatives.

Proposition 218 does not affect the State or its ability to
levy or collect taxes. There are a number of ambiguities concerning the
Proposition and its impact on local governments which will require
interpretation by the courts or the Legislature. The Legislative Analyst
estimated that enactment of Proposition 218 would reduce local government
revenues statewide by over $100 million a year, and that over time revenues to
local government would be reduced by several hundred million dollars a year
under this Proposition.

In May 1996, a taxpayer filed an action (the "Rider Case")
against the City of San Diego ("San Diego") and the San Diego Convention Center
Expansion Authority (the "Authority") challenging the validity of a lease
revenue financing involving a lease having features similar to the leases
commonly used in California lease-based financings such as certificates of
participation. In the Rider Case, the plaintiffs maintain that voter approval is
required for the San Diego lease (a) since the lease constituted indebtedness
prohibited by Article XVI, Section 18 of the California Constitution without a
two-thirds vote of the electorate, and (b) since San Diego was prohibited under
its charter from issuing bonds without a two-thirds vote of the electorate, and
the power of the Authority, a joint powers' authority, one of the members of
which is San Diego, to issue bonds is no greater than the power of San Diego. In
response to San Diego's motion for summary judgment, the trial court rejected
the plaintiffs' arguments and ruled that the lease was constitutionally valid
and that the Authority's related lease revenue bonds did not require voter
approval. The plaintiffs appealed the matter to the Court of Appeals for the
Fourth District, which likewise affirmed the validity of the lease and of the
lease revenue bond financing arrangements. The plaintiffs then filed a petition
for review with the California State Supreme Court, and, on April 2, 1997, the
California Supreme Court granted the plaintiffs' petition for review. No
decision from the State Supreme Court is expected until sometime during the 1998
calendar year.

Constitutional and Statutory Limitations; 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 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

82600.8
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<PAGE>

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.

Proposition 98. 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
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.

During the recent recession, General Fund revenues for several
years were less than originally projected, so that the original Proposition 98
appropriations turned out to be higher than the minimum percentage provided in
the law. The Legislature responded to these developments by designating the
"extra" Proposition 98 payments in one year as a "loan" from future years'
Proposition 98 entitlements, and also intended that the "extra" payments would
not be included in the Proposition 98 "base" for calculating future years'
entitlements. By implementing these actions, per-pupil funding from Proposition
98 sources stayed almost constant at approximately $4,200 from Fiscal Year
1991-92 to Fiscal Year 1993-94.

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

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<PAGE>

Substantially increased General Fund revenues, above initial
budget projections, in the fiscal years 1994-95 and thereafter have resulted or
will result in retroactive increases in Proposition 98 appropriations from
subsequent fiscal years' budgets. Because of the State's increasing revenues,
per-pupil funding at the K-12 level has increased by about 22% from the level in
place from 1991-92 through 1993-94, and is estimated at about $5,150 per ADA in
1997-98. A significant amount of the "extra" Proposition 98 monies in the last
few years have been allocated to special programs, most particularly an
initiative to allow each classroom from grades K-3 to have no more than 20
pupils by the end of the 1997-98 school year.

Proposition 187. On November 8, 1994, the voters in California
approved Proposition 187, an initiative statute ("Proposition 187"). Proposition
187 specifically prohibits funding by the State of social service, health care
services and public school education for the benefit of any person not verified
as either a United States citizen or a person legally admitted to the Untied
States. Among the provisions in Proposition 187 pertaining to public school
education, the measure requires, commencing January 1, 1995, that every school
district in the State verify the legal status of every child enrolling in the
district for the first time. By January 1, 1996, each school district must also
verify the legal status of children already enrolled in the district and of all
parents or guardians of all students. If the district "reasonably suspects" that
a student, parent or guardian is not legally in the United States, that 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 State
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) with first-year costs potentially in excess of $100
million.

The reporting requirements 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 United States Department of Education has indicated that the
reporting requirement in Proposition 187 could jeopardize the ability of school
districts to receive these funds.

Opponents of Proposition 187 have filed at least eight
lawsuits challenging the constitutionality and validity of the measure. On
November 2, 1995, a United States District Court judge struck down the central
provision of Proposition 187 by ruling that parts of Proposition 187 conflict
with federal power over immigration. An appeal has been filed. It cannot be
predicted what the nature or outcome of such appeal will be or the ultimate
fiscal impact of Proposition 187.

Article XIIIA, Article XIIIB, Article XIIIC and Article XIIID
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. The primary government of the State is a
party to numerous legal proceedings, many of which normally occur in

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<PAGE>

governmental operations. The following are the more significant lawsuits
pending against the primary government:

Northern California 1997 Flood Litigation: In January of 1997,
California experienced major flooding in six different areas with current
estimates of property damage to be approximately $1.6 to $2 billion. To date,
one lawsuit has been filed by 500 homeowners, but more lawsuits are expected.
Exposure from all of the anticipated cases arising from these floods could total
approximately $2 billion.

The primary government is a defendant in several related
cases, mainly California Ambulance Association v. Shalala et. al., in which the
plaintiffs are seeking action to compel the Department of Health Services to pay
Part B ambulance and physician services co-payments under the Medicare and
Medicaid Acts. Should the plaintiffs prevail, the liability for retroactive
payments is estimated to be $490 million, and the liability for future payments
can be in excess of $130 million annually. The General Fund and the federal
government will share the liability equally.

The primary government is a defendant in Ceridian Corporation
v. Franchise Tax Board, a suit which challenges the validity of two sections of
the California Tax laws. The first relates to deduction from corporate taxes for
dividends received from insurance companies to the extent the insurance
companies have California activities. The second relates to corporate deduction
of dividends to the extent the earnings of the dividend paying corporation have
already been included in the measure of their California tax. If both sections
of the California Tax law are invalidated, and all dividends become deductible,
then the General Fund can become liable for approximately $200-$250 million
annually.

The primary government is involved in a lawsuit, Thomas Hayes
v. Commission of State Mandates, related to state-mandated costs. The action
involves an appeal by the Director of Finance from a 1984 decision by the State
Board of Control (now succeeded by the Commission on State Mandates ("COSM")).
The Board of Control decided in favor of local school districts' claims for
reimbursement for special education programs for handicapped students. The case
was then brought to the trial court by the primary government and later remanded
to the COSM for redetermination. The COSM has since expanded the claim to
include supplemental claims filed by seven other educational institutions; the
issuance of a final consolidated decision is anticipated sometime in early 1998.
To date, the Legislature has not appropriated funds. The liability to the
primary government, if all potentially eligible school districts pursue timely
claims, has been estimated by the Department of Finance at more than $1 billion.

The primary government is involved in a lawsuit related to
contamination at the Stringfellow toxic waste site. In United States, People of
the State of California v. J.B. Stringfellow, Jr., et al., the primary
government is seeking recovery for past costs of cleanup of the site, a
declaration that the defendants are jointly and severally liable for future
costs, and an injunction ordering completion of the cleanup. However, the
defendants have filed a counterclaim against the primary government for alleged
negligent acts. Because the primary government is the present owner of the site,
the primary government may be found liable. Present estimates of the cleanup
range from $300 million to $800 million.

The primary government is a defendant in a coordinated action
involving 3,000 plaintiffs seeking recovery for damages caused by the Yuba

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<PAGE>

River flood of February 1986. The trial court has found liability in inverse
condemnation and awarded damages of $500,000 to a sample of plaintiffs. The
primary government's potential liability to the remaining plaintiffs ranges from
$800 million to $1.5 billion. An appeal has been filed.

The primary government is a defendant in California State
Employees Association v. Wilson, where the petitioners are challenging several
budget appropriations in the 1994 and 1995 Budget Acts. The appropriations
mandate the transfer of funds from the State Highway Account, within the special
revenue funds, to the General Fund to reimburse the General Fund for debt
service costs on two rail bond measures. The petitioners contend that the
transfers violate the bond acts themselves and are requesting the monies be
returned. The loss to the primary government's General Fund could be up to $227
million.

In a similar case, Professional Engineers in California
Government v. Wilson, the petitioners are challenging several appropriations in
the 1993, 1994, and 1995 Budget Acts. The appropriations mandate the transfer of
approximately $262 million from the State Highway Account, within the special
revenue funds, and $113 million from the Motor Vehicle Account, within the
special revenue funds, to the General Fund and appropriate approximately $6
million from the State Highway Account to fund a highway-grade crossing program
administered by the Public Utilities Commission. Petitioners contend that the
transfers violate several constitutional provisions and request that the moneys
be returned to the State Highway Account and Motor Vehicle Account.

The primary government is a defendant in Just Say No To
Tobacco Dough Campaign v. State of California, where the petitioners challenge
the appropriation of approximately $166 million of Proposition 99 funds in the
Cigarette and Tobacco Products Surtax Fund for years ended June 30, 1990,
through June 30, 1995, for programs which were allegedly not health education or
tobacco-related disease research. If the primary government loses, the General
Fund and funds from other sources would be used to reimburse the Cigarette and
Tobacco Products Surtax Fund, an agency fund, for approximately $166 million.

The primary government is a defendant in the case of Kurt
Hathaway, et al. v. Wilson, et al., where the plaintiffs are challenging the
legality of various budget action transfers and appropriations from particular
special funds for years ended June 30, 1995, and June 30, 1996. The plaintiffs
allege that the transfers and appropriations are contrary to the substantive law
establishing the funds and providing for interest accruals to the fund, violate
the single subject requirement of the State Constitution, and are an invalid
"special law". Plaintiffs seek to have monies totaling approximately $335
million returned to the special funds.

The primary government is a defendant in two related cases,
Beno vs. Sullivan ("Beno") and Welch vs. Anderson ("Welch"), concerning
reductions in Aid to Families with Dependent Children (AFDC) grant payments. In
the Beno case, plaintiffs seek to invalidate AFDC grant reductions, and in the
Welch case plaintiffs contend that AFDC grant reductions are not authorized by
state law. The Beno case concerns the total grant reductions while the Welch
case concerns the period of time the State did not have a waiver for those
reductions. The primary government's potential liability for retroactive AFDC
grant reductions is estimated at $831 million if the plaintiffs are awarded the
full amount in both cases.

82600.8
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<PAGE>

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 16, 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 unconstitutional, and to transfer to PERS the
contributions that were unpaid to date. On February 19, 1997, the State Court of
Appeals affirmed the decision of the Superior Court, and the Supreme Court
subsequently refused to hear the case, making the Court of Appeals' ruling
final.

On July 30, 1997, the Controller transferred $1.228 billion
from the General Fund to PERS in repayment of the principal amount determined to
have been improperly deferred. Subsequent State payments to PERS will be made on
a quarterly basis. No prejudgment interest has been paid in accordance with the
trial court ruling that there was insufficient evidence that money for that
purpose had been appropriated and was available. No post-judgment interest was
ordered. PERS has filed a claim with the State Board of Control in the amount of
$308 million for the accrued interest on the judgment; PERS also seeks interest
on the unpaid accrued interest amount. The State Board of Control is expected to
rule on this claim in early 1998.

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

Florida Trust

Risk Factors

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

The State Economy. In 1980 Florida ranked seventh among the
fifty states with a population of 9.7 million people. The State has grown
dramatically since then and, as of April 1, 1996, ranked fourth with an
estimated population of 14.4 million. Since the beginning of the eighties,
Florida has surpassed Ohio, Illinois and Pennsylvania in total population.
Florida's attraction, as both a growth and retirement state, has kept net
migration at an average of 224,240 new residents each year from 1987 through
1996. Since 1987 the prime working age population (18-44) has grown at an
average annual rate of 2.1%. The share of Florida's total working age population
(18-59) to total State population is approximately 54%. Non-farm employment has
grown by over 35.6% since 1986. Total non-farm employment in Florida is expected
to increase 3.9% in 1997-98 and rise 2.6% in 1998-99. By the end of 1998-99,
non-farm employment in the State is expected to reach an average of 6.7 million
jobs. The service sector is Florida's largest employment sector, presently
accounting for 87% of total non-farm employment.

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<PAGE>

Employment in the service sector should experience an increase of 4.8% in
1997-98, while again growing 4.1% in 1998-99. Manufacturing jobs in Florida are
concentrated in the area of high-tech and high value-added sectors, such as
electrical and electronic equipment, as well as printing and publishing.
Florida's manufacturing sector has kept pace with the U.S., at about 2.6% of
total U.S. manufacturing employment since the beginning of the nineties. Foreign
Trade has contributed significantly to Florida's employment growth. Trade
employment is expected to expand 3.7% this year and 2.3% next year. Florida's
dependence on highly cyclical construction and construction-related
manufacturing has declined. Total contract construction employment as a share of
total non-farm employment reach a peak of 10% in 1973. In 1980 the share was
roughly 7.5%, and in 1996 the share edged downward to 5%. Since 1987, the job
creation rate for the State of Florida is almost twice the rate for the nation
as a whole. Florida's unemployment rate throughout most of the 1980's tracked
below that of the nation. In the nineties, the trend was reversed, until 1995
and 1996, where the state's unemployment rate again tracked below the U.S. The
average rate of unemployment for Florida since 1987 is 6.2%, while the national
average is also 6.2%. Florida's unemployment rate is expected to average 4.6%
this year and 2.3% next year. Because Florida has a proportionately greater
retirement age population, property income (dividends, interest and rent) and
transfer payments (Social Security and pension benefits) are a relatively more
important source of income. In 1995, Florida employment income represented 60.6%
of total personal income, while nationally, employment income represented 70.8%
of total personal income. From 1985 through 1995, Florida total nominal personal
income grew by 103% and per capita income expanded approximately 62.5%. For the
nation, total and per capita personal income increased by roughly 77.8% and
61.0%, respectively. Real personal income in Florida is estimated to increase
5.2% in 1997-98 and to increase 3.7% in 1998-99, while real personal income per
capita in the State is projected to grow at 3.2% in 1997-98 and 1.8% in 1998-99.

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

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

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

82600.8
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<PAGE>

Stabilization Fund. The majority of the State's tax revenues are deposited in
the General Revenue Fund and monies for all funds are expended pursuant to
appropriations acts. In fiscal year 1996-1997, appropriations for education,
health and welfare and public safety represented approximately 53%, 26% and 14%,
respectively, of total General Revenue Funds available. The Trust Funds consist
of monies received by the State which under law or trust agreement are
segregated for a purpose authorized by law. Revenues in the General Revenue Fund
which are in excess of the amount needed to meet appropriations are transferred
to the Working Capital Fund.

State Revenues. For fiscal year 1997-1998 the estimated
General Revenue plus Working Capital and Budget Stabilization Funds total
$18,150.9 million, an 8.5% increase over 1996-97. The $16,598.5 million in
Estimated Revenues represents an increase of 5.7% over the analogous figure in
1996-97. With combined General Revenue, Working Capital Fund and Budget
Stabilization Fund appropriations at $7,114.0 million, unencumbered reserves at
the end of 1996-97 are estimated at $17,114.0 million. For fiscal year 1998-99,
the estimated General Revenue plus Working Capital and Budget Stabilization
Funds available total $18,644.0 million, a 2.7% increase over 1997-98. The
$17,405.5 million in Estimated Revenues represents a 4.9% increase over the
analogous figure in 1997-98.

In fiscal year 1996-1997, the State derived approximately 67%
of its total direct revenues for deposit in the General Revenue Fund, Trust
Funds, Working Capital Fund and Budget Stabilization Fund from State taxes and
fees. Federal funds and other special revenues accounted for the remaining
revenues. The greatest single source of tax receipts in the State is the 6%
sales and use tax. For the fiscal year ended June 30, 1997, receipts from the
sales and use tax totaled $12,089 million, an increase of 5.5% from fiscal year
1995-96. The second largest source of State tax receipts is the tax on motor
fuels including the tax receipts distributed to local governments. Receipts from
the taxes on motor fuels are almost entirely dedicated to trust funds for
specific purposes or transferred to local governments and are not included in
the General Revenue Fund. Preliminary data for the fiscal year ended June 30,
1997, show collections of this tax totaled $2,012.0 million.

The State currently does not impose a personal income tax.
However, the State does impose a corporate income tax on the net income of
corporations, organizations, associations and other artificial entities for the
privilege of conducting business, deriving income or existing within the State.
For the fiscal year ended June 30, 1997, receipts from the corporate income tax
totaled $1,362.3 million, an increase of 17.2% from fiscal year 1995-96. The
Documentary Stamp Tax collections totaled $844.2 million during fiscal year
1996-97, posting an 8.9% increase from the previous fiscal year. The Alcoholic
Beverage Tax, an excise tax on beer, wine and liquor totaled $447.2 million in
fiscal year 1996-97. The Florida lottery produced gross sales of $2.09 billion
in fiscal year 1996-97 of which $792.3 million was used for education purposes.

While the State does not levy ad valorem taxes on real
property or tangible personal property, counties, municipalities and school
districts are authorized by law, and special districts may be authorized by law,
to levy ad valorem taxes. Under the State Constitution, ad valorem taxes may not
be levied by counties, municipalities, school districts and water management
districts in excess of the following respective mileages upon the assessed value
of real estate and tangible personal property: for all county, municipal or
school purposes, ten mills; and for water management districts, no more than
0.05 mill or 1.0 mill, depending upon geographic location. These millage
limitations do not apply to taxes levied for payment of bonds and

82600.8
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<PAGE>

taxes levied for periods not longer than two years when authorized by a vote
of the electors. (Note: one mill equals one-tenth of one cent).

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

As of January 1, 1994, the property valuations for homestead
property are subject to a growth cap of the lesser of 3% or the increase in the
Consumer Price Index during the relevant year, except in the event of a sale
thereof during such year, and except as to improvements thereto during such
year. If the property changes ownership or homestead status, it is to be
re-valued at full just value on the next tax roll.

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

At the November 1994 general election, voters approved an
amendment to the State Constitution that limits the amount of taxes, fees,
licenses and charges imposed by the Legislature and collected during any fiscal
year to the amount of revenues allowed for the prior fiscal year, plus an
adjustment for growth. The revenue limit is determined by multiplying the
average annual rate of growth in Florida personal income over the previous five
years times the maximum amount of revenues permitted under the cap for the prior
fiscal year. The revenues allowed for any fiscal year can be increased by a
two-thirds vote of the Legislature. The limit was effective starting with fiscal
year 1995-1996 based on actual revenues from fiscal year 1994-1995. Any excess
revenues generated will be deposited in the Budget Stabilization Fund. Included
among the categories of revenues which are exempt from the proposed revenue
limitation, however, are revenues pledged to state bonds.

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

82600.8
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<PAGE>

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

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

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

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

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

A. In an inverse condemnation suit, plaintiff claims that the
action of State constitutes a taking of plaintiff's leases for which
compensation is due. The Circuit judge granted the State's motion for summary
judgment finding that as a matter of law, the State had not deprived plaintiff
of any royalty rights. Plaintiff appealed to the First District Court of
Appeals, but the case was remanded to the Circuit Court for trial. On August 6,
1996, final judgment was made in favor of the State; however plaintiff has filed
for a review by the Florida Supreme Court. The State is awaiting a decision by
the Court.

B. The Florida Department of Transportation has filed an
action against owners of property adjoining property that is subject to a claim
by the U.S. Environmental Protection Agency, seeking a declaratory judgment that
the Department is not the owner of such property. The case was dismissed and
FDOT's appeal of the order of dismissal is pending in the Third District Court
of Appeal. The EPA has agreed to await the outcome of the Department's
declaratory action before proceeding further. If the Department's action is not
successful, the possible clean-up costs could exceed $25 million.

82600.8
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<PAGE>

C. In a class action suit on behalf of clients of residential
placement for the developmentally disabled seeking refunds for services where
children were entitled to free education under the Education for Handicapped
Act, the District Court held that the State could not charge maintenance fees
for children between the ages of 5 and 17 based on the Act. All appeals have
been exhausted. The State's potential cost of refunding these charges could
exceed $42 million. However, attorneys are in the process of negotiating a
settlement amount.

D. In an action challenging the constitutionality of the
Public Medical Assistance Trust Fund annual assessment on net operating revenue
of free-standing out-patient facilities offering sophisticated radiology
services, a trial has not been scheduled. If the State does not prevail, the
potential refund liability could be approximately $70 million.

E. In an action against the Florida Department of Corrections,
plaintiffs seek a declaratory judgment that they are not exempt employees under
the Fair Labor Standards Act and that, therefore, they are entitled to certain
overtime compensation. The US. District Court for the Northern District of
Florida entered an order dismissing the case for lack of jurisdiction on June
24, 1996. Plaintiffs filed a lawsuit against the Department in July, 1996 at the
State level making the same allegations at that level which plaintiffs
previously made before the U.S. District Court for the Northern District of
Florida. On December 20, 1996, the State Court determined that it had
jurisdiction over the FLSA claim. On December 10, 1997, the Court entered final
summary judgment. The plaintiffs were not awarded overtime pay at time and
one-half nor liquidated damages; however, they were awarded attorneys' fees and
costs. On December 10, 1997, the Court entered final summary judgment. The
plaintiffs were not awarded overtime pay at time and one-half nor liquidated
damages; however, they were awarded attorneys fees and costs.

F. In an action challenging whether Florida's statute for
dealer repossessions authorizes the Department of Revenue to grant a refund to a
financial institution as the assignee of numerous security agreements governing
the sale of automobiles and other property sold by dealers, the question turns
on whether the Legislature intended the statute only to provide a refund or
credit to the dealer who actually sole the tangible personal property and
collected and remitted the tax or intended that right to be assignable. Several
banks have applied for refunds; the potential refund to financial institutions
exceeds $30,000,000.

New York Trust

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

Economic Trends. Over the long term, the State of New York
(the "State") and the City of New York (the "City") face serious potential
economic problems. The City accounts for approximately 41% of the State's
population and personal income, and the City's financial health affects the
State in numerous ways. The State historically has been one of the wealthiest
states in the nation. For decades, however, the State has grown more slowly than
the nation as a whole, gradually eroding its relative economic affluence.
Statewide, urban centers have experienced significant changes involving
migration of the more affluent to the suburbs and an influx of generally less

82600.8
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<PAGE>

affluent residents. Regionally, the older Northeast cities have suffered because
of the relative success that the South and the West have had in attracting
people and business. The City has also had to face greater competition as other
major cities have developed financial and business capabilities which make them
less dependent on the specialized services traditionally available almost
exclusively in the City.

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

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

New York City. The City, with a population of approximately
7.3 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 printing.

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. 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. After noticeable improvements in the City's economy during
calendar year 1994, economic growth slowed in calendar year 1995, and thereafter
improved during calendar year 1996, reflecting improved securities industry
earnings and employment in other sectors. The City's current four-year financial
plan assumes that moderate economic growth will continue through calendar year
2001, with moderating job growth and wage increases.

For each of the 1981 through 1996 fiscal years, the City
achieved balanced operating results as reported in accordance with generally
accepted accounting principles ("GAAP"). The City has been required to close
substantial budget gaps between forecast revenues and forecast expenditures in
order to maintain balanced operating results. There can be no assurance that the
City will continue to maintain a balanced budget as required by State law
without additional tax or other revenue increases or additional reductions in
City services or entitlement programs, which could adversely affect the City's
economic base.

Pursuant to the New York State Financial Emergency Act for the
City of New York, 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's current four-year

82600.8
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<PAGE>

financial plan projects a surplus in the 1998 fiscal year (before discretionary
transfers) and substantial budget gaps for each of the 1999, 2000 and 2001
fiscal years. This pattern of current year surplus and projected subsequent year
budget gaps has been consistent through virtually the entire period since 1982,
during which the City has achieved balanced operating results for each fiscal
year. The City is required to submit its financial plans to review bodies,
including the New York State Financial Control Board ("Control Board").

The City depends on 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. In addition, the
Federal Budget negotiation process could result in a reduction in or a delay in
the receipt of Federal grants which could have additional adverse effects on the
City's cash flow or revenues.

The Mayor is responsible for preparing the City's four-year
financial plan, including the City's current financial plan for the 1998 through
2001 fiscal years (the "1998-2001 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 ability to implement
proposed reductions in City personnel and other cost reduction initiatives, the
ability of the New York City Health and Hospitals Corporation ("HHC") and the
Board of Education ("BOE") to take actions to offset potential budget
shortfalls, the ability to complete revenue generating transactions, provision
of State and Federal aid and mandate relief and the impact on City revenues and
expenditures of Federal and State welfare reform and any future legislation
affecting Medicare or other entitlements.

Implementation of the Financial Plan is also dependent upon
the City's ability to market its securities successfully. The City's financing
program for fiscal years 1998 through 2001 contemplates the issuance of $4.9
billion of general obligation bonds and $7.1 billion of bonds to be issued by
the proposed New York City Infrastructure Finance Authority ("Finance
Authority") to finance City capital projects. The Finance Authority was created
as part of the City's effort to assist in keeping the City's indebtedness within
the forecast level of the constitutional restrictions on the amount of debt the
City is authorized to incur. In addition, the City issues revenue and tax
anticipation notes to finance its seasonal working capital requirements. The
success of projected public sales of City bonds and notes, New York Municipal
Water Finance Authority ("Water Authority") bonds and Finance Authority bonds
will be subject to prevailing market conditions. The City's planned capital and
operating expenditures are dependent upon the sale of its general obligation
bonds and notes, and the Water Authority and Finance Authority bonds. Future
developments concerning the City and public discussion of such developments, as
well as prevailing market conditions, may affect the market for outstanding City
general obligation bonds and notes.

82600.8
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<PAGE>

The City's operating results for the 1996 fiscal year were
balanced in accordance with GAAP, after taking into account a discretionary
transfer of $224 million, the sixteenth consecutive year of GAAP balanced
results.
On June 10, 1997, the City submitted to the Control Board the
Financial Plan for the 1998 through 2001 fiscal years, which relates to the
City, BOE and the City University of New York ("CUNY") and reflects the City's
expense and capital budgets for the 1998 fiscal year, which were adopted on June
6, 1997. The Financial Plan projects revenues and expenditures for the 1998
fiscal year balanced in accordance with GAAP. The Financial Plan includes
increased tax revenue projections; reduced debt service costs; the assumed
restoration of Federal funding for programs assisting certain legal aliens;
additional expenditures for textbooks, computers, improved education programs
and welfare reform, law enforcement, immigrant naturalization, initiatives
proposed by the City Council and other initiatives; and a proposed discretionary
transfer to the 1998 fiscal year of $300 million of debt service due in the 1999
fiscal year for budget stabilization purposes. In addition, the Financial Plan
reflects the discretionary transfer to the 1997 fiscal year of $1.3 billion of
debt service due in the 1998 and 1999 fiscal years, and includes actions to
eliminate a previously projected budget gap for the 1998 fiscal year. These gap
closing actions include (i) additional agency actions totaling $621 million;
(ii) the proposed sale of various assets; (iii) additional State aid of $294
million, including a proposal that the State accelerate a $142 million revenue
sharing payment to the City from March 1999; and (iv) entitlement savings of
$128 million which would result from certain of the reductions in Medicaid
spending proposed in the Governor's 1997-1998 Executive Budget and the State
making available to the City $77 million of additional Federal block grant aid,
as proposed in the Governor's 1997-1998 Executive Budget. The Financial Plan
also sets forth projections for the 1999 through 2001 fiscal years and projects
gaps of $1.8 billion, $2.8 billion and $2.6 billion for the 1999 through 2001
fiscal years, respectively.

The Financial Plan assumes approval by the State Legislature
and the Governor of (i) a tax reduction program proposed by the City totaling
$272 million, $435 million, $465 million and $481 million in the 1998 through
2001 fiscal years, respectively, which includes a proposed elimination of the 4%
City sales tax on clothing items under $500 as of December 1, 1997, and (ii) a
proposed State tax relief program, which would reduce the City property tax and
personal income tax, and which the Financial Plan assumes will be offset by
proposed increased State aid totaling $47 million, $254 million, $472 million
and $722 million in the 1998 through 2001 fiscal years, respectively.

The Financial Plan also assumes (i) approval by the Governor
and the State Legislature of the extension of the 14% personal income tax
surcharge, which is scheduled to expire on December 31, 1999 and the extension
of which is projected to provide revenue of $166 million and $494 million in the
2000 and 2001 fiscal years, respectively, and of the extension of the 12.5%
personal income tax surcharge, which is scheduled to expire on December 31, 1998
and the extension of which is projected to provide revenue of $188 million, $527
million and $554 million in the 1999 through 2001 fiscal year, respectively;
(ii) collection of the projected rent payments for the City's airports, totaling
$385 million, $175 million, and $170 million in the 1999, 2000 and 2001 fiscal
years, respectively, which may depend on the successful completion of
negotiations with the Port Authority or the enforcement of the City's rights
under the existing leases through pending legal actions; and (iii) State
approval of the cost containment initiatives and State aid proposed by the City
for the 1998 fiscal year, and $115 million in State aid which is assumed in the
Financial Plan but was not provided for

82600.8
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<PAGE>

in the Governor's 1997-1998 Executive Budget. The Financial Plan reflects the
increased costs which the City is prepared to incur as a result of welfare
legislation recently enacted by Congress. The Financial Plan provides no
additional wage increases for City employees after their contracts expire in
fiscal years 2000 and 2001. In addition, the economic and financial condition of
the City may be affected by various financial, social, economic and political
factors which could have a material effect on the City.

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 Major is expected to
publish the first quarter modification (the "Modification") for the 1998 fiscal
year in November. Since the preparation of the Financial Plan, the State has
adopted its budget for the 1997-1998 fiscal year. The State budget enacted a
smaller sales tax reduction than the tax reduction program assumed by the City
in the Financial Plan, which will increase projected City sales tax revenues;
provided for State aid to the City which was less than assumed in the Financial
Plan; and enacted a State funded tax relief program which begins a year later
than reflected in the Financial Plan. In addition, the net effect of tax law
changes made in the Federal Balanced Budget Act of 1997 are expected to increase
tax revenues in the 1998 fiscal year. These changes will be reflected in the
Modification.

The projections for the 1998 through 2001 fiscal years reflect
the costs of the settlements with the United Federation of Teachers ("UFT") and
a coalition of unions headed by District Council 37 of the American Federation
of State, County and Municipal Employees ("District Council 37"), which together
represent approximately two-thirds of the City's workforce, and assume that the
City will reach agreement with its remaining municipal unions under terms which
are generally consistent with such settlements. The settlement provides for a
wage freeze in the first two years, followed by a cumulative effective wage
increase of 11% by the end of the five year period covered by the proposed
agreements, ending in fiscal years 2000 and 2001. Additional benefit increases
would raise the total cumulative effective increase to 13% above present costs.
Costs associated with similar settlements for all City-funded employees would
total $49 million, $459 million and $1.2 billion in the 1997, 1998 and 1999
fiscal years, respectively, and exceed $2 billion in each fiscal year after the
1999 fiscal year. Subsequently, the City reached settlements, through agreements
or statutory impasse procedures, with bargaining units which, together with the
UFT and District Council 37, represent approximately 86% of the City's
workforce.

In 1975, Standard & Poor's suspended its A rating of City
bonds. This suspension remained in effect until March 1981, at which time the
City received an investment grade rating of BBB from Standard & Poor's. On July
2, 1985, Standard & Poor's revised its rating of City bonds upward to BBB+ and
on November 19, 1987, to A-. On July 10, 1995, Standard & Poor's revised its
rating of City bonds downward to BBB+.

Moody's ratings of City bonds were revised in November 1981
from B (in effect since 1977) to Ba1, in November 1983 to Baa, in December 1985
to Baa1, in May 1988 to A and again in February 1991 to Baa1. On July 17, 1997,
Moody's changed its outlook on City bonds to positive from stable. Since July
15, 1993, Fitch has rated City bonds A-. Since July 8, 1997, IBCA Limited has
rated City bonds A.

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<PAGE>

New York State and its Authorities. The State's budget for the
State's 1997-1998 fiscal year, commencing on April 1, 1997, was adopted by the
Legislature on August 4, 1997. Prior to adoption of the budget, the Legislature
enacted appropriations for disbursements for its 1997-1998 fiscal year
considered to be necessary for State operations and other purposes. The State
Financial Plan for the 1997-1998 fiscal year was formulated on August 11, 1997
and is based on the State's budget as enacted by the Legislature, as well as
actual results for the first quarter of the current fiscal year. The 1997-1998
State Financial Plan is expected to be updated in October and January. The
1997-1998 State Financial Plan is projected to be balanced on a cash basis.
Total General Fund receipts and transfers from other funds are projected to be
$35.09 billion, while total General Fund disbursements and transfers to other
funds are projected to be $34.60 billion. The adopted 1997-1998 budget projects
a year-over-year increase in General Fund disbursements of 5.2 percent. As
compared to the Governor's proposed budget amended in February 1997, the State's
adopted budget for 1997-1998 increases General Fund spending by $1.7 billion,
primarily due to increases for local assistance ($1.3 billion). Resources used
to fund these additional expenditures include increased revenues projected for
the 1997-1998 fiscal year, increased resources produced in the 1996-1997 fiscal
year that will be utilized in 1997-1998, reestimates of social service, fringe
benefit and other spending, and certain non-recurring resources.

The 1997-1998 adopted budget includes multi-year tax
reductions, including a State funded property and local income tax reduction
program, estate tax relief, utility gross receipts tax reductions, permanent
reductions in the State sales tax on clothing, and elimination of assessments on
medical providers. The various elements of the State and local tax and
assessment reductions have little or no impact on the 1997-1998 Financial Plan,
and do not begin to materially affect the out-year projections until the State's
1999-2000 fiscal year.

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. In addition, 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. Actual results could differ
materially and adversely from projections and those projections may be changed
materially and adversely from time to time.

The State closed projected budget gaps of $5.0 billion, $3.9
billion and $2.3 billion for its 1995-1996, 1996-1997 and 1997-1998 fiscal
years, respectively. The 1998-1999 budget gap was projected at $1.68 billion
(before the application of any assumed efficiencies) in the out-year projections
submitted to the Legislature in February 1997. As a result of changes made in
the adopted budget, the 1998-1999 gap is now expected by the State to be about
the same or smaller than the amount previously projected, after application of
the $530 million reserve for future needs. The Governor has indicated that he
will propose to close any potential imbalance primarily through General Fund
expenditure reductions and without increases in taxes or deferrals of scheduled
tax reductions. The revised expectations for the 1998- 1999 fiscal year reflect
the loss of $1.4 billion in surplus resources from 1996-1997 operations that are
being utilized to finance current year spending,

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<PAGE>

an incremental effect of approximately $300 million in legislated State and
local tax reductions in the out-year and other factors.

In recent years, State actions affecting the level of receipts
and disbursements, 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 recurrent revenues and the costs of maintaining or increasing the level
of support for State programs. 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. 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.

Other actions taken in the 1997-1998 adopted budget add
further pressure to future State budget balance. For example, the fiscal effects
of tax reductions adopted in the 1997-1998 budget are projected to grow more
substantially beyond the 1998-1999 fiscal year. The full annual cost of the
enacted tax reduction package is estimated by the State at approximately $4.8
billion when fully effective in State fiscal year 2001-2002. In addition, the
1997-1998 budget included multi-year commitments for school aid and pre-
kindergarten early learning programs which could add as much as $1.4 billion in
costs when fully annualized in fiscal year 2001-2002. These spending commitments
are subject to annual appropriation.

On September 11, 1997, the New York State Comptroller issued a
report which noted that the ability to deal with future budget gaps could become
a significant issue in the State's 2000-2001 fiscal year, when the cost of tax
cuts increases by $1.9 billion. The report contained projections that, based on
current economic conditions and current law for taxes and spending, showed a gap
in the 2000-2001 State fiscal year of $5.6 billion and of $7.4 billion in the
2001-2002 State fiscal year. The report noted that these gaps would be smaller
if recurring spending reductions produce savings in earlier years. The State
Comptroller has also stated that if Wall Street earnings moderate and the State
experiences a moderate recession, the gap for the 2001- 2002 State fiscal year
could grow to nearly $12 billion.

In recent years, the State has failed to adopt a budget prior
to the beginning of this fiscal year. A prolonged delay in the adoption of the
State's budget beyond the statutory April 1 deadline without interim
appropriations could delay the projected receipt by the City of State aid, and
there can be no assurance that State budgets in future fiscal years will be
adopted by the April 1 statutory deadline.

On August 28, 1997, Standard & Poor's revised its ratings on
the State's general obligation bonds from A- to A and, in addition, revised its
ratings on the State's moral obligation, lease purchase, guaranteed and
contractual obligation debt. On January 6, 1992, Moody's reduced its ratings on
outstanding limited-liability State lease purchase and contractual obligations
from A to Baa1. On February 10, 1997, Moody's confirmed its A2 rating on the
State's general obligation long-term indebtedness.

Litigation. The court actions in which the State is a
defendant generally involve State programs and miscellaneous tort, real
property, and contract claims. While the ultimate outcome and fiscal impact, if
any, on the

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<PAGE>

State of those proceedings and claims are not currently predictable, adverse
determinations in certain of them might have a material adverse effect upon the
State's ability to maintain a balanced 1997-98 State Financial Plan.

The claims involving the City other than routine litigation
incidental to the performance of their governmental and other functions and
certain other litigation arise out of alleged constitutional violations, torts,
breaches of contract and other violations of law and condemnation proceedings.
While the ultimate outcome and fiscal impact, if any, on the City of those
proceedings and claims are not currently predictable, adverse determinations in
certain of them might have a material adverse effect upon the City's ability to
carry out the 1998-2001 Financial Plan. The City has estimated that its
potential future liability on account of outstanding claims against it as of
June 30, 1996 amounted to approximately $2.8 billion.

Virginia Trust

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

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

To the extent bonds of the Commonwealth of Virginia are
included in the Virginia Issues, information on the financial condition of the
Commonwealth is noted. The Constitution of Virginia limits the ability of the
Commonwealth to create debt. The Constitution requires a balanced budget. The
Commonwealth has maintained a high level of fiscal stability for many years due
in large part to conservative financial operations and diverse sources of
revenue. The economy of the Commonwealth of Virginia is based primarily on
manufacturing, the government sector (including defense), agriculture, mining
and tourism. Defense installations are concentrated in Northern Virginia, the
location of the Pentagon, and the Hampton Roads area, including the Cities of
Newport News, Hampton, Norfolk and Virginia Beach, the locations of, among other
installations, the Army Transportation Center (Ft. Eustis), the Langley Air
Force Base, Norfolk Naval Base and the Oceana Naval Air Station, respectively.
Any substantial reductions in defense spending generally or in particular areas,
including base closings, could adversely affect the state and local economies.

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

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<PAGE>

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

PUBLIC OFFERING

Offering Price. The secondary market Public Offering Price per
Unit of each Trust is computed by adding a sales charge to the aggregate bid
price of the Bonds in such Trust divided by the number of Units thereof
outstanding. The method used by the Evaluator for computing the sales charge for
secondary market purchases shall be based upon the number of years remaining to
maturity of each Bond in the portfolio. Bonds will be deemed to mature on their
stated maturity dates unless bonds have been called for redemption, funds have
been placed in escrow to redeem them on an earlier call date or are subject to a
"mandatory put," in which case the maturity will be deemed to be such other
date.

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

As Percent of Public
Time to Maturity Offering Price
- --------------- -------------------
less than 6 months 0%

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<PAGE>

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 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 Certificateholder 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
Certificateholder will receive his proportionate share of the accrued interest
computed to the settlement date in the case of sale or termination and to the
date of tender in the case of redemption.

Employee Discounts. Employees (and their families) of Reich &
Tang Distributors, Inc. (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. 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

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<PAGE>

banks. Under the Glass-Steagall Act, banks are prohibited from underwriting
Units; however, the Glass-Steagall Act does permit certain agency transactions
and the banking regulators have indicated that these particular agency
transactions are permitted under such Act. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed herein
and banks and financial institutions may be required to register as dealers
pursuant to state law.

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

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

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 applicable 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
-------------------------------------------------------

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

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<PAGE>

practices, which practices take into account not only the interest payable on
the Bond but also the amortization of premiums or accretion of discounts, if
any; (2) calculating the average of the yields for the Bonds in each Trust's
portfolio by weighing each Bond's yield by the market value of the Bond and by
the amount of time remaining to the date to which the Bond is priced (thus
creating an average yield for the portfolio of each Trust); and (3) reducing the
average yield for the portfolio of each Trust in order to reflect estimated fees
and expenses of that Trust and the maximum sales charge paid by
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

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<PAGE>

State Trust from the maturity, redemption, sale or other disposition of Bonds
are credited to the Principal Account of such State Trust.

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

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

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

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

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<PAGE>

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

Records. The Trustee shall furnish Certificateholders in
connection with each distribution a statement of the amount of interest, if any,
and the amount of other receipts, if any, which are being distributed, expressed
in each case as a dollar amount per Unit. Within a reasonable time after the end
of each calendar year, the Trustee will furnish to each person who at any time
during the calendar year was a Certificateholder of record of a State Trust, a
statement showing (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
Certificateholders, 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 alternative
minimum tax and to state and local taxes in other jurisdictions.

82600.8
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<PAGE>

Neither the Sponsor nor the Trustee nor their respective counsel have made any
review of the proceedings relating to the issuance of the Bonds or the bases for
such opinions and express no opinion as to these matters, and neither the
Trustee nor the Sponsor nor their respective counsel have made an independent
examination or verification that the federal income tax status of the Bonds has
not been altered since the time of the original delivery of those opinions.

In rendering the opinion set forth below, counsel has examined
the Agreement, the final form of Prospectus dated the date hereof (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 mid-, 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 held by individuals will qualify for mid-term or long-term
capital gain treatment if held for more than 12 months or more than 18
months, respectively, and will be subject to reduced tax rates of 28%
and 20%, respectively, rather than the "regular" maximum tax rate of
39.6%.

Each Certificateholder of a State Trust will realize taxable
gain or loss when that State Trust disposes of a Bond (whether by sale,
exchange, redemption or payment at maturity), as if the
Certificateholder had directly disposed of 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

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<PAGE>

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

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

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

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<PAGE>

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.

Messrs. Battle Fowler LLP are also of the opinion that under
the personal income tax laws of the State and City of New York, the income of
each State Trust will be treated as the income of the Certificateholders.
Interest on the Bonds that is exempt from tax under the laws of the State and
City of New York when received by the New York Trust will retain its status as
tax-exempt interest of the Certificateholders. In addition, non-residents of New
York City will not be subject to the City personal income tax on gains derived
with respect to their Units. Non-residents of New York State will not be subject
to New York State personal income tax on such gains unless the Units are
employed in a business, trade or occupation carried on in New York State. A New
York State or New York City resident should determine 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 LLP, special counsel to the
Sponsor for California tax matters, under existing California law applicable to
individuals who are California residents:

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

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

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

82600.8
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<PAGE>

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

2. Because Florida does not impose a personal income tax,
non-corporate Certificateholders of Units of the Florida Trust will not
be subject to any Florida income taxes with respect to (i) amounts
received by the Florida Trust on the Bonds it holds; (ii) amounts which
are distributed by the Florida Trust to non-corporate
Certificateholders of the Florida Trust; or (iii) any gain realized on
the sale or redemption of Bonds by the Florida Trust or of a Unit of
the Florida Trust by a noncorporate Certificateholder. However,
corporations (including limited liability companies) as defined in
Chapter 220, Florida Statutes (1995), as amended, which are otherwise
subject to Florida income taxation will be subject to tax on their
respective share of any income and gain realized by the Florida Trust
and on any gain realized on the sale or redemption of Units of the
Florida Trust by the corporate Certificateholder.

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

4. Bonds issued by the State of Florida or its political
subdivisions are exempt from Florida intangible personal property
taxation under Chapter 199, Florida Statutes (1995), as amended. Bonds
issued by the Government of Puerto Rico or by the Government of Guam,
or by their authority, are exempt by Federal statute from taxes such as
the Florida intangible personal property tax. Thus, the Florida Trust
will not be subject to Florida intangible personal property tax on any
Bonds in the Florida Trust issued by the State of Florida or its
political subdivisions, by the Government of Puerto Rico or by its
authority or by the Government of Guam or by its authority. In
addition, the Units of the Florida Trust will not be subject to the
Florida intangible personal property tax if the Florida Trust invests
solely in such Florida, Puerto Rico or Guam debt obligations.

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

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

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

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

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<PAGE>

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 Bond, 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 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 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

82600.8
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<PAGE>

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.")
Certificateholders who wish to dispose of their Units should inquire of the
Sponsor as to current market prices prior to making a tender for redemption. The
Sponsor may discontinue repurchases of Units of a State Trust if the supply of
Units exceeds demand, or for other business reasons. The date of repurchase is
deemed to be the date on which Certificates representing Units of a State Trust
are physically received in proper form by the Sponsor, Reich & Tang
Distributors, 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.

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

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

82600.8
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<PAGE>

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

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

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

82600.8
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<PAGE>

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

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

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

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 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

- -------------------------
* 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>

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 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.

82600.8
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<PAGE>

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 Certificateholders, 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
Certificateholder will be deemed to have elected the semi-annual plan of
distribution, and to participate in the Plan with respect to distributions made,
in connection with such Plan Units.) A participant who subsequently desires to
have distributions made with respect to Plan Units delivered to him in cash may
withdraw from the Plan with respect to such Plan Units and remain in the Plan
with respect to units acquired other than through the Plan. Assuming a
participant has his distributions made with respect to Plan Units reinvested,
all such distributions will be accumulated with distributions generated from the
Units of the Trust used to purchase such additional Plan Units. However,
distributions related to units in other series of "Municipal Securities Trust"
will not be accumulated with the foregoing distributions for Plan purchases.
Thus, if a person owns units in more than one series of "Municipal Securities
Trust" (which are not the result of purchases under the Plan), distributions
with respect thereto will not be aggregated for purchases under the Plan.

82600.8
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<PAGE>

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.

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

82600.8
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<PAGE>

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 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

82600.8
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<PAGE>

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 Sponsors. The Sponsor, Reich & Tang Distributors, Inc.
("Reich & Tang"), a Delaware corporation, is engaged in the brokerage business
and is a member of the National Association of Securities Dealers, Inc. Reich &
Tang is also a registered investment adviser. Reich & Tang maintains its
principal business offices at 600 Fifth Avenue, New York, New York 10020. The
sole shareholder of the Sponsor, Reich & Tang Asset Management, Inc. ("RTAM
Inc.") is wholly owned by NEIC Holdings, Inc. which, effective December 29,
1997, was wholly owned by NEIC Operating Partnership, L.P. ("NEICOP").
Subsequently, on March 31, 1998, NEICOP changed its name to Nvest Companies,
L.P. ("Nvest"). The general partners of Nvest are Nvest Corporation and Nvest,
L.P. Nvest, L.P. is owned approximately 99% by public unitholders and its
general partner is Nvest Corporation. Nvest, with a principal place of business
at 399 Boyston Street, Boston, MA 02116, is a holding company of firms engaged
in the securities and investment advisory business. These affiliates in the
aggregate are investment advisors or managers to over 80 registered investment
companies. Reich & Tang is Sponsor (and Co-Sponsor, as the case may be) for
numerous series of unit investment trusts, including New York Municipal Trust,
Series 1 (and Subsequent Series), Municipal Securities Trust, Series 1 (and
Subsequent Series), 1st Discount Series (and Subsequent Series), Multi-State
Series 1 (and Subsequent Series), Mortgage Securities Trust, Series 1 (and
Subsequent Series), Insured Municipal Securities Trust, Series 1 (and Subsequent
Series) and 5th Discount Series (and Subsequent Series), Equity Securities
Trust, Series 1, Signature Series, Gabelli Communications Income Trust (and
Subsequent Series) and Schwab Trusts.

Nvest Corporation is wholly owned by MetLife New England Holdings,
Inc., a wholly-owned subsidiary of Metropolitan Life Insurance Company
("MetLife"). Effective December 30, 1997, MetLife owns approximately 47% of the
limited partnership interests of Nvest.

MetLife is a mutual life insurance company with assets of $297.6
billion at December 31, 1996. It is the second largest life insurance company in
the United States in terms of total assets. MetLife provides a wide range of
insurance and investment products and services to individuals and groups and is
the leader among United States life insurance companies in terms of total life
insurance in force, which exceeded $1.6 trillion at December 31, 1996 for
MetLife and its insurance affiliates. MetLife and its affiliates provide
insurance or other financial services to approximately 36 million people
worldwide.

For certain other Trusts as set forth in the "Summary of
Essential Information" in Part A, the Sponsors are Reich & Tang and Gruntal &
Co., L.L.C., both of whom have entered into an Agreement Among Co-Sponsors
pursuant to which both parties have agreed to act as Co-Sponsors for the Trust.
Reich & Tang has been appointed by Gruntal & Co., L.L.C. as agent for purposes
of taking any action required or permitted to be taken by the Sponsor 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

82600.8
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<PAGE>

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 may
continue to act as Sponsor.

Gruntal & Co., L.L.C., a Delaware limited liability company,
operates a regional securities broker/dealer from its main office in New York
City and branch offices in nine states. The firm is very active in the marketing
of investment companies and has signed dealer agreements with many mutual fund
groups. Further, through its Syndicate Department, Gruntal & Co., L.L.C. 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 information included herein is only for the purpose of
informing investors as to the financial responsibility of the Sponsor and its
ability to carry out its contractual obligations. The Sponsor will be under no
liability to Certificateholders for taking any action, or refraining from taking
any action, in good faith pursuant to the Trust Agreement, or for errors in
judgment except in cases of its own willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.

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

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

The Trustee. For certain of the State Trusts, as set forth in
the "Summary of Essential Information" in Part A, the Trustee is The Chase
Manhattan Bank with its principal executive office located at 270 Park Avenue,
New York, New York 10017 (800) 428-8890 and its unit investment trust office at
4 New York Plaza, New York, New York 10004. The Trustee is subject to
supervision by the Superintendent of Banks of the State of New York, the Federal
Deposit Insurance Corporation and the Board of Governors of the Federal Reserve
System.

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.

82600.8
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<PAGE>

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

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

82600.8
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<PAGE>

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, 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 Certificateholders
by amounts not exceeding proportionate increases in consumer prices for services
as measured by the United States Department of Labor's Consumer Price Index
entitled "All Services Less Rent."

The following additional charges are or may be incurred by any
or all of the State Trusts: 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 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

82600.8
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<PAGE>

first lien on the State Trust to which such expenses are allocable. In addition,
the Trustee is empowered to sell Bonds of a State Trust in order to make funds
available to pay all expenses of such State Trust.

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

EXCHANGE PRIVILEGE AND CONVERSION OFFER
---------------------------------------

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

Except for Certificateholders who wish to exercise the
Exchange Privilege or Conversion Offer within the first five months of their
purchase of Units of the Exchange or Redemption Trust, any purchaser who
purchases Units under the Exchange Privilege or Conversion Offer will pay a
lower sales charge than that which would be paid for the Units by a new
investor. For Certificateholders who wish to exercise the Exchange Privilege or
Conversion Offer within the first five months of their purchase of Units of the
Exchange or Redemption Trust, the sales charge applicable to the purchase of
units of an Exchange or Conversion Trust shall be the greater of (i) the reduced
sales charge or (ii) an amount which when coupled with the sales charge paid by
the Certificateholder upon his original purchase of Units of the Exchange or

82600.8
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<PAGE>

Redemption Trust would equal the sales charge applicable in the direct purchase
of units of an Exchange Trust.

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

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

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

82600.8
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<PAGE>

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 retainf a portion of the
sales charge.

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

OTHER MATTERS
-------------

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

Independent Accountants. The financial statements of the
Trusts for the years ended December 31, 1996 and 1997 included in Part A of this
Prospectus have been examined by Price Waterhouse LLP, independent accountants.
The financial statements have been so included in reliance on their report given
upon the authority of said firm as experts in accounting and auditing. KPMG Peat
Marwick LLP has consented to the incorporation by reference of their report on
the statements of operations and changes in net assets for the Trusts included
in Part A of this Prospectus for the period ended December 31, 1995.

Performance Information. Total returns, average annualized
returns or cumulative returns for various periods of this Trust may be included
from time to time in advertisements, sales literature and reports to current or
prospective investors. Total return shows changes in Unit price during the
period plus reinvestment of dividends and capital gains, divided by the original
public offering price as of the date of calculation. Average annualized returns
show the average return for stated periods of longer than a year. Sales material
may also include an illustration of the cumulative results of like annual
investments during an accumulation period and like annual withdrawals during a
distribution period. Figures for actual

82600.8
-59-

<PAGE>

portfolios will reflect all applicable expenses and, unless otherwise stated,
the maximum sales charge. No provision is made for any income taxes payable.
Returns may also be shown on a combined basis. Trust performance may be compared
to performance on a total return basis of the Dow Jones Industrial Average, the
S&P 500 Composite Price Stock Index, or performance data from Lipper Analytical
Services, Inc. and Morningstar Publications, Inc. or from publications such as
Money, The New York Times, U.S. News and World Report, Business Week, Forbes or
Fortune. As with other performance data, performance comparisons should not be
considered representative of a Trust's relative performance for any future
period.

DESCRIPTION OF BOND RATINGS*
---------------------------

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

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

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

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

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

(1) 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.
(2) Nature of and provisions of the obligation.

(3) 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.

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

82600.8
-60-

<PAGE>

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

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

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

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

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

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

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

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

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

82600.8
-61-

<PAGE>

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.

* * *

82600.8
-62-

<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, 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, 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 prospectus
relating to such available series.

<TABLE>
<S> <C>
- ------------------------------------ ------------------------------------
Registered Holder (print) Registered Holder (print)

- ------------------------------------ ------------------------------------
Registered Holder Signature Registered Holder Signature
(Two signatures if joint tenancy)
</TABLE>

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
THE CHASE MANHATTAN BANK
ATTN: THE UIT REINVESTMENT UNIT A
4 NEW YORK PLAZA
NEW YORK, NEW YORK 10004

82600.8
-63-

<PAGE>

INDEX * * *
MUNICIPAL SECURITIES TRUST
Title Page MULTI-STATE SERIES

<S> <C> <C>
Summary of Essential Information.................................... A-5 (A Unit Investment Trust)
Financial and Statistical Information............................... A-6
Information Regarding the Trust..................................... A-7 Prospectus
----------
Audit and Financial Information..................................... F-1
Dated: April 30, 1998
The Trust........................................................... 1
The State Trusts.................................................... 9 Sponsor:
Public Offering..................................................... 35
Estimated Long Term Return and Estimated Reich & Tang Distributors,
Current Return.................................................... 37 Inc.
Rights of Certificateholders........................................ 38 600 Fifth Avenue
Tax Status.......................................................... 40 New York, N.Y. 10020
Liquidity........................................................... 46 212-830-5200
Total Reinvestment Plan............................................. 48
Trust Administration................................................ 51 (and for certain Trusts:)
Trust Expenses and Charges.......................................... 56 Gruntal & Co., L.L.C.
Exchange Privilege and Conversion Offer............................. 57 14 Wall Street
Other Matters....................................................... 59 New York, New York 10005
Description of Bond Ratings......................................... 60 (212) 267-8800

Parts A and B of this Prospectus do Trustee:
not contain all of the information set forth in
the registration statement and exhibits relating The Chase Manhattan Bank
thereto, filed with the Securities and Exchange 4 New York Plaza
Commission, Washington, D.C., under the New York, N.Y. 10004
Securities Act of 1933, and to which reference is 800-882-9898
made.
Evaluator:

Kenny S&P Evaluation
Services
65 Broadway
New York, N.Y. 10006
</TABLE>

This Prospectus does not constitute an offer to sell, or a
solicitation of any offer to buy, securities in any state to any person to whom
it is not lawful to make such offer in such state.

* * *

No person is authorized to give any information or to make any
representations not contained in Parts A and B of this Prospectus; and any
information or representation not contained herein must not be relied upon as
having been authorized by the Trust, the Trustee, the Evaluator, or the Sponsor.
The Trust is registered as a unit investment trust under the Investment Company
Act of 1940. Such registration does not imply that the Trust or any of its Units
have been guaranteed, sponsored, recommended or approved by the United States or
any state or any agency or officer thereof.

82600.8
-64-

<PAGE>

PART II

ADDITIONAL INFORMATION NOT REQUIRED
IN PROSPECTUS

CONTENTS OF REGISTRATION STATEMENT

This Post-Effective Amendment to the Registration Statements on Form S-6
comprises the following papers and documents:

The facing sheet on Form S-6.
The Cross-Reference Sheet (incorporated by reference to the Post-Effective
Amendments to Form S-6 Registration Nos. 33-10963, 33-27108, 33-33606 and
33-38722, filed on April 26, 1996 and April 29, 1996).
The Prospectus consisting of pages.
Signatures.
Consent of Independent Accountants.
Consent of Counsel (included in Exhibits 99.3.1 and 99.3.1.1).
Consent of the Evaluator (included in Exhibit 99.5.1).

The following exhibits:

99.1.1 -- Form of Reference Trust Agreement (filed as Exhibit 99.1.1
to Post-Effective Amendment No. 8 to Form S-6 Registration
Statement No. 33-26426 on April 25, 1997 and incorporated
herein by reference).

99.1.1.1 -- Trust Indenture and Agreement for Municipal Securities
Trust, Series 26 and 35th Discount Series (and Subsequent
Series) (filed as Exhibit 99.1.1.1 to the Post-Effective
Amendment to Form S-6 Registration Statement No. 33-10963,
on April 26, 1996 and incorporated herein by reference).

Trust Indenture and Agreement for Municipal Securities
Trust, Series 45 and 73rd Discount Series (and Subsequent
Series) (filed as Exhibit 99.1.1.1 to Post Effective
Amendment No. 6 to Form S-6 Registration Statement No.
33-33606 of Municipal Securities Trust, Multi-State Series
39 on April 26, 1996 and incorporated herein by reference).

99.1.3.4 -- Certificate of Incorporation of Reich & Tang Distributors,
Inc. (filed as Exhibit 99.1.3.5 to Form S-6 Registration
Statement No. 333-44301 on January 15, 1998 and
incorporated herein by reference).

99.1.3.5 -- By-Laws of Reich & Tang Distributors, Inc.(filed as Exhibit
99.1.3.6 to Form S-6 Registration Statement No. 333-44301
on January 15, 1998 and incorporated herein by reference).

99.1.3.6 -- Certificate of Formation of Gruntal & Co., L.L.C. (filed as
Exhibit 99.1.3.6 to the Post-Effective Amendment to Form
S-6 Registration Statement No. 33-31426 on April 25, 1997
and incorporated herein by reference).

47832.1
II-1

<PAGE>

99.2.1 -- Form of Certificate (filed as Exhibit 99.2.1 to
Post-Effective Amendment No. 8 to Form S-6 Registration
Statement No. 33-26426 on April 25, 1997 and incorporated
herein by reference).

Form of Certificate dated June 16, 1989 (filed as Exhibit
99.2.1 to Post-Effective Amendment No. 7 to Registration
Statement Nos. 33-29313 and 33-30144 of Municipal
Securities Trust, Series 45 and Series 46 on October 25,
1996 and incorporated herein by reference).

99.3.1 -- Form of Opinion of Berger Steingut 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 99.3.1 to
Post-Effective Amendment No. 10 to Form S-6 Registration
Statement No. 33-10963 on April 28, 1997 and incorporated
herein by reference).

99.3.1.1 -- Form of Opinion of Battle Fowler LLP as to tax status of
Securities being registered including their consent to the
delivery thereof and to the use of their name under the
heading "Tax Status" in the Prospectus (filed as Exhibits
99.3.1.1 to Post-Effective Amendment Nos. 18 and 20 to Form
S-6 Registration Statement Nos. 2-62605 and 2-62505 on
April 28, 1997 and April 25, 1997, respectively, and
incorporated herein by reference).

*99.5.1 -- Consent of the Evaluator.

99.6.0 -- Powers of Attorney of Reich & Tang Distributors, Inc., by
its officers and a majority of its Directors (filed as
Exhibit 99.6.0 to Form S-6 Registration Statement No.
333-44301 on January 15, 1998 and incorporated herein by
reference).

99.6.1 -- Power of Attorney of Gruntal & Co., L.L.C., by its officers
and a majority of its Directors of the Executive Committee
(filed as Exhibit 99.6.1 to the Post-Effective Amendment to
Form S-6 Registration Statement No. 33-31426 of Insured
Municipal Securities Trust, Series 23 on April 25, 1997 and
incorporated herein by reference).

99.7.0 -- Form of Agreement Among Co-Sponsors (filed as Exhibit
99.7.0 to Post-Effective Amendment No. 7 to Form S-6
Registration Statement No. 33-28384 of Insured Municipal
Securities Trust, Series 20 on April 25, 1996 and
incorporated herein by reference).

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

- --------
* Being filed by this Amendment.

47832.1
II-2

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933,
the registrants, Municipal Securities Trust, Series 36, Series 43, Series 47 and
Series 51 certify that they have met all of the requirements for effectiveness
of this Post-Effective Amendment to the Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933. The registrants have duly caused this
Post-Effective Amendment to the Registration Statement to be signed on their
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York on the 20th day of April, 1998.

MUNICIPAL SECURITIES TRUST, SERIES 36,
SERIES 43, SERIES 47 and SERIES 51
(Registrants)

REICH & TANG DISTRIBUTORS, INC.
(Depositor)

By: /s/PETER J. DEMARCO
-------------------
Peter J. DeMarco
(Executive Vice President)

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

<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>

RICHARD E. SMITH, III President and Director )
PETER S. VOSS Director ) April 20, 1998
G. NEAL RYLAND Director )
STEVEN W. DUFF Director )By: /s/PETER J. DEMARCO
-------------------
ROBERT F. HOERLE Managing Director ) Peter J. DeMarco
PETER J. DEMARCO Executive Vice President ) as Executive Vice
RICHARD I. WEINER Vice President ) President and
BERNADETTE N. FINN Vice President ) Attorney-in-Fact*
LORRAINE C. HYSLER Secretary )
RICHARD DE SANCTIS Treasurer )
EDWARD N. WADSWORTH Executive Officer )
</TABLE>

- ---------------
* Executed copies of Powers of Attorney were filed as Exhibit 99.6.0 to
Form S-6 Registration Statement No. 333-44301 on January 15, 1998.

47832.1
II-3

<PAGE>

SIGNATURES

MUNICIPAL SECURITIES TRUST, SERIES 36,
SERIES 43, SERIES 47 and SERIES 51
(Registrants)

GRUNTAL & CO., L.L.C.
(Depositor)

By: /s/JOANNE T. MARREN
-------------------
Joanne T. Marren
(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 the Executive Committee of Gruntal & Co., L.L.C.,
the Depositor, in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Name Title Date

ROBERT P. RITTEREISER Chief Executive Officer and )
Chairman of the Board of ) April 20, 1998
Directors )
LEE FENSTERSTOCK President and Director )
JOANNE T. MARREN Executive Vice President, ) By: /s/JOANNE T. MARREN
-------------------
General Counsel, Secretary ) Joanne T. Marren
and Director ) Attorney-in-Fact*
HENRY D. GOTTMANN Executive Vice President and )
Director )
JOSEPH V. BATTIPAGLIA Executive Vice President and )
Director )
JOHN FEENEY Director and President of GMS )
JOHN CIRRITO Executive Vice President and )
Director )
RALPH H. BRADLEY, JR. Executive Vice President and )
Director )
STEPHEN BYERS Executive Vice President, )
Chief Financial Officer and
Director )
STEPHEN A. GREYSER Director )
MICHAEL A. MADDEN Director )
</TABLE>
- ---------------
* Executed copies of the Power of Attorney were filed as Exhibit 99.6.1
to the Post-Effective Amendment to Form S-6 Registration Statement
No. 33-31426 on April 25, 1997.

47832.1
II-4

<PAGE>

Independent Auditors' Consent
-----------------------------

Re: Municipal Securities Trust, Series 36
Municipal Securities Trust, Series 43
Municipal Securities Trust, Series 47
Municipal Securities Trust, Series 51

We consent to the incorporation by reference of our report dated March
31, 1996 on the statements of operations and changes in net assets for the
subject trusts for the year ended December 31, 1995, and to the reference to our
firm under the heading "Independent Accountants" in the prospectus.

KPMG Peat Marwick LLP

New York, New York
April 24, 1998

<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment to the registration statement on Form S-6 of our report
dated March 18, 1998, relating to the financial statements and financial
highlights for the two years ended December 31, 1997 of the Municipal Securities
Trust, Series 36; Municipal Securities Trust, Series 43; Municipal Securities
Trust, Series 47; and Municipal Securities Trust, Series 51, which appear in
such Prospectus. We also consent to the reference to us under the heading
"Independent Accountants" in the Prospectus.

PRICE WATERHOUSE LLP

Boston, MA
April 28, 1998

<PAGE>

47832.1
II-5

<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> 0000808243
<NAME> MST, Series 36
<SERIES>
<NUMBER> 1
<NAME> MST, Series 36

<S> <C>
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Dec-31-1997
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 758,333
<INVESTMENTS-AT-VALUE> 839,251
<RECEIVABLES> 24,356
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 863,607
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,840
<TOTAL-LIABILITIES> 9,840
<SENIOR-EQUITY> 853,767
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 14,506
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 10
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 80,918
<NET-ASSETS> 853,767
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 57,359
<OTHER-INCOME> 0
<EXPENSES-NET> 3,560
<NET-INVESTMENT-INCOME> 53,799
<REALIZED-GAINS-CURRENT> (3,239)
<APPREC-INCREASE-CURRENT> 14,658
<NET-CHANGE-FROM-OPS> 65,218
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 60,018
<DISTRIBUTIONS-OF-GAINS> 201,287
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 52
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (196,087)
<ACCUMULATED-NII-PRIOR> 20,725
<ACCUMULATED-GAINS-PRIOR> 169,345
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 586.51
<PER-SHARE-NII> 30.50
<PER-SHARE-GAIN-APPREC> 8.16
<PER-SHARE-DIVIDEND> 34.03
<PER-SHARE-DISTRIBUTIONS> 99.90
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 491.24
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND> The schedule contains
summary financial
information extracted from
the financial statements
and supporting schedules
as of the end of the most
current period and is
qualified in its entirety
by reference to such
financial statements.
</LEGEND>
<CIK> 0000846673
<NAME> MST, Series 43
<SERIES>
<NUMBER> 1
<NAME> MST, Series 43

<S> <C>
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Dec-31-1997
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 1,649,149
<INVESTMENTS-AT-VALUE> 2,113,531
<RECEIVABLES> 45,293
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,158,824
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18,429
<TOTAL-LIABILITIES> 18,429
<SENIOR-EQUITY> 2,140,395
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 30,504
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,640)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 464,382
<NET-ASSETS> 2,140,395
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 122,470
<OTHER-INCOME> 0
<EXPENSES-NET> 7,123
<NET-INVESTMENT-INCOME> 115,347
<REALIZED-GAINS-CURRENT> 2,347
<APPREC-INCREASE-CURRENT> 89,197
<NET-CHANGE-FROM-OPS> 206,891
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 119,023
<DISTRIBUTIONS-OF-GAINS> 138,145
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 300
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (50,277)
<ACCUMULATED-NII-PRIOR> 34,180
<ACCUMULATED-GAINS-PRIOR> (13,852)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 362.27
<PER-SHARE-NII> 19.56
<PER-SHARE-GAIN-APPREC> 15.79
<PER-SHARE-DIVIDEND> 20.18
<PER-SHARE-DISTRIBUTIONS> 5.00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 372.44
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND> The schedule contains
summary financial
information extracted from
the financial statements
and supporting schedules
as of the end of the most
current period and is
qualified in its entirety
by reference to such
financial statements.
</LEGEND>
<CIK> 0000861068
<NAME> MST, Series 47
<SERIES>
<NUMBER> 1
<NAME> MST, Series 47

<S> <C>
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Dec-31-1997
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 2,511,393
<INVESTMENTS-AT-VALUE> 2,751,415
<RECEIVABLES> 68,296
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,819,711
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,612
<TOTAL-LIABILITIES> 8,612
<SENIOR-EQUITY> 2,811,099
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 59,230
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 10,214
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 240,022
<NET-ASSETS> 2,811,099
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 192,799
<OTHER-INCOME> 0
<EXPENSES-NET> 7,666
<NET-INVESTMENT-INCOME> 185,133
<REALIZED-GAINS-CURRENT> (544)
<APPREC-INCREASE-CURRENT> (4,838)
<NET-CHANGE-FROM-OPS> 179,751
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 185,017
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (5,266)
<ACCUMULATED-NII-PRIOR> 59,114
<ACCUMULATED-GAINS-PRIOR> (4,786)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 605.54
<PER-SHARE-NII> 39.80
<PER-SHARE-GAIN-APPREC> (1.15)
<PER-SHARE-DIVIDEND> 39.78
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 604.41
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND> The schedule contains
summary financial
information extracted from
the financial statements
and supporting schedules
as of the end of the most
current period and is
qualified in its entirety
by reference to such
financial statements.
</LEGEND>
<CIK> 0000874821
<NAME> MST, Series 51
<SERIES>
<NUMBER> 1
<NAME> MST, Series 51

<S> <C>
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Dec-31-1997
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 4,051,654
<INVESTMENTS-AT-VALUE> 4,268,597
<RECEIVABLES> 84,987
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,353,584
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26,196
<TOTAL-LIABILITIES> 26,196
<SENIOR-EQUITY> 4,327,388
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 77,794
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10,927)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 216,943
<NET-ASSETS> 4,327,388
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 319,290
<OTHER-INCOME> 0
<EXPENSES-NET> 9,682
<NET-INVESTMENT-INCOME> 309,608
<REALIZED-GAINS-CURRENT> 8,420
<APPREC-INCREASE-CURRENT> (66,110)
<NET-CHANGE-FROM-OPS> 251,918
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 314,905
<DISTRIBUTIONS-OF-GAINS> 342,890
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 361
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (405,877)
<ACCUMULATED-NII-PRIOR> 83,091
<ACCUMULATED-GAINS-PRIOR> (5,713)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 975.13
<PER-SHARE-NII> 66.24
<PER-SHARE-GAIN-APPREC> (10.85)
<PER-SHARE-DIVIDEND> 67.38
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 963.14
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

Standard & Poor's J.J. Kenny Frank A. Ciccotto, Jr.
65 Broadway Senior Vice President and
New York, NY 10006-2551 General Manager
Tel 212 770 4417 Office Evaluation Department
212 770 4422 Desk
Fax 212 797 8681
[email protected] Standard & Poor's
A Division of The McGraw-Hill Companies

April 30, 1998

Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, NY 10020

Re: Municipal Securities Trust,
Series 36
---------

Gentlemen:

We have examined the post-effective Amendment to the Registration Statement
File No. 33-10963 for the above-captioned trust. We hereby acknowledge that
Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc. is currently
acting as the evaluator for the trust. We hereby consent to the use in the
Amendment of the reference to Kenny S&P Evaluation Services, a division of J.J.
Kenny Co., Inc. as evaluator.

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

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

Sincerely,

Frank A. Ciccotto

FAC/trh

<PAGE>
Standard & Poor's J.J. Kenny Frank A. Ciccotto, Jr.
65 Broadway Senior Vice President and
New York, NY 10006-2551 General Manager
Tel 212 770 4417 Office Evaluation Department
212 770 4422 Desk
Fax 212 797 8681
[email protected] Standard & Poor's
A Division of The McGraw-Hill Companies

April 30, 1998

Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, NY 10020

Re: Municipal Securities Trust,
Series 43
---------

Gentlemen:

We have examined the post-effective Amendment to the Registration Statement
File No. 33-27108 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 Registraton Statement for the respective bonds
comprising the trust portfolio are the ratings indicated in our KENNYBASE
database.

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

Sincerely,

Frank A. Ciccotto

FAC/trh

April 30, 1998

Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, NY 10020

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

Re: Municipal Securities Trust,
Series 47
---------

Gentlemen:

We have examined the post-effective Amendment to the Registration Statement
File No. 33-33606 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

April 30, 1998

Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, NY 10020

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

Re: Municipal Securities Trust,
Series 51
---------

Gentlemen:

We have examined the post-effective Amendment to the Registration Statement
File No. 33-40625 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