INSURED MUNICIPALS INCOME TRUST 97TH INSURED MULTI SERIES, 485BPOS, 1997-12-24

INSURED MUNICIPALS INCOME TRUST 97TH INSURED MULTI SERIES
485BPOS, 1997-12-24

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File No. 33-37044
CIK #868398

Securities and Exchange Commission
Washington, D. C. 20549-1004

Post-Effective
Amendment No. 6

to
Form S-6

For Registration under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on
Form N-8B-2

Insured Municipals Income Trust, 97th Insured Multi-Series
(Exact Name of Trust)

Van Kampen American Capital Distributors, Inc.
(Exact Name of Depositor)

One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(Complete address of Depositor's principal executive offices)

Van Kampen American Capital Distributors, Inc. Chapman and Cutler
Attention: Don G. Powell Attention: Mark J. Kneedy
One Parkview Plaza 111 West Monroe Street
Oakbrook Terrace, Illinois 60181 Chicago, Illinois 60603
(Name and complete address of agents for service)

( X ) Check if it is proposed that this filing will become effective
on December 24, 1997 pursuant to paragraph (b) of Rule 485.
97th INSURED MULTI-SERIES

IM-IT/50th Intermediate Series

Pennsylvania/140

PROSPECTUS PART ONE

NOTE: Part One of this Prospectus may not be distributed unless accompanied by
Part Two. Please retain both parts of this Prospectus for future reference.

In the opinion of counsel, interest to the Fund and to Unitholders, with
certain exceptions, is exempt under existing law from all Federal income
taxes. In addition the interest income of each Trust is, in the opinion of
counsel, exempt to the extent indicated from state and local taxes, when held
by residents of the state where the issuer of Bonds in such Trust are located.
Capital gains, if any, are subject to Federal tax.

THE FUND

The above-named series of Insured Municipals Income Trust--Insured
Multi-Series (the "Fund" ) consists of a number of underlying separate
unit investment trusts. The various trusts in the Fund are collectively
referred to herein as the "Trusts" . Each Trust consists of an insured
portfolio of interest-bearing obligations (the "Bonds" or "
Securities" ) issued by or on behalf of municipalities and other
governmental authorities, the interest on which is, in the opinion of
recognized bond counsel to the issuing governmental authority, exempt from all
Federal income taxes under existing law. In addition, the interest income of
each State Trust is, in the opinion of counsel, exempt to the extent indicated
from state and local taxes, when held by residents of the state where the
issuers of Bonds in such Trust are located. Each Unit represents a fractional
undivided interest in the principal and net income of the respective Trust
(see "Summary of Essential Financial Information" in this Part One and
"The Fund" in Part Two).

The Units being offered by this Prospectus are issued and outstanding Units
which have been purchased by the Sponsor in the secondary market or from the
Trustee after having been tendered for redemption. The profit or loss
resulting from the sale of Units will accrue to the Sponsor. No proceeds from
the sale of Units will be received by the Fund.

PUBLIC OFFERING PRICE

The Public Offering Price of the Units of each Trust during the secondary
market will include the aggregate bid price of the Securities in such Trust,
an applicable sales charge, cash, if any, in the Principal Account held or
owned by such Trust, and accrued interest, if any. See "Summary of
Essential Financial Information" in this Part One.

ESTIMATED CURRENT AND LONG-TERM RETURNS

Estimated Current and Long-Term Returns to Unitholders are indicated under
"Summary of Essential Financial Information" in this Part One. The
methods of calculating Estimated Current Returns and Estimated Long-Term
Return are set forth in Part Two of this Prospectus.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE 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 Date of this Prospectus is December 24, 1997

Van Kampen American Capital

INSURED MUNICIPALS INCOME TRUST, 97th MULTI-SERIES
Summary of Essential Financial Information
As of September 26, 1997

Sponsor: Van Kampen American Capital Distributors, Inc.
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Sponsor)
Trustee: The Bank of New York

The income, expense and distribution data set forth below have been calculated
for Unitholders electing to receive monthly distributions. Unitholders
choosing distributions semi-annually will receive a slightly higher net annual
interest income because of the lower Trustee's fees and expenses under such
plan.

<TABLE>
<CAPTION>
Intermediate Pennsylvania
Trust Trust
----------------- -----------------
<S> <C> <C>
General Information
Principal Amount (Par Value) of Securities..................................................... $ 3,435,000 $ 5,260,000
Number of Units................................................................................ 3,563 5,356
Fractional Undivided Interest in Trust per Unit................................................ 1/3,563 1/5,356
Public Offering Price: ........................................................................
Aggregate Bid Price of Securities in Portfolio................................................. $ 3,606,358.00 $ 5,499,683.00
Aggregate Bid Price of Securities per Unit..................................................... $ 1,012.17 $ 1,026.83
Sales charge 1.522% (1.50% of Public Offering Price excluding principal cash) for the
Intermediate Trust and 2.564% (2.50% of Public Offering Price excluding principal cash) for
the Pennsylvania Trust......................................................................... $ 15.39 $ 26.32
Principal Cash per Unit........................................................................ $ (1.21) $ (.21)
Public Offering Price per Unit <F1>............................................................ $ 1,026.35 $ 1,052.94
Redemption Price per Unit...................................................................... $ 1,010.96 $ 1,026.62
Excess of Public Offering Price per Unit over Redemption Price per Unit........................ $ 15.39 $ 26.32
Minimum Value of the Trust under which Trust Agreement may be terminated....................... $ 1,021,000.00 $ 1,193,000.00
Annual Premium on Portfolio Insurance.......................................................... $ 91.25 $ --
Evaluator's Annual Fee <F4>.................................................................... $ 1,320 $ 1,986
Special Information
Calculation of Estimated Net Annual Unit Income: ..............................................
Estimated Annual Interest Income per Unit...................................................... $ 61.42 $ 66.56
Less: Estimated Annual Expense excluding Insurance............................................. $ 2.14 $ 2.14
Less: Annual Premium on Portfolio Insurance.................................................... $ .03 $ --
Estimated Net Annual Interest Income per Unit.................................................. $ 59.25 $ 64.42
Calculation of Estimated Interest Earnings per Unit: ..........................................
Estimated Net Annual Interest Income........................................................... $ 59.25 $ 64.42
Divided by 12.................................................................................. $ 4.94 $ 5.37
Estimated Daily Rate of Net Interest Accrual per Unit.......................................... $ .16459 $ .17896
Estimated Current Return Based on Public Offering Price <F2><F3>............................... 5.77% 6.12%
Estimated Long-Term Return <F2><F3>............................................................ 3.76% 4.29%

- ----------
<FN>
<F1>Plus accrued interest to the date of settlement (three business days after
purchase) of $14.64 and $15.58 for the Intermediate Trust and Pennsylvania
Trust, respectively.

<F2>The Estimated Current Returns and Estimated Long-Term Returns are increased
for transactions entitled to a reduced sales charge.

<F3>The Estimated Current Return and Estimated Long-Term Return on an identical
portfolio without the insurance obtained by the Intermediate Trust would have
been slightly higher.

<F4>Notwithstanding information to the contrary in Part Two of this Prospectus,
the Trust Indenture provides that as compensation for its services, the
Evaluator shall receive a fee of $.30 per $1,000 principal amount of Bonds per
Trust annually. This fee may be adjusted for increases in consumer prices for
services under the category "All Services Less Rent of Shelter" in the
Consumer Price Index.
</TABLE>

Summary of Essential Financial Information (continued)

Evaluations for purpose of sales, purchase or redemption of Units are made as
of 4:00 P.M. Eastern time on days of trading on the New York Stock Exchange
next following receipt of an order for a sale or purchase of Units or receipt
by The Bank of New York of Units tendered for redemption.

<TABLE>
<CAPTION>
<S> <C>
Minimum Principal Distribution.......$1.00 per Unit
Date of Deposit......................December 6, 1990
Mandatory Termination Date...........December 31, 2019
Evaluator's Annual Supervisory Fee...Maximum of $0.25 per Unit
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
TENTH day of the month as follows: monthly - each month; quarterly - March, June, September and
December for the Intermediate Trust; semi-annual - June and December for the Intermediate Trust
Record and Computation Dates...and January and July for the Pennsylvania Trust.
TWENTY-FIFTH day of the month as follows: monthly - each month; quarterly - March, June, September
and December for the Intermediate Trust; semi-annual - June and December for the Intermediate Trust
Distribution Dates.............and January and July for the Pennsylvania Trust.
$0.91 and $0.51 per $1,000 principal amount of Bonds respectively, for those portions of the Trusts
under the monthly and semi-annual distribution plans and $0.72 per $1,000 principal amount of Bonds
Trustee's Annual Fee...........for the portion of the Intermediate Trust under the quarterly distribution plan.
</TABLE>

PORTFOLIO

In selecting Bonds for the Insured Municipals Income Trust, Intermediate
Series 50, the following facts, among others, were considered: (i) either the
Standard & Poor's, A Division of The McGraw-Hill Companies rating of the Bonds
was in no case less than "BBB-" , or the Moody's Investors Service,
Inc. rating of the Bonds was in no case less than "Baa" , including
provisional or conditional ratings, respectively (see "Description of
Securities Ratings" in Part Two), (ii) the prices of the Bonds relative to
other bonds of comparable quality and maturity, (iii) the availability and
cost of insurance for the prompt payment of principal and interest on the
Bonds and (iv) the diversification of Bonds as to purpose of issue and
location of issuer. As of August 31, 1997, the Trust consists of 9 issues
which are payable from the income of a specific project or authority. The
portfolio is divided by purpose of issue as follows: General Obligation, 1
(4%); Health Care, 2 (25%); Miscellaneous, 2 (19%); Public Building, 1 (16%);
Escrow, 1 (11%) and Wholesale Electric, 2 (25%). The portfolio consists of 9
Bond issues in 7 states. See "Bond Portfolio" herein and "
Description of Securities Ratings" in Part Two.

PER UNIT INFORMATION

<TABLE>
<CAPTION>
1991<F1> 1992 1993
------------- ------------- -------------
<S> <C> <C> <C>
Net asset value per Unit at beginning of period.......................................... $ 983.96 $ 1,030.20 $ 1,073.72
============= ============= =============
Net asset value per Unit at end of period................................................ $ 1,030.20 $ 1,073.72 $ 1,114.15
============= ============= =============
Distributions to Unitholders of investment income including accrued interest to carry
paid on Units redeemed (average Units outstanding for entire period) <F2>.............. $ 23.17 $ 63.74 $ 63.42
============= ============= =============
Distributions to Unitholders from Bond redemption proceeds (average Units outstanding
for entire period)....................................................................... $ -- $ -- $ --
============= ============= =============
Unrealized appreciation (depreciation) of Bonds (per Unit outstanding at end of period).. $ 23.88 $ 42.44 $ 39.24
============= ============= =============
Distributions of investment income by frequency of payment <F2>
Monthly................................................................................. $ 28.90 $ 63.00 $ 63.00
Quarterly............................................................................... $ 18.48 $ 63.32 $ 63.32
Semiannual.............................................................................. $ 18.53 $ 63.56 $ 63.56
Units outstanding at end of period....................................................... 5,105 4,936 4,847

- ----------
<FN>
<F1>For the period from December 6, 1990 (date of deposit) through August 31, 1991.

<F2>Unitholders may elect to receive distributions on a monthly, quarterly or
semi-annual basis.
</TABLE>

PER UNIT INFORMATION (continued)

<TABLE>
<CAPTION>
1994 1995 1996 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value per Unit at beginning of period................................ $ 1,114.15 $ 1,039.05 $ 1,053.68 $ 1,034.45
============ ============ ============ ============
Net asset value per Unit at end of period...................................... $ 1,039.05 $ 1,053.68 $ 1,034.45 $ 1,030.75
============ ============ ============ ============
Distributions to Unitholders of investment income including accrued interest
to carry paid on Units redeemed (average Units outstanding for entire period)
<F2>........................................................................... $ 62.88 $ 63.06 $ 64.53 $ 61.51
============ ============ ============ ============
Distributions to Unitholders from Bond redemption proceeds (average Units
outstanding for entire period)................................................. $ 40.93 $ -- $ -- $ --
============ ============ ============ ============
Unrealized appreciation (depreciation) of Bonds (per Unit outstanding at end
of period)..................................................................... $ (40.89) $ 10.05 $ (24.58) $ (5.08)
============ ============ ============ ============
Distributions of investment income by frequency of payment <F2>
Monthly....................................................................... $ 61.31 $ 60.60 $ 61.86 $ 59.78
Quarterly..................................................................... $ 62.01 $ 61.04 $ 62.11 $ 60.06
Semiannual.................................................................... $ 62.28 $ 61.30 $ 62.34 $ 60.37
Units outstanding at end of period............................................. 4,639 4,258 3,801 3,566

- ----------
<FN>
<F1>For the period from December 6, 1990 (date of deposit) through August 31, 1991.

<F2>Unitholders may elect to receive distributions on a monthly, quarterly or
semi-annual basis.
</TABLE>

PORTFOLIO

In selecting Bonds for the Pennsylvania Insured Municipals Income Trust,
Series 140, the following facts, among others, were considered: (i) either the
Standard & Poor's, A Division of The McGraw-Hill Companies rating of the Bonds
was in no case less than "BBB-" , or the Moody's Investors Service,
Inc. rating of the Bonds was in no case less than "Baa" , including
provisional or conditional ratings, respectively (see "Description of
Securities Ratings" in Part Two), (ii) the prices of the Bonds relative to
other bonds of comparable quality and maturity, (iii) the availability and
cost of insurance for the prompt payment of principal and interest on the
Bonds and (iv) the diversification of Bonds as to purpose of issue and
location of issuer. As of August 31, 1997, the Trust consists of 11 issues
which are payable from the income of a specific project or authority. The
portfolio is divided by purpose of issue as follows: Escrowed to Maturity, 2
(15%); Health Care, 1 (10%); Industrial Revenue, 1 (14%); Pre-refunded, 6
(59%); and Water and Sewer, 1 (2%). See "Bond Portfolio" herein and
"Description of Securities Ratings" in Part Two.

PER UNIT INFORMATION

<TABLE>
<CAPTION>
1991<F1> 1992 1993
------------- ------------- -------------
<S> <C> <C> <C>
Net asset value per Unit at beginning of period.......................................... $ 951.00 $ 975.03 $ 1,032.44
============= ============= =============
Net asset value per Unit at end of period................................................ $ 975.03 $ 1,032.44 $ 1,083.84
============= ============= =============
Distributions to Unitholders of investment income including accrued interest to carry
paid on Units redeemed (average Units outstanding for entire period) <F2>.............. $ 28.58 $ 65.59 $ 65.61
============= ============= =============
Distributions to Unitholders from Bond redemption proceeds (average Units outstanding
for entire period)....................................................................... $ -- $ -- $ --
============= ============= =============
Unrealized appreciation (depreciation) of Bonds (per Unit outstanding at end of period).. $ 5.36 $ 57.14 $ 51.41
============= ============= =============
Distributions of investment income by frequency of payment <F2>
Monthly................................................................................. $ 30.20 $ 65.40 $ 65.40
Semiannual.............................................................................. $ 24.94 $ 66.00 $ 66.00
Units outstanding at end of period....................................................... 6,095 6,095 6,092

- ----------
<FN>
<F1>For the period from December 6, 1990 (date of deposit) through August 31, 1991.

<F2>Unitholders may elect to receive distributions on a monthly or semi-annual
basis.
</TABLE>

PER UNIT INFORMATION (continued)

<TABLE>
<CAPTION>
1994 1995 1996 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value per Unit at beginning of period................................ $ 1,083.84 $ 1,036.99 $ 1,052.40 $ 1,036.16
============ ============ ============ ============
Net asset value per Unit at end of period...................................... $ 1,036.99 $ 1,052.40 $ 1,036.16 $ 1,041.97
============ ============ ============ ============
Distributions to Unitholders of investment income including accrued interest
to carry paid on Units redeemed (average Units outstanding for entire period)
<F2>........................................................................... $ 65.81 $ 65.77 $ 67.69 $ 66.41
============ ============ ============ ============
Distributions to Unitholders from Bond redemption proceeds (average Units
outstanding for entire period)................................................. $ -- $ -- $ -- $ --
============ ============ ============ ============
Unrealized appreciation (depreciation) of Bonds (per Unit outstanding at end
of period)..................................................................... $ (47.53) $ 14.98 $ (15.98) $ 4.57
============ ============ ============ ============
Distributions of investment income by frequency of payment <F2>
Monthly....................................................................... $ 65.40 $ 65.40 $ 66.96 $ 64.82
Semiannual.................................................................... $ 66.00 $ 66.00 $ 67.49 $ 65.50
Units outstanding at end of period............................................. 6,042 5,990 5,810 5,368
</TABLE>

- ----------
[FN]
<F1>For the period from December 6, 1990 (date of deposit) through
August 31, 1991.

<F2>Unitholders may elect to receive distributions on a monthly or semi-annual
basis.

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Insured Municipals Income Trust, 97th Multi-Series:

We have audited the accompanying statements of condition (including the
analyses of net assets) and the related portfolio of Insured Municipals Income
Trust, 97th Multi-Series (Intermediate and Pennsylvania Trusts) as of August
31, 1997, and the related statements of operations and changes in net assets
for the three years ended August 31, 1997. These statements are the
responsibility of the Trustee and the Sponsor. Our responsibility is to
express an opinion on such statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of tax-exempt securities owned at August 31,
1997 by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee and
the Sponsor, as well as evaluating the overall financial statement
presentation. We believe our audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Insured Municipals Income
Trust, 97th Multi-Series (Intermediate and Pennsylvania Trusts) as of August
31, 1997, and the results of operations and changes in net assets for the
three years ended August 31, 1997, in conformity with generally accepted
accounting principles.

GRANT THORNTON LLP

Chicago, Illinois
October 17, 1997

<TABLE>
INSURED MUNICIPALS INCOME TRUST,
97th MULTI-SERIES
Statements of Condition
August 31, 1997

<CAPTION>
Intermediate Pennsylvania
Trust Trust
------------- -------------
<S> <C> <C>
Trust property
Cash.................................................................................................. $ 28,863 $ --
Tax-exempt securities at market value, (cost $3,386,928 and $5,074,904, respectively) (note 1)........ 3,650,022 5,503,334
Accrued interest...................................................................................... 45,409 115,156
Receivable for securities sold........................................................................ -- --
$ 3,724,294 $ 5,618,490
============= =============
Liabilities and interest to Unitholders
Cash overdraft........................................................................................ $ -- $ 25,185
Redemptions payable................................................................................... 48,623 --
Interest to Unitholders............................................................................... 3,675,671 5,593,305
$ 3,724,294 $ 5,618,490
============= =============
Analyses of Net Assets
Interest of Unitholders (3,566 and 5,368 Units, respectively of fractional undivided interest
outstanding)
Cost to original investors of 5,105 and 6,095 Units, respectively (note 1)............................ $ 5,226,958 $ 6,095,000
Less initial underwriting commission (note 3)......................................................... 203,819 298,603
------------- -------------
5,023,139 5,796,397
Less redemption of Units (1,539 and 727 Units, respectively).......................................... 1,574,642 746,612
------------- -------------
3,448,497 5,049,785
Undistributed net investment income
Net investment income................................................................................. 1,891,779 2,634,104
Less distributions to Unitholders..................................................................... 1,817,015 2,539,595
------------- -------------
....................................................................................................... 74,764 94,509
Realized gain (loss) on Bond sale or redemption....................................................... 83,729 20,581
Unrealized appreciation (depreciation) of Bonds (note 2).............................................. 263,094 428,430
Distributions to Unitholders of Bond sale or redemption proceeds...................................... (194,413) --
Net asset value to Unitholders........................................................................ $ 3,675,671 $ 5,593,305
============= =============
Net asset value per Unit (Units outstanding of 3,566 and 5,368, respectively).......................... $ 1,030.75 $ 1,041.97
============= =============
</TABLE>

The accompanying notes are an integral part of these statements.

<TABLE>
INSURED MUNICIPALS INCOME TRUST, INTERMEDIATE SERIES 50
Statements of Operations
Years ended August 31,

<CAPTION>
1995 1996 1997
----------- ------------ ------------
<S> <C> <C> <C>
Investment income
Interest income................................................ $ 278,995 $ 251,723 $ 230,944
Expenses
Trustee fees and expenses...................................... 4,559 4,264 3,707
Evaluator fees................................................. 1,467 1,529 1,320
Insurance expense.............................................. 91 91 91
Supervisory fees............................................... 821 916 1,137
----------- ------------ ------------
Total expenses................................................. 6,938 6,800 6,255
----------- ------------ ------------
Net investment income.......................................... 272,057 244,923 224,689
Realized gain (loss) from Bond sale or redemption
Proceeds....................................................... 381,250 467,799 194,212
Cost........................................................... 366,311 445,705 189,706
----------- ------------ ------------
Realized gain (loss)........................................... 14,939 22,094 4,506
Net change in unrealized appreciation (depreciation) of Bonds... 42,809 (93,445) (18,128)
----------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.$ 329,805 $ 173,572 $ 211,067
=========== ============ ============
</TABLE>

<TABLE>
Statements of Changes in Net Assets
Years ended August 31,

<CAPTION>
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income................................................................... $ 272,057 $ 244,923 $ 224,689
Realized gain (loss) on Bond sale or redemption......................................... 14,939 22,094 4,506
Net change in unrealized appreciation (depreciation) of Bonds........................... 42,809 (93,445) (18,128)
------------- ------------- -------------
Net increase (decrease) in net assets resulting from operations......................... 329,805 173,572 211,067
Distributions to Unitholders from:
Net investment income................................................................... (281,433) (260,589) (229,300)
Bonds sale or redemption proceeds....................................................... -- -- --
Redemption of Units (381,964) (467,620) (238,024)
------------- ------------- -------------
Total increase (decrease)............................................................... (333,592) (554,637) (256,257)
Net asset value to Unitholders
Beginning of period..................................................................... 4,820,157 4,486,565 3,931,928
------------- ------------- -------------
End of period (including undistributed net investment income of $95,041, $79,375 and
$74,764, respectively)................................................................... $ 4,486,565 $ 3,931,928 $ 3,675,671
============= ============= =============
</TABLE>

The accompanying notes are an integral part of these statements.

<TABLE>
PENNSYLVANIA INSURED MUNICIPALS INCOME TRUST, SERIES 140
Statements of Operations
Years ended August 31,

<CAPTION>
1995 1996 1997
----------- ------------ -----------
<S> <C> <C> <C>
Investment income
Interest income................................................ $ 405,656 $ 396,753 $ 374,073
Expenses
Trustee fees and expenses...................................... 6,832 6,873 6,378
Evaluator fees................................................. 1,950 2,156 1,986
Insurance expense.............................................. -- -- --
Supervisory fees............................................... 1,075 1,279 1,678
----------- ------------ -----------
Total expenses................................................. 9,857 10,308 10,042
----------- ------------ -----------
Net investment income.......................................... 395,799 386,445 364,031
Realized gain (loss) from Bond sale or redemption
Proceeds....................................................... 54,158 179,742 458,225
Cost........................................................... 52,282 172,530 449,625
----------- ------------ -----------
Realized gain (loss)........................................... 1,876 7,212 8,600
Net change in unrealized appreciation (depreciation) of Bonds... 89,727 (92,847) 24,548
----------- ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.$ 487,402 $ 300,810 $ 397,179
=========== ============ ===========
</TABLE>

<TABLE>
Statements of Changes in Net Assets
Years ended August 31,

<CAPTION>
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income................................................................... $ 395,799 $ 386,445 $ 364,031
Realized gain (loss) on Bond sale or redemption......................................... 1,876 7,212 8,600
Net change in unrealized appreciation (depreciation) of Bonds........................... 89,727 (92,847) 24,548
------------- ------------- -------------
Net increase (decrease) in net assets resulting from operations......................... 487,402 300,810 397,179
Distributions to Unitholders from:
Net investment income................................................................... (396,172) (399,156) (371,157)
Bonds sale or redemption proceeds....................................................... -- -- --
Redemption of Units (52,835) (185,477) (452,788)
------------- ------------- -------------
Total increase (decrease)............................................................... 38,395 (283,823) (426,766)
Net asset value to Unitholders
Beginning of period..................................................................... 6,265,499 6,303,894 6,020,071
------------- ------------- -------------
End of period (including undistributed net investment income of $114,346, $101,635 and
$94,509, respectively)................................................................... $ 6,303,894 $ 6,020,071 $ 5,593,305
============= ============= =============
</TABLE>

The accompanying notes are an integral part of these statements.

<TABLE>
INSURED MULTI-SERIES 97
INSURED MUNICIPALS INCOME TRUST INTERMEDIATE
PORTFOLIO as of August 31, 1997

<CAPTION>
August 31,
1997

Port- Redemption Market
folio Aggregate Rating Feature Value
Item Principal Name of Issuer, Title, Interest Rate and Maturity Date (Note 2) (Note 2) (Note 1)
- -------- ------------------ ----------------------------------------------------------- ------------ -------------- ---------------
<S> <C> <C> <C> <C> <C>
A $ - 0 - Madison County Community Unit School District #11, Alton,
Illinois (FGIC Insured) 6.700% Due 12/01/99 .............. $ - 0 -
- -----------------------------------------------------------------------------------------------------------------------------------
B 540,000 Warsaw High School Building Corporation First Mortgage
Refunding Bonds, Series 1990 (MBIA Insured) 6.700% Due
01/01/00 .................................................. AAA 565,456
- -----------------------------------------------------------------------------------------------------------------------------------
C 665,000 Utah Municipal Finance Cooperative Local Government
Revenue Bonds, Pooled Capital Financing Program, Series
12-5-90, Redevelopment Agency of Salt Lake City, Tax
Increment Revenue (FSA Insured) 315M-6.700% Due 03/01/00 AAA 330,208
350M-6.800% Due 03/01/01 .................................. AAA 373,674
- -----------------------------------------------------------------------------------------------------------------------------------
D - 0 - Oklahoma City, Oklahoma, Airport Trust, Junior Lien
Revenue Bonds, Seventeenth Series (MBIA Insured) 7.000%
Due 07/01/00 .............................................. - 0 -
- -----------------------------------------------------------------------------------------------------------------------------------
E 375,000 Lehigh County, Pennsylvania, General Purpose Authority,
Health East Hospital Revenue Bonds, Series B (MBIA
Insured) 6.700% Due 07/01/00 ............................. AAA 396,484
- -----------------------------------------------------------------------------------------------------------------------------------
F 500,000 Oklahoma State Industrial Authority Revenue Bonds, Baptist
Medical Center Project, Series A (AMBAC Indemnity Insured)
6.700% Due 08/15/00 ...................................... AAA 530,050
- -----------------------------------------------------------------------------------------------------------------------------------
G 125,000 Stafford, Texas, Municipal School District Refunding
Unlimited Tax General Obligation Bonds (AMBAC Indemnity
Insured) 0.000% Due 08/15/00 ............................. AAA 109,441
- -----------------------------------------------------------------------------------------------------------------------------------
H 125,000 Intermountain Power Agency, Utah, Power Supply System
Revenue Bonds 0.000% Due 07/01/01 ........................ A+ 104,261
- -----------------------------------------------------------------------------------------------------------------------------------
I 750,000 Washington Public Power Supply System, Nuclear Project #2
Refunding Bonds, Series 1990C (FGIC Insured) 7.000% Due
07/01/01 .................................................. AAA 2001 @ 102 813,368
- -----------------------------------------------------------------------------------------------------------------------------------
J 400,000 The City of New York, General Obligation Bonds, Fiscal
1990 Series C (FSA Insured) 7.500% Due 08/01/01 ........... AAA [email protected] 427,080
- -----------------------------------------------------------------------------------------------------------------------------------
K - 0 - Washington State General Obligation Bonds, Series L-1
5.700% Due 11/01/01 ....................................... - 0 -
$ 3,480,000 $ 3,650,022
================== ===============
</TABLE>

The accompanying notes are an integral part of these statements.

<TABLE>
INSURED MULTI-SERIES 97
PENNSYLVANIA INSURED MUNICIPALS INCOME TRUST
PORTFOLIO as of August 31, 1997

<CAPTION>
August 31,
1997

Port- Redemption Market
folio Aggregate Name of Issuer, Title, Interest Rate and Maturity Rating Feature Value
Item Principal Date (Note 2) (Note 2) (Note 1)
- -------- ------------------ ------------------------------------------------------- ------------ ------------------ ---------------
<S> <C> <C> <C> <C> <C>
A $ 100,000 Harrisburg Water and Sewer Authority, Dauphin County,
Pennsylvania, Sewer Revenue Refunding Bonds, Second
Series of 1989 (FGIC Insured) 0.000% Due 10/15/10 .... AAA 2009 @ 93.22 $ 48,986
- -----------------------------------------------------------------------------------------------------------------------------------
B 500,000 Allegheny County Higher Education Building Authority,
College Revenue Refunding Bonds, Series of 1990
(Robert Morris College) MBIA Insured 7.000% Due
06/15/13 .............................................. AAA 2000 @ 100 P.R. 534,255
- -----------------------------------------------------------------------------------------------------------------------------------
C 200,000 Canon McMillan School District, Pennsylvania, Revenue
Bonds, Series 1990 (AMBAC Indemnity Insured) 0.000%
Due 02/01/15 .......................................... AAA 77,312
- -----------------------------------------------------------------------------------------------------------------------------------
D 450,000 Lehigh County, Pennsylvania, General Purpose Authority
Hospital Revenue Bonds, Healtheast, Inc., Series B
(MBIA Insured) 7.000% Due 07/01/15 ................... AAA 2000 @ 102 P.R. 489,325
- -----------------------------------------------------------------------------------------------------------------------------------
E 225,000 Pennsylvania Turnpike Commission, Pennsylvania
Turnpike Revenue Bonds, Series C of 1986 (FGIC 1998 @ 102
Insured) 7.625% Due 12/01/17 ......................... AAA 1998 @ 102 P.R. 238,426
- -----------------------------------------------------------------------------------------------------------------------------------
F 500,000 Sayre, Pennsylvania, Health Care Facilities Authority
Revenue Health Care Bonds (Tioga Nursing Facilities) 1999 @ 102
AMBAC Indemnity Insured 7.250% Due 10/01/18 .......... AAA 2011 @ 100 S.F. 523,015
- -----------------------------------------------------------------------------------------------------------------------------------
G 500,000 Washington County Authority Municipal Facilities Lease
Revenue Bonds (Pooled Capital Program) Series 1985 C-1
(Shadyside Hospital Project) AMBAC Indemnity Insured 2000 @ 103
7.450% Due 12/15/18 ................................... AAA 2000 @ 103 P.R. 553,485
- -----------------------------------------------------------------------------------------------------------------------------------
H 600,000 Pennsylvania Convention Center Authority Revenue
Bonds, 1989 Series A (FGIC Insured) 6.000% Due
09/01/19**............................................. AAA 641,886
- -----------------------------------------------------------------------------------------------------------------------------------
I 950,000 County of Berks, Pennsylvania, General Obligation
Bonds, Series of 1990 (FGIC Insured) 7.250% Due 2000 @ 102
11/15/20 .............................................. AAA 2000 @ 102 P.R. 1,048,459
- -----------------------------------------------------------------------------------------------------------------------------------
J 500,000 Delaware County Authority (Commonwealth of
Pennsylvania) Hospital Revenue Bonds, Series A, B and
C of 1990 (Crozer Chester Medical Center) MBIA Insured 2000 @ 102
7.500% Due 12/15/20 .................................. AAA 2000 @ 102 P.R. 556,695
- -----------------------------------------------------------------------------------------------------------------------------------
K 750,000 Beaver County Industrial Development Authority
(Pennsylvania) Pollution Control Revenue Refunding
Bonds, 1989 Series A (Ohio Edison Company Beaver
Valley Project) FGIC Insured 7.750% Due 09/01/24 ..... AAA 1999 @ 102 791,490
$ 5,275,000 $ 5,503,334
================== ===============
</TABLE>

The accompanying notes are an integral part of these statements.

**The issuer of these bonds has placed funds or securities in escrow against
payment of the issue on the date or dates indicated.

INSURED MUNICIPALS INCOME TRUST 97th MULTI-SERIES
Notes to Financial Statements
August 31, 1995, 1996 and 1997

- --------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Security Valuation - Tax-exempt municipal securities are stated at the value
determined by the Evaluator, American Portfolio Evaluation Services (a
division of an affiliate of the Sponsor). The Evaluator may determine the
value of the Bonds (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 each of the Trusts, (2) on the basis of bid prices for
comparable Bonds, (3) by determining the value of the Bonds by appraisal or
(4) by any combination of the above. The Intermediate Trust maintains
insurance which provides for the timely payment when due, of all principal and
interest on Bonds owned by it. Except in cases in which Bonds are in default,
or significant risk of default, this valuation does not include any value
attributable to this insurance feature since the insurance terminates as to
any Bond at the time of its disposition.

Security Cost - The original cost to each of the Trusts (Intermediate and
Pennsylvania) was based on the determination by Interactive Data Corporation
of the offering prices of the Bonds on the date of deposit (December 6, 1990).
Since the valuation is based upon the bid prices, such Trusts (Intermediate
and Pennsylvania) recognized downward adjustments of $36,358 and $44,622,
respectively, on the date of deposit resulting from the difference between the
bid and offering prices. These downward adjustments were included in the
aggregate amount of unrealized appreciation reported in the financial
statements for each Trust for the period ended August 31, 1991.

Unit Valuation - The redemption price per Unit is the pro rata share of each
Unit in each Trust based upon (1) the cash on hand in such Trust or monies in
the process of being collected, (2) the Bonds in such Trust based on the value
determined by the Evaluator and (3) interest accrued thereon, less accrued
expenses of the Trust, if any.

Federal Income Taxes - The Trust is not taxable for Federal income tax
purposes. Each Unitholder is considered to be the owner of a pro rata portion
of such Trust and, accordingly, no provision has been made for Federal income
taxes.

Other - The financial statements are presented on the accrual basis of
accounting. Any realized gains or losses from securities transactions are
reported on an identified cost basis.

NOTE 2 - PORTFOLIO

Ratings - The source of all ratings, exclusive of those designated N/R or * is
Standard & Poor's, A Division of the McGraw-Hill Companies. Ratings marked *
are by Moody's Investors Service, Inc. as these Bonds are not rated by
Standard & Poor's, A Division of the McGraw-Hill Companies. N/R indicates that
the Bond is not rated by Standard & Poor's, A Division of the McGraw-Hill
Companies or Moody's Investors Service, Inc. The ratings shown represent the
latest published ratings of the Bonds. For a brief description of rating
symbols and their related meanings, see "Description of Securities
Ratings" in Part Two.

Redemption Feature - There is shown under this heading the year in which each
issue of Bonds is initially or currently callable and the call price for that
year. Each issue of Bonds continues to be callable at declining prices
thereafter (but not below par value) except for original issue discount Bonds
which are redeemable at prices based on the issue price plus the amount of
original issue discount accreted to redemption date plus, if applicable, some
premium, the amount of which will decline in subsequent years. "S.F."
indicates a sinking fund is established with respect to an issue of Bonds.
"P.R." indicates a bond has been prerefunded. Redemption pursuant to
call provisions generally will, and redemption pursuant to sinking fund
provisions may, occur at times when the redeemed Bonds have an offering side
evaluation which represents a premium over par. To the extent that the Bonds
were deposited in the Trust at a price higher than the price at which they are
redeemed, this will represent a loss of capital when compared with the
original Public Offering Price of the Units. Conversely, to the extent that
the Bonds were acquired at a price lower than the redemption price, this will
represent an increase in capital when compared with the original Public
Offering Price of the Units. Distributions will generally be reduced by the
amount of the income which would otherwise have been paid with respect to
redeemed Bonds and there will be distributed to Unitholders the principal
amount in excess of $1 per Unit semi-annually and any premium received on such
redemption. However, should the amount available for distribution in the
Principal Account exceed $10.00 per Unit, the Trustee will make a special
distribution from the Principal Account on the next succeeding monthly
distribution date to holders of record on the related monthly record date. The
Estimated Current Return in this event may be affected by such redemptions.
For the Federal tax effect on Unitholders of such redemptions and resultant
distributions, see paragraph (3) under "Federal Tax Status of the
Trusts" and "Annual Unit Income and Estimated Current Returns" in
Part Two.

NOTE 2 - PORTFOLIO (continued)

Insurance - Insurance coverage providing for the timely payment when due of
all principal and interest on the Bonds in the Trusts has been obtained by the
Trusts or by one of the Preinsured Bond Insurers (as indicated in the Bond
name). Such insurance does not guarantee the market value of the Bonds or the
value of the Units. For Bonds covered under the Trust's insurance policy the
insurance is effective only while Bonds thus insured are held in the Trusts
and the insurance premium, which is a Trust obligation, is paid on a monthly
basis. The premium for insurance which has been obtained from various
insurance companies by the issuer of the Bond involved is payable by the
issuer. Insurance expense for the period reflects adjustments for redeemed or
sold Bonds.

An Accounting and Auditing Guide issued by the American Institute of Certified
Public Accountants states that, for financial reporting purposes, insurance
coverage of the type acquired by the Trust does not have any measurable value
in the absence of default of the underlying Bonds or indication of the
probability of such default. In the opinion of the Evaluator, there is no
indication of a probable default of Bonds in the portfolio as of the date of
these financial statements.

Unrealized Appreciation and Depreciation - An analysis of net unrealized
appreciation (depreciation) at August 31, 1997 is as follows:

<TABLE>
<CAPTION>
Intermediate Pennsylvania
Trust Trust
---------------- ----------------
<S> <C> <C>
Unrealized Appreciation $ 263,094 $ 428,430
Unrealized Depreciation -- --
---------------- ----------------
$ 263,094 $ 428,430
================ ================
</TABLE>

NOTE 3 - OTHER

Marketability - Although it is not obligated to do so, the Sponsor intends to
maintain a market for Units and to continuously offer to purchase Units at
prices, subject to change at any time, based upon the aggregate bid price of
the Bonds in the portfolio of each Trust, plus interest accrued to the date of
settlement. If the supply of Units exceeds demand, or for other business
reasons, the Sponsor may discontinue purchases of Units at such prices. In the
event that a market is not maintained for the Units, a Unitholder desiring to
dispose of his Units may be able to do so only by tendering such Units to the
Trustee for redemption at the redemption price.

Cost to Investors - The cost to original investors was based on the
Evaluator's determination of the aggregate offering price of the Bonds per
Unit on the date of an investor's purchase, plus a sales charge of 3.9% of the
public offering price which is equivalent to 4.058% of the aggregate offering
price of the Bonds for the Intermediate Trust and 4.9% of the public offering
price which is equivalent to 5.152% of the aggregate offering price of the
Bonds for the Pennsylvania Trust. The secondary market cost to investors is
based on the Evaluator's determination of the aggregate offering price of the
Bonds for the Intermediate Trust and per Unit on the date of an investor's
purchase plus a sales charge based upon the years to average maturity of the
Bonds in the portfolio. The sales charge ranges from 1.0% of the public
offering price (1.010% of the aggregate bid price of the Bonds) for a Trust
with a portfolio with less than two years to average maturity to 5.40% of the
public offering price (5.708% of the aggregate bid price of the Bonds) for a
Trust with a portfolio with twenty-one or more years to average maturity.

Compensation of Evaluator - The Evaluator receives a fee for providing
portfolio supervisory services for each of the Trusts ($.25 per Unit, not to
exceed the aggregate cost of the Evaluator for providing such services to all
applicable Trusts). In addition, the Evaluator receives an annual fee for
regularly evaluating each of the Trust's portfolios. Both fees may be adjusted
for increases under the category "All Services Less Rent of Shelter"
in the Consumer Price Index.

NOTE 4 - REDEMPTION OF UNITS

Units were presented for redemption as follows:

<TABLE>
<CAPTION>
Years Ended August 31,
<S> <C> <C> <C>
1995 1996 1997
------- ------- -------
Intermediate Trust 381 457 235
Pennsylvania Trust 52 180 442
</TABLE>

INSURED MUNICIPALS INCOME TRUST

PROSPECTUS

Part Two

In the opinion of counsel, interest income to the Trust and to Unitholders,
with certain exceptions, is excludable under existing law from gross income
for Federal income taxes, but may be subject to state and local taxes. Capital
gains, if any, are subject to Federal tax.

The Trust. The Trust consists of a series of unit investment trusts issued
under the name Insured Municipals Income Trust (and including the various
series of the Discount Series, the Limited Maturity Series, the Intermediate
Series and the Short Intermediate Series) or under the name The First National
Dual Series Tax-Exempt Bond Trust. Each Trust consists of interest-bearing
obligations issued by or on behalf of municipalities and other governmental
authorities or issued by certain United States territories or possessions and
their public authorities, the interest on which is, in the opinion of
recognized bond counsel to the issuing governmental authority, exempt from all
Federal income taxes under existing law (the "Bonds" or "
Securities" ). The objectives of the Trust are Federally tax-exempt income
and conservation of capital through an investment in a diversified, insured
portfolio of tax-exempt Bonds. The payment of interest and the preservation of
principal are, of course, dependent upon the continuing ability of the issuers
and/or obligors of the Bonds and of the insurers thereof to meet their
respective obligations. There is no assurance that the Trust's objectives will
be met. The Securities in the Discount Series were acquired at prices which
resulted in each Discount Series portfolio, as a whole, being purchased at a
deep discount from the aggregate par value of such Securities. Gains based
upon the difference, if any, between the value of the Securities at maturity,
redemption or sale and their purchase price at a market discount (plus earned
original issue discount) will constitute taxable ordinary income with respect
to a Unitholder.

The Trust and "AAA" Rating. Insurance guaranteeing the payments of
principal and interest, when due, on the Securities in the portfolio of the
Trust has been obtained from a municipal bond insurance company either by the
Trust, by a prior owner of the Bonds, by the issuer of the Bonds involved or
by the Sponsor prior to the deposit of the Bonds in the Trust. All issues of
the Trust are insured under one or more insurance policies obtained by the
Trust, except for certain issues of certain Trusts for which insurance has
been obtained by the issuer of the Bonds involved, by a prior owner of the
Bonds or by the Sponsor prior to the deposit of such Bonds in the Trust.
Insurance obtained by the Trust, if any, applies only while Bonds are retained
in the Trust while insurance obtained by a Bond issuer is effective so long as
such Bonds are outstanding. The Trustee, upon the sale of a Bond insured under
an insurance policy obtained by the Trust, has a right to obtain from the
insurer involved permanent insurance for such Bond upon the payment of a
single predetermined insurance premium and any expenses related thereto from
the proceeds of the sale of such Bond. Insurance relates only to the Bonds in
the Trust and not to the Units offered hereby or to the market value thereof.
As a result of such insurance, the Units of the Trust received a rating of
"AAA" by Standard & Poor's, a division of the McGraw-Hill Companies,
Inc. ("Standard & Poor's" ) on the date the Trust was created. Standard
& Poor's has indicated that this rating is not a recommendation to buy, hold
or sell Units nor does it take into account the extent to which expenses of
the Trust or sales by the Trust of Bonds for less than the purchase price paid
by the Trust will reduce payment to Unitholders of the interest and principal
required to be paid on such Bonds. See "Insurance on the Bonds" . No
representation is made as to any insurer's ability to meet its commitments.

Public Offering Price. The secondary market Public Offering Price of each
Trust will include the aggregate bid price of the Securities in such Trust, an
applicable sales charge, cash, if any, in the Principal Account held or owned
by such Trust, accrued interest and Purchased Interest, if any. If the Bonds
in the Trust were available for direct purchase by investors, the purchase
price of the Bonds would not include the sales charge included in the Public
Offering Price of the Units.

Units of the Trusts are not insured by the FDIC, are not deposits or other
obligations of, or guaranteed by, any depository institution or any government
agency and are subject to investment risk, including possible loss of the
principal amount invested.

NOTE: THIS PROSPECTUS MAY BE USED ONLY WHEN ACCOMPANIED BY PART ONE

Both parts of this Prospectus should be retained for future reference.

This Prospectus is dated as of the date of the Prospectus Part I accompanying
this Prospectus Part II.

Van Kampen American Capital

Estimated Current Return and Estimated Long-Term Return. The annual Estimated
Current Returns and Estimated Long-Term Returns to Unitholders as of the close
of business on the date of the "Summary of Essential Financial
Information" were as set forth under "Per Unit Information" for
each Trust in Part one of this Prospectus. The methods of calculating
Estimated Current Return and Estimated Long-Term Return are set forth under
"Estimated Current Returns and Estimated Long-Term Returns."

Objectives of The Fund. The objectives of the Fund are income exempt from
Federal income tax and conservation of capital through an investment in
diversified portfolios of Federal tax-exempt obligations. There is, of course,
no guarantee that the Fund will achieve its objectives. The Fund may be an
appropriate investment vehicle for investors who desire to participate in a
portfolio of tax-exempt fixed income securities with greater diversification
that they might be able to acquire individually. In addition, securities of
the type deposited in the Fund are often not available in small amounts.

Market for Units. Although not obligated to do so, the Sponsor, Van Kampen
American Capital Distributors, Inc., intends to maintain a secondary market
for the Units at prices based upon the aggregate bid prices of the Securities
in the respective Trusts plus interest accrued to the date of settlement. If
such a market is not maintained and no other over-the-counter market is
available, a Unitholder will be able to dispose of his Units only through
redemption at prices based upon the bid prices of the underlying Securities
plus interest accrued to the date of settlement (see "Rights of
Unitholders--Redemption of Units" and "Public Offering--Market for
Units" ).

Reinvestment Option. Unitholders of any Van Kampen American Capital-sponsored
unit investment trust may utilize their redemption or termination proceeds to
purchase units of any other Van Kampen American Capital trust in the initial
offering period accepting rollover investments subject to a reduced sales
charge to the extent stated in the related prospectus (which may be deferred
in certain cases).

Unitholders have the opportunity to have their distributions reinvested into
an open-end, management investment company as described herein. See "
Rights of Unitholders--Reinvestment Option" .

Risk Factors. An investment in the Trusts should be made with an understanding
of the risks associated therewith, including among other factors, the
inability of the issuer or an insurer to pay the principal of or interest on a
bond when due, volatile interest rates, early call provisions, and changes to
the tax status of the Bonds. See "Risk Factors" .

THE TRUST

Each series of Insured Municipals Income Trust and The First National Dual
Series Tax-Exempt Bond Trust (Insured Series) (the "Trust" ) was
created under the laws of the State of New York pursuant to a Trust Agreement
(the "Trust Agreement" ), between Van Kampen American Capital
Distributors, Inc., as Sponsor, American Portfolio Evaluation Services, a
division of Van Kampen American Capital Investment Advisory Corp., as
Evaluator, and The Bank of New York, as Trustee, or their respective
predecessors.

The Trust consists of a portfolio of interest-bearing obligations issued by or
on behalf of states and territories of the United States, and political
subdivisions and authorities thereof, the interest on which is, in the opinion
of recognized bond counsel to the issuing authorities, excludable from gross
income for Federal income tax under existing law, but may be subject to state
and local taxes. Unless otherwise terminated as provided therein, the Trust
Agreement for all series except the Limited Maturity, Intermediate and Short
Intermediate Series will terminate at the end of the calendar year prior to
the fiftieth anniversary of its execution, while the Trust Agreement for the
Limited Maturity, Intermediate and Short Intermediate Series will terminate at
the end of the calendar year prior to the twentieth anniversary of its
execution.

The portfolio of certain Trusts (including the Discount Series) may consist of
bonds that were purchased at a "market" discount from par value at
maturity. The coupon interest rates on the discount bonds at the time they
were purchased and deposited in such Trust were lower than the current market
interest rates for newly issued bonds of comparable rating and type. If such
interest rates for newly issued comparable bonds increase, the market discount
of previously issued bonds will become greater, and if such interest rates for
newly issued comparable bonds decline, the market discount of previously
issued bonds will be reduced, other things being equal. Investors should also
note that the value of bonds purchased at a market discount will increase in
value faster than bonds purchased at a market premium if interest rates
decrease. Conversely, if interest rates increase, the value of bonds purchased
at a market discount will decrease faster than bonds purchased at a market
premium. In addition, if interest rates rise, the prepayment risk of higher
yielding, premium bonds and the prepayment benefit for lower yielding,
discount bonds will be reduced. A bond purchased at a market discount and held
to maturity will have a larger portion of its total return in the form of
taxable income and capital gain and less in the form of tax-exempt interest
income than a comparable bond newly issued at current market rates. See "
Tax Status." Market discount attributable to interest changes does not
indicate a lack of market confidence in the issue. Neither the Sponsor nor the
Trustee shall be liable in any way for any default, failure or defect in any
of the Bonds.

Certain of the Bonds in the Trust are "zero coupon" bonds. Zero coupon
bonds are purchased at a deep discount because the buyer receives only the
right to receive a final payment at the maturity of the bond and does not
receive any periodic interest payments. The effect of owning deep discount
bonds which do not make current interest payments (such as the zero coupon
bonds) is that a fixed yield is earned not only on the original investment but
also, in effect, on all discount earned during the life of such obligation.
This implicit reinvestment of earnings at the same rate eliminates the risk of
being unable to reinvest the income on such obligation at a rate as high as
the implicit yield on the discount obligation, but at the same time eliminates
the holder's ability to reinvest at higher rates in the future. For this
reason zero coupon bonds are subject to substantially greater price
fluctuations during periods of changing market interest rates than are
securities of comparable quality which pay interest currently.

Each Unit initially offered represents a fractional undivided interest in the
principal and net income of the Trust. To the extent that any Units are
redeemed by the Trustee, the fractional undivided interest in the Trust
represented by each unredeemed Unit will increase, although the actual
interest in the Trust represented by such fraction will remain unchanged.
Units will remain outstanding until redeemed upon tender to the Trustee by
Unitholders, which may include the Sponsor or the Underwriters, or until the
termination of the Trust Agreement.

OBJECTIVES AND SECURITIES SELECTION

The objectives of the Trust are income exempt from Federal income taxation and
conservation of capital through an investment in a diversified, insured
portfolio of Federal tax-exempt obligations. There is, of course, no guarantee
that the Trust will achieve its objective. The Trust may be an appropriate
investment vehicle for investors who desire to participate in a portfolio of
tax-exempt fixed income securities with greater diversification than they
might be able to acquire individually. In addition, securities of the type
deposited in the Trust are often not available in small amounts.

Insurance guaranteeing the timely payment, when due, of all principal and
interest on the Bonds in the Trust has been obtained by the Trust from either
AMBAC Indemnity Corporation ("AMBAC Indemnity" ), Financial Guaranty
Insurance Company ("Financial Guaranty" ) or a combination thereof
(collectively, the "Portfolio Insurers" ) or by the issuer of such
Bonds, by a prior owner of such Bonds, or by the Sponsor prior to the deposit
of such Bonds in the Trust from (1) AMBAC Indemnity or one of its
subsidiaries, American Municipal Bond Assurance Corporation ("AMBAC" )
or MGIC Indemnity Corporation ("MGIC Indemnity" ), (2) Financial
Guaranty, (3) MBIA Insurance Corporation ("MBIA" ), (4) Bond Investors
Guaranty Insurance Company ("BIG" ), (5) National Union Fire Insurance
Company of Pittsburgh, PA. ("National Union" ), (6) Capital Guarantee
Insurance Company ("Capital Guaranty" ), (7) Capital Market Assurance
Corporation ("CapMAC" ) and/or (8) Financial Security Assurance Inc.
("Financial Security" or "FSA" ) (collectively, the "
Preinsured Bond Insurers" ) (see "Insurance on the Bonds" ).
Insurance obtained by the Trust is effective only while the Bonds thus insured
are held in the Trust. The Trustee has the right to acquire permanent
insurance from a Portfolio Insurer with respect to each Bond insured by the
respective Portfolio Insurer under a Trust portfolio insurance policy.
Insurance relating to Bonds insured by the issuer, by a prior owner of such
Bonds or by the Sponsor is effective so long as such Bonds are outstanding.
Bonds insured under a policy of insurance obtained by the issuer, by a prior
owner, or by the Sponsor from one of the Preinsured Bond Insurers (the "
Preinsured Bonds" ) are not additionally insured by the Trust. No
representation is made as to any insurer's ability to meet its commitments.

Neither the Public Offering Price nor any evaluation of Units for purposes of
repurchases or redemptions reflects any element of value for the insurance
obtained by the Trust, if any, unless Bonds are in default in payment of
principal or interest or in significant risk of such default. See "Public
Offering--Offering Price" . On the other hand, the value, if any, of
Preinsured Bond insurance is reflected and included in the market value of
such Bonds.

In order for bonds to be eligible for insurance, they must have credit
characteristics which would qualify them for at least the Standard & Poor's
rating of "BBB" or at least the Moody's Investors Service, Inc. rating
of "Baa" , which in brief represent the lowest ratings for securities
of investment grade (see "Description of Bond Ratings" ). Insurance is
not a substitute for the basic credit of an issuer, but supplements the
existing credit and provides additional security therefor. If an issue is
accepted for insurance, a non-cancellable policy for the prompt payment of
interest and principal on the bonds, when due, is issued by the insurer. Any
premium or premiums relating to Preinsured Bond insurance is paid by the
issuer, by a prior owner of such Bonds or by the Sponsor, and a monthly
premium is paid by an Insured Trust for the portfolio insurance, if any,
obtained by such Trust. The Trustee has the right to obtain permanent
insurance from a Portfolio Insurer in connection with the sale of a Bond
insured under the insurance policy obtained from the respective Insurer by the
Trust upon the payment of a single predetermined insurance premium from the
proceeds of the sale of such Bond. Accordingly, any Bond in the Trust is
eligible to be sold on an insured basis. All bonds insured by the Portfolio
Insurers and the Preinsured Bond Insurers received a "AAA" rating by
Standard & Poor's on the date such bonds were deposited in the Trust. See "
Insurance on the Bonds" .

In selecting Bonds for the Trust, the following facts, among others, were
considered by the Sponsor: (a) either the Standard & Poor's rating of the
Bonds was in no case less than "BBB-" or the Moody's Investors
Service, Inc. rating of the Bonds was in no case less than "Baa"
including provisional or conditional ratings, respectively, or, if not rated,
the Bonds had, in the opinion of the Sponsor, credit characteristics
sufficiently similar to the credit characteristics of interest-bearing
tax-exempt obligations that were so rated as to be acceptable for acquisition
by the Trust (see "Description of Bond Ratings" ), (b) the prices of
the Bonds relative to other bonds of comparable quality and maturity, (c) the
diversification of Bonds as to purpose of issue and location of issuer, and
(d) the availability and cost of insurance for the prompt payment of principal
and interest, when due, on the Bonds. Subsequent to the Date of Deposit, a
Bond may cease to be rated or its rating may be reduced below the minimum
required as of the Date of Deposit. Neither event requires elimination of such
Bond from the portfolio but may be considered in the Sponsor's determination
as to whether or not to direct the Trustee to dispose of the Bond (see "
Trust Administration--Portfolio Administration" ).

To the best knowledge of the Sponsor, there was no litigation pending as of
the Date of Deposit in respect of any Securities which might reasonably be
expected to have a material adverse effect upon the Fund or any of the Trusts.
At any time after the Date of Deposit, litigation may be initiated on a
variety of grounds with respect to Securities in the Fund. Such litigation,
as, for example, suits challenging the issuance of pollution control revenue
bonds under environmental protection statutes, may affect the validity of such
Securities or the tax-free nature of the interest thereon. While the outcome
of litigation of such nature can never be entirely predicted, the Fund has
received or will receive opinions of bond counsel to the issuing authorities
of each Security on the date of issuance to the effect that such Securities
have been validly issued and that the interest thereon is exempt from Federal
income tax. In addition, other factors may arise from time to time which
potentially may impair the ability of issuers to meet obligations undertaken
with respect to the Securities.

TRUST PORTFOLIO

Risk Factors. Certain of the Bonds in the Trust may be general obligations of
a governmental entity that are backed by the taxing power of such entity. In
view of this an investment in the Trust should be made with an understanding
of the characteristics of such issuers and the risks which such an investment
may entail. All other Bonds in the Trust are revenue bonds payable from the
income of a specific project or authority and are not supported by the
issuer's power to levy taxes. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. Revenue bonds, on the other hand, are payable only
from the revenues derived from a particular facility or class of facilities
or, in some cases, from the proceeds of a special excise tax or other specific
revenue source. There are, of course, variations in the security of the
different Bonds in the Fund, both within a particular classification and
between classifications, depending on numerous factors.

Certain of the Bonds in the Trust may be obligations which derive their
payment from mortgage loans. Certain of such housing bonds may be FHA insured
or may be single family mortgage revenue bonds issued for the purpose of
acquiring from originating financial institutions notes secured by mortgages
on residences located within the issuer's boundaries and owned by persons of
low or moderate income. In view of this an investment in the Trust should be
made with an understanding of the characteristics of such issuers and the
risks which such an investment may entail. Mortgage loans are generally
partially or completely prepaid prior to their final maturities as a result of
events such as sale of the mortgaged premises, default, condemnation or
casualty loss. Because these bonds are subject to extraordinary mandatory
redemption in whole or in part from such prepayments of mortgage loans, a
substantial portion of such bonds will probably be redeemed prior to their
scheduled maturities or even prior to their ordinary call dates. Extraordinary
mandatory redemption without premium could also result from the failure of the
originating financial institutions to make mortgage loans in sufficient
amounts within a specified time period. Additionally, unusually high rates of
default on the underlying mortgage loans may reduce revenues available for the
payment of principal of or interest on such mortgage revenue bonds. These
bonds were issued under Section 103A of the Internal Revenue Code, which
Section contains certain requirements relating to the use of the proceeds of
such bonds in order for the interest on such bonds to retain its tax-exempt
status. In each case the issuer of the bonds has covenanted to comply with
applicable requirements and bond counsel to such issuer has issued an opinion
that the interest on the bonds is exempt from Federal income tax under
existing laws and regulations. Certain issuers of housing bonds have
considered various ways to redeem bonds they have issued prior to the stated
first redemption dates for such bonds. In connection with the housing Bonds
held by the Trust, the Sponsor at the Date of Deposit was not aware that any
of the respective issuers of such Bonds were actively considering the
redemption of such Bonds prior to their respective stated initial call dates.

Certain of the Bonds in the Trust may be health care revenue bonds. In view of
this an investment in the Trust should be made with an understanding of the
characteristics of such issuers and the risks which such an investment may
entail. Ratings of bonds issued for health care facilities are often based on
feasibility studies that contain projections of occupancy levels, revenues and
expenses. A facility's gross receipts and net income available for debt may
service be affected by future events and conditions including, among other
things, demand for services and the ability of the facility to provide the
services required, physicians' confidence in the facility, management
capabilities, competition with other health care facilities, efforts by
insurers and governmental agencies to limit rates, legislation establishing
state rate-setting agencies, expenses, the cost and possible unavailability of
malpractice insurance, the funding of Medicare, Medicaid and other similar
third party payor programs, government regulation and the termination or
restriction of governmental financial assistance, including that associated
with Medicare, Medicaid and other similar third party payor programs. Pursuant
to recent Federal legislation, Medicare reimbursements are currently
calculated on a prospective basis utilizing a single nationwide schedule of
rates. Prior to such legislation Medicare reimbursements were based on the
actual costs incurred by the health facility. The current legislation may
adversely affect reimbursements to hospitals and other facilities for services
provided under the Medicare program. Such adverse changes also may adversely
affect the ratings of the Securities held in the portfolio of the Trust;
however, because of the insurance obtained by the Trust, the "AAA"
rating of the Units of the Trust would not be affected.

Certain of the Bonds in the Trust may be obligations of public utility
issuers, including those selling wholesale and retail electric power and gas.
In view of this an investment in the Trust should be made with an
understanding of the characteristics of such issuers and the risks which such
an investment may entail. General problems of such issuers would include the
difficulty in financing large construction programs in an inflationary period,
the limitations on operations and increased costs and delays attributable to
environmental considerations, the difficulty of the capital market in
absorbing utility debt, the difficulty in obtaining fuel at reasonable prices
and the effect of energy conservation. All of such issuers have been
experiencing certain of these problems in varying degrees. In addition,
Federal, state and municipal governmental authorities may from time to time
review existing, and impose additional, regulations governing the licensing,
construction and operation of nuclear power plants, which may adversely affect
the ability of the issuers of certain of the Bonds in the portfolio to make
payments of principal and/or interest on such Bonds.

Certain of the Bonds in the Trust may be obligations of issuers whose revenues
are derived from the sale of water and/or sewerage services. In view of this
an investment in the Trust should be made with an understanding of the
characteristics of such issuers and the risks which such an investment may
entail. Such bonds are generally payable from user fees. The problems of such
issuers include the ability to obtain timely and adequate rate increases,
population decline resulting in decreased user fees, the difficulty of
financing large construction programs, the limitations on operations and
increased costs and delays attributable to environmental considerations, the
increasing difficulty of obtaining or discovering new supplies of fresh water,
the effect of conservation programs and the impact of "no-growth"
zoning ordinances. All of such issuers have been experiencing certain of these
problems in varying degrees.

Certain of the Bonds in the Trust may be industrial revenue bonds ("
IRBs" ). In view of this an investment in the Trust should be made with an
understanding of the characteristics of such issuers and the risks which such
an investment may entail. IRBs have generally been issued under bond
resolutions pursuant to which the revenues and receipts payable under the
arrangements with the operator of a particular project have been assigned and
pledged to purchasers. In some cases, a mortgage on the underlying project may
have been granted as security for the IRBs. Regardless of the structure,
payment of IRBs is solely dependent upon the creditworthiness of the corporate
operator of the project or corporate guarantor. Corporate operators or
guarantors may be affected by many factors which may have an adverse impact on
the credit quality of the particular company or industry. These include
cyclicality of revenues and earnings, regulatory and environmental
restrictions, litigation resulting from accidents or environmentally-caused
illnesses, extensive competition and financial deterioration resulting from a
corporate restructuring pursuant to a leveraged buy-out, takeover or
otherwise. Such a restructuring may result in the operator of a project
becoming highly leveraged which may impact on such operator's creditworthiness
which in turn would have an adverse impact on the rating and/or market value
of such Bonds. Further, the possibility of such a restructuring may have an
adverse impact on the market for and consequently the value of such Bonds,
even though no actual takeover or other action is ever contemplated or
effected.

Certain of the Bonds in the Trust may be obligations that are secured by lease
payments of a governmental entity (hereinafter called "lease
obligations" ). Lease obligations are often in the form of certificates of
participation. In view of this an investment in the Trust should be made with
an understanding of the characteristics of such issuers and the risks which
such an investment may entail. Although the lease obligations do not
constitute general obligations of the municipality for which the
municipality's taxing power is pledged, a lease obligation lease is ordinarily
backed by the municipality's covenant to budget for, appropriate and make the
payments due under the lease obligation. However, certain lease obligations
contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease payments in future years unless
money is appropriated for such purpose on a yearly basis. A governmental
entity that enters into such a lease agreement cannot obligate future
governments to appropriate for and make lease payments but covenants to take
such action as is necessary to include any lease payments due in its budgets
and to make the appropriations therefor.A governmental entity's failure to
appropriate for and to make payments under its lease obligation could result
in insufficient funds available for payment of the obligations secured
thereby. Although "non-appropriation" lease obligations are secured by
the leased property, disposition of the property in the event of foreclosure
might prove difficult.

Certain of the Bonds in the Trust may be obligations of issuers which are, or
which govern the operation of, schools, colleges and universities and whose
revenues are derived mainly from ad valorem taxes or for higher education
systems, from tuition, dormitory revenues, grants and endowments. In view of
this an investment in the Trust should be made with an understanding of the
characteristics of such issuers and the risks which such an investment may
entail. General problems relating to school bonds include litigation
contesting the State constitutionality of financing public education in part
from ad valorem taxes, thereby creating a disparity in educational funds
available to schools in wealthy areas and schools in poor areas. Litigation or
legislation on this issue may affect the sources of funds available for the
payment of school bonds in the Trust. General problems relating to college and
university obligations include the prospect of a declining percentage of the
population consisting of "college" age individuals, possible inability
to raise tuitions and fees sufficiently to cover increased operating costs,
the uncertainty of continued receipt of Federal grants and state funding, and
government legislation or regulations which may adversely affect the revenues
or costs of such issuers. All of such issuers have been experiencing certain
of these problems in varying degrees.

Certain of the Bonds in the Trust may be obligations which are payable from
and secured by revenues derived from the ownership and operation of facilities
such as airports, bridges, turnpikes, port authorities, convention centers and
arenas. In view of this an investment in the Trust should be made with an
understanding of the characteristics of such issuers and the risks which such
an investment may entail. The major portion of an airport's gross operating
income is generally derived from fees received from signatory airlines
pursuant to use agreements which consist of annual payments for leases,
occupancy of certain terminal space and service fees. Airport operating income
may therefore be affected by the ability of the airlines to meet their
obligations under the use agreements. The air transport industry is
experiencing significant variations in earnings and traffic, due to increased
competition, excess capacity, increased costs, deregulation, traffic
constraints and other factors, and several airlines are experiencing severe
financial difficulties. The Sponsor cannot predict what effect these industry
conditions may have on airport revenues which are dependent for payment on the
financial condition of the airlines and their usage of the particular airport
facility. Similarly, payment on Bonds related to other facilities is dependent
on revenues from the projects, such as user fees from ports, tolls on
turnpikes and bridges and rents from buildings. Therefore, payment may be
adversely affected by reduction in revenues due to such factors as increased
cost of maintenance, decreased use of a facility, lower cost of alternative
modes of transportation, scarcity of fuel and reduction or loss of rents.

Certain of the Bonds in the Trust may be obligations which are payable from
and secured by revenues derived from the operation of resource recovery
facilities. In view of this an investment in the Trust should be made with an
understanding of the characteristics of such issuers and the risks which such
an investment may entail. Resource recovery facilities are designed to process
solid waste, generate steam and convert steam to electricity. Resource
recovery bonds may be subject to extraordinary optional redemption at par upon
the occurrence of certain circumstances, including but not limited to:
destruction or condemnation of a project; contracts relating to a project
becoming void, unenforceable or impossible to perform; changes in the economic
availability of raw materials, operating supplies or facilities necessary for
the operation of a project or technological or other unavoidable changes
adversely affecting the operation of a project; administrative or judicial
actions which render contracts relating to the projects void, unenforceable or
impossible to perform; or impose unreasonable burdens or excessive
liabilities. The Sponsor cannot predict the causes or likelihood of the
redemption of resource recovery bonds in such a Trust prior to the stated
maturity of the Bonds.

Bond Redemptions. Because certain of the Bonds in the Trust may from time to
time under certain circumstances be sold or redeemed or will mature in
accordance with their terms and because the proceeds from such events will be
distributed to Unitholders and will not be reinvested, no assurance can be
given that the Trust will retain for any length of time its present size and
composition. Neither the Sponsor nor the Trustee shall be liable in any way
for any default, failure or defect in any Bond.

Certain of the Bonds in the Trust may be subject to redemption prior to their
stated maturity date pursuant to sinking fund provisions, call provisions or
extraordinary optional or mandatory redemption provisions or otherwise. A
sinking fund is a reserve fund accumulated over a period of time for
retirement of debt. A callable debt obligation 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 debt obligation is redeemed, at or before
maturity, by the proceeds of a new debt obligation. In general, call
provisions are more likely to be exercised when the offering side valuation is
at a premium over par than when it is at a discount from par. The exercise of
redemption or call provisions will (except to the extent the proceeds of the
called Bonds are used to pay for Unit redemptions) result in the distribution
of principal and may result in a reduction in the amount of subsequent
interest distributions and it may also offset the current return on Units of
the Trust. The portfolio contains a listing of the sinking fund and call
provisions, if any, with respect to each of the debt obligations.
Extraordinary optional redemptions and mandatory redemptions result from the
happening of certain events. Generally, events that may permit the
extraordinary optional redemption of Bonds or may require the mandatory
redemption of Bonds include, among others: a final determination that the
interest on the Bonds is taxable; the substantial damage or destruction by
fire or other casualty of the project for which the proceeds of the Bonds were
used; an exercise by a local, state or Federal governmental unit of its power
of eminent domain to take all or substantially all of the project for which
the proceeds of the Bonds were used; changes in the economic availability of
raw materials, operating supplies or facilities or technological or other
changes which render the operation of the project for which the proceeds of
the Bonds were used uneconomic; changes in law or an administrative or
judicial decree which renders the performance of the agreement under which the
proceeds of the Bonds were made available to finance the project impossible or
which creates unreasonable burdens or which imposes excessive liabilities,
such as taxes, not imposed on the date the Bonds are issued on the issuer of
the Bonds or the user of the proceeds of the Bonds; an administrative or
judicial decree which requires the cessation of a substantial part of the
operations of the project financed with the proceeds of the Bonds; an
overestimate of the costs of the project to be financed with the proceeds of
the Bonds resulting in excess proceeds of the Bonds which may be applied to
redeem Bonds; or an underestimate of a source of funds securing the Bonds
resulting in excess funds which may be applied to redeem Bonds. The issuer of
certain Bonds in a Trust may have sold or reserved the right to sell, upon the
satisfaction of certain conditions, to third parties all or any portion of its
rights to call Bonds in accordance with the stated redemption provisions of
such Bonds. In such a case the issuer no longer has the right to call the
Bonds for redemption unless it reacquires the rights from such third party. A
third party pursuant to these rights may exercise the redemption provisions
with respect to a Bond at a time when the issuer of the Bond might not have
called a Bond for redemption had it not sold such rights. The Sponsor is
unable to predict all of the circumstances which may result in such redemption
of an issue of Bonds. See "Portfolio" and the notes thereto in Part
One of this Prospectus. See also the discussion of single family mortgage and
multi-family revenue bonds above for more information on the call provisions
of such bonds.

ESTIMATED CURRENT RETURNS AND ESTIMATED LONG-TERM RETURNS

As of the opening of business on the date indicated therein, the Estimated
Current Returns and the Estimated Long-Term Returns for each Trust under the
various distribution plans were as set forth under "Per Unit
Information" for the applicable Trust in Part One of this Prospectus.
Estimated Current Returns are calculated by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price. The Estimated Net
Annual Interest Income per Unit will vary with changes in fees and expenses of
the Trustee and the Evaluator and with the principal prepayment, redemption,
maturity, exchange or sale of Securities while the Public Offering Price will
vary with changes in the offering price of the underlying Securities and with
changes in Purchased Interest for those series which contain Purchased
Interest; therefore, there is no assurance that the present Estimated Current
Returns will be realized in the future. Estimated Long-Term Returns are
calculated using a formula which (1) takes into consideration, and determines
and factors in the relative weightings of, the market values, yields (which
takes into account the amortization of premiums and the accretion of
discounts) and estimated retirements of all of the Securities in the Trust and
(2) takes into account the expenses and sales charge associated with each
Trust Unit. Since the market values and estimated retirements of the
Securities and the expenses of the Trust will change, there is no assurance
that the present Estimated Long-Term Returns will be realized in the future.
Estimated Current Returns and Estimated Long-Term Returns are expected to
differ because the calculation of Estimated Long-Term Returns reflects the
estimated date and amount of principal returned while Estimated Current
Returns calculations include only Net Annual Interest Income and Public
Offering Price.

TRUST OPERATING EXPENSES

Compensation of Sponsor and Evaluator. The Sponsor will not receive any fees
in connection with its activities relating to the Trust. However, in
connection with certain series of the Trust, American Portfolio Evaluation
Services, a division of Van Kampen American Capital Investment Advisory
Corp.,which is an affiliate of the Sponsor (the "Evaluator" ), will
receive an annual supervisory fee, which is not to exceed the amount set forth
under "Summary of Essential Financial Information" in Part One of this
Prospectus, for providing portfolio supervisory services for such series. Such
fee (which is based on the number of Units outstanding in the Trust on January
1 of each year) may exceed the actual costs of providing such supervisory
services for such series, but at no time will the total amount received for
portfolio supervisory services rendered to all series of Insured Municipals
Income Trust in any calendar year exceed the aggregate cost to the Evaluator
of supplying such services in such year. In addition, the Evaluator shall
receive an annual evaluation fee in the amount set forth in "Summary of
Essential Financial Information" in Part One of this Prospectus (which is
based on the outstanding principal amount of Securities on January 1 of each
year) for regularly evaluating the Trust's portfolio. Both of the foregoing
fees may be increased without approval of the Unitholders by amounts not
exceeding proportionate increases under the category "All Services Less
Rent of Shelter" in the Consumer Price Index published by the United
States Department of Labor or, if such category is no longer published, in a
comparable category. The Sponsor and the dealers will receive sales
commissions and may realize other profits (or losses) in connection with the
sale of Units as described under "Public Offering" .

Trustee's Fee. For its services, the Trustee will receive a fee from the Trust
based on the aggregate outstanding principal amount of Securities in the Trust
as of the opening of business on January 2 and July 2 of each year as set
forth under "Per Unit Information" for the applicable Trust in Part
One of this Prospectus. Such fee will be computed at the amounts set forth in
Part One to this Prospectus for that portion of the Trust under the
semi-annual distribution plan and for those portions of the Trust representing
monthly and quarterly distribution plans. The Trustee's fees are payable
monthly on or before the twenty-fifth day of each month from the Interest
Account to the extent funds are available and then from the Principal Account.
Such fees may be increased without approval of the Unitholders by amounts not
exceeding proportionate increases under the category "All Services Less
Rent of Shelter" in the Consumer Price Index published by the United
States Department of Labor or, if such category is no longer published, in a
comparable category. Since the Trustee has the use of the funds being held in
the Principal and Interest Accounts for future distributions, payment of
expenses and redemptions and since such Accounts are non-interest bearing to
Unitholders, the Trustee benefits thereby. Part of the Trustee's compensation
for its services to the Trust is expected to result from the use of these
funds. For a discussion of the services rendered by the Trustee pursuant to
its obligations under the Trust Agreement, see "Rights of
Unitholders--Reports Provided" and "Trust Administration" .

Insurance Premiums. The cost of the portfolio insurance obtained by the Trust,
if any, is the amount shown in "Summary of Essential Financial
Information" in Part One of this Prospectus. The premium is payable each
year that the Trust retains the Bonds. Premiums, if any, which are Trust
obligations, are payable monthly by the Trustee on behalf of the Trust. As
Bonds in the portfolio are redeemed by their respective issuers or are sold by
the Trustee, the amount of the premium will be reduced in respect of those
Bonds no longer owned by and held in the Trust. If the Trustee exercises the
right to obtain permanent insurance, the premiums payable for such permanent
insurance will be paid solely from the proceeds of the sale of the related
Bonds. The premiums for such permanent insurance with respect to each Bond
will decline over the life of the Bond. The Trust does not incur any expense
for insurance which has been obtained by an issuer of a Bond, since the
premium or premiums for such insurance have been paid by the respective
issuers of such bonds. Bonds for which insurance has been obtained by the
issuer from one of the Preinsured Bond Insurers are not additionally insured
by the Trust. See "Objectives and Securities Selection" .

Miscellaneous Expenses. The following additional charges are or may be
incurred by the Trust: (a) fees of the Trustee for extraordinary services, (b)
expenses of the Trustee (including legal and auditing expenses) and of counsel
designated by the Sponsor, (c) various governmental charges, (d) expenses and
costs of any action taken by the Trustee to protect the Trust and the rights
and interests of Unitholders, (e) indemnification of the Trustee for any loss,
liability or expenses incurred by it in the administration of the Trust
without negligence, bad faith or willful misconduct on its part, (f) any
special custodial fees payable in connection with the sale of any Bonds in a
Trust and (g) expenditures incurred in contacting Unitholders upon termination
of the Trust.

The fees and expenses set forth herein are payable out of the Trust. When such
fees and expenses are paid by or owing to the Trustee, they are secured by a
lien on the portfolio of the Trust. If the balances in the Interest and
Principal Accounts are insufficient to provide for amounts payable by the
Trust, the Trustee has the power to sell Securities to pay such amounts.

INSURANCE ON THE BONDS

Insurance has been obtained by the Trust or by the issuer of such Bonds, or by
a prior owner of such Bonds, or by the Sponsor prior to the deposit of such
Bonds in the Trust guaranteeing prompt payment of interest and principal, when
due, in respect of the Bonds in the Trust. See "Objectives and Securities
Selection" . An insurance policy obtained by the Trust, if any, is
non-cancellable and will continue in force so long as the Trust is in
existence, the respective Portfolio Insurer is still in business and the Bonds
described in such policy continue to be held by the Trust. Any portfolio
insurance premium for the Trust, which is an obligation of the Trust, is paid
by the Trust on a monthly basis. Non-payment of premiums on a policy obtained
by the Trust will not result in the cancellation of insurance but will force
the insurer to take action against the Trustee to recover premium payments due
it. The Trustee in turn will be entitled to recover such payments from the
Trust. Premium rates for each issue of Bonds protected by a policy obtained by
the Trust, if any, are fixed for the life of the Trust. The premium for any
Preinsured Bond insurance has been paid by such issuer, by a prior owner of
such Bonds or the Sponsor and any such policy or policies are non-cancellable
and will continue in force so long as the Bonds so insured are outstanding and
the respective Preinsured Bond Insurer remains in business. If the provider of
an original issuance insurance policy is unable to meet its obligations under
such policy or if the rating assigned to the claims-paying ability of any such
insurer deteriorates, the Portfolio Insurers have no obligation to insure any
issue adversely affected by either of the above described events.

The aforementioned portfolio insurance obtained by the Trust, if any,
guarantees the timely payment of principal and interest on the Bonds as they
fall due. For the purposes of insurance obtained by the Trust, "when
due" generally means the stated maturity date for the payment of principal
and interest. However, in the event (a) an issuer of a Bond defaults in the
payment of principal or interest on such Bond, (b) such issuer enters into a
bankruptcy proceeding or (c) the maturity of such Bond is accelerated, the
affected Portfolio Insurer has the option, in its sole discretion, after
receiving notice of the earliest to occur of such a default, bankruptcy
proceeding or acceleration to pay the outstanding principal amount of such
Bond plus accrued interest to the date of such payment and thereby retire the
Bond from the Trust prior to such Bond's stated maturity date. The insurance
does not guarantee the market value of the Bonds or the value of the Units.
Insurance obtained by the Trust, if any, is only effective as to Bonds owned
by and held in the Trust. In the event of a sale of any such Bond by the
Trustee, such insurance terminates as to such Bond on the date of sale.

Pursuant to an irrevocable commitment of the Portfolio Insurers, the Trustee,
upon the sale of a Bond covered under a portfolio insurance policy obtained by
the Trust, has the right to obtain permanent insurance with respect to such
Bond (i.e., insurance to maturity of the Bonds regardless of the indemnity of
the holder thereof) (the "Permanent Insurance" ) upon the payment of a
single predetermined insurance premium and any expenses related thereto from
the proceeds of the sale of such Bond. Accordingly, any Bond in the Trust is
eligible to be sold on an insured basis. It is expected that the Trustee would
exercise the right to obtain Permanent Insurance only if upon such exercise
the Trust would receive net proceeds (sale of Bond proceeds less the insurance
premium and related expenses attributable to the Permanent Insurance) from
such sale in excess of the sale proceeds if such Bonds were sold on an
uninsured basis. The insurance premium with respect to each Bond eligible for
Permanent Insurance would be determined based upon the insurability of each
Bond as of the Date of Deposit and would not be increased or decreased for any
change in creditworthiness of each Bond.

The Sponsor believes that the Permanent Insurance option provides an advantage
to the Trust in that each Bond insured by a Trust insurance policy may be sold
out of the Trust with the benefits of the insurance attaching thereto. Thus,
the value of the insurance, if any, at the time of sale, can be realized in
the market value of the Bond so sold (which is not the case in connection with
any value attributable to an Insured Trust's portfolio insurance). See "
Public Offering--Offering Price" . Because any such insurance value may be
realized in the market value of the Bond upon the sale thereof upon exercise
of the Permanent Insurance option, the Sponsor anticipates that (a) in the
event the Trust were to be comprised of a substantial percentage of Bonds in
default or significant risk of default, it is much less likely that the Trust
would need at some point in time to seek a suspension of redemptions of Units
than if the Trust were to have no such option and (b) at the time of
termination of the Trust, if the Trust were holding defaulted Bonds or Bonds
in significant risk of default the Trust would not need to hold such Bonds
until their respective maturities in order to realize the benefits of the
Trust's portfolio insurance.

Except as indicated below, insurance obtained by the Trust, if any, has no
effect on the price or redemption value of Units. It is the present intention
of the Evaluator to attribute a value for such insurance (including the right
to obtain Permanent Insurance) for the purpose of computing the price or
redemption value of Units if the Bonds covered by such insurance are in
default in payment of principal or interest or in significant risk of such
default. The value of the insurance will be the difference between (i) the
market value of a Bond which is in default in payment of principal or interest
or in significant risk of such default assuming the exercise of the right to
obtain Permanent Insurance (less the insurance premium and related expenses
attributable to the purchase of Permanent Insurance) and (ii) the market value
of such Bonds not covered by Permanent Insurance. It is also the present
intention of the Trustee not to sell such Bonds to effect redemptions or for
any other reason but rather to retain them in the portfolio because value
attributable to the insurance cannot be realized upon sale. See "Public
Offering--Offering Price" herein for a more complete description of the
Trust's method of valuing defaulted Bonds and Bonds which have a significant
risk of default. Insurance obtained by the issuer of a Bond is effective so
long as such Bond is outstanding. Therefore, any such insurance may be
considered to represent an element of market value in regard to the Bonds thus
insured, but the exact effect, if any, of this insurance on such market value
cannot be predicted.

The portfolio insurance policy or policies obtained by the Trust, if any, with
respect to the Bonds in the Trust were issued by one or more of the Portfolio
Insurers. Any other Preinsured Bond insurance policy (or commitment therefor)
was issued by one of the Preinsured Bond Insurers. See "Objectives and
Securities Selection" .

Capital Markets Assurance Corporation ("CapMAC" ) is a New
York-domiciled monoline stock insurance company which engages only in the
business of financial guarantee and surety insurance. CapMAC is licensed in 50
states in addition to the District of Columbia, the Commonwealth of Puerto
Rico and the territory of Guam. CapMAC insures structured asset-backed,
corporate, municipal and other financial obligations in the U.S. and
international capital markets. CapMAC also provides financial guarantee
reinsurance for structured asset-backed, corporate, municipal and other
financial obligations written by other major insurance companies.

CapMAC's claims-paying ability is rated "Aaa" by Moody's Investors
Service, Inc. ("Moody's" ), "AAA" by Standard & Poor's, "
AAA" by Duff & Phelps Credit Rating Co. ("Duff & Phelps" ) and "
AAA" by Nippon Investors Service Inc. Such ratings reflect only the views
of the respective rating agencies, are not recommendations to buy, sell or
hold securities and are subject to revision or withdrawal at any time by such
rating agencies.

CapMAC is a wholly-owned subsidiary of CapMAC Holdings Inc. ("Holdings"
). In December of 1995, in connection with an initial public offering of its
common stock, Holdings became a public company with its common stock listed on
the New York Stock Exchange under the symbol "KAP." Neither Holdings
nor any of its stockholders is obligated to pay any claims under any policy
issued by CapMAC or any debts of CapMAC or to make additional capital
contributions to CapMAC.

CapMAC is regulated by the Superintendent of Insurance of the State of New
York. In addition, CapMAC is subject to regulation by the insurance laws and
regulations of other jurisdictions in which it is licensed. Such insurance
laws regulate, among other things, the amount of net exposure per risk that
CapMAC may retain, capital transfers, dividends, investment of assets, changes
in control, transactions with affiliates and consolidations and acquisitions.
CapMAC is subject to periodic regulatory examinations by the same regulatory
authorities.

CapMAC's obligations under the Policy(s) may be reinsured. Such reinsurance
does not relieve CapMAC of any of its obligations under the Policy(s).

THE POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND
SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.

At September 30, 1996, CapMAC had qualified statutory capital (which consists
of policyholders' surplus, statutory capital, and contingency reserve) of
approximately $254.2 million, up from $239.9 million at December 31, 1995, and
had not incurred any debt obligations. Article 69 of the New York State
Insurance Law requires CapMAC to establish and maintain the contingency
reserve, which is available to cover claims under policies issued by CapMAC.

Copies of CapMAC's financial statements prepared in accordance with statutory
accounting standards, which differ from generally accepted accounting
principles, and filed with the Insurance Department of the State of New York
are available upon request.

AMBAC Indemnity Corporation ("AMBAC Indemnity" ) is a
Wisconsin-domiciled stock insurance corporation regulated by the Office of the
Commissioner of Insurance of the State of Wisconsin and licensed to do
business in 50 states, the District of Columbia and the Commonwealth of Puerto
Rico, with admitted assets of approximately $2,440,000,000 (unaudited) and
statutory capital of approximately $1,387,000,000 (unaudited) as of March 31,
1996. Statutory capital consists of AMBAC Indemnity's policyholders' surplus
and statutory contingency reserve. AMBAC Indemnity is a wholly owned
subsidiary of AMBAC Inc., a 100% publicly-held company. Moody's Investors
Service, Inc. and Standard & Poor's have both assigned a triple-A
claims-paying ability rating to AMBAC Indemnity.

Copies of its financial statements prepared in accordance with statutory
accounting standards are available from AMBAC Indemnity. The address of AMBAC
Indemnity's administrative offices and its telephone number are One State
Street Plaza, 17th Floor, New York, New York, 10004 and (212) 668-0340.

AMBAC Indemnity has entered into quota share reinsurance agreements under
which a percentage of the insurance underwritten pursuant to certain municipal
bond insurance programs of AMBAC Indemnity has been and will be assumed by a
number of foreign and domestic unaffiliated reinsurers.

MBIA Insurance Corporation ("MBIA" ) is the principal operating
subsidiary of MBIA, Inc., a New York Stock Exchange listed company. MBIA, Inc.
is not obligated to pay the debts of or claims against MBIA. MBIA is a limited
liability corporation rather than a several liability association. MBIA is
domiciled in the State of New York and licensed to do business in all fifty
states, the District of Columbia, the Commonwealth of the Northern Mariana
Islands, the Commonwealth of Puerto Rico, the Virgin Islands of the United
States and the Territory of Guam. As of September 30, 1996, the insurer had
admitted assets of $4.3 billion (unaudited), total liabilities of $2.9 billion
(unaudited), and total capital and surplus of $1.4 billion (unaudited)
determined in accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities. As of March 31, 1996, MBIA had
admitted assets of $4.0 billion (unaudited), total liabilities of $2.7 billion
(unaudited), and total capital and surplus of $1.3 (unaudited), determined in
accordance with statutory accounting practices prescribed or permitted by
insurance regulatory authorities. Copies of MBIA's year end financial
statements prepared in accordance with statutory accounting practices are
available from MBIA. The address of MBIA is 113 King Street, Armonk, New York
10504.

Effective December 31, 1989, MBIA, Inc. acquired Bond Investors Group, Inc. On
January 5, 1990, MBIA acquired all of the outstanding stock of Bond Investors
Group, Inc., the parent of Bond Investors Guaranty Insurance Company (BIG),
now known as MBIA Insurance Corp. of Illinois. Through a reinsurance
agreement, BIG has ceded all of its net insured risks, as well as its unearned
premium and contingency reserves, to MBIA and MBIA has reinsured BIG's net
outstanding exposure.

Moody's Investors Service, Inc. rates all bond issues insured by MBIA "
Aaa" and short-term loans "MIG-1," both designated to be of the
highest quality.

Standard & Poor's rates all new issues insured by MBIA "AAA" Prime
Grade.

The Moody's Investors Service, Inc. rating of MBIA should be evaluated
independently of the Standard & Poor's rating of MBIA. No application has
been made to any other rating agency in order to obtain additional ratings on
the Obligations. The ratings reflect the respective rating agency's current
assessment of the creditworthiness of MBIA and its ability to pay claims on
its policies of insurance. Any further explanation as to the significance of
the above ratings may be obtained only from the applicable rating agency.

The above ratings are not recommendations to buy, sell or hold the Obligations
and such ratings may be subject to revision or withdrawal at any time by the
rating agencies. Any downward revision or withdrawal of either or both ratings
may have an adverse effect on the market price of the Obligations.

Financial Guaranty Insurance Company ("Financial Guaranty" or "
FGIC" ) is a wholly-owned subsidiary of FGIC Corporation (the "
Corporation" } a Delaware holding company. The Corporation is a
wholly-owned subsidiary of General Electric Capital Corporation ("GECC"
). Neither the Corporation nor GECC is obligated to pay the debts of or the
claims against Financial Guaranty. Financial Guaranty is domiciled in the
State of New York and is subject to regulation by the State of New York
Insurance Department. As of June 30, 1996, the total capital and surplus of
Financial Guaranty was approximately $1,069,597,000. Copies of Financial
Guaranty's financial statements, prepared on the basis of statutory
accounting principles, and the Corporation's financial statements, prepared
on the basis of generally accepted accounting principles, may be obtained by
writing to Financial Guaranty at 115 Broadway, New York, New York 10006,
Attention: Communications Department, telephone number: (212) 312-3000 or to
the New York State Insurance Department at 160 West Broadway, 18th Floor, New
York, New York 10013, Attention: Property Companies Bureau, telephone number:
(212) 621-0389.

In addition, Financial Guaranty is currently licensed to write insurance in
all 50 states and the District of Columbia.

Financial Security Assurance Inc. ("Financial Security" or "
FSA" ) is a monoline insurance company incorporated in 1984 under the laws
of the State of New York. Financial Security is licensed to engage in the
financial guaranty insurance business in all 50 states, the District of
Columbia, Puerto Rico and the United Kingdom.

Financial Security and its subsidiaries are engaged in the business of writing
financial guaranty insurance, principally in respect of securities offered in
domestic and foreign markets. In general, financial guaranty insurance
consists of the issuance of a guaranty of scheduled payments of an issuer's
securities, thereby enhancing the credit rating of those securities, in
consideration for payment of a premium to the insurer. Financial Security and
its subsidiaries principally insure asset-backed, collateralized and municipal
securities. Asset-backed securities are generally supported by residential
mortgage loans, consumer or trade receivables, securities or other assets
having an ascertainable cash flow or market value. Collateralized securities
include public utility first mortgage bonds and sale/leaseback obligation
bonds. Municipal securities consist largely of general obligation bonds,
special revenue bonds and other special obligations of state and local
governments. Financial Security insures both newly issued securities sold in
the primary market and outstanding securities sold in the secondary market
that satisfy Financial Security's underwriting criteria.

Financial Security is a wholly owned subsidiary of Financial Security
Assurance Holdings Ltd. ("Holdings" }) a New York Stock Exchange listed
company. Major shareholders of Holdings include Fund American Enterprises
Holdings, Inc., U S WEST Capital Corporation and The Tokio Marine and Fire
Insurance Co., Ltd. No shareholder of Holdings is obligated to pay any debt of
Financial Security or its subsidiaries or any claim under any insurance policy
issued by Financial Security or its subsidiaries or to make any additional
contribution to the capital of Financial Security or its subsidiaries. As of
March 31, 1996 the total policyholders' surplus and contingency reserves and
the total unearned premium reserve, respectively, of Financial Security and
its consolidated subsidiaries were, in accordance with generally accepted
accounting principles, approximately $650,053,000 (unaudited) and $387,239,000
(unaudited), and the total shareholders' equity and the total unearned
premium reserve, respectively, of Financial Security and its consolidated
subsidiaries were, in accordance with generally accepted accounting
principles, approximately $779,177,000 (unaudited) and $340,226,000
(unaudited). Copies of Financial Security's financial statements may be
obtained by writing to Financial Security at 350 Park Avenue, New York, New
York, 10022, Attention: Communications Department. Its telephone number is
(212) 826-0100.

Pursuant to an intercompany agreement, liabilities on financial guaranty
insurance written or reinsured from third parties by Financial Security or any
of its domestic operating insurance company subsidiaries (including FSA
Maryland) are reinsured among such companies on an agreed-upon percentage
substantially proportional to their respective capital, surplus and reserves,
subject to applicable statutory risk limitations. In addition, Financial
Security and FSA Maryland reinsure a portion of their liabilities under
certain of their financial guaranty insurance policies with other reinsurers
under various quota share treaties and on a transaction-by-transaction basis.
Such reinsurance is utilized as a risk management device and to comply with
certain statutory and rating agency requirements; it does not alter or limit
the obligations of Financial Security under any financial guaranty insurance
policy.

The claims-paying ability of Financial Security and FSA Maryland is rated "
Aaa" by Moody's Investors Service, Inc., and "AAA" by Standard &
Poor's Ratings Services, Nippon Investors Service Inc. and Standard & Poor's
(Australia) Pty. Ltd. Such ratings reflect only the views of the respective
rating agencies, are not recommendations to buy, sell or hold securities and
are subject to revision or withdrawal at any time by such rating agencies.

Capital Guaranty Insurance Company was involved in a merger in 1995. On
December 20, 1995, Capital Guaranty Corporation ("CGC" ) merged with a
subsidiary of Financial Security Assurance Holdings Ltd. and Capital Guaranty
Insurance Company, CGC's principal operating subsidiary, changed its name to
Financial Security Assurance of Maryland Inc. ("FSA Maryland" ) and
became a wholly owned subsidiary of Financial Security Assurance Inc. For
further description, see "Financial Security Assurance Inc." herein.

The address of FSA Maryland and its telephone number are Steuart Tower, One
Market Plaza, San Francisco, CA 94105-1413 and (415) 995-8000.

In order to be in the Trust, Bonds must be insured by one of the Preinsured
Bond Insurers or be eligible for the insurance being obtained by the Trust. In
determining eligibility for insurance, the Preinsured Bond Insurers; AMBAC
Indemnity and Financial Guaranty, have applied their own standards which
correspond generally to the standards they normally use in establishing the
insurability of new issues of municipal bonds and which are not necessarily
the criteria used in the selection of Bonds by the Sponsor. To the extent the
standards of the Preinsured Bond Insurers; AMBAC Indemnity and Financial
Guaranty, are more restrictive than those of the Sponsor, the previously
stated Trust investment criteria have been limited with respect to the Bonds.
This decision is made prior to the Date of Deposit, as debt obligations not
eligible for insurance are not deposited in the Trust. Thus, all Bonds in the
portfolio are insured either by the Trust or by the issuer of the Bonds, by a
prior owner of such Bonds, or by the Sponsor prior to the deposit of such
Bonds in the Trust.

Because the Bonds are insured by one of the Portfolio Insurers or one of the
Preinsured Bond Insurers as to the timely payment of principal and interest,
when due, and on the basis of the various reinsurance agreements in effect, on
the Date of Deposit of each Trust Standard & Poor's assigned to the Units of
the Trust its "AAA" investment rating., Such rating will be in effect
for a period of thirteen months from the Date of Deposit and will, unless
renewed, terminate at the end of such period. See "Description of Bond
Ratings" . The obtaining of this rating by the Trust should not be
construed as an approval of the offering of the Units by Standard & Poor's or
as a guarantee of the market value of the Trust or of the Units.

The Estimated Current Return and the Estimated Long-Term Return on an
identical portfolio without the insurance obtained by the Trust would have
been higher than the Estimated Current Return and the Estimated Long-Term
Return on the Securities in the Trust after payment of the insurance premium.
An objective of portfolio insurance obtained by the Trust is to obtain a
higher yield on the Trust portfolio than would be available if all the
Securities in such portfolio had Standard & Poor's "AAA" rating and
yet at the same time to have the protection of insurance of prompt payment of
interest and principal, when due, on the Bonds. There is, of course, no
certainty that this result will be achieved. Preinsured bonds in the Trust
which have been insured by the issuer (all of which are rated "AAA" by
Standard & Poor's) may or may not have a higher yield than uninsured bonds
rated "AAA" by Standard & Poor's. In selecting such Bonds for the
portfolio, the Sponsor has applied the criteria hereinbefore described.

In the event of nonpayment of interest or principal, when due, in respect of a
Bond, AMBAC Indemnity shall make such payment not later than 30 days and
Financial Guaranty shall make such payment within one business day after the
respective insurer has been notified that such nonpayment has occurred or is
threatened (but not earlier than the date such payment is due). The insurer,
as regards any payment it may make, will succeed to the rights of the Trustee
in respect thereof. All policies issued by the Portfolio Insurers and the
Preinsured Bond Insurers are substantially identical insofar as obligations to
the Trust are concerned.

The Internal Revenue Service has issued a letter ruling which holds in effect
that insurance proceeds representing maturing interest on defaulted municipal
obligations paid to holders of insured bonds, under policy provisions
substantially identical to the policies described herein, will be excludable
from Federal gross income under Section 103(a)(1) of the Internal Revenue Code
to the same extent as if such payments were made by the issuer of the
municipal obligations. Holders of Units in the Trust should discuss with their
tax advisers the degree of reliance which they may place on this letter
ruling. However, Chapman and Cutler, counsel for the Sponsor, has given an
opinion to the effect such payment of proceeds would be excludable from
Federal gross income if, and to the same extent as, such interest would have
been so excludable if paid by the issuer of the defaulted obligations. See
"Tax Status" .

Each Portfolio Insurer is subject to regulation by the department of insurance
in each state in which it is qualified to do business. Such regulation,
however, is no guarantee that each Portfolio Insurer will be able to perform
on its contracts of insurance in the event a claim should be made thereunder
at some time in the future. At the date hereof, it is reported that no claims
have been submitted or are expected to be submitted to any of the Portfolio
Insurers which would materially impair the ability of such company to meet its
commitments pursuant to any contract of bond or portfolio insurance.

The information relating to each Portfolio Insurer has been furnished by such
companies. The financial information with respect to each Portfolio Insurer
appears in reports filed with state insurance regulatory authorities and is
subject to audit and review by such authorities. No representation is made
herein as to the accuracy or adequacy of such information or as to the absence
of material adverse changes in such information subsequent to the dates
thereof.

FEDERAL TAX STATUS OF THE TRUSTS

In the opinion of Chapman and Cutler, counsel for the Sponsor, under the
existing law:

(1)Each Trust is not an association taxable as a corporation for Federal
income tax purposes and interest and accrued original issue discount on Bonds
which is excludable from gross income under the Internal Revenue Code of 1986
(the "Code" ) will retain its status when distributed to Unitholders;
however such interest may be taken into account in computing the alternative
minimum tax, an additional tax on branches of foreign corporations and the
environmental tax (the "Superfund Tax" ), as noted below;

(2)Each Unitholder is considered to be the owner of a pro rata portion each
asset of the respective Trust under subpart E, subchapter J of chapter 1 of
the Code and will have a taxable event when such Trust disposes of a Bond, or
when the Unitholder redeems or sells his Units. Unitholders must reduce the
tax basis of their Units for their share of accrued interest received by the
respective Trust, if any, on Bonds delivered after the Unitholders pay for
their Units to the extent that such interest accrued on such Bonds before the
date the Trust acquired ownership of the Bonds (and the amount of this
reduction may exceed the amount of accrued interest paid to the seller) and,
consequently, such Unitholders may have an increase in taxable gain or
reduction in capital loss upon the disposition of such Units. Gain or loss
upon the sale or redemption of Units is measured by comparing the proceeds of
such sale or redemption with the adjusted basis of the Units. If the Trustee
disposes of Bonds (whether by sale, payment on maturity, redemption or
otherwise), gain or loss is recognized to the Unitholder (subject to various
non-recognition provisions of the Code). The amount of any such gain or loss
is measured by comparing the Unitholder's pro rata share of the total proceeds
from such disposition with the Unitholder's basis for his or her fractional
interest in the asset disposed of. In the case of a Unitholder who purchases
Units, such basis (before adjustment for earned original issue discount and
amortized bond premium, if any) is determined by apportioning the cost of the
Units among each of the Trust assets ratably according to value as of the
valuation date nearest the date of acquisition of the Units. The tax basis
reduction requirements of the Code relating to amortization of bond premium
may, under some circumstances, result in the Unitholder realizing a taxable
gain when his Units are sold or redeemed for an amount less than or equal to
his original cost;

(3)Any proceeds paid under an insurance policy or policies dated the Date of
Deposit, issued to an Insured Trust by AMBAC Indemnity, Financial Guaranty or
a combination thereof with respect to the Bonds which represent maturing
interest on defaulted obligations held by the Trustee will be excludable from
Federal gross income if, and to the same extent as, such interest would have
been so excludable if paid in the normal course by the issuer of the defaulted
obligations provided that, at the time such policies are purchased, the
amounts paid for such policies are reasonable, customary and consistent with
the reasonable expectation that the issuer of the obligations, rather than the
insurer, will pay debt service on the obligations; and

(4)Any proceeds paid under individual policies obtained by issuers of Bonds
which represent maturing interest on defaulted obligations held by the Trustee
will be excludable from Federal gross income if, and to the same extent as,
such interest would have been excludable if paid in the normal course by the
issuer of the defaulted obligations provided that, at the time such policies
are purchased, the amounts paid for such policies are reasonable, customary
and consistent with the reasonable expectation that the issuer of the
obligations, rather than the insurer, will pay debt service on the obligations.

Sections 1288 and 1272 of the Code provide a complex set of rules governing
the accrual of original issue discount. These rules provide that original
issue discount accrues either on the basis of a constant compound interest
rate or ratably over the term of the Bond, depending on the date the Bond was
issued. In addition, special rules apply if the purchase price of a Bond
exceeds the original issue price plus the amount of original issue discount
which would have previously accrued based upon its issue price (its "
adjusted issue price" ) to prior owners. If a Bond is acquired with accrued
interest, that portion of the price paid for the accrued interest is added to
the tax basis of the Bond. When this accrued interest is received, it is
treated as a return of capital and reduces the tax basis of the Bond. If a
Bond is purchased for a premium, the amount of the premium is added to the tax
basis of the Bond. Bond premium is amortized over the remaining term of the
Bond, and the tax basis of the Bond is reduced each tax year by the amount of
the premium amortized in that tax year. The application of these rules will
also vary depending on the value of the Bond on the date a Unitholder acquires
his Units and the price the Unitholder pays for his Units. Unitholders should
consult with their tax advisers regarding these rules and their application.

"The Revenue Reconciliation Act of 1993" (the "Tax Act" )
subjects tax-exempt bonds to the market discount rules of the Code effective
for bonds purchased after April 30, 1993. In general, market discount is the
amount (if any) by which the stated redemption price at maturity exceeds an
investor's purchase price (except to the extent that such difference, if any,
is attributable to original issue discount not yet accrued), subject to a
statutory de minimis rule. Market discount can arise based on the price a
Trust pays for Bonds or the price a Unitholder pays for his or her Units.
Under the Tax Act, accretion of market discount is taxable as ordinary income;
under prior law the accretion had been treated as capital gain. Market
discount that accretes while a Trust holds a Bond would be recognized as
ordinary income by the Unitholders when principal payments are received on the
Bond, upon sale or at redemption (including early redemption), or upon the
sale or redemption of his or her Units, unless a Unitholder elects to include
market discount in taxable income as it accrues. The market discount rules are
complex and Unitholders should consult their tax advisers regarding these
rules and their application.

In the case of certain corporations, the alternative minimum tax and the
Superfund Tax for taxable years beginning after December 31,1986 depends upon
the corporation's alternative minimum taxable income, which is the
corporation's taxable income uncertain adjustments. One of the adjustment
items used in computing the alternative minimum taxable income and the
Superfund Tax of a corporation (other than an S Corporation, Regulated
Investment Company, Real Estate Investment Trust, or REM IC) is an amount
equal to 75% of the excess of such corporation's "adjusted current
earnings" over an amount equal to its alternative minimum taxable income
(before such adjustment item and the alternative tax net operating loss
deduction). "Adjusted current earnings" includes all tax exempt
interest, including interest on all of the Bonds in the Fund. Under current
Code provisions, the Superfund Tax does not apply to tax years beginning on or
after January 1, 1996. However, the Superfund Tax could be extended
retroactively. Under the provisions of Section 884 of the Code, a branch
profits tax is levied on the "effectively connected earnings and
profits" of certain foreign corporations which include tax-exempt interest
such as interest on the Bonds in the Trust. Unitholders should consult their
tax advisers with respect to the particular tax consequences to them including
the corporate alternative minimum tax, the Superfund Tax and the branch
profits tax imposed by Section 884 of the Code.

Counsel for the Sponsor has also advised that under Section 265 of the Code,
interest on indebtedness incurred or continued to purchase or carry Units of a
Trust is not deductible for Federal income tax purposes. The Internal Revenue
Service has taken the position that such indebtedness need not be directly
traceable to the purchase or carrying of Units (however, these rules generally
do not apply to interest paid on indebtedness incurred to purchase or improve
a personal residence). Also, under Section 265 of the Code, certain financial
institutions that acquire Units would generally not be able to deduct any of
the interest expense attributable to ownership of such Units. The U.S.
Treasury Department has proposed extending the financial institution rules to
all corporations. Investors with questions regarding this issue should consult
with their tax advisers.

In the case of certain of the Bonds in the Fund, the opinions of bond counsel
indicate that interest on such Bonds received by a "substantial user"
of the facilities being financed with the proceeds of these Bonds, or persons
related thereto, for periods while such Bonds are held by such a user or
related person, will not be excludible from Federal gross income, although
interest on such Bonds received by others would be excludible from Federal
gross income. "Substantial user" and "related person" are
defined under the Code and U.S. Treasury Regulations. Any person who believes
that he or she may be a "substantial user" or a "related
person" as so defined should contact his or her tax adviser.

In the opinion of special counsel to the Fund for New York tax matters, under
existing law, the Fund and each Trust are not associations taxable as
corporations and the income of each Trust will be treated as the income of the
Unitholders under the income tax laws of the State and City of New York.

All statements of law in the Prospectus concerning exclusion from gross income
for FacIera4 state or other tax purposes are the opinions of counsel and are
to be so construed.

At the respective times of issuance of the Bonds, opinions relating to the
validity thereof and to the exclusion of interest thereon from Federal gross
income are rendered by bond counsel to the respective issuing authorities.
Neither the Sponsor nor Chapman and Cutler has made any special review for the
Fund of the proceedings relating to the issuance of the Bonds or of the basis
for such opinions.

In the case of corporations, the alternative tax rate applicable to long-term
capital gains is 35%, effective for long-term capital gains realized in
taxable years beginning on or after January 1,1993. For taxpayers other than
corporations, net capital gains (which are defined as net long-term capital
gain over net short-term capital loss for a taxable year) are subject to a
maximum marginal stated tax rate of 28%. However, it should be noted that
legislative proposals are introduced from time to time that affect tax rates
and could affect relative differences at which ordinary income and capital
gains are taxed. Under the Code, taxpayers must disclose to the Internal
Revenue Service the amount of tax-exempt interest earned during the year.

Section 86 of the Code, in general, provides that 50% of Social Security
benefits are includible in gross income to the extent that the sum of "
modified adjusted gross income" plus 50% of the Social Security benefits
received exceeds a "base amount" . The base amount is $25,000 for
unmarried taxpayers, $32,000 for married taxpayers filing a joint return and
zero for married taxpayers who do not live apart at all times during the
taxable year and who file separate returns. Modified adjusted gross income is
adjusted gross income determined without regard to certain otherwise allowable
deductions and exclusions from gross income and by including tax-exempt
interest. To the extent that Social Security benefits are includible in gross
income, they will be treated as any other item of gross income.

In addition, under the Tax Act, for taxable years beginning after December
31,1993, up to 85% of Social Security benefits are includible in gross income
to the extent that the sum of "modified adjusted gross income" plus
50% of Social Security benefits received exceeds an "adjusted base
amount." The adjusted base amount is $34,000 for unmarried taxpayers,
$44,000 for married taxpayers filing a joint return, and zero for married
taxpayers who do not live apart at all times during the taxable year and who
file separate returns.

Although tax-exempt interest is included in modified adjusted gross income
solely for the purpose of determining what portion, if any, of Social Security
benefits will be included in gross income, no tax-exempt interest, including
that received from a Trust, will be subject to tax. A taxpayer whose adjusted
gross income already exceeds the base amount or the adjusted base amount must
include 50% or 85%, respectively, of his Social Security benefits in gross
income whether or not he receives any tax-exempt interest. A taxpayer whose
modified adjusted gross income (after inclusion of tax-exempt interest) does
not exceed the base amount need not include any Social Security benefits in
gross income.

Ownership of the Units may result in collateral federal income tax
consequences to certain taxpayers, including, without limitation, corporations
subject to either the environmental tax or the branch profits tax, financial
institutions, certain insurance companies, certain S corporations, individual
recipients of Social Security or Railroad Retirement benefits and taxpayers
who may be deemed to have incurred (or continued) indebtedness to purchase or
carry tax-exempt obligations. Prospective investors should consult their tax
advisors as to the applicability of any collateral consequences.

Except as noted therein, the exemption of interest on state and local
obligations for Federal income tax purposes discussed above does not
necessarily result in exemption under the income or other tax laws of any
state or city. The laws of the several states vary with respect to the
taxation of such obligations.

PUBLIC OFFERING

General. Units are offered at the Public Offering Price. The secondary market
public offering price is based on the bid prices of the Securities in each
Trust, an applicable sales charge as determined in accordance with the table
set forth below, which is based upon the estimated long-term return life of
each Trust, cash, if any, in the Principal Account held or owned by such
Trust, accrued interest and Purchased Interest, if any. For purposes of this
computation, Bonds will be deemed to mature on their expressed maturity dates
unless: (a) the Bonds have been called for redemption or are subject to
redemption on an earlier call date, in which case such call date will be
deemed to be the date upon which they mature; or (b) such Bonds are subject to
a "mandatory tender" , in which case such mandatory tender will be
deemed to be the date upon which they mature. The effect of this method of
sales charge computation will be that different sales charge rates will be
applied to each Trust based upon the estimated long term return life of such
Trust's Portfolio, in accordance with the following schedule:

Years To Maturity Sales Charge Years To Maturity Sales Charge
<S> <C> <C> <C>
1 1.010% 12 4.712%
2 1.523 13 4.822
3 2.041 14 4.932
4 2.302 15 5.042
5 2.564 16 5.152
6 2.828 17 5.263
7 3.093 18 5.374
8 3.627 19 5.485
9 4.167 20 5.597
10 4.384 21 to 30 5.708
11 4.603
</TABLE>

The sales charges in the above table are expressed as a percentage of the
aggregate bid prices of the securities in the Trust. Expressed as a percent of
the Public Offering Price (excluding Purchased Interest for those Trusts which
contain Purchased Interest), the sales charge on a Trust consisting entirely
of a portfolio of Bonds with 15 years to maturity would be 4.80%.

Accrued Interest (Accrued Interest To Carry). Accrued interest to carry
consists of two elements. The first element arises as a result of accrued
interest which is the accumulation of unpaid interest on a bond from the last
day on which interest thereon was paid. Interest on Securities in each Trust
is actually paid either monthly, quarterly, if applicable, or semi-annually to
such Trust. However, interest on the Securities in each Trust is accounted for
daily on an accrual basis. Because of this, each Trust always has an amount of
interest earned but not yet collected by the Trustee because of coupons that
are not yet due. For this reason, the Public Offering Price will have added to
it the proportionate share of accrued and undistributed interest to the date
of settlement.

The second element of accrued interest to carry arises because of the
structure of the Interest Account. The Trustee has no cash for distribution to
Unitholders of a Trust until it receives interest payments on the Securities
in such Trust. The Trustee is obligated to provide its own funds, at times, in
order to advance interest distributions. The Trustee will recover these
advancements when such interest is received. Interest Account balances are
established so that it will not be necessary on a regular basis for the
Trustee to advance its own funds in connection with such interest
distributions. The Interest Account balances are also structured so that there
will generally be positive cash balances and since the funds held by the
Trustee may be used by it to earn interest thereon, it benefits thereby. If a
Unitholder sells or redeems all or a portion of his Units or if the Bonds in a
Trust are sold or otherwise removed or if a Trust is liquidated, he will
receive at that time his proportionate share of the accrued interest to carry
computed to the settlement date in the case of sale or liquidation and to the
date of tender in the case of redemption.

Purchased and Accrued Interest. Included in the Public Offering Price for
Insured Municipals Income Trust, 152nd-173rd Insured Multi-Series and Insured
Municipals Income Trust and Investor's Quality Tax-Exempt Trust, Multi-Series
213-246 is Purchased Interest and accrued interest.

Purchased Interest. Purchased Interest is a portion of the unpaid interest
that has accrued on the Securities from the later of the last payment date on
the Securities or the date of issuance thereof through the First Settlement
Date and is included in the calculation of the Public Offering Price.
Purchased Interest will be distributed to Unitholders as Units are redeemed or
Securities mature or are called. See "Summary of Essential Financial
Information" in Part One of this Prospectus for the amount of Purchased
Interest per Unit for each Trust. Purchased Interest is an element of the
price Unitholders will receive in connection with the sale or redemption of
Units prior to the termination of a Trust.

Accrued Interest. Accrued interest is an accumulation of unpaid interest on
securities which generally is paid semi-annually, although a Trust accrues
such interest daily. Because of this, a Trust always has an amount of interest
earned but not yet collected by the Trustee. For this reasons, the Public
Offering Price of Units will have added to it the proportionate share of
accrued interest to the date of settlement. Unitholders will receive on the
next distribution date of a Trust the amount, if any, of accrued interest paid
on their Units.

As indicated in "Purchased Interest" , accrued interest as of the First
Settlement Date includes Purchased Interest. In an effort to reduce the amount
of Purchased Interest which would otherwise have to be paid by Unitholders,
the Trustee may advance a portion of such accrued interest to the Sponsor as
the Unitholder of record as of the First Settlement Date. Consequently, the
amount of accrued interest to be added to the Public Offering Price of Units
will include only accrued interest from the First Settlement Date to the date
of settlement (other than the Purchased Interest already included therein),
less any distributions from the Interest Account subsequent to the First
Settlement Date.

Because of the varying interest payment dates of the Securities, accrued
interest at any point in time will be greater than the amount of interest
actually received by a Trust and distributed to Unitholders. If a Unitholder
sells or redeems all or a portion of his Units, he will be entitled to receive
his proportionate share of the Purchased Interest and accrued interest from
the purchaser of his Units. Since the Trustee has the use of the funds
(including Purchased Interest) held in the Interest Account for distributions
to Unitholders and since such Account is non-interest-bearing to Unitholders,
the Trustee benefits thereby.

Accrued Interest. Included in the Public Offering Price for Insured Municipals
Income Trust, 174th Insured Multi-Series and subsequent series and Insured
Municipals Income Trust and Investors' Quality Tax-Exempt Trust, Multi-Series
247 and subsequent series is accrued interest. Accrued Interest is an
accumulation of unpaid interest on securities which generally is paid
semi-annually, although a Trust accrues such interest daily. Because of this,
a Trust always has an amount of interest earned but not yet collected by the
Trustee. For this reason, with respect to sales settling subsequent to the
First Settlement Date, the Public Offering Price of Units will have added to
it the proportionate share of accrued interest to the date of settlement.
Unitholders will receive on the next distribution date of the Trust the
amount, if any, of accrued interest paid on their Units.

In an effort to reduce the amount of accrued interest which would otherwise
have to be paid by Unitholders, the Trustee may advance the amount of accrued
interest to the Sponsor as the Unitholder of record as of the First Settlement
Date. Consequently, the amount of accrued interest to be added to the Public
Offering Price of Units will include only accrued interest from the First
Settlement Date to the date of settlement, less any distributions from the
Interest Account subsequent to the First Settlement Date.

Because of the varying interest payment dates of the Securities, accrued
interest at any point in time will be greater than the amount of interest
actually received by a Trust and distributed to Unitholders. If a Unitholder
sells or redeems all or a portion of his Units, he will be entitled to receive
his proportionate share of the accrued interest from the purchaser of his
Units. Since the Trustee has the use of the funds held in the Interest Account
for distributions to Unitholders and since such Account is
non-interest-bearing to Unitholders, the Trustee benefits thereby.

Offering Price. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in
Part One of this Prospectus in accordance with fluctuations in the prices of
the underlying Securities in the Trust. The price of the Units as of the
opening of business on the date of Part One of this Prospectus was determined
by adding to the determination of the aggregate bid price of the Bonds the
amount of the sales charge expressed as a percentage of the aggregate bid
price of the Securities plus Purchased Interest, if any, and dividing the sum
so obtained by the number of Units outstanding. This computation produced a
gross profit equal to the sales charge expressed as a percentage of the Public
Offering Price (excluding Purchased Interest). For secondary market purposes
an appraisal and adjustment with respect to the Trust will be made by the
Evaluator as of 4:00 P.M. Eastern time on days on which the New York Stock
Exchange is open for each day on which any Unit of the Trust is tendered for
redemption, and it shall determine the aggregate value of the Trust as of 4:00
P.M. Eastern time on such other days as may be necessary.

The aggregate price of the Securities in the Trust has been and will be
determined on the basis of bid prices: (a) on the basis of current market
prices for the Securities obtained from dealers or brokers who customarily
deal in bonds comparable to those held by the Trust; (b) if such prices are
not available for any particular Securities, on the basis of current market
prices for comparable bonds; (c) by causing the value of the Securities to be
determined by others engaged in the practice of evaluation, quoting or
appraising comparable bonds; or (d) by any combination of the above. Market
prices of the Securities will generally fluctuate with changes in market
interest rates. Unless Bonds are in default in payment of principal or
interest or in significant risk of such default, the Evaluator will not
attribute any value to the insurance obtained by the Trust.

The Evaluator will consider in its evaluation of Bonds which are in default in
payment of principal or interest or, in the Sponsor's opinion, in significant
risk of such default (the "Defaulted Bonds" ) the value of the
insurance guaranteeing interest and principal payments. The value of the
insurance will be equal to the difference between (i) the market value of
Defaulted Bonds assuming the exercise of the right to obtain Permanent
Insurance (less the insurance premiums and related expenses attributable to
the purchase of Permanent Insurance) and (ii) the market value of such
Defaulted Bonds not covered by Permanent Insurance. In addition, the Evaluator
will consider the ability of the affected Portfolio Insurer to meet its
commitments under any Trust insurance policy, including the commitments to
issue Permanent Insurance. It is the position of the Sponsor that this is a
fair method of valuing the Bonds and the insurance obtained by the Trust and
reflects a proper valuation method in accordance with the provisions of the
Investment Company Act of 1940.

Although payment is normally made three business days following the order for
purchase, payment may be made prior thereto. However, delivery of certificates
representing Units so ordered will be made three business days following such
order or shortly thereafter. A person will become the owner of Units on the
date of settlement provided payment has been received. Cash, if any, made
available to the Sponsor prior to the date of settlement for the purchase of
Units may be used in the Sponsor's business and may be deemed to be a benefit
to the Sponsor, subject to the limitations of the Securities Exchange Act of
1934. See "Rights of Unitholders--Redemption of Units" for information
regarding the ability to redeem Units ordered for purchase.

Unit Distribution. Units repurchased in the secondary market, if any, may be
offered by this Prospectus at the secondary Public Offering Price in the
manner described.

Broker-dealers or others will be allowed a concession or agency commission in
connection with secondary market transactions in the amount of 70% of the
applicable sales charge as determined using the table found in "Public
Offering--General" . Certain commercial banks are making Units of the Trust
available to their customers on an agency basis. A portion of the sales charge
(equal to the agency commission referred to above) is retained by or remitted
to the banks. Under the Glass-Steagall Act, banks are prohibited from
underwriting Trust Units; however, the Glass-Steagall Act does permit certain
agency transactions and the banking regulators have not indicated that these
particular agency transactions are not 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 minimum purchase in
the secondary market will be one Unit.

Broker-dealers of the Trusts and/or others may be eligible to participate in a
program in which such firms receive from the Sponsor a nominal award for each
of their registered representatives who have sold a minimum number of units of
unit investment trusts created by the Sponsor during a specified time period.
In addition, at various times the Sponsor may implement other programs under
which the sales forces of brokers, dealers, and/or others may be eligible to
win other nominal awards for certain sales efforts, or under which the Sponsor
will reallow to any such brokers, dealers, and/or others that sponsor sales
contests or recognition programs conforming to criteria established by the
Sponsor, or participate in sales programs sponsored by the Sponsor, an amount
not exceeding the total applicable sales charges on the sales generated by
such persons at the public offering price during such programs. Also, the
Sponsor in its discretion may from time to time pursuant to objective criteria
established by the Sponsor pay fees to qualifying brokers, dealers or others
for certain services or activities which are primarily intended to result in
sales of Units of the Trust. Such payments are made by the Sponsor out of its
own assets, and not out of the assets of the Trust. These programs will not
change the price Unitholders pay for their Units or the amount that the Trust
will receive from the Units sold.

The Sponsor reserves the right to reject, in whole or in part, any order for
the purchase of Units and to change the amount of the concession or agency
commission to dealers and others from time to time.

Sponsor and Dealer Profits. Dealers will receive the gross sales commission as
described under "Public Offering--General" above.

As stated under "Market for Units" below, the Sponsor intends to, and
certain of the dealers may, maintain a secondary market for the Units of the
Trust. In so maintaining a market, the Sponsor or any such dealer will realize
profits or sustain losses in the amount of any difference between the price at
which Units are purchased and the price at which Units are resold. In
addition, the Sponsor or any such dealer will also realize profits or sustain
losses resulting from a redemption of such repurchased Units at a price above
or below the purchase price for such Units, respectively.

Market for Units. Although they are not obligated to do so, the Sponsor
intends to, and certain of the dealers may, maintain a market for the Units
offered hereby and to offer continuously to purchase such Units at prices,
subject to change at any time, based upon the aggregate bid prices of the
Securities in the portfolio of the Trust, plus Purchased Interest, if any,
plus interest accrued to the date of settlement plus any principal cash on
hand, less any amounts representing taxes or other governmental charges
payable out of the Trust and less any accrued Trust expenses. If the supply of
Units exceeds demand or if some other business reason warrants it, the Sponsor
and/or the dealers may either discontinue all purchases of Units or
discontinue purchases of Units at such prices. In the event that a market is
not maintained for the Units and the Unitholder cannot find another purchaser,
a Unitholder desiring to dispose of his Units may be able to dispose of such
Units only by tendering them to the Trustee for redemption at the Redemption
Price, which is based upon the aggregate bid price of the Securities in the
portfolio of such Trust, plus Purchased Interest, if any, and any accrued
interest. The aggregate bid prices of the underlying Securities in the Trust
are expected to be less than the related aggregate offering prices. See "
Rights of Unitholders--Redemption of Units." A Unitholder who wishes to
dispose of his Units should inquire of his broker as to current market prices
in order to determine whether there is in existence any price in excess of the
Redemption Price and, if so, the amount thereof.

RIGHTS OF UNITHOLDERS

Certificates. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units of each Trust is evidenced by separate registered
certificates executed by the Trustee and the Sponsor unless a Unitholder or
the Unitholder's registered broker-dealer makes a written request to the
Trustee that ownership be in book entry form. Units are transferable by making
a written request to the Trustee and, in the case of Units evidenced as a
certificate, by presentation and surrender of such certificate to the Trustee
properly endorsed or accompanied by a written instrument or instruments of
transfer. A Unitholder must sign such written request, or such certificate
transfer instrument exactly as his name appears on the records of the Trustee,
and on the face of any certificate representing Units to be transferred, with
the signature guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP" ) or such other signature guaranty program
in addition to, or in substitution for, STAMP, as may be accepted by the
Trustee. 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. Certificates will be issued in denominations of one Unit or any
multiple thereof. Certificates for Units will bear appropriate notations on
their face indicating which plan of distribution has been selected in respect
thereof. If a change in the plan of distribution is made, the existing
certificate must be surrendered tot he Trustee and a new certificate will be
issued, at no charge to the Unitholder, to reflect the currently effective
plan of distribution.

Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each certificate reissued (other than
as a result of a change in plan of distribution) or transferred and to pay any
governmental charge that may be imposed in connection with each such transfer
or interchange. Destroyed, stolen, mutilated or lost certificates will be
replaced upon delivery to the Trustee of satisfactory indemnity, evidence of
ownership and payment of expenses incurred. Mutilated certificates must be
surrendered to the Trustee for replacement.

Distributions of Interest and Principal. Interest received by the Trust,
including that part of the proceeds of any disposition of Securities which
Purchased Interest and/or represents accrued interest, is credited by the
Trustee to the Interest Account. Other receipts are credited to the Principal
Account. All distributions will be net of applicable expenses. The pro rata
share of cash in the Principal Account will be computed as of the semi-annual
record date, and distributions to the Unitholders as of such record date will
be made on or shortly after the twenty-fifth day of such month. Proceeds
received from the disposition of any of the Securities after such record date
and prior to the following distribution date will be held in the Principal
Account and not distributed until the next distribution date. The Trustee is
not required to pay interest on funds held in the Principal or Interest
Accounts (but may itself earn interest thereon and therefore benefits from the
use of such funds) nor to make a distribution from the Principal Account
unless the amount available for distribution therein shall equal at least
$1.00 per Unit.

The distribution to the Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of an
amount substantially equal to such portion of the Unitholders' pro rata share
of the Estimated Net Annual Unit Income in the Interest Account after
deducting estimated expenses attributable as is consistent with the
distribution plan chosen. Only monthly distributions are available for Insured
Municipals Income Trust, 152nd-173rd Insured Multi-Series and for Insured
Municipals Income Trust and Investors' Quality Tax-Exempt Trust, Multi-Series
213-246. Because interest payments are not received by the Trust at a constant
rate throughout the year, such interest distribution may be more or less than
the amount credited to the Interest Account as of the record date. For the
purpose of minimizing fluctuation in the distributions from the Interest
Account, the Trustee is authorized to advance such amounts as may be necessary
to provide interest distributions of approximately equal amounts. The Trustee
shall be reimbursed, without interest, for any such advances from funds in the
Interest Account on the ensuing record date. Persons who purchase Units
between a record date and a distribution date will receive their first
distribution on the second distribution date after the purchase.

On or before the twenty-fifth 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 Operating Expenses" ).
The Trustee also may withdraw from said accounts such amounts, if any, as it
deems necessary to establish a reserve for any governmental charges 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.

Distribution. Distributions of interest received by the Trust, prorated on an
annual basis, will be made monthly unless the Unitholder has elected to
receive them semi-annually or quarterly, if such options are available.
Distributions of funds from the Principal Account will be made on a
semi-annual basis, except under the special circumstances outlined in "
Rights of Unitholders--Distribution of Interest and Principal" above.
Record dates for monthly distributions will be the tenth day of each month,
record dates for quarterly distributions will be the tenth day of March, June,
September and December, and record dates for semi-annual distributions will be
the tenth day of June and December. Distributions will be made on the
twenty-fifth day of the month subsequent to the respective record dates.
Unitholders of Insured Municipals Income Trust, 152nd-173rd Insured
Multi-Series, and Insured Municipals Income Trust and Investors' Quality
Tax-Exempt Trust, Multi- Series 213-246 will receive distributions of income
and principal, if any, on a monthly basis.

Change of Distribution Option. The plan of distribution selected by a
Unitholder will remain in effect until changed. Unitholders purchasing Units
in the secondary market will initially receive distributions in accordance
with the election of the prior owner. Unitholders may change the plan of
distribution in which they are participating. For the convenience of
Unitholders, the Trustee will furnish a card for this purpose; cards may also
be obtained upon request from the Trustee. Unitholders desiring to change
their plan of distribution may so indicate on the card and return it, together
with their certificate and such other documentation that the Trustee may then
require, to the Trustee. Certificates should be sent only by registered or
certified mail to minimize the possibility of their being lost or stolen. If
the card and certificate are properly presented to the Trustee, the change
will become effective for all subsequent distributions.

Reinvestment Option. Unitholders of all unit investment trusts sponsored by
Van Kampen American Capital Distributors, Inc., may elect to have each
distribution of interest income, capital gains and/or principal on their Units
automatically reinvested in shares of any Van Kampen American Capital mutual
funds (except for B shares) which are registered in the Unitholder's state of
residence. Such mutual funds are hereinafter collectively referred to as the
"Reinvestment Funds" .

Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trusts. The prospectus relating to each
Reinvestment Fund describes the investment policies of such fund and sets
forth the procedures to follow to commence reinvestment. A Unitholder may
obtain a prospectus for the respective Reinvestment Funds from Van Kampen
American Capital Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181. Texas residents who desire to reinvest may request that a
broker-dealer registered in Texas send the prospectus relating to the
respective fund.

After becoming a participant in a reinvestment plan, each distribution of
interest income, capital gains and/or principal on the participant's Units
will, on the applicable distribution date, automatically be applied, as
directed by such person, as of such distribution date by the Trustee to
purchase shares (or fractions thereof) of the applicable Reinvestment Fund at
a net asset value as computed as of the close of trading on the New York Stock
Exchange on such date. Unitholders with an existing Guaranteed Reinvestment
Option (GRO) Program account (whereby a sales charge is imposed on
distribution reinvestments) may transfer their existing account into a new GRO
account which allows purchases of Reinvestment Fund shares at net asset value
as described above.

Confirmations of all reinvestments by a Unitholder into a Reinvestment Fund
will be mailed to the Unitholder by such Reinvestment Fund. A participant may
at any time prior to five days preceding the next succeeding distribution
date, by so notifying the Trustee in writing, elect to terminate his or her
reinvestment plan and receive future distributions of his or her Units in
cash. There will be no charge or other penalty for such termination. Each
Reinvestment Fund, its sponsor and investment adviser shall have the right to
terminate at any time the reinvestment plan relating to such fund.

Reports to Unitholders. The Trustee shall furnish Unitholders in connection
with each distribution a statement of the amount of interest and, if any, the
amount of other receipts (received since the preceding distribution) being
distributed expressed in each case as a dollar amount representing the pro
rata share of each Unit outstanding. For as long as the Trustee deems it to be
in the best interests of the Unitholders, the accounts of the Trust shall be
audited, not less frequently than annually, by independent certified public
accountants and the report of such accountants shall be furnished by the
Trustee to Unitholders upon request. Within a reasonable period of time after
the end of each calendar year, the Trustee shall furnish to each person who at
any time during the calendar year was a registered Unitholder a statement (i)
as to the Interest Account: interest received (including amounts representing
interest received upon any disposition of Securities) and the percentage of
such interest by states in which the issuers of the Securities are located,
the amount of Purchased Interest, deductions for applicable taxes and for fees
and expenses of the Trust (including insurance costs), for redemptions of
Units, if any, and the balance remaining after such distributions and
deductions, expressed in each case both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (ii) as to the Principal Account: the
dates of disposition of any Securities and the net proceeds received therefrom
(excluding any portion representing accrued interest), the amount paid for
redemptions of Units, if any, deductions for payment of applicable taxes and
fees and expenses of the Trustee, the amount of "when issued" interest
treated as a return of capital, if any, and the balance remaining after such
distributions and deductions expressed both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (iii) a list of the Securities held
and the number of Units outstanding on the last business day of such calendar
year; (iv) the Redemption Price per Unit based upon the last computation
thereof made during such calendar year; and (v) amounts actually distributed
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.

In order to comply with Federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in the Trust furnished to it by the Evaluator.

Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay
Street, 20th Floor, New York, New York 10286, of the certificates representing
the Units to be redeemed, duly endorsed or accompanied by proper instruments
of transfer with signature guaranteed (or by providing satisfactory indemnity,
as in connection with lost, stolen or destroyed certificates) and by payment
of applicable governmental charges, if any. Thus, redemption of Units cannot
be effected until certificates representing such Units have been delivered to
the person seeking redemption or satisfactory indemnity provided. No
redemption fee will be charged. On the third business day following such
tender, the Unitholder will be entitled to receive in cash an amount for each
Unit equal to the Redemption Price per Unit next computed after receipt by the
Trustee of such tender of Units. The "date of tender" is deemed to be
the date on which Units are received by the Trustee, except that as regards
Units received after 4:00 P.M. Eastern time on days 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.

Under regulations issued by the Internal Revenue Service, the Trustee will be
required to withhold a specified percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's
tax identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and may be
recovered by the Unitholder only when filing a return. Under normal
circumstances the Trustee obtains the Unitholder's tax identification number
from the selling broker. However, at any time a Unitholder elects to tender
Units for redemption, such Unitholder should provide a tax identification
number to the Trustee in order to avoid this possible "back-up
withholding" in the event the Trustee has not been previously provided
such number.

Purchased Interest, if applicable, and accrued interest paid on redemption
shall be withdrawn from the Interest Account of the Trust or, if the balance
therein is insufficient, from the Principal Account. All other amounts will be
withdrawn from the Principal Account. The Trustee is empowered to sell
underlying Securities in order to make funds available for redemption. Units
so redeemed shall be cancelled.

The Redemption Price per Unit will be determined on the basis of the bid price
of the Securities in the Trust as of 4:00 P.M. Eastern time on days of trading
on the New York Stock Exchange on the date any such determination is made.
While the Trustee has the power to determine the Redemption Price per Unit
when Units are tendered for redemption, such authority has been delegated to
the Evaluator which determines the price per Unit on a daily basis. The
Redemption Price per Unit is the pro rata share of each Unit in the Trust
determined on the basis of (i) the cash on hand in the Trust or monies in the
process of being collected, (ii) the value of the Securities in the Trust
based on the bid prices of the Securities, except for those cases in which the
value of insurance has been included, (iii) Purchased Interest, if any, and
(iv) interest accrued thereon, less (a) amounts representing taxes or other
governmental charges payable out of the Trust and (b) the accrued expenses of
the Trust. The Evaluator may determine the value of the Securities in the
Trust by employing any of the methods set forth in "Public
Offering--Offering Price" . In determining the Redemption Price per Unit no
value will be assigned to the portfolio insurance maintained by the Trust on
the Bonds in the Trust unless such Bonds are in default in payment of
principal or interest or in significant risk of such default. On the other
hand, Bonds insured under a policy obtained by the issuer thereof are entitled
to the benefits of such insurance at all times and such benefits are reflected
and included in the market value of such Bonds. For a description of the
situations in which the Evaluator may value the insurance obtained by the
Trust, see "Public Offering--Offering Price" .

The price at which Units may be redeemed could be less than the price paid by
the Unitholder. As stated above, the Trustee may sell Securities to cover
redemptions. When Securities are sold, the size and diversity of the Trust
will be reduced. Such sales may be required at a time when Securities would
not otherwise be sold and might result in lower prices than might otherwise be
realized.

The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or during which the Securities and Exchange
Commission determines that trading on that Exchange is restricted or an
emergency exists, as a result of which disposal or evaluation of the
Securities in the Trust is not reasonably practicable, or for such other
periods as the Securities and Exchange Commission may by order permit. Under
certain extreme circumstances the Sponsor may apply to the Securities and
Exchange Commission for an order permitting a full or partial suspension of
the right of Unitholders to redeem their Units.

TRUST ADMINISTRATION

Sponsor Purchases of Units. The Trustee shall notify the Sponsor of any tender
of Units for redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before the close of business on the second
succeeding business day and by making payment therefor to the Unitholder not
later than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee for
redemption as any other Units.

The offering price of any Units acquired by the Sponsor will be in accord with
the Public Offering Price described in the then currently effective prospectus
describing such Units. Any profit resulting from the resale of such Units will
belong to the Sponsor which likewise will bear any loss resulting from a lower
offering or redemption price subsequent to its acquisition of such Units.

Portfolio Administration. The Trustee is empowered to sell, for the purpose of
redeeming Units tendered by any Unitholder, and for the payment of expenses
for which funds may not be available, such of the Bonds designated by the
Evaluator as the Trustee in its sole discretion may deem necessary. The
Evaluator, in designating such Bonds, will consider a variety of factors,
including (a) interest rates, (b) market value and (c) marketability. To the
extent that Bonds are sold which are current in payment of principal and
interest in order to meet redemption requests and defaulted Bonds are retained
in the portfolio in order to preserve the related insurance protection
applicable to said Bonds, the overall quality of the Bonds remaining in the
Trust's portfolio will tend to diminish. Except as described below and in
certain other unusual circumstances for which it is determined by the Trustee
to be in the best interests of the Unitholders or if there is no alternative,
the Trustee is not empowered to sell Bonds which are in default in payment of
principal or interest or in such significant risk of such default and for
which value has been attributed for the insurance obtained by the Trust.
Because of such restrictions on the Trustee under certain circumstances the
Sponsor may seek a full or partial suspension of the right of Unitholders to
redeem their Units. See "Rights of Unitholders--Redemption of Units" .
The Sponsor is empowered, but not obligated, to direct the Trustee to dispose
of Bonds in the event of an advanced refunding.

The Sponsor is required to instruct the Trustee to reject any offer made by an
issuer of any of the Bonds to issue new obligations in exchange or
substitution for any Bond pursuant to a refunding or refinancing plan, except
that the Sponsor may instruct the Trustee to accept or reject such an offer or
to take any other action with respect thereto as the Sponsor may deem proper
if (1) the issuer is in default with respect to such Bond or (2) in the
written opinion of the Sponsor the issuer will probably default with respect
to such Bond in the reasonably foreseeable future. Any obligation so received
in exchange or substitution will be held by the Trustee subject to the terms
and conditions of the Trust Agreement to the same extent as Bonds originally
deposited thereunder. Within five days after the deposit of obligations in
exchange or substitution for underlying Bonds, the Trustee is required to give
notice thereof to each Unitholder, identifying the Bonds eliminated and the
Bonds substituted therefor. Except as stated herein, the acquisition by the
Trust of any securities other than the Bonds initially deposited is not
permitted.

If any default in the payment of principal or interest on any Bond occurs and
no provision for payment is made therefor either pursuant to the portfolio
insurance, or otherwise, within 30 days, the Trustee is required to notify the
Sponsor thereof. If the Sponsor fails to instruct the Trustee to sell or to
hold such Bond within 30 days after notification by the Trustee to the Sponsor
of such default, the Trustee may in its discretion sell the defaulted Bond and
not be liable for any depreciation or loss thereby incurred.

Amendment or Termination. The Sponsor and the Trustee have the power to amend
the Trust Agreement without the consent of any of the Unitholders when such an
amendment is (a) to cure an ambiguity or to correct or supplement any
provision of the Trust Agreement which may be defective or inconsistent with
any other provision contained therein or (b) to make such other provisions as
shall not adversely affect the interest of the Unitholders (as determined in
good faith by the Sponsor and the Trustee), provided that the Trust Agreement
may not be amended to increase the number of Units issuable thereunder or to
permit the deposit or acquisition of securities either in addition to or in
substitution for any of the Securities initially deposited in the Trust,
except for the substitution of certain refunding securities for such Bonds. In
the event of any amendment, the Trustee is obligated to notify promptly all
Unitholders of the substance of such amendment.

All Trusts other than those indicated in the next sentence may be terminated
at any time by consent of Unitholders representing 100% of the Units of the
Trust then outstanding. Each series of Insured Municipals Income Trust, Series
98 and subsequent series may be terminated at any time by consent of the
Unitholders representing 51% of the Units of such Trust then outstanding. In
addition, a Trust may be terminated by the Trustee when the value of the
Trust, as shown by any semi-annual evaluation, is less than that indicated
under "Summary of Essential Financial Information" in Part One of this
Prospectus.

The Trust Agreement provides that the Trust shall terminate upon the
redemption, sale or other disposition of the last Security held in the Trust,
but in no event shall it continue beyond the end of the year indicated under
"The Trust" . In the event of termination of the Trust, written notice
thereof will be sent by the Trustee to each Unitholder thereof at his address
appearing on the registration books of the Trust maintained by the Trustee.
Within a reasonable time thereafter the Trustee shall liquidate any Securities
then held in the Trust and shall deduct from the funds of the Trust any
accrued costs, expenses or indemnities provided by the Trust Agreement,
including estimated compensation of the Trustee and costs of liquidation and
any amounts required as a reserve to provide for payment of any applicable
taxes or other governmental charges. The sale of Securities in the Trust upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time. For this reason, among others, the
amount realized by a Unitholder upon termination may be less than the
principal amount of Securities represented by the Units held by such
Unitholder. The Trustee shall then distribute to each Unitholder his share of
the balance of the Interest and Principal Accounts. With such distribution the
Unitholders shall be furnished a final distribution statement of the amount
distributable. At such time as the Trustee in its sole discretion shall
determine that any amounts held in reserve are no longer necessary, it shall
make distribution thereof to Unitholders in the same manner.

Notwithstanding the foregoing, in connection with final distributions to
Unitholders, it should be noted that because the portfolio insurance obtained
by the Trust is applicable only while Bonds so insured are held by the Trust,
the price to be received by the Trust upon the disposition of any such Bond
which is in default, by reason of nonpayment of principal or interest, will
not reflect any value based on such insurance. Therefore, in connection with
any liquidation, it shall not be necessary for the Trustee to, and the Trustee
does not currently intend to, dispose of any Bond or Bonds if retention of
such Bond or Bonds, until due, shall be deemed to be in the best interest of
Unitholders, including, but not limited to situations in which a Bond or Bonds
so insured are in default and situations in which a Bond or Bonds so insured
have a deteriorated market price resulting from a significant risk of default.
Since the Bonds which are insured by insurance obtained by the Bond issuer
will reflect the value of the related insurance, it is the present intention
of the Sponsor not to direct the Trustee to hold any of such Bonds after the
date of termination. All proceeds received, less applicable expenses, from
insurance on defaulted Bonds not disposed of at the date of termination will
ultimately be distributed to Unitholders of record as of such date of
termination as soon as practicable after the date such defaulted Bond or Bonds
become due and applicable insurance proceeds have been received by the
Trustee.

Limitation on Liabilities. The Sponsor, the Evaluator and the Trustee shall be
under no liability to Unitholders for taking any action or for refraining from
taking any action in good faith pursuant to the Trust Agreement, or for errors
in judgment, but shall be liable only for their own willful misfeasance, bad
faith or gross negligence (negligence in the case of the Trustee) in the
performance of their duties or by reason of their reckless disregard of their
obligations and duties hereunder. The Trustee shall not be liable for
depreciation or loss incurred by reason of the sale by the Trustee of any of
the Securities. In the event of the failure of the Sponsor to act under the
Trust Agreement, the Trustee may act thereunder and shall not be liable for
any action taken by it in good faith under the Trust Agreement.

The Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Securities or upon the interest thereon or
upon it as Trustee under the Trust Agreement or upon or in respect of the
Trust which the Trustee maybe required to pay under any present or future law
of the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee.

The Trustee, Sponsor and Unitholders 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 of information available to it,
provided, however, that the Evaluator shall be under no liability to the
Trustee, Sponsor or Unitholders for errors in judgment. This provision shall
not protect the Evaluator in any case of willful misfeasance, bad faith, gross
negligence or reckless disregard to its obligations and duties.

Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. The Sponsor is an indirect
subsidiary of VK/AC Holding, Inc. Prior to October 31, 1996, VK/AC Holding,
Inc. was controlled, through the ownership of a substantial majority of its
common stock, by The Clayton & Dubilier Private Equity IV Limited Partnership.
On October 31, 1996, VK/AC Holding, Inc. became a wholly owned indirect
subsidiary of Morgan Stanley Group Inc. pursuant to the closing of an
Agreement and Plan of Merger among Morgan Stanley Group Inc., MSAM Holdings
II, Inc. and MSAM Acquisition Inc., whereby MSAM Acquisition Inc. was merged
with and into VK/AC Holding, Inc. and VK/AC Holding, Inc. was the surviving
corporation (the "Acquisition" ).

As a result of the Acquisition, VK/AC Holding, Inc. became a wholly owned
subsidiary of MSAM Holdings II, Inc. which, in turn, is a wholly owned
subsidiary of Morgan Stanley Group Inc. Morgan Stanley Group Inc. and various
of its directly or indirectly owned subsidiaries, including Morgan Stanley
Asset Management Inc., an investment adviser (MSAM" ), Morgan Stanley & Co.
Incorporated, a registered broker-dealer and investment adviser, and Morgan
Stanley International, are engaged in a wide range of financial services.
Their principal businesses include securities underwriting, distribution and
trading; merger, acquisition, restructuring and other corporate finance
advisory activities; merchant banking; stock brokerage and research services;
asset management; trading of futures, options, foreign exchange commodities
and swaps (involving foreign exchange, commodities, indices and interest
rates); real estate advice, financing and investing; and global custody,
securities clearance services and securities lending. As of September 30,
1996, MSAM, together with its affiliated investment advisory companies, had
approximately $103.5 billion of assets under management and fiduciary advice.

On February 5, 1997, Morgan Stanley Group Inc. and Dean Witter, Discover & Co.
announced that they had entered into an Agreement and Plan of Merger to form
Morgan Stanley, Dean Witter, Discover & Co. Subject to certain conditions
being met, it is currently anticipated that the transaction will close in
mid-1997. Thereafter, Van Kampen American Capital Distributors, Inc. will be
an indirect subsidiary of Morgan Stanley, Dean Witter, Discover & Co.

Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.

Van Kampen American Capital Distributors, Inc. specializes in the underwriting
and distribution of unit investment trusts and mutual funds with roots in
money management dating back to 1926. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and has offices at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, (630) 684-6000 and 2800 Post Oak Boulevard,
Houston, Texas 77056, (713) 993-0500. It maintains a branch office in
Philadelphia and has regional representatives in Atlanta, Dallas, Los Angeles,
New York, San Francisco, Seattle and Tampa. As of November 30, 1996, the total
stockholders' equity of Van Kampen American Capital Distributors, Inc. was
$129,451,000 (unaudited). (This paragraph relates only to the Sponsor and not
to the Trust or to any other Series thereof. The information is included
herein only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations. More detailed financial information will be made available by the
Sponsor upon request.)

As of December 31, 1996, the Sponsor and its Van Kampen American Capital
affiliates managed or supervised approximately $59 billion of investment
products, of which over $11.88 billion is invested in municipal securities.
The Sponsor and its Van Kampen American Capital affiliates managed $48 billion
of assets, consisting of $29.9 billion for 59 open end mutual funds (of which
46 are distributed by Van Kampen American Capital Distributors, Inc.), $13.1
billion for 38 closed-end funds and $4.99 billion for 106 institutional
accounts. The Sponsor has also deposited approximately $26 billion of unit
investment trusts. All of Van Kampen American Capital's open-end funds,
closed-end funds and unit investment trusts are professionally distributed by
leading financial firms nationwide. Based on cumulative assets deposited, the
Sponsor believes that it is the largest sponsor of insured municipal unit
investment trusts, primarily through the success of its Insured Municipals
Income Trust(R)or the IM-IT(R)trust. The Sponsor also provides
surveillance and evaluation services at cost for approximately $13 billion of
unit investment trust assets outstanding. Since 1976, the Sponsor has serviced
over two million investor accounts, opened through retail distribution firms.

If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or become bankrupt or its affairs are
taken over by public authorities, then the Trustee may (i) appoint a successor
Sponsor at rate of compensation deemed by the Trustee to be reasonable and not
exceeding amounts prescribed by the Securities and Exchange Commission, (ii)
terminate the Trust Agreement and liquidate the Trust as provided therein or
(iii) continue to act as Trustee without terminating the Trust Agreement.

Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its Unit Investment Trust
Division offices at 101 Barclay Street, New York, New York 10286 (800)
221-7668. The Bank of New York is subject to supervision and examination by
the Superintendent of Banks of the State of New York and the Board of
Governors of the Federal Reserve System, and its deposits are insured by the
Federal Deposit Insurance Corporation to the extent permitted by law.

The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolio.

In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the certificates issued by
the Trust to, every Unitholder of the Trust. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or Federal statute,
rule or regulation (see "Public Offering--Reports Provided" ). The
Trustee is required to keep a certified copy or duplicate original of the
Trust Agreement on file in its office available for inspection at all
reasonable times during the usual business hours by any Unitholder, together
with a current list of the Securities held in the Trust.

Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of the Trust created by the Trust Agreement by executing an
instrument in writing and filing the same with the Sponsor. The Trustee or
successor trustee must mail a copy of the notice of resignation to all
Unitholders then of record, not less than 60 days before the date specified in
such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. 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. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.

Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.

OTHER MATTERS

Legal Opinions. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Various counsel have acted as counsel for the Trustee
and as special counsel for the Trust for New York tax matters.

Independent Certified Public Accountants. The statement of condition and the
related securities portfolio included in Part One of this Prospectus have been
audited by Grant Thornton LLP, independent certified public accountants, as
set forth in their report in Part One of this Prospectus, and are included
herein in reliance upon the authority of said firm as experts in accounting
and auditing.

DESCRIPTION OF BOND RATINGS

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

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

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

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

Nature of and provisions of the obligation.

Protection afforded by, and relative position of, the obligation in the event
of bankruptcy, reorganization or other arrangements 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 in the majority of instances
they differ from AAA issues only in small degree.

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
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.

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

Provisional Ratings: A provisional rating "(p)" 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, Inc. A brief description of the applicable Moody's
Investors Service, Inc. ("Moody's" ) rating symbols and their meanings
follows:

Aaa Bonds which are rated Aaa are judged to be 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.
With the occasional exception of oversupply in a few specific instances, the
safety of obligations of this class is so absolute that their market value is
affected solely by money market fluctuation.

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 fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities. These Aa bonds are high grade, their market value virtually immune
to all but money market influences, with the occasional exception of
oversupply in a few specific instances.

A Bonds which are rated A possess many favorable investment attributes and
are to be considered as higher 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. The market value of A rated bonds may be influenced to some degree by
credit circumstances during a sustained period of depressed business
conditions. During periods of normalcy, bonds of this quality frequently move
in parallel with Aaa and Aa obligations, with the occasional exception of
oversupply in a few specific instances.

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.

Moody's bond rating symbols may contain numerical modifiers of a generic
rating classification. The modifier 1 indicates that the bond ranks at the
high end of its 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 bonds
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. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.

No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the
Trust, the Sponsor or any dealer. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, securities in any state to any
person to whom it is not lawful to make such offer in such state.

<TABLE>
<CAPTION>
Table of Contents Page
<S> <C>
The Trust...................................................2
Objectives and Securities Selection.........................2
Trust Portfolio.............................................3
Risk Factors................................................3
Bond Redemptions............................................5
Estimated Current Returns and Estimated Long-Term Returns...5
Trust Operating Expenses....................................5
Compensation of Sponsor and Evaluator.......................5
Trustee's Fee...............................................5
Insurance Premiums..........................................5
Miscellaneous Expenses......................................6
Insurance on the Bonds......................................6
Federal Tax Status Of The Trusts............................9
Public Offering.............................................10
General.....................................................10
Accrued Interest (Accrued Interest To Carry)................10
Purchased and Accrued Interest..............................11
Accrued Interest............................................11
Offering Price..............................................11
Unit Distribution...........................................12
Sponsor and Dealer Profits..................................12
Market for Units............................................12
Rights of Unitholders.......................................12
Certificates................................................12
Distributions of Interest and Principal.....................12
Distribution................................................13
Change of Distribution Option...............................13
Reinvestment Option.........................................13
Reports to Unitholders......................................13
Redemption of Units.........................................14
Trust Administration........................................14
Sponsor Purchases of Units..................................14
Portfolio Administration....................................14
Amendment or Termination....................................15
Limitation on Liabilities...................................15
Sponsor.....................................................15
Trustee.....................................................16
Other Matters...............................................16
Legal Opinions..............................................16
Independent Certified Public Accountants....................16
Description of Bond Ratings.................................16
Standard & Poor's...........................................16
Moody's Investors Service, Inc..............................17
</TABLE>

This Prospectus contains information concerning the Trust and the Sponsor, but
does not contain all of the information set forth in the registration
statements and exhibits relating thereto, which the Trust has filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933 and the Investment Company Act of 1940, and to which reference is
hereby made.

INSURED MUNICIPALS INCOME TRUST

PROSPECTUS PART TWO

Note: This Prospectus May Be Used Only
When Accompanied by Part One. Both
Parts of this Prospectus should be
retained for future reference.
Dated as of the date of the Prospectus
Part I accompanying this Prospectus
Part II.

Sponsor: VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.

One Parkview Plaza
Oakbrook Terrace, Illinois 60181

2800 Post Oak Boulevard
Houston, Texas 77056

A Wealth of Knowledge A Knowledge of Wealth

VAN KAMPEN AMERICAN CAPITAL

STATE INSURED MUNICIPALS INCOME TRUST

FIRST FAMILY OF TRUSTS

PROSPECTUS Part Two

In the opinion of counsel, interest to the Fund and to Unitholders, with
certain exceptions, is excludable under existing law from gross income for
Federal income taxes. In addition, the interest income of each Trust is, in
the opinion of counsel, exempt to the extent indicated from state and local
taxes, when held by residents of the state where the issuers of Bonds in such
Trust are located. Capital gains, if any, are subject to Federal tax.

INTRODUCTION

The Fund. The objectives of the Fund are Federal and state tax-exempt income
(to the extent indicated) and conservation of capital through an investment in
a diversified, insured portfolio of tax-exempt bonds. The Fund consists of a
series of separate unit investment trusts. The various trusts collectively are
referred to herein as the "Trusts" . Each Trust consists of such
securities as may continue to be held (the "Bonds" or "
Securities" ). Such Securities are interest-bearing obligations issued by
or on behalf of municipalities and other governmental authorities, the
interest on which is, in the opinion of recognized bond counsel to the issuing
governmental authority, exempt from all Federal income taxes under existing
law. In addition, the interest income of each Trust is, in the opinion of
counsel, exempt to the extent indicated from state and local taxes, when held
by residents of the state where the issuers of Bonds in such Trust are
located. See "Risk Factors and State Tax Status of the Trusts" .

The Fund and "AAA" Rating. Insurance guaranteeing the payments of
principal and interest, when due, on the Securities in the portfolio of each
Trust has been obtained from a municipal bond insurance company either by the
Trust, by a prior owner of the Bonds, by the issuer of the Bonds involved or
by the Sponsor prior to the deposit of the Bonds in the Fund. Bonds for which
insurance has been obtained by the issuer thereof or by the Sponsor prior to
the deposit of such Bonds in the Fund are referred to herein as "
Preinsured Bonds" . All issues of a Trust are insured under one or more
insurance policies obtained by the Trust, if any, except for certain issues of
certain Trusts which are Preinsured Bonds. Insurance obtained by a Trust, if
any, applies only while Bonds are retained in such Trust while insurance
obtained on Preinsured Bonds is effective so long as such Bonds are
outstanding. The Trustee, upon the sale of a Bond insured under an insurance
policy obtained by a Trust, has a right to obtain from the insurer involved
permanent insurance for such Bond upon the payment of a single predetermined
insurance premium and any expenses related thereto from the proceeds of the
sale of such Bond. Insurance relates only to the Bonds in the respective Trust
and not to the Units offered hereby or to the market value thereof. As a
result of such insurance, the Units of each Trust received a rating of "
AAA" by Standard & Poor's, A Division of the McGraw-Hill Companies ("
Standard & Poor's" ) on the date the Trust was created. Standard & Poor's
has indicated that this rating is not a recommendation to buy, hold or sell
Units nor does it take into account the extent to which expenses of each Trust
or sales by each Trust of Bonds for less than the purchase price paid by such
Trust will reduce payments to Unitholders of the interest and principal
required to be paid on such Bonds. See "lnsurance on the Bonds" . No
representation is made as to any insurer's ability to meet its commitments.
Units of the Trusts are not insured by the FDIC, are not deposits or other
obligations of, or guaranteed by, any government agency and are subject to
investment risk, including possible loss of the principal amount invested.

Public Offering Price. The secondary market Public Offering Price of each
Trust will include the aggregate bid price of the Securities in such Trust, an
applicable sales charge, cash, if any, in the Principal Account held or owned
by such Trust, accrued interest and Purchased Interest, if any. If the
Securities in each Trust were available for direct purchase by investors, the
purchase price of the Securities would not include the sales charge included
in the Public Offering Price of the Units.

NOTE: THIS PROSPECTUS MAY BE USED ONLY WHEN ACCOMPANIED BY PART ONE.

Both parts of this Prospectus should be retained for future reference.

This Prospectus is dated as of the date of the Prospectus Part I accompanying
this Prospectus Part II.

Van Kampen American Capital

DESCRIPTION OF THE FUND

Each series of the Fund was created under the laws of the State of New York
pursuant to a Trust Indenture and Agreement (the "Trust Agreement" ),
dated the Date of Deposit, between Van Kampen American Capital Distributors,
Inc., as Sponsor, American Portfolio Evaluation Services, a division of Van
Kampen American Capital Investment Advisory Corp., as Evaluator, and The Bank
of New York, as Trustee, or their predecessors.

The Fund consists of various Trusts, each of which contains a portfolio of
interest-bearing obligations issued by or on behalf of states and territories
of the United States, and political subdivisions and authorities thereof, the
interest on which is, in the opinion of recognized bond counsel to the issuing
authorities, excludable from gross income for Federal income tax under
existing law. All issuers of Securities in a Trust, are located in the State
for which such Trust is named, or in United States territories or possessions
and their public authorities; consequently, in the opinion of recognized bond
counsel to such State issuers, the related interest earned on such Securities
is exempt to the extent indicated from state and local taxes of such State.
Unless otherwise terminated as provided therein, the Trust Agreement for each
Trust (other than a State Intermediate Laddered Maturity Trust) will terminate
at the end of the calendar year prior to the fiftieth anniversary of its
execution and the Trust Agreement for any State Intermediate Laddered Maturity
Trust will terminate at the end of the calendar year prior to the twentieth
anniversary of its execution.

The portfolio of any Trust (other than a State Intermediate Laddered Maturity
Trust) consists of Bonds maturing approximately 15 to 40 years from the Date
of Deposit. The approximate range of maturities from the Date of Deposit for
Bonds in any State Intermediate Laddered Maturity Trust is 5 to 10 years. The
dollar-weighted average maturity of the Bonds in a State Intermediate Laddered
Maturity Trust is less than or equal to 10 years. The portfolio of any State
Intermediate Laddered Maturity Trust is structured so that approximately 20%
of the Bonds contained in such portfolio will mature each year, commencing in
approximately the fifth year of the Trust, entitling each Unitholder to a
return of principal. This return of principal may offer Unitholders the
opportunity to respond to changing economic conditions and to specific
financial needs that may arise between the fifth and tenth years of a State
Intermediate Laddered Maturity Trust. However, the flexibility provided by the
return of principal may at the same time eliminate a Unitholders's ability to
reinvest the amount returned at a rate as high as the implicit yield on the
obligations which matured.

Each Unit of each Trust represents a fractional undivided interest in the
principal and net income of such Trust. To the extent that any Units are
redeemed by the Trustee, the fractional undivided interest in a Trust
represented by each unredeemed Unit will increase, although the actual
interest in such Trust represented by such fraction will remain unchanged.
Units will remain outstanding until redeemed upon tender to the Trustee by
Unitholders, which may include the Sponsor, or until the termination of the
Trust Agreement.

OBJECTIVES AND SECURITIES SELECTION

The objectives of the Fund are income exempt from Federal and state (to the
extent indicated) income taxation and conservation of capital through an
investment in diversified, insured portfolios of Federal and state (to the
extent indicated) tax-exempt obligations. A State Intermediate Laddered
Maturity Trust has additional objectives of providing protection against
changes in interest rates and investment flexibility through an investment in
a laddered portfolio of intermediate-term interest-bearing obligations with
maturities ranging approximately 5 to 10 years in which roughly 20% of the
obligations contained in such portfolio will mature each year commencing in
approximately the fifth year of the Trust. There is, of course, no guarantee
that the Fund will achieve its objectives. The Fund may be an appropriate
investment vehicle for investors who desire to participate in a portfolio of
tax-exempt fixed income securities with greater diversification than they
might be able to acquire individually. In addition, securities of the type
deposited in the Fund are often not available in small amounts.

Insurance guaranteeing the timely payment, when due, of all principal and
interest on the Bonds in each Trust has been obtained by such Trust from
either AMBAC Indemnity Corporation ("AMBAC Indemnity" ), Financial
Guaranty Insurance Company ("Financial Guaranty" or "FGIC" ) or
a combination thereof (collectively, the "Portfolio Insurers" ) or by
the issuer of such Bonds, a prior owner of such Bonds, or the Sponsor prior to
the deposit of such Bonds in such Trust from certain of the "Preinsured
Bond Insurers" described herein. For more information relating to
insurance on the bonds, see "Insurance on the Bonds." Insurance
obtained by a Trust is effective only while the Bonds thus insured are held in
such Trust.

In selecting Securities for a Trust the following factors, among others, were
considered by the Sponsor: (a) either the Standard & Poor's rating of the
Securities was in no case less than "BBB-" , or the Moody's Investors
Service, Inc. rating of the Securities was in no case less than "Baa"
including provisional or conditional ratings, respectively, or, if not rated,
the Securities had, in the opinion of the Sponsor, credit characteristics
sufficiently similar to the credit characteristics of interest-bearing
tax-exempt obligations that were so rated as to be acceptable for acquisition
by the Trust (see "Description of Securities Ratings" ), (b) the prices
of the Securities relative to other bonds of comparable quality and maturity,
(c) the diversification of Securities as to purpose of issue and location of
issuer and (d) the availability and cost of insurance for the prompt payment
of principal and interest, when due, on the Securities. Subsequent to the Date
of Deposit, a Security may cease to be rated or its rating may be reduced
below the minimum required as of the Date of Deposit. Neither event requires
elimination of such Security from the portfolio of a Trust but may be
considered in the Sponsor's determination as to whether or not to direct the
Trustee to dispose of the Security (see "Trust Administration and
Expenses--Portfolio Administration" ).

TRUST PORTFOLIO

Risk Factors. The Trusts include certain types of bonds described below.
Accordingly, an investment in a Trust should be made with an understanding of
the characteristics of and risks associated with such bonds. See "
General" for each Trust in Part I of this Prospectus. Neither the Sponsor
nor the Trustee shall be liable in any way for any default, failure or defect
in any of the Bonds.

Certain of the Bonds may be general obligations of a governmental entity that
are backed by the taxing power of such entity. All other Bonds in the Trusts
are revenue bonds payable from the income of a specific project or authority
and are not supported by the issuer's power to levy taxes. General obligation
bonds are secured by the issuer's pledge of its faith, credit and taxing power
for the payment of principal and interest. Revenue bonds, on the other hand,
are payable only from the revenues derived from a particular facility or class
of facilities or, in some cases, from the proceeds of a special excise tax or
other specific revenue source. There are, of course, variations in the
security of the different Bonds in the Fund, both within a particular
classification and between classifications, depending on numerous factors.

Certain of the Bonds may be obligations which derive their payments from
mortgage loans. Included among such Bonds may be bonds which are single family
mortgage revenue bonds issued for the purpose of acquiring from originating
financial institutions notes secured by mortgages on residences located within
the issuer's boundaries and owned by persons of low or moderate income and
mortgage revenue bonds which are FHA insured. Mortgage loans are generally
partially or completely prepaid prior to their final maturities as a result of
events such as sale of the mortgaged premises, default, condemnation or
casualty loss. Because these bonds are subject to extraordinary mandatory
redemption in whole or in part from such prepayments of mortgage loans, a
substantial portion of such bonds will probably be redeemed prior to their
scheduled maturities or even prior to their ordinary call dates. Extraordinary
mandatory redemption without premium could also result from the failure of the
originating financial institutions to make mortgage loans in sufficient
amounts within a specified time period. Additionally, unusually high rates of
default on the underlying mortgage loans may reduce revenues available for the
payment of principal of or interest on such mortgage revenue bonds. These
bonds were issued under Section 103A of the Internal Revenue Code, which
Section contains certain requirements relating to the use of the proceeds of
such bonds in order for the interest on such bonds to retain its tax-exempt
status. In each case the issuer of the bonds has covenanted to comply with
applicable requirements and bond counsel to such issuer has issued an opinion
that the interest on the bonds is exempt from Federal income tax under
existing laws and regulations. Certain issuers of housing bonds have
considered various ways to redeem bonds they have issued prior to the stated
first redemption dates for such bonds. In connection with the housing Bonds
held by the Trust, the Sponsor at the Date of Deposit was not aware that any
of the respective issuers of such Bonds were actively considering the
redemption of such Bonds prior to their respective stated initial call dates.

Certain of the Bonds may be health care revenue bonds. Ratings of bonds issued
for health care facilities are often based on feasibility studies that contain
projections of occupancy levels, revenues and expenses. A facility's gross
receipts and net income available for debt service will be affected by future
events and conditions including, among other things, demand for services and
the ability of the facility to provide the services required, physicians'
confidence in the facility, management capabilities, economic developments in
the service area, competition, efforts by insurers and governmental agencies
to limit rates, legislation establishing state rate-setting agencies,
expenses, the cost and possible unavailability of malpractice insurance, the
funding of Medicare, Medicaid and other similar third party payor programs,
and government regulation and the termination or restriction of governmental
financial assistance, including that associated with Medicare, Medicaid and
other similar third party payor programs.

Certain of the Bonds may be obligations of public utility issuers, including
those selling wholesale and retail electric power and gas. General problems of
such issuers would include the difficulty in financing large construction
programs in an inflationary period, the limitations on operations and
increased costs and delays attributable to environmental considerations, the
difficulty of the capital market in absorbing utility debt, the difficulty in
obtaining fuel at reasonable prices and the effect of energy conservation. All
of such issuers have been experiencing certain of these problems in varying
degrees. In addition, Federal, state and municipal governmental authorities
may from time to time review existing, and impose additional, regulations
governing the licensing, construction and operation of nuclear power plants,
which may adversely affect the ability of the issuers of certain of the Bonds
in the portfolio to make payments of principal and/or interest on such Bonds.

Certain of the Bonds may be industrial revenue bonds ("IRBs" ). IRBs
have generally been issued under bond resolutions pursuant to which the
revenues and receipts payable under the arrangements with the operator of a
particular project have been assigned and pledged to purchasers. In some
cases, a mortgage on the underlying project may have been granted as security
for the IRBs. Regardless of the structure, payment of IRBs is solely dependent
upon the creditworthiness of the corporate operator of the project or
corporate guarantor. Corporate operators or guarantors may be affected by many
factors which may have an adverse impact on the credit quality of the
particular company or industry. These include cyclicality of revenues and
earnings, regulatory and environmental restrictions, litigation resulting from
accidents or environmentally-caused illnesses, extensive competition and
financial deterioration resulting from a corporate restructuring pursuant to a
leveraged buy-out, takeover or otherwise. Such a restructuring may result in
the operator of a project becoming highly leveraged which may impact on such
operator's creditworthiness which in turn would have an adverse impact on the
rating and/or market value of such Bonds. Further, the possibility of such a
restructuring may have an adverse impact on the market for and consequently
the value of such Bonds, even though no actual takeover or other action is
ever contemplated or effected.

Certain of the Bonds may be obligations of issuers whose revenues are derived
from the sale of water and/or sewerage services. Such bonds are generally
payable from user fees. The problems of such issuers include the ability to
obtain timely and adequate rate increases, population decline resulting in
decreased user fees, the difficulty of financing large construction programs,
the limitations on operations and increased costs and delays attributable to
environmental considerations, the increasing difficulty of obtaining or
discovering new supplies of fresh water, the effect of conservation programs
and the impact of "no-growth" zoning ordinances.

Certain of the Bonds may be obligations that are secured by lease payments of
a governmental entity (hereinafter called "lease obligations" ). Lease
obligations are often in the form of certificates of participation. Although
the lease obligations do not constitute general obligations of the
municipality for which the municipality's taxing power is pledged, a lease
obligation is ordinarily backed by the municipality's covenant to appropriate
for and make the payments due under the lease obligation. However, certain
lease obligations contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease payments in future years
unless money is appropriated for such purpose on a yearly basis. A
governmental entity that enters into such a lease agreement cannot obligate
future governments to appropriate for and make lease payments but covenants to
take such action as is necessary to include any lease payments due in its
budgets and to make the appropriations therefor. A governmental entity's
failure to appropriate for and to make payments under its lease obligation
could result in insufficient funds available for payment of the obligations
secured thereby. Although "non-appropriation" lease obligations are
secured by the leased property, disposition of the property in the event of
foreclosure might prove difficult.

Certain of the Bonds may be obligations of issuers which are, or which govern
the operation of, schools, colleges and universities and whose revenues are
derived mainly ad valorem taxes or for higher education systems, from tuition,
dormitory revenues, grants and endowments. General problems relating to school
bonds include litigation contesting the State constitutionality of financing
public education in part from ad valorem taxes, thereby creating a disparity
in educational funds available to schools in wealthy areas and schools in poor
areas. Litigation or legislation on this issue may affect the sources of funds
available for the payment of school bonds in the Trusts. General problems
relating to college and university obligations include the prospect of a
declining percentage of the population consisting of "college" age
individuals, possible inability to raise tuitions and fees sufficiently to
cover increased operating costs, the uncertainty of continued receipt of
Federal grants and state funding, and government legislation or regulations
which may adversely affect the revenues or costs of such issuers.

Certain of the Bonds may be obligations which are payable from and secured by
revenues derived from the ownership and operation of facilities such as
airports, bridges, turnpikes, port authorities, convention centers and arenas.
The major portion of an airport's gross operating income is generally derived
from fees received from signatory airlines pursuant to use agreements which
consist of annual payments for leases, occupancy of certain terminal space and
service fees. Airport operating income may therefore be affected by the
ability of the airlines to meet their obligations under the use agreements.
The air transport industry is experiencing significant variations in earnings
and traffic, due to increased competition, excess capacity, increased costs,
deregulation, traffic constraints and other factors, and several airlines are
experiencing severe financial difficulties. The Sponsor cannot predict what
effect these industry conditions may have on airport revenues which are
dependent for payment on the financial condition of the airlines and their
usage of the particular airport facility. Similarly, payment on Bonds related
to other facilities is dependent on revenues from the projects, such as user
fees from ports, tolls on turnpikes and bridges and rents from buildings.
Therefore, payment may be adversely affected by reduction in revenues due to
such factors as increased cost of maintenance, decreased use of a facility,
lower cost of alternative modes of transportation, scarcity of fuel and
reduction or loss of rents.

Certain of the Bonds may be obligations which are payable from and secured by
revenues derived from the operation of resource recovery facilities. Resource
recovery facilities are designed to process solid waste, generate steam and
convert steam to electricity. Resource recovery bonds may be subject to
extraordinary optional redemption at par upon the occurrence of certain
circumstances, including but not limited to: destruction or condemnation of a
project; contracts relating to a project becoming void, unenforceable or
impossible to perform; changes in the economic availability of raw materials,
operating supplies or facilities necessary for the operation of a project or
technological or other unavoidable changes adversely affecting the operation
of a project; administrative or judicial actions which render contracts
relating to the projects void, unenforceable or impossible to perform; or
impose unreasonable burdens or excessive liabilities. The Sponsor cannot
predict the causes or likelihood of the redemption of resource recovery bonds
in such a Trust prior to the stated maturity of the Bonds.

Certain of the Bonds in the Fund are "zero coupon" bonds. Zero coupon
bonds are purchased at a deep discount because the buyer receives only the
right to receive a final payment at the maturity of the bond and does not
receive any periodic interest payments. The effect of owning deep discount
bonds which do not make current interest payments (such as the zero coupon
bonds) is that a fixed yield is earned not only on the original investment but
also, in effect, on all discount earned during the life of such obligation.
This implicit reinvestment of earnings at the same rate eliminates the risk of
being unable to reinvest the income on such obligation at a rate as high as
the implicit yield on the discount obligation, but at the same time eliminates
the holder's ability to reinvest at higher rates in the future. For this
reason, zero coupon bonds are subject to substantially greater price
fluctuations during periods of changing market interest rates than are
securities of comparable quality which pay interest currently.

Bond Redemptions. Because certain of the Bonds in certain of the Trusts may
from time to time under certain circumstances be sold or redeemed or will
mature in accordance with their terms and because the proceeds from such
events will be distributed to Unitholders and will not be reinvested, no
assurance can be given that any Trust will retain for any length of time its
present size and composition. Neither the Sponsor nor the Trustee shall be
liable in any way for any default, failure or defect in any Bond.

Certain of the Bonds in certain of the Trusts may be subject to redemption
prior to their stated maturity date pursuant to sinking fund provisions, call
provisions or extraordinary optional or mandatory redemption provisions or
otherwise. A sinking fund is a reserve fund accumulated over a period of time
for retirement of debt. A callable debt obligation 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 debt obligation is redeemed, at or before
maturity, by the proceeds of a new debt obligation. In general, call
provisions are more likely to be exercised when the offering side valuation is
at a premium over par than when it is at a discount from par. The exercise of
redemption or call provisions will (except to the extent the proceeds of the
called Bonds are used to pay for Unit redemptions) result in the distribution
of principal and may result in a reduction in the amount of subsequent
interest distributions and it may also offset the current return on Units of a
Trust. Each Trust portfolio contains a listing of the sinking fund and call
provisions, if any, with respect to each of the debt obligations.
Extraordinary optional redemptions and mandatory redemptions result from the
happening of certain events including, but not limited to, a final
determination that the interest on the Bonds is taxable; the substantial
damage or destruction by fire or other casualty of the project for which the
proceeds of the Bonds were used; an exercise by a local, state or Federal
governmental unit of its power of eminent domain to take all or substantially
all of the project for which the proceeds of the Bonds were used; changes in
the economic availability of raw materials, operating supplies or facilities
or technological or other changes which render the operation of the project
for which the proceeds of the Bonds were used uneconomic; changes in law or an
administrative or judicial decree which renders the performance of the
agreement under which the proceeds of the Bonds were made available to finance
the project impossible or which creates unreasonable burdens or which imposes
excessive liabilities, such as taxes, not imposed on the date the Bonds are
issued on the issuer of the Bonds or the user of the proceeds of the Bonds; an
administrative or judicial decree which requires the cessation of a
substantial part of the operations of the project financed with the proceeds
of the Bonds; an overestimate of the costs of the project to be financed with
the proceeds of the Bonds resulting in excess proceeds of the Bonds which may
be applied to redeem Bonds; or an underestimate of a source of funds securing
the Bonds resulting in excess funds which may be applied to redeem Bonds. The
issuer of certain Bonds in a Trust may have sold or reserved the right to
sell, upon the satisfaction of certain conditions, to third parties all or any
portion of its rights to call Bonds in accordance with the stated redemption
provisions of such Bonds. In such a case the issuer no longer has the right to
call the Bonds for redemption unless it reacquires the rights from such third
party. A third party pursuant to these rights may exercise the redemption
provisions with respect to a Bond at a time when the issuer of the Bond might
not have called a Bond for redemption had it not sold such rights. The Sponsor
is unable to predict all of the circumstances which may result in such
redemption of an issue of Bonds. See "Trust Portfolio" and note (3) in
"Notes to Portfolio" in Part One of this Prospectus. See also the
discussion of single family mortgage and multi-family revenue bonds above for
more information on the call provisions of such Bonds.

To the best knowledge of the Sponsor, there is no litigation pending as of the
date hereof in respect of any Securities which might reasonably be expected to
have a material adverse effect upon any Trust. At any time after the date
hereof, litigation may be initiated on a variety of grounds with respect to
Securities in a Trust. Such litigation, as, for example, suits challenging the
issuance of pollution control revenue bonds under environmental protection
statutes, may affect the validity of such Securities or the tax-free nature of
the interest thereon. While the outcome of litigation of such nature can never
be entirely predicted, the Fund has received or will receive opinions of bond
counsel to the issuing authorities of each Security on the date of issuance of
the effect that such Securities have been validly issued and that the interest
thereon is exempt from Federal income tax. In addition, other factors may
arise from time to time which potentially may impair the ability of issuers to
meet obligations undertaken with such respect to the Securities.

Distributions. Distributions of interest received by a Trust, pro-rated on an
annual basis, will be made on a monthly basis unless the Unitholder elects to
receive them semi-annually. Distributions of funds from the Principal Account,
if any, will be made on a semi-annual basis, except under certain special
circumstances (see "Public Offering--Distributions of Interest and
Principal" ). Record dates for monthly distributions for each Trust are the
tenth day of each month and record dates for semi-annual distributions for
each Trust are the tenth day of the months indicated under "Per Unit
Information" in Part One of this Prospectus. Distributions are made on the
twenty-fifth day of the month subsequent to the respective record dates.
Unitholders of Insured Municipals Income Trust, 152nd-173rd Insured
Multi-Series and Insured Municipals Income Trust and Investors' Quality
Tax-Exempt Trust, Multi-Series 213-246 will receive distributions of income
and principal, if any, on a monthly basis.

Change of Distribution Option. The plan of distribution selected by a
Unitholder remains in effect until changed. Unitholders purchasing Units in
the secondary market will initially receive distributions in accordance with
the election of the prior owner. Unitholders may change the plan of
distribution in which they are participating. For the convenience of
Unitholders, the Trustee will furnish a card for this purpose; cards may also
be obtained upon request from the Trustee. Unitholders desiring to change
their plan of distribution may so indicate on the card and return it, together
with their certificate and such other documentation that the Trustee may then
require, to the Trustee. Certificates should be sent only by registered or
certified mail to minimize the possibility of their being lost or stolen. If
the card and certificate are properly presented to the Trustee, the change
will become effective for all subsequent distributions.

Certificates. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units of each Trust is evidenced by separate registered
certificates executed by the Trustee and the Sponsor unless a Unitholder or
the Unitholder's registered broker-dealer makes a written request to the
Trustee that ownership be in book entry form. Units are transferable by making
a written request to the Trustee and, in the case of Units evidenced as a
certificate, by presentation and surrender of such certificate to the Trustee
properly endorsed or accompanied by a written instrument or instruments of
transfer. A Unitholder must sign such written request, or such certificate
transfer instrument exactly as his name appears on the records of the Trustee,
and on the face of any certificate representing Units to be transferred, with
the signature guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP" ) or such other signature guaranty program
in addition to, or in substitution for, STAMP, as may be accepted by the
Trustee. In certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of death,
appointments as executor or certificates of corporate authority. Certificates
will be issued in denominations of one Unit or any multiple thereof.
Certificates for Units will bear appropriate notations on their face
indicating which plan of distribution has been selected in respect thereof. If
a change in the plan of distribution is made, the existing certificate must be
surrendered to the Trustee and a new certificate will be issued, at no charge
to the Unitholder, to reflect the currently effective plan of distribution.

Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each certificate re-issued (other than
as a result of a change in plan of distribution) or transferred and to pay any
governmental charge that may be imposed in connection with each such transfer
or interchange. Destroyed, stolen, mutilated or lost certificates will be
replaced upon delivery to the Trustee of satisfactory indemnity, evidence of
ownership and payment of expenses incurred. Mutilated certificates must be
surrendered to the Trustee for replacement.

ESTIMATED CURRENT RETURNS AND ESTIMATED LONG-TERM RETURNS

As of the opening of business on the date indicated therein, the Estimated
Current Returns and the Estimated Long-Term Returns for each Trust under the
monthly and semi-annual distribution plans were as set forth under "Per
Unit Information" for the applicable Trust in Part One of this Prospectus.
Estimated Current Return is calculated by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price. The Estimated Net
Annual Interest Income per Unit will vary with changes in fees and expenses of
the Trustee and the Evaluator and with the principal prepayment, redemption,
maturity, exchange or sale of Securities while the Public Offering Price will
vary with changes in the offering price of the underlying Securities and with
changes in Purchased Interest for those series which contain Purchased
Interest; therefore, there is no assurance that the present Estimated Current
Return will be realized in the future. Estimated Long-Term Return is
calculated using a formula which (1) takes into consideration, and determines
and factors in the relative weightings of, the market values, yields (which
takes into account the amortization of premiums and the accretion of
discounts) and estimated retirements of all of the Securities in the Trust and
(2) takes into account the expenses and sales charge associated with each
Trust Unit. Since the market values and estimated retirements of the
Securities and the expenses of the Trust will change, there is no assurance
that the present Estimated Long-Term Return will be realized in the future.
Estimated Current Return and Estimated Long-Term Return are expected to differ
because the calculation of Estimated Long-Term Return reflects the estimated
date and amount of principal returned while the Estimated Current Return
calculation includes only Net Annual Interest Income and Public Offering Price.

PUBLIC OFFERING

General. Units are offered at the Public Offering Price. The secondary market
public offering price is based on the bid prices of the Securities in each
Trust, an applicable sales charge as determined in accordance with the table
set forth below, which is based upon the estimated long term return life of
each Trust, cash, if any, in the Principal Account held or owned by such
Trust, accrued interest and Purchased Interest, if any. For purposes of
computation, Bonds will be deemed to mature on their expressed maturity dates
unless: (a) the Bonds have been called for redemption or are subject to
redemption on an earlier call date, in which case such call date will be
deemed to be the date upon which they mature; or (b) such Bonds are subject to
a "mandatory tender" , in which case such mandatory tender will be
deemed to be the date upon which they mature. The effect of this method of
sales charge computation will be that different sales charge rates will be
applied to each Trust based upon the estimated long term return life of such
Trust's Portfolio, in accordance with the following schedule:

<TABLE>
<CAPTION>
Years To Maturity Sales Charge Years To Maturity Sales Charge
<S> <C> <C> <C>
1 1.010% 12 4.712%
2 1.523 13 4.822
3 2.041 14 4.932
4 2.302 15 5.042
5 2.564 16 5.152
6 2.828 17 5.263
7 3.093 18 5.374
8 3.627 19 5.485
9 4.167 20 5.597
10 4.384 21 to 30 5.708
11 4.603
</TABLE>

The sales charges in the above table are expressed as a percentage of the
aggregate bid prices of the Securities in a Trust. Expressed as a percent of
the Public Offering Price (excluding Purchased Interest for those Trusts which
contain Purchased Interest), the sales charge on a Trust consisting entirely
of a portfolio of Bonds with 15 years to maturity would be 4.80%.

Employees, officers and directors (including their spouses, children,
grandchildren, parents, grandparents, siblings, mother-in-law, fathers-in-law,
sons-in-law and daughters-in-law, and trustees, custodians or fiduciaries for
the benefit of such persons (collectively referred to herein as "related
purchasers" )) of Van Kampen American Capital Distributors, Inc. and its
affiliates and Underwriters and their affiliates may purchase Units at the
Public Offering Price less the applicable underwriting commission or less the
applicable dealer concession in the absence of an underwriting commission and
employees, officers and directors (including related purchasers) of dealers
and their affiliates and vendors providing services to the Sponsor may
purchase Units at the Public Offering Price less the applicable dealer
concession.

Purchasers of units of any two consecutive series of a Trust may aggregate
purchases of units of such series for purposes of the sales charge reduction
for quantity purchases described in the table above, provided that at the time
of the initial purchase of units of such purchaser submitted a purchase order
for at least 100 units that was partially unfulfilled due to a lack of units
of such Trust series available for sale at such time. The sales charge
reduction shall be applied to the subsequent purchase of units such that the
aggregate sales charge reduction applicable to both purchases will equal the
amount described in the table above.

Units may be purchased in the primary or secondary market at the Public
Offering Price (for purchases which do not qualify for a sales charge
reduction for quantity purchases) less the concession the Sponsor typically
allows to brokers and dealers for purchases (see "Trust
Administration--General--Unit Distribution" ) by (1) investors who purchase
Units through registered investment advisers, certified financial planners and
registered broker-dealers who in each case either charge periodic fees for
financial planning, investment advisory or asset management services, or
provide such services in connection with the establishment of an investment
account for which a comprehensive "wrap fee" charge is imposed, (2)
bank trust departments investing funds over which they exercise exclusive
discretionary investment authority and that are held in a fiduciary, agency,
custodial or similar capacity, (3) any person who for at least 90 days, has
been an officer, director or bona fide employee of any firm offering Units for
sale to investors or their immediate family members (as described above) and
(4) officers and directors of bank holding companies that make Units available
directly or through subsidiaries or bank affiliates. Notwithstanding anything
to the contrary in this Prospectus, such investors, bank trust departments,
firm employees and bank holding company officers and directors who purchase
Units through this program will not receive sales charge reductions for
quantity purchases.

Accrued Interest (Accrued Interest to Carry). Accrued interest to carry is
included in the Public Offering Price for Insured Municipals Income Trust,
151st Insured Multi-Series and prior series and Insured Municipals Income
Trust and Investors' Quality Tax-Exempt Trust, Multi-Series 212 and prior
series. Accrued interest to carry consists of two elements. The first element
arises as a result of accrued interest which is the accumulation of unpaid
interest on a bond from the last day on which interest thereon was paid.
Interest on Securities in each Trust is actually paid either monthly,
quarterly, if applicable, or semi-annually to such Trust. However, interest on
the Securities in each Trust is accounted for daily on an accrual basis.
Because of this, each Trust always has an amount of interest earned but not
yet collected by the Trustee because of coupons that are not yet due. For this
reason, the Public Offering Price will have added to it the proportionate
share of accrued and undistributed interest to the date of settlement.

Purchased and Accrued Interest. Included in the Public Offering Price for
Insured Municipals Income Trust, 152nd-173rd Insured Multi-Series and Insured
Municipals Income Trust and Investors' Quality Tax-Exempt Trust, Multi-Series
213-246 is Purchased Interest and accrued interest.

Accrued Interest. Accrued Interest is an accumulation of unpaid interest on
securities which generally is paid semi-annually, although a Trust accrues
such interest daily. Because of this, a Trust always has an amount of interest
earned but not yet collected by the Trustee. For this reasons, the Public
Offering Price of Units will have added to it the proportionate share of
accrued interest to the date of settlement. Unitholders will receive on the
next distribution date of a Trust the amount, if any, of accrued interest paid
on their Units.

Accrued Interest. Included in the Public Offering Price for Insured Municipals
Income Trust, 174th Insured Multi-Series and subsequent series and Insured
Municipals Income Trust and Investors' Quality Tax-Exempt Trust, Multi-Series
247 and subsequent series is accrued interest. Accrued interest is an
accumulation of unpaid interest on securities which generally is paid
semi-annually, although the Trust accrues such interest daily. Because of
this, the Trust always has an amount of interest earned but not yet collected
by the Trustee. For this reason, with respect to sales settling subsequent to
the First Settlement Date, the Public Offering Price of Units will have added
to it the proportionate share of accrued interest to the date of settlement.
Unitholders will receive on the next distribution date of the Trust the
amount, if any, of accrued interest paid on their Units.

In an effort to reduce the amount of accrued interest which would otherwise
have to be paid by Unitholders, the Trustee will advance the amount of accrued
interest to the Sponsor as the Unitholder of record as of the First Settlement
Date. Consequently, the amount of accrued interest to be added to the Public
Offering Price of Units will include only accrued interest from the First
Settlement Date to the date of settlement, less any distributions from the
Interest Account subsequent to the First Settlement Date. See "Public
Offering--Distributions of Interest and Principal."

Because of the varying interest payment dates of the Securities, accrued
interest at any point in time will be greater than the amount of interest
actually received by a Trust and distributed to Unitholders. If a Unitholder
sells or redeems all or a portion of his Units, he will be entitled to receive
his proportionate share of the accrued interest from the purchaser of his
Units. Since the Trustee has the use of the funds held in the Interest Account
for distributions to Unitholders and since such Account is
non-interest-bearing to Unitholders, the Trustee benefits thereby.

For secondary market sales, the Public Offering Price per Unit will be equal
to the aggregate bid price of the Securities in the Trust plus an amount equal
to the applicable secondary market sales charge expressed as a percentage of
the aggregate bid price of the Securities plus Purchased Interest for those
Trusts which contain Purchased Interest and dividing the sum so attained by
the number of Units then outstanding. This computation produced a gross
commission equal to such sales charge expressed as a percentage of the Public
Offering Price (excluding Purchased Interest).

For secondary market purposes an appraisal and adjustment with respect to a
Trust will be made by the Evaluator as of the Evaluation Time on days in which
the New York Stock Exchange is open for each day on which any Unit of such
Trust is tendered for redemption, and it shall determine the aggregate value
of any Trust as of The Evaluation Time at such other times as may be
necessary.

The aggregate price of the Securities in each Trust has been and will be
determined on the basis of bid prices as follows: (a) on the basis of current
market prices for the Securities obtained from dealers or brokers who
customarily deal in bonds comparable to those held by the Trust; (b) if such
prices are not available for any particular Securities, on the basis of
current market prices for comparable bonds; (c) by causing the value of the
Securities to be determined by others engaged in the practice of evaluation,
quoting or appraising comparable bonds; or (d) by any combination of the
above. Market prices of the Securities will generally fluctuate with changes
in market interest rates. Unless Bonds are in default in payment of principal
or interest or in significant risk of such default, the Evaluator will not
attribute any value to the insurance obtained by the Trust.

The Evaluator will consider in its evaluation of Bonds which are in default in
payment of principal or interest or, in the Sponsor's opinion, in significant
risk of such default (the "Defaulted Bonds" ) the value of the
insurance guaranteeing interest and principal payments. The value of the
insurance will be equal to the difference between (i) the market value of
Defaulted Bonds assuming the exercise of the right to obtain Permanent
Insurance (less the insurance premiums and related expenses attributable to
the purchase of Permanent Insurance) and (ii) the market value of such
Defaulted Bonds not covered by Permanent Insurance. In addition, the Evaluator
will consider the ability of the affected Portfolio to meet its commitments
under any Trust insurance policy, including the commitments to issue Permanent
Insurance. It is the position of the Sponsor that this is a fair method of
valuing insured Bonds and reflects a proper valuation method in accordance
with the provisions of the Investment Company Act of 1940.

Although payment is normally made three business days following the order for
purchase, payment may be made prior thereto. A person will become the owner of
Units on the date of settlement provided payment has been received. Cash, if
any, made available to the Sponsor prior to the date of settlement for the
purchase of Units may be used in the Sponsor's business and may be deemed to
be a benefit to the Sponsor, subject to the limitations of the Securities
Exchange Act of 1934. Delivery of certificates representing Units so ordered
will be made three business days following such order or shortly thereafter.
See "Redemption of Units" below for information regarding the ability
to redeem Units ordered for purchase.

Market for Units. Although they are not obligated to do so, the Sponsor
intends to, and certain of the dealers may, maintain a market for the Units
offered hereby and to offer continuously to purchase such Units at prices,
subject to change at any time, based upon the aggregate bid prices of the
Securities in the portfolio of each Trust plus Purchased Interest, if any,
plus interest accrued to the date of settlement and plus any principal cash on
hand, less any amounts representing taxes or other governmental charges
payable out of the Trust and less any accrued Trust expenses. lf the supply of
Units exceeds demand or if some other business reason warrants it, the Sponsor
and/or the dealers may either discontinue all purchases of Units or
discontinue purchases of Units at such prices. In the event that a market is
not maintained for the Units and the Unitholder cannot find another purchaser,
a Unitholder of any Trust desiring to dispose of his Units may be able to
dispose of such Units only by tendering them to the Trustee for redemption at
the Redemption Price, which is based upon the aggregate bid price of the
Securities in the portfolio of such Trust plus Purchased Interest, if any, and
any accrued interest. The aggregate bid prices of the underlying Securities in
a Trust are expected to be less than the related aggregate offering prices.
See "Redemption of Units" below. A Unitholder who wishes to dispose of
his Units should inquire of his broker as to current market prices in order to
determine whether there is in existence any price in excess of the Redemption
Price and, if so, the amount thereof.

Distributions of Interest and Principal. Interest received by a Trust,
including that part of the proceeds of any disposition of Securities which
represents Purchased Interest, if any, and/or accrued interest, is credited by
the Trustee to the Interest Account for the Trust. Other receipts are credited
to the Principal Account for the Trust. All distributions will be net of
applicable expenses. The pro rata share of cash in the Principal Account of a
Trust will be computed as of the semi-annual record date and distributions to
the Unitholders as of such record date will be made on or shortly after the
twenty-fifth day of such month. For Insured Municipals Income Trust,
152nd-173rd Insured Multi-Series and Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust, Multi-Series 213-246 such computation and
distribution will occur monthly. Proceeds received from the disposition of any
of the Securities after such record date and prior to the following
distribution date will be held in the Principal Account and not distributed
until the next distribution date. The Trustee is not required to pay interest
on funds held in any Principal or Interest Account (but may itself earn
interest thereon and therefore benefits from the use of such funds) nor to
make a distribution from the Principal Account unless the amount available for
distribution therein shall equal at least $1.00 per Unit.

The distribution to the Unitholders of a Trust as of each record date will be
made on the following distribution date or shortly thereafter and shall
consist of an amount substantially equal to such portion of the Unitholder's
pro rata share of the Estimated Net Annual Interest Income in the Interest
Account of such Trust after deducting estimated expenses attributable as is
consistent with the distribution plan chosen. Only monthly distributions are
available for Insured Municipals Income Trust, 152nd-173rd Insured
Multi-Series and Insured Municipals Income Trust and Investors' Quality
Tax-Exempt Trust, Multi-Series 213-246. Because interest payments are not
received by a Trust at a constant rate throughout the year, such interest
distribution may be more or less than the amount credited to such Interest
Account as of the record date. For the purpose of minimizing fluctuations in
the distributions from an Interest Account, the Trustee is authorized to
advance such amounts as may be necessary to provide interest distributions of
approximately equal amounts. The Trustee will be reimbursed for any such
advances from funds in the applicable Interest Account on the ensuing record
date. Persons who purchase Units between a record date and a distribution date
will receive their first distribution on the second distribution date after
the purchase, under the applicable plan of distribution. Only monthly
distributions are available for Insured Municipals Income Trust, 152nd-173rd
Insured Multi-Series and Insured Municipals Income Trust and Investors'
Quality Tax-Exempt Trust, Multi-Series 213-246.

On or before the twenty-fifth 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 Administration and
Expenses" ). The Trustee also may withdraw from said Accounts such amounts,
if any, as it deems necessary to establish a reserve for any governmental
charges payable out of the Trust. Amounts so withdrawn will 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 proper 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.

Confirmations of all reinvestments by a Unitholder into a Reinvestment Fund
will be mailed to the Unitholder by such Reinvestment Fund. A participant may
elect to terminate his or her reinvestment plan and receive future
distributions of his or her Units in cash by notifying the Trustee in writing
at any time prior to five days before the next distribution date. There will
be no charge or other penalty for such termination. Each Reinvestment Fund,
its sponsor and investment adviser shall have the right to terminate at any
time the reinvestment plan relating to such fund.

Unitholders of New York Trusts, other than residents of Massachusetts, may
elect to have distributions reinvested in shares of First Investors New York
Insured Tax Free Fund, Inc. subject to a sales charge of $1.50 per $100
reinvested (paid to First Investors Management Company, Inc.).

Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay
Street, 20th Floor, New York, New York 10286, of the certificates representing
the Units to be redeemed, duly endorsed or accompanied by proper instruments
of transfer with signature guaranteed (or by providing satisfactory indemnity,
as in connection with lost, stolen or destroyed certificates) and by payment
of applicable governmental charges, if any. Thus, redemption of Units cannot
be effected until certificates representing such Units have been delivered by
the person seeking redemption or satisfactory indemnity provided. No
redemption fee will be charged. On the third business day following such
tender, the Unitholder will receive in cash an amount for each Unit equal to
the Redemption Price per Unit next computed after receipt by the Trustee of
such tender of Units. The "date of tender" is deemed to be the date on
which Units are received by the Trustee, except that as regards Units received
after 4:00 P.M. Eastern time on days 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.

Purchased Interest, if any, and accrued interest paid on redemption shall be
withdrawn from the Interest Account of such Trust or, if the balance therein
is insufficient, from the Principal Account of such Trust. All other amounts
will be withdrawn from the Principal Account of such Trust. The Trustee is
empowered to sell underlying Securities of a Trust in order to make funds
available for redemption. Units so redeemed shall be cancelled. The Redemption
Price per Unit will be determined on the basis of the bid price of the
Securities in each Trust as of the Evaluation Time on days of trading on the
New York Stock Exchange on the date any such determination is made. While the
Trustee has the power to determine the Redemption Price per Unit when Units
are tendered for redemption, such authority has been delegated to the
Evaluator which determines the price per Unit on a daily basis.

The Redemption Price per Unit is the pro rata share of each Unit in each Trust
on the basis of (i) the cash on hand in such Trust or moneys in the process of
being collected, (ii) the value of the Securities in such Trust based on the
bid prices of the Securities therein, except for cases in which the value of
insurance has been included, (iii) Purchased Interest, if any, and (iv)
interest accrued thereon, less (a) amounts representing taxes or other
governmental charges payable out of such Trust and (b) the accrued expenses of
such Trust. The Evaluator may determine the value of the Securities in each
Trust by employing any of the methods set forth in "Public Offering
Price." In determining the Redemption Price per Unit no value will be
assigned to the portfolio insurance maintained on the Bonds in a Trust unless
such Bonds are in default in payment of principal or interest or in
significant risk of such default. For a description of the situations in which
the Evaluator may value the insurance obtained by the Trust, see "Public
Offering Price" .

Reports Provided. The Trustee shall furnish Unitholders of a Trust in
connection with each distribution a statement of the amount of interest and
the amount of other receipts (received since the preceding distribution), if
any, being distributed expressed in each case as a dollar amount representing
the pro rata share of each Unit of a Trust outstanding. For as long as the
Sponsor deems it to be in the best interests of the Unitholders, the accounts
of each Trust shall be audited, not less frequently than annually, by
independent certified public accountants and the report of such accountants
shall be furnished by the Sponsor or Trustee to Unitholders of such Trust upon
request. Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each person who at any time during the
calendar year was a registered Unitholder of a Trust a statement (i) as to the
Interest Account: interest received (including amounts representing interest
received upon any disposition of Securities) and the percentage of such
interest by states in which the issuers of the Securities are located, the
amount of Purchased Interest, if any, deductions for applicable taxes and for
fees and expenses of the Trust, for redemptions of Units, if any, and the
balance remaining after such distributions and deductions, expressed in each
case both as a total dollar amount and as a dollar amount representing the pro
rata share of each Unit outstanding on the last business day of such calendar
year; (ii) as to the Principal Account: the dates of disposition of any
Securities and the net proceeds received therefrom (excluding any portion
representing accrued interest), the amount paid for redemptions of Units, if
any, deductions for payment of applicable taxes and fees and expenses of the
Trustee, the amount of "when issued" interest treated as a return of
capital, if any, and the balance remaining after such distributions and
deductions expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last business
day of such calendar year; (iii) a list of the Securities held and the number
of Units outstanding on the last business day of such calendar year; (iv) the
Redemption Price per Unit based upon the last computation thereof made during
such calendar year; and (v) amounts actually distributed 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.

In order to comply with Federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in a Trust furnished to it by the Evaluator.

Each distribution statement will reflect pertinent information in respect of
the other plan of distribution so that Unitholders may be informed regarding
the results of such other plan of distribution.

INSURANCE ON THE BONDS

Insurance has been obtained by each Trust or by a prior owner of such Bonds,
or by the Bond issuer, or by the Sponsor prior to the deposit of such Bonds in
a Trust guaranteeing prompt payment of interest and principal, when due, in
respect of the Bonds in such Trust. See "Objectives and Securities
Selection" . The "Portfolio Insurers" and the "Preinsured Bond
Insurers" are described under "Notes to Portfolios" in Part I of
this Prospectus. The Portfolio Insurers are either AMBAC Indemnity Corporation
or Financial Guaranty Insurance Company. An insurance policy obtained by a
Trust is non-cancellable and will continue in force so long as such Trust is
in existence, the respective Portfolio Insurer is still in business and the
Bonds described in the policy continue to be held by such Trust. Any portfolio
insurance premium for a Trust, which is an obligation of such Trust, is paid
by each Trust on a monthly basis. Nonpayment of premiums on the policy
obtained by a Trust will not result in the cancellation of insurance but will
force the insurer to take action against the Trustee to recover premium
payments due it. The Trustee in turn will be entitled to recover such payments
from such Trust. Premium rates for each issue of Bonds protected by the policy
obtained by a Trust are fixed for the life of the Trust. The premium for any
Preinsured Bond insurance has been paid by such issuer, by a prior owner of
such Bonds or the Sponsor and any such policy or policies are non-cancellable
and will continue in force so long as the Bonds so insured are outstanding and
the respective Preinsured Bond Insurer remains in business. If the provider of
an original issuance insurance policy is unable to meet its obligations under
such policy or if the rating assigned to the claims-paying ability of any such
insurer deteriorates, the Portfolio Insurers have no obligation to insure any
issue adversely affected by either of the above described events.

The aforementioned portfolio insurance obtained by a Trust guarantees the
timely payment of principal and interest on the Bonds when they fall due. For
the purposes of insurance obtained by a Trust, "when due" generally
means the stated payment or maturity date for the payment of principal and
interest. However, in the event (a) an issuer of a Bond defaults in the
payment of principal or interest on such Bond, (b) such issuer enters into a
bankruptcy proceeding or (c) the maturity of such Bond is accelerated, the
affected Portfolio Insurer has the option, in its sole discretion, after
receiving notice of the earliest to occur of such a default, bankruptcy
proceeding or acceleration to pay the outstanding principal amount of such
Bond plus accrued interest to the date of such payment and thereby retire the
Bond from the affected Trust prior to such Bond's stated maturity date. The
insurance does not guarantee the market value of the Bonds or the value of the
Units. Insurance obtained by a Trust, if any, is only effective as to Bonds
owned by and held in such Trust. In the event of a sale of any such Bond by
the Trustee, such insurance terminates as to such Bond on the date of sale.

Pursuant to an irrevocable commitment of the Portfolio Insurers, the Trustee,
upon the sale of a Bond covered under a portfolio insurance policy obtained by
a Trust, has the right to obtain permanent insurance with respect to such Bond
(i.e., insurance to maturity of the Bonds regardless of the identity of the
holder thereof) (the "Permanent Insurance" ) upon the payment of a
single predetermined insurance premium and any expenses related thereto from
the proceeds of the sale of such Bond. Accordingly, any Bond in a Trust is
eligible to be sold on an insured basis. It is expected that the Trustee would
exercise the right to obtain Permanent Insurance only if upon such exercise
the affected Trust would receive net proceeds (sale of Bond proceeds less the
insurance premium and related expenses attributable to the Permanent
Insurance) from such sale in excess of the sale proceeds if such Bonds were
sold on an uninsured basis. The insurance premium with respect to each Bond
eligible for Permanent Insurance would be determined based upon the
insurability of each Bond as of the Date of Deposit and would not be increased
or decreased for any change in the creditworthiness of each Bond.

The Sponsor believes that the Permanent Insurance option provides an advantage
to a Trust in that each Bond insured by a Trust insurance policy may be sold
out of the affected Trust with the benefits of the insurance attaching
thereto. Thus, the value of the insurance, if any, at the time of sale, can be
realized in the market value of the Bond so sold (which is not the case in
connection with any value attributable to a Trust's portfolio insurance). See
"Public Offering-Offering Price" . Because any such insurance value may
be realized in the market value of the Bond upon the sale thereof upon
exercise of the Permanent Insurance option, the Sponsor anticipates that (a)
in the event a Trust were to be comprised of a substantial percentage of Bonds
in default or significant risk of default, it is much less likely that such
Trust would need at some point in time to seek a suspension of redemptions of
Units than if such Trust were to have no such option (see "Public
Offering-Redemption of Units" ) and (b) at the time of termination of a
Trust, if such Trust were holding defaulted Bonds or Bonds in significant risk
of default such Trust would not need to hold such Bonds until their respective
maturities in order to realize the benefits of such Trust's portfolio
insurance (see "General-Amendment or Termination" ).

Except as indicated below, insurance obtained by a Trust, if any, has no
effect on the price or redemption value of Units. lt is the present intention
of the Evaluator to attribute a value for such insurance (including the right
to obtain Permanent Insurance) for the purpose of computing the price or
redemption value of Units if the Bonds covered by such insurance are in
default in payment of principal or interest or in significant risk of such
default. The value of the insurance will be the difference between (i) the
market value of a Bond in default in payment of principal or interest or in
significant risk of such default assuming the exercise of the right to obtain
Permanent Insurance (less the insurance premium and related expenses
attributable to the purchase of Permanent Insurance) and (ii) the market value
of such Bonds not covered by Permanent Insurance. See "Public
OfferingOffering Price" . It is also the present intention of the Trustee
not to sell such Bonds to effect redemptions or for any other reason but
rather to retain them in the portfolio because value attributable to the
insurance cannot be realized upon sale. See "Public Offering--Offering
Price" herein for a more complete description of a Trust's method of
valuing defaulted Bonds and Bonds which have a significant risk of default.
Insurance obtained by the Issuer of a Bond is effective so long as such Bond
is outstanding. Therefore, any such insurance may be considered to represent
an element of market value in regard to the Bonds thus insured, but the exact
effect, if any, of this insurance on such market value cannot be predicted.

Any policy obtained by a Trust with respect to the Bonds in such Trust and any
policy obtained on a Preinsured Bond was issued by one of the Portfolio
Insurers or one of the Preinsured Bond Insurers.

The following summary information relating to the listed insurance companies
has been obtained from publicly available information:

<TABLE>
<CAPTION>
Financial Information (in millions of dollars)
-----------------------------------------
Date Admitted Policyholders'
Name Established Assets Surplus
- ------------------------------------------------------ -------------- ---------- ---------------
<S> <C> <C> <C>
AMBAC Indemnity Corporation (at 3/31/96).............. 1970 $ 2,440 $ 878
Capital Guaranty Insurance Corporation (at 9/30/96)... 1987 313 194
Financial Guaranty Insurance Company (at 9/30/96)..... 1984 2,436 1,097
Financial Security Assurance, Inc. (at 9/30/96)....... 1984 1,184 452
MBIA Insurance Corporation (at 9/30/96)............... 1986 4,300 1,300
</TABLE>

In order to be in a Trust, Bonds must be insured by one of the Preinsured Bond
Insurers or be eligible for the insurance being obtained by such Trust. In
determining eligibility for insurance, the Preinsured Bond Insurers and the
Portfolio Insurers have applied their own standards which correspond generally
to the standards they normally use in establishing the insurability of new
issues of municipal bonds and which are not necessarily the criteria used in
the selection of Bonds by the Sponsor. To the extent the standards of the
Preinsured Bond Insurers and the Portfolio Insurers are more restrictive than
those of the Sponsor, the previously stated Trust investment criteria have
been limited with respect to the Bonds. This decision is made prior to the
Date of Deposit, as debt obligations not eligible for insurance are not
deposited in a Trust. Thus, all of the Bonds in the portfolios of the Trusts
in the Fund are insured either by the respective Trust, by the issuer of the
Bonds, by a prior owner of such Bonds or by the Sponsor prior to the deposit
of the Bonds in a Trust.

Because the Bonds are insured by one of the Portfolio Insurers or one of the
Preinsured Bond Insurers as to the timely payment of principal and interest,
when due, and on the basis of the various reinsurance agreements in effect at
the initial date of deposit, Standard & Poor's assigned to the Units of each
Trust its "AAA" investment rating. Such rating will be in effect for a
period of thirteen months from the Date of Deposit and will, unless renewed,
terminate at the end of such period. See "Description of Securities
Ratings" . The obtaining of this rating by a Trust should not be construed
as an approval of the offering of the Units by Standard & Poor's or as a
guarantee of the market value of such Trust or of the Units. Although each of
these trusts has elected not to renew this rating, in the opinion of the
Sponsor, there has been no significant structural change to any of these
Trusts which would warrant a different rating than was originally obtained.

An objective of portfolio insurance obtained by a Trust is to obtain a higher
yield on the portfolio of such Trust than would be available if all the
Securities in such portfolio had Standard & Poor's "AAA" rating and
yet at the same time to have the protection of insurance of prompt payment of
interest and principal, when due, on the Bonds. There is, of course, no
certainty that this result will be achieved. Preinsured Bonds in a Trust (all
of which are rated "AAA" by Standard & Poor's) may or may not have a
higher yield than uninsured bonds rated "AAA" by Standard & Poor's. In
selecting such Bonds for a Trust, the Sponsor has applied the criteria
hereinbefore described.

The Internal Revenue Service has issued a letter ruling which holds in effect
that insurance proceeds representing maturing interest on defaulted municipal
obligations paid to holders of insured bonds, under policy provisions
substantially identical to the policies described herein, will be excludable
from Federal gross income under Section 103(a)(1) of the Internal Revenue Code
to the same extent as if such payments were made by the issuer of the
municipal obligations. Holders of Units in a Trust should discuss with their
tax advisers the degree of reliance which they may place on this letter
ruling. However, Chapman and Cutler, counsel for the Sponsor, has given an
opinion to the effect such payment of proceeds would be excludable from
Federal gross income to the extent described under "Federal Tax Status of
the Trusts" .

Each Portfolio Insurer is subject to regulation by the department of insurance
in the state in which it is qualified to do business. Such regulation,
however, is no guarantee that they will be able to perform on their contracts
of insurance in the event a claim should be made thereunder at some time in
the future. At the date hereof, it is reported that no claims have been
submitted or are expected to be submitted to any of the Portfolio Insurers
which would materially impair the ability of such company to meet its
commitments pursuant to any contract of bond or portfolio insurance.

FEDERAL TAX STATUS OF THE TRUSTS

At the time of the closing for each Trust, Chapman and Cutler, Counsel for the
Sponsor, rendered an opinion under then existing law substantially to the
effect that:

(2)Each Unitholder is considered to be the owner of a pro rata portion of each
asset of the respective Trust under subpart E, subchapter J of chapter 1 of
the Code and will have a taxable event when such Trust disposes of a Bond, or
when the Unitholder redeems or sells his Units. Unitholders must reduce the
tax basis of their Units for their share of accrued interest received by the
respective Trust, if any, on Bonds delivered after the Unitholders pay for
their Units to the extent that such interest accrued on such Bonds before the
date the Trust acquired ownership of the Bonds (and the amount of this
reduction may exceed the amount of accrued interest paid to the seller) and,
consequently, such Unitholders may have an increase in taxable gain or
reduction in capital loss upon the disposition of such Units. Gain or loss
upon the sale or redemption of Units is measured by comparing the proceeds of
such sale or redemption with the adjusted basis of the Units. If the Trustee
disposes of Bonds (whether by sale, payment on maturity, redemption or
otherwise), gain or loss is recognized to the Unitholder (subject to various
non-recognition provisions of the Code). The amount of any such gain or loss
is measured by comparing the Unitholder's pro rata share of the total proceeds
from such disposition with the Unitholder's basis for his or her fractional
interest in the asset disposed of. In the case of a Unitholder who purchases
Units, such basis (before adjustment for earned original issue discount and
amortized bond premium, if any) is determined by apportioning the cost of the
Units among each of the Trust assets ratably according to value as of the
valuation date nearest the date of acquisition of the Units. The tax basis
reduction requirements of the Code relating to amortization of bond premium
may, under some circumstances, result in the Unitholder realizing a taxable
gain when his Units are sold or redeemed for an amount less than or equal to
his original cost;

In the case of certain corporations, the alternative minimum tax and the
Superfund Tax for taxable years beginning after December 31, 1986 depends upon
the corporation's alternative minimum taxable income, which is the
corporation's taxable income with certain adjustments. One of the adjustment
items used in computing the alternative minimum taxable income and the
Superfund Tax of a corporation (other than an S Corporation, Regulated
Investment Company, Real Estate Investment Trust, or REMIC) is an amount equal
to 75% of the excess of such corporation's "adjusted current earnings"
over an amount equal to its alternative minimum taxable income (before such
adjustment item and the alternative tax net operating loss deduction). "
Adjusted current earnings" includes all tax exempt interest, including
interest on all of the Bonds in the Fund. Under current Code provisions, the
Superfund Tax does not apply to tax years beginning on or after January 1,
1996. However, the Superfund Tax could be extended retroactively. Under the
provisions of Section 884 of the Code, a branch profits tax is levied on the
"effectively connected earnings and profits" of certain foreign
corporations which include tax-exempt interest such as interest on the Bonds
in the Trust. Unitholders should consult their tax advisers with respect to
the particular tax consequences to them including the corporate alternative
minimum tax, the Superfund Tax and the branch profits tax imposed by Section
884 of the Code.

In the opinion of Kroll & Tract LLP, special counsel to the Fund for New York
tax matters, under existing law, the Fund and each Trust are not associations
taxable as corporations and the income of each Trust will be treated as the
income of the Unitholders under the income tax laws of the State and City of
New York.

All statements of law in the Prospectus concerning exclusion from gross income
for Federal, state or other tax purposes are the opinions of counsel and are
to be so construed.

In the case of corporations, the alternative tax rate applicable to long-term
capital gains is 35%, effective for long-term capital gains realized in
taxable years beginning on or after January 1, 1993. For taxpayers other than
corporations, net capital gains (which are defined as net long-term capital
gain over net short-term capital loss for a taxable year) are subject to a
maximum marginal stated tax rate of 28%. However, it should be noted that
legislative proposals are introduced from time to time that affect tax rates
and could affect relative differences at which ordinary income and capital
gains are taxed. Under the Code, taxpayers must disclose to the Internal
Revenue Service the amount of tax-exempt interest earned during the year.

In addition, under the Tax Act, for taxable years beginning after December 31,
1993, up to 85% of Social Security benefits are includible in gross income to
the extent that the sum of "modified adjusted gross income" plus 50%
of Social Security benefits received exceeds an "adjusted base amount."
The adjusted base amount is $34,000 for unmarried taxpayers, $44,000 for
married taxpayers filing a joint return, and zero for married taxpayers who do
not live apart at all times during the taxable year and who file separate
returns.

For a discussion of the state tax status of income earned on Units of a Trust,
see "Tax Status" for the applicable Trust. Except as noted therein,
the exemption of interest on state and local obligations for Federal income
tax purposes discussed above does not necessarily result in exemption under
the income or other tax laws of any state or city. The laws of the several
states vary with respect to the taxation of such obligations.

RISK FACTORS AND STATE TAX STATUS OF THE TRUSTS

Alabama Trusts

Alabama Economy. Alabama's economy has experienced a major trend toward
industrialization over the past two decades. By 1990, manufacturing accounted
for 26.7% of Alabama's Real Gross State Product (the total value of goods and
services produced in Alabama). During the 1960s and 1970s, the State's
industrial base became more diversified and balanced, moving away from primary
metals into pulp and paper, lumber, furniture, electrical machinery,
transportation equipment, textiles (including apparel), chemicals, rubber and
plastics. Since the early 1980s, modernization of existing facilities and an
increase in direct foreign investments in the State has made the manufacturing
sector more competitive in domestic and international markets.

Among several leading manufacturing industries have been pulp and papers and
chemicals. In recent years, Alabama has ranked as the fifth largest producer
of timber in the nation. The State's growing chemical industry has been the
natural complement of production of wood pulp and paper. Mining, oil and gas
production and service industries are also important to Alabama's economy.
Coal mining is by far the most important mining activity.

From 1995-96, total farm and forestry receipts were over $4.1 billion.
Cash receipts from farm commodities totaled $2.91 billion, a slight decrease
from $2.95 billion in 1994-95. The top five commodities for cash receipts were
(1) poultry, (2) cattle and calves, (3) cotton, (4) nursery, sod, and
greenhouse products, and (5) peanuts. Combined, they accounted for
approximately 85% of the total receipts. Poultry made up almost 60% of the
total cash receipts.

Principal crops in Alabama during 1995-96 were cotton, corn, soybeans,
peanuts, and wheat. Alabama ranked third in broiler production, third in
peanuts, and 11th in cotton production.

Employment. Preliminary data show total nonagricultural employment as of
January 1997 was 1.823 million (all data not seasonally adjusted). This is an
increase of 28,900 from January 1996. The unemployment rate as of January 1997
was 4.4%, much lower than its 5.8% rate in January 1996. The national
unemployment rate was 5.9% and 6.3% in January of 1997 and January 1996,
respectively.

The Alabama economy created almost 27,000 new jobs in 1996, with the trade and
services sector contributing almost 57% of these. In contrast, the
manufacturing sector lost approximately 5,000 jobs, with all of the losses
occurring in nondurable goods production. Slower job growth in 1997 is
consistent with national trends. Nevertheless, the Alabama economy should
still add about 20,500 new jobs in 1997. Although overall manufacturing jobs
losses will continue, jobs should be added in nonelectrical and electrical
machinery manufacturing.

Business services and health care services will contribute the largest share
of new jobs in 1997. The state should also gain some employment from the
Mercedes-Benz plant and its related industries. However, job losses in
defense-related industries may offset some of this growth. Some
construction-related industries (lumber; stone, clay, and glass; and
fabricated metals) are expected to add jobs in 1997. These new jobs will be
indirect effects of the opening of the Mercedes-Benz plant and its suppliers.

The service-producing industry is the largest industry, consisting of 73.6% of
total nonagricultural employment in 1996. The manufacturing industry, the
largest goods-producing industry, made up 21% of total wage and salary
employment in 1996. Manufacturing accounts for 23% of the total output created
in the state. Remaining total nonagricultural employment in 1996 consisted of
service 22.4%, trade 23.1%, government 18.9%, transportation, communications,
and public utilities 4.9%, construction 4.8%, finance, insurance and real
estate 4.3%, and mining 0.6%.

Real wage and salary income in the state will grow only 1.2% in 1997, down
significantly from the 1996 real growth rate of 1.8%. During the last two
years, Alabama has been one of the ten slowest growing states in terms of
income. One of the major reasons for this slow growth has been the continuing
changes in the state's economic structure; Alabama has created more jobs in
trade and services than in manufacturing. Average wages are higher in
manufacturing than in trade and services.

Political subdivisions of the State of Alabama have limited taxing authority.
In addition, the Alabama Supreme Court has held that a governmental unit may
first use its taxes and other revenues to pay the expenses of providing
governmental services before paying debt service on its bonds, warrants or
other indebtedness. The State has statutory budget provisions which result in
a proration procedure in the event estimated budget resources in a fiscal year
are insufficient to pay in full all appropriations for that year. Proration
has a materially adverse effect on public entities that are dependent upon
State funds subject to proration.

Deterioration of economic conditions could adversely affect both tax and other
governmental revenues, as well as revenues to be used to service various
revenue obligations, such as industrial development obligations. Such
difficulties could affect the market value of the bonds held by the Alabama
IM-IT Trust and thereby adversely affect Unitholders.

In the fiscal year ended September 30, 1996, total tax revenues in the state
grew by 2.7%, an increase of $129.8 million. Total tax collections from all
sources equaled $4.997 billion. Income taxes accounted for approximately 41%
of total revenues. Sales taxes were the second largest source of revenue,
contributing about 26% of the total.

For fiscal year 1996-97, total tax revenues are forecast to increase by 2.3%.
Revenues will increase $114 million, down from $129.8 million in fiscal year
1996. A nominal growth rate of 2.3% translates into a real decrease of 0.5%
based upon projected inflation rates. Income taxes (individual and corporate
combined) are expected to grow by 5%, down slightly from the 5.3% rate of
fiscal year 1995-96. Sales taxes are expected to increase 3.5% in fiscal year
1997, down from the 5.5% growth of the previous fiscal year.

Most income and sales tax revenues in Alabama are "earmarked" for the
Education Trust Fund. The Education Trust Fund in fiscal year 1995-96
increased by 5% and net receipts totaled $3,346.5 million. Expenditures and
encumbrances in the Education Trust Fund were $3,345.6 million. The balance in
the Education Trust Fund at the end of fiscal year 1995-96 was $24.61 million.

Estimated net receipts in the Education Trust Fund for fiscal years 1996-97
and 1997-98 are $3,530 million and $3,680 million, respectively. Estimated
expenditures and encumbrances are $3,552.2 million for fiscal year 1996-97 and
$3,682.4 million for fiscal year 1997-98. The ending balance for the Education
Trust Fund for fiscal year 1996-97 is estimated at $2.375 million. Projections
for fiscal year 1997-98 show a zero ending balance in the Education Trust Fund.

The State's General Fund grew 3% for fiscal year 1995-96 with General Fund
receipts at $896.91 million. Expenditures and encumbrances in the General Fund
were $893.92 million. The balance in the General Fund at the end of fiscal
year 1995-96 was $33.4 million. Estimated receipts in the General Fund for
fiscal years 1996-97 and 1997-98 are $920 million and $927.5 million,
respectively, with expenditures and encumbrances estimated at $905.28 million
and $950.45 million, respectively. The balance at the end of fiscal year
1996-97 is projected at $44.73 million and for fiscal year 1997-98, $21.77
million.

Total annual payments for the state's general obligation bonds for the period
1996-2015 are $596,177,372.50. Total annual payments for revenue obligation
bonds for the same period are $1,498,437,489.69. The majority of the limited
obligation bonds payable from state revenues which have been authorized but
are unissued are from the Alabama Incentives Financing Authority and the State
Industrial Development Authority. Total bonded indebtedness during 1996-2015
amounts to $2,094,614,862.19.

The foregoing information constitutes only a brief summary of some of the
financial difficulties which may impact certain issuers of Bonds and does not
purport to be a complete or exhaustive description of all adverse conditions
to which the issuers in the Alabama IM-IT Trust are subject. Additionally,
many factors including national economic, social and environmental policies
and conditions, which are not within the control of the issuers of Bonds,
could affect or could have an adverse impact on the financial condition of the
State and various agencies and political subdivisions located in the State.
The Sponsor is unable to predict whether or to what extent such factors or
other factors may affect the issuers of Bonds, the market value or
marketability of the Bonds or the ability of the respective issuers of the
Bonds acquired by the Alabama IM-IT Trust to pay interest on or principal of
the Bonds.

At the time of the closing for each Alabama Trust, Special Counsel to the Fund
for Alabama tax matters rendered an opinion under then existing Alabama income
tax law applicable to taxpayers whose income is subject to Alabama income
taxation substantially to the effect that:

the Alabama IM-IT Trust is not taxable as a corporation for purposes of the
Alabama income tax.

income of the Alabama IM-IT Trust, to the extent it is taxable, will be
taxable to the Unitholders, not the Alabama IM-IT Trust.

each Unitholder's distributive share of the Alabama IM-IT Trust's net income
will be treated as the income of the Unitholder for purposes of the Alabama
income tax.

interest on obligations held by the Alabama IM-IT Trust which is exempt from
the Alabama income tax will retain its tax-exempt character when the
distributive share thereof is distributed or deemed distributed to each
Unitholder.

any proceeds paid to the Alabama IM-IT Trust under insurance policies issued
to the Sponsor or under individual policies obtained by the Sponsor, the
issuer or underwriter of the respective obligations which represent maturing
interest on defaulted obligations held by the Trustee will be exempt from
Alabama income tax if and to the same extent as such interest would be exempt
from such taxes if paid directly by the issuer of such obligations.

each Unitholder will, for purposes of the Alabama income tax, treat his
distributive share of gains realized upon the sale or other disposition of the
Bonds held by the Alabama IM-IT Trust as though the Bonds were sold or
disposed of directly by the Unitholders.

gains realized on the sale or redemption of Units by Unitholders, who are
subject to the Alabama income tax, will be includable in the Alabama income of
such Unitholders.

Arizona Trusts

The following brief summary regarding the economy of Arizona is based upon
information drawn from publicly available sources and is included for the
purpose of providing the information about general economic conditions that
may or may not affect issuers of the Arizona Bonds. The Sponsor has not
independently verified any of the information contained in such publicly
available documents.

Arizona is the nation's sixth largest state in terms of area. Arizona's main
economic/employment sectors include services, trade, tourism and
manufacturing. Mining and agriculture are also significant, although they tend
to be more capital than labor intensive. Services is the single largest
economic sector. Many of these jobs are directly related to tourism.

Employment in the services sector increased 7.3% during 1995 and is projected
to increase 6.2% for 1996 and 6.0% for 1997. Construction employment showed an
8.3% job growth in 1995 with projections in job growth for 1996 and 1997
declining to 6.5% and 4.4%, respectively. Trade employment also had a high
increase in job growth in 1995 at 7.7% with 1996 and 1997 estimates at 4.4%
and 4.2%, respectively. Overall, Arizona's wage and salary employment grew
5.4% in 1995 and is expected to increase 4.3% in 1996, 3.7% in 1997, and 3.0%
in 1998-1999. This translates into an increase of over 153,000 new jobs
through 1997. Total employment growth for Arizona from 1995-96 was 4.2%, which
compares favorably with the national figure of 2.3% during 1995-96. Arizona's
economy is expected to continue to show moderate growth, albeit at slower
rates over the next few years.

The unemployment rate in Arizona as of October 1996 was 5.6%. This is higher
than the national rate of 4.9% in October 1996 and an increase from the
Arizona unemployment rate of 5.1% in 1995. The annual unemployment rate for
the U.S. in 1995 and 1996 was 5.6% and 5.4% (not seasonally adjusted)
respectively. Part of Arizona's increase in unemployment is attributed to
structural changes in industries resulting from new technologies and methods.

In 1986, the value of Arizona real estate began a steady decline, reflecting a
market which had been overbuilt in the previous decade with a resulting
surplus of completed inventory. This decline adversely affected both the
construction industry and those Arizona financial institutions which had
aggressively pursued many facets of real estate lending. In the near future,
Arizona's financial institutions are likely to continue to experience problems
until the excess inventories of commercial and residential properties are
absorbed. The problems of the financial institutions have adversely affected
employment and economic activity. Longer-term prospects are brighter. Arizona
has been, and is projected to continue to be, one of the fastest growing areas
in the United States. Over the last several decades, the State has outpaced
most other regions of the country in virtually every major category of growth,
including population, personal income, gross state product and job creation.

Arizona's per capita personal income in 1994 and 1995 was $19,389 and $20,489,
respectively, a 5.7% increase. The national increase for the same period was
5.3%. Arizona ranked third in the nation in personal income growth during
1990-95. Personal income growth for Arizona is estimated at 8% in 1996, 6.7%
in 1997, 6.1% in 1998, and 5.5% in 1999.

The state operates on a fiscal year beginning July 1 and ending June 30.
Fiscal year 1996 refers to the year ended June 30, 1996.

Arizona began fiscal year 1996 with a $269.5 million cash surplus. Total
sources of funds in the general fund for fiscal year 1996 were $4,933.0
million. Total expenditures were $4,533.1 million, leaving a cash surplus for
fiscal year 1997 of $399.9 million. This was 50% higher than projected and set
a record for the State. That record balance did not include $235 million in
the Budget Stabilization Fund and $14.1 million in the Medical Services
Stabilization Fund.

Total revenue for the General Fund in fiscal year 1996 was $4.663 billion.
Approximately 45% of this budgeted revenue came from sales and use taxes, 42%
from income taxes (individual and corporate), and 4% from property taxes. All
taxes totaled approximately $4.408 billion, or 94.5% of General Fund revenues.
Non-tax revenue includes items such as income from state lottery, licenses,
fees and permits, and interest.

For fiscal year 1996, General Fund expenditures totaled $4.378 billion. These
expenditures fell into the following major categories: education 58% ($2.527
billion), health and welfare 23% ($1.032 billion), protection and safety 10%
($469.6 million), general government 6% ($273.1 million), and inspection and
regulation, transportation, and natural resources 3% ($149.6 million).

Fiscal year 1997 revenues will most likely be impacted by a $200 million
property tax reduction in 1996. This reduction has reduced Fiscal year 1997
revenues by almost 3.2%; yet, General Fund revenues are expected to increase
2.4% from fiscal year 1996. Total revenues in the General Fund for fiscal year
1997 are forecast at $4.776 billion. General Fund expenditures are estimated
at $4.771 billion. Total sources of funds for fiscal year 1997 are estimated
at $5,176.0 million with expenditures at $4,921.1 million, leaving a projected
$254.9 million cash surplus for fiscal year 1998. However, fiscal year 1998
ending balance is projected at only $11.2 million. The Budget Stabilization
Fund is expected to grow to $246.7 million at the end of fiscal year 1998. The
Medical Services Stabilization Fund is estimated at $74.2 million for fiscal
year 1998 and $17.2 million is projected for the Temporary Assistance
Stabilization Fund. General Fund revenues for fiscal year 1998 are forecast to
increase 3.4% to $4.939 billion, with expenditures at $4.94 billion.

Most or all of the Bonds of the Arizona Trust are not obligations of the State
of Arizona, and are not supported by the State's taxing powers. The particular
source of payment and security for each of the Bonds is detailed in the
instruments themselves and in related offering materials. There can be no
assurances, however, with respect to whether the market value or marketability
of any of the Bonds issued by an entity other than the State of Arizona will
be affected by the financial or other condition of the State or of any entity
located within the State. In addition, it should be noted that the State of
Arizona, as well as counties, municipalities, political subdivisions and other
public authorities of the state, are subject to limitations imposed by
Arizona's constitution with respect to ad valorem taxation, bonded
indebtedness and other matters. For example, the state legislature cannot
appropriate revenues in excess of 7% of the total personal income of the state
in any fiscal year. These limitations may affect the ability of the issuers to
generate revenues to satisfy their debt obligations.

Although most of the Bonds in the Arizona Trust are revenue obligations of
local governments or authorities in the State, there can be no assurance that
the fiscal and economic conditions referred to above will not affect the
market value or marketability of the Bonds or the ability of the respective
obligors to pay principal of and interest on the Bonds when due.

On July 21, 1994, the Arizona Supreme Court rendered its opinion in Roosevelt
Elementary School District Number 66, et al v. Dianne Bishop, et al (the "
Roosevelt Opinion" ). In this opinion, the Arizona Supreme Court held that
the present statutory financing scheme for public education in the State of
Arizona does not comply with the Arizona constitution. Subsequently, the
Arizona School Boards Association, with the approval of the appellants and the
appellees to the Roosevelt Opinion, and certain Arizona school districts,
filed with the Arizona Supreme Court motions for clarification of the
Roosevelt Opinion, specifically with respect to seeking prospective
application of the Roosevelt Opinion. On July 29, 1994, the Arizona Supreme
Court clarified the Roosevelt Opinion to hold that such opinion will have
prospective effect only.

Certain other circumstances are relevant to the market value, marketability
and payment of any hospital and health care revenue bonds in the Arizona
Trust. The Arizona Legislature has in the past sought to enact health care
cost control legislation. Certain other health care regulatory laws have
expired. It is expected that the Arizona legislature will at future sessions
continue to attempt to adopt legislation concerning health care cost control
and related regulatory matters. The effect of any such legislation or of the
continued absence of any legislation restricting hospital bed increases and
limiting new hospital construction on the ability of Arizona hospitals and
other health care providers to pay debt service on their revenue bonds cannot
be determined at this time.

Arizona does not participate in the federally administered Medicaid program.
Instead, the state administers an alternative program, Arizona Health Care
Cost Containment System ("AHCCCS" ), which provides health care to
indigent persons meeting certain financial eligibility requirements, through
managed care programs. In fiscal year 1996, AHCCCS was financed approximately
55% by federal funds, and 45% by state funds.

In 1996, voters in Arizona passed an initiative (Proposition 203) which
provides for an expansion of eligibility for AHCCCS. For 1997, the Executive
recommended an $8.3 million supplemental to the AHCCCS for disproportionate
share hospital payments. Actual expenditures for the program in fiscal year
1996 were $128.9 million, and are projected at $135.3 million in fiscal year
1997.

Under state law, hospitals retain the authority to raise rates with
notification and review by, but not approval from, the Department of Health
Services. Hospitals in Arizona have experienced profitability problems along
with those in other states. At least two Phoenix-based hospitals have
defaulted on or reported difficulties in meeting their bond obligations in
recent years.

Insofar as tax-exempt Arizona public utility pollution control revenue bonds
are concerned, the issuance of such bonds and the periodic rate increases
needed to cover operation costs and debt service are subject to regulation by
the Arizona Corporation Commission, the only significant exception being the
Salt River Project Agricultural Improvement and Power District which, as a
Federal instrumentality, is exempt from rate regulation. On July 15, 1991,
several creditors of Tucson Electric Power Company ("Tucson Electric" )
filed involuntary petitions under Chapter 11 of the U.S. Bankruptcy Code to
force Tucson Power to reorganize under the supervision of the bankruptcy
court. On December 31, 1991, the Bankruptcy Court approved the utility's
motion to dismiss the July petition after five months of negotiations between
Tucson Electric and its creditors to restructure the utility's debts and other
obligations. In December 1992, Tucson Electric announced that it had completed
its financial restructuring. In January 1993, Tucson Electric asked the
Arizona Corporation Commission for a 9.3% average rate increase. Tucson
Electric serves approximately 270,000 customers, primarily in the Tucson area.
Inability of any regulated public utility to secure necessary rate increases
could adversely affect, to an indeterminable extent, its ability to pay debt
service on its pollution control revenue bonds.

Based on a recent U.S. Supreme Court ruling, the State has determined to
refund $197 million, including statutory interest, in State income taxes
previously collected from Federal retirees on their pensions. This payment
will be made over a four-year period beginning with approximately $14.6
million in tax refunds in fiscal year 1994. A combination of tax refunds and
tax credits will be used to satisfy this liability.

At the time of the closing for each Arizona Trust, Special Counsel to the Fund
for Arizona tax matters rendered an opinion under then existing Arizona income
tax law applicable to taxpayers whose income is subject to Arizona income
taxation substantially to the effect that:

The assets of the Trust will consist of interest-bearing obligations issued by
or on behalf of the State of Arizona (the "State" ), its political
subdivisions and authorities (the "Arizona Bonds" ) and by or on behalf
of the government of Puerto Rico, the government of Guam, or the government of
the Virgin Islands (collectively the "Possession Bonds" ) (collectively
the Arizona Bonds and Possession Bonds shall be referred to herein as the "
Bonds" ), provided the interest on such Bonds received by the Trust is
exempt from State income taxes.

For Arizona income tax purposes, each Unitholder will be treated as the owner
of a pro rata portion of the Arizona IM-IT Trust, and the income of the Trust
therefore will be treated as the income of the Unitholder under State law.

For Arizona income tax purposes, interest on the Bonds which is excludable
from Federal gross income and which is exempt from Arizona income taxes when
received by the Arizona IM-IT Trust, and which would be excludable from
Federal gross income and exempt from Arizona income taxes if received directly
by a Unitholder, will retain its status as tax-exempt interest when received
by the Arizona IM-IT Trust and distributed to the Unitholders.

To the extent that interest derived from the Arizona IM-IT Trust by a
Unitholder with respect to the Bonds is excludable from Federal gross income,
such interest will not be subject to Arizona income taxes.

Each Unitholder will receive taxable gain or loss for Arizona income tax
purposes when Bonds held in the Arizona IM-IT Trust are sold, exchanged,
redeemed or paid at maturity, or when the Unitholder redeems or sells Units,
at a price that differs from original cost as adjusted for amortization of
Bond discount or premium and other basis adjustments, including any basis
reduction that may be required to reflect a Unitholder's share of interest, if
any, accruing on Bonds during the interval between the Unitholder's settlement
date and the date such Bonds are delivered to the Arizona IM-IT Trust, if
later.

Amounts paid by the Insurer under an insurance policy or policies issued to
the Trust, if any, with respect to the Bonds in the Trust which represent
maturing interest on defaulted Bonds held by the Trustee will be exempt from
State income taxes if, and to the same extent as, such interest would have
been so exempt if paid by the issuer of the defaulted Bonds provided that, at
the time such policies are purchased, the amounts paid for such policies are
reasonable, customary and consistent with the reasonable expectation that the
issuer of the Bonds, rather than the insurer, will pay debt service on the
Bonds.

Arizona law does not permit a deduction for interest paid or incurred on
indebtedness incurred or continued to purchase or carry Units in the Arizona
IM-IT Trust, the interest on which is exempt from Arizona income taxes.

Neither the Bonds nor the Units will be subject to Arizona property taxes,
sales tax or use tax.

Chapman and Cutler has expressed no opinion with respect to taxation under any
other provision of Arizona law. Ownership of the Units may result in
collateral Arizona tax consequences to certain taxpayers. Prospective
investors should consult their tax advisors as to the applicability of any
such collateral consequences.

California Trusts

The Trust will invest substantially all of its assets in California Municipal
Obligations. The Trust is therefore susceptible to political, economic or
regulatory factors affecting issuers of California Municipal Obligations.
These include the possible adverse effects of certain California
constitutional amendments, legislative measures, voter initiatives and other
matters that are described below. The following information provides only a
brief summary of the complex factors affecting the financial situation in
California (the "State" ) and is derived from sources that are
generally available to investors and are believed to be accurate. No
independent verification has been made of the accuracy or completeness of any
of the following information. It is based in part on information obtained from
various State and local agencies in California or contained in official
statements for various California Municipal Obligations.

There can be no assurance that future statewide or regional economic
difficulties, and the resulting impact on State or local governmental finances
generally, will not adversely affect the market value of California Municipal
Obligations held in the portfolio of the Trust or the ability of particular
obligors to make timely payments of debt service on (or relating to) those
obligations.

California's economy is the largest among the 50 states and one of the largest
in the world. The State's population of over 32 million represents 12.3% of
the total United States population and grew by 27% in the 1980s. The June 1996
population projection forecasts 33.9 million California residents in July
1998. The diversified economy has major components in agriculture,
manufacturing, high-technology, trade, entertainment, tourism, construction
and services. Total state gross domestic product of $1 trillion in 1997 will
be larger than all but seven nations in the world and California will become
the first state to produce over one trillion dollars worth of goods and
services in a single year.

After suffering through a severe recession, California's economy has been on
a steady recovery since the start of 1994. In 1996, California had eight
consecutive months of record high employment levels. Employment grew over
330,000 jobs in 1996 or 2.7%, and is expected to add another 330,000 in 1997.
California employment is expanding more rapidly than the nation as a whole,
which saw 2% job gains in 1995. The strongest growth has been in high
technology and export-related industries, including computer software,
business services, electronics, entertainment and tourism, 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),
and finance and insurance. Residential housing construction, with new permits
rising from 94,000 units in 1996 to 110,000 in 1997, is weaker than in
previous recoveries, but has been growing slowly since 1993.

California enjoys a large and diverse labor force. For 1996, the total
civilian labor force was 15,496,000 with 14,372,000 individuals employed and
1,124,000, or 7.3%, unemployed. In comparison, the unemployment rate for the
United States during the same time was 5.4%. Yet, with several major
industries undergoing restructuring, job losses are occurring in industries
which, in the past, have been a stable source of growth to California's
economy. Energy and telephone companies are deregulating while banking and
insurance are streamlining and consolidating. Deregulation is expected to make
California more competitive by lowering electric rates by at least 20% over
the next five years.

Personal income rose to $815 billion in 1996, a 7.2% increase over 1995,
outpacing gains nationwide. Wages and salaries grew 6.9% during 1996. This is
over 2.5 times the increase in employment. Solid gains in employment and
income are expected to continue for the next several years with growth above
the national average.

Certain California Municipal Obligations may be obligations of issuers which
rely in whole or in part, directly or indirectly, on ad valorem property taxes
as a source of revenue. The taxing powers of California local governments and
districts are limited by Article XIIIA of the California Constitution, enacted
by the voters in 1978 and commonly known as "Proposition 13." Briefly,
Article XIIIA limits to 1% of full cash value the rate of ad valorem property
taxes on real property and generally restricts the reassessment of property to
2% per year, except upon new construction or change of ownership (subject to a
number of exemptions). Taxing entities may, however, raise ad valorem taxes
above the 1% limit to pay debt service on voter-approved bonded indebtedness.

Under Article XIIIA, the basic 1% ad valorem tax levy is applied against the
assessed value of property as of the owner's date of acquisition (or as of
March 1, 1975, if acquired earlier), subject to certain adjustments. This
system has resulted in widely varying amounts of tax on similarly situated
properties. Several lawsuits have been filed challenging the acquisition-based
assessment system of Proposition 13, and on June 18, 1992 the U.S. Supreme
Court announced a decision upholding Proposition 13.

Article XIIIA prohibits local governments from raising revenues through ad
valorem property taxes above the 1% limit; it also requires voters of any
governmental unit to give two-thirds approval to levy any "special
tax." Court decisions, however, allowed non-voter approved levy of "
general taxes" which were not dedicated to a specific use. In response to
these decisions, the voters of the State in 1986 adopted an initiative statute
which imposed significant new limits on the ability of local entities to raise
or levy general taxes, except by receiving majority local voter approval.
Significant elements of this initiative, "Proposition 62," have been
overturned in recent court cases. An initiative proposed to re-enact the
provisions of Proposition 62 as a constitutional amendment was defeated by the
voters in November 1990, but such a proposal may be renewed in the future.

California and its local governments are subject to an annual "
appropriations limit" imposed by Article XIIIB of the California
Constitution, enacted by the voters in 1979 and significantly amended by
Propositions 98 and 111 in 1988 and 1990, respectively. Article XIIIB
prohibits the State or any covered local government from spending "
appropriations subject to limitation" in excess of the appropriations
limit imposed. "Appropriations subject to limitation" are
authorizations to spend "proceeds of taxes," which consists of tax
revenues and certain other funds, including proceeds from regulatory licenses,
user charges or other fees, to the extent that such proceeds exceed the cost
of providing the product or service, but "proceeds of taxes" excludes
most State subventions to local governments. No limit is imposed on
appropriations of funds which are not "proceeds of taxes," such as
reasonable user charges or fees and certain other non-tax funds, including
bond proceeds.

Among the expenditures not included in the Article XIIIB appropriations limit
are (1) the debt service cost of bonds issued or authorized prior to January
1, 1979, or subsequently authorized by the voters, (2) appropriations arising
from certain emergencies declared by the Governor, (3) appropriations for
certain capital outlay projects, (4) appropriations by the State of post-1989
increases in gasoline taxes and vehicle weight fees, and (5) appropriations
made in certain cases of emergency.

The appropriations limit for each year is adjusted annually to reflect changes
in cost of living and population, and any transfers of service
responsibilities between government units. The definitions for such
adjustments were liberalized in 1990 by Proposition 111 to follow more closely
growth in California's economy.

"Excess" revenues are measured over a two-year cycle. With respect to
local governments, excess revenues must be returned by a revision of tax rates
or fee schedules within the two subsequent fiscal years. The appropriations
limit for a local government may be overridden by referendum under certain
conditions for up to four years at a time. With respect to the State, 50% of
any excess revenues is to be distributed to K-12 school districts and
community college districts (collectively, "K-14 districts" ) and the
other 50% is to be refunded to taxpayers. With more liberal annual adjustment
factors since 1988, and depressed revenues since 1990 because of the
recession, few governments, including the State, are currently operating near
their spending limits, but this condition may change over time. Local
governments may by voter approval exceed their spending limits for up to four
years.

Because of the complex nature of Articles XIIIA and XIIIB of the California
Constitution, the ambiguities and possible inconsistencies in their terms, and
the impossibility of predicting future appropriations or changes in population
and cost of living, and the probability of continuing legal challenges, it is
not currently possible to determine fully the impact of Article XIIIA or
Article XIIIB on California Municipal Obligations or on the ability of
California or local governments to pay debt service on such California
Municipal Obligations. It is not presently possible to predict the outcome of
any pending litigation with respect to the ultimate scope, impact or
constitutionality of either Article XIIIA or Article XIIIB, or the impact of
any such determinations upon State agencies or local governments, or upon
their ability to pay debt service on their obligations. Future initiative or
legislative changes in laws or the California Constitution may also affect the
ability of the State or local issuers to repay their obligations.

Under the California Constitution, debt service on outstanding general
obligation bonds is the second charge to the General Fund after support of the
public school system and public institutions of higher education. The State
had $17,913,271,000 aggregate principal amount of general obligation bonds
outstanding, and $8,383,864,000 authorized and unissued, as of December 31,
1996. Outstanding lease revenue bonds totaled $5.845 billion as of June 30,
1996, and are estimated to total $6.398 billion as of June 30, 1997.

General Fund general obligation debt service expenditures for fiscal year
1995-96 were $1.911 billion, and are estimated at $1.953 billion and $1.979
billion for fiscal years 1996-97 and 1997-98, respectively.

The principal sources of General Fund revenues in 1995-96 were the California
personal income tax (45% of total revenues), the sales tax (34%), bank and
corporation taxes (12.6%), and the gross premium tax on insurance (2.6%).
California maintains a Special Fund for Economic Uncertainties (the "
Economic Uncertainties Fund" ), derived from General Fund revenues, as a
reserve to meet cash needs of the General Fund.

Throughout the 1980s, State spending increased rapidly as the State population
and economy also grew rapidly, including increased spending for many
assistance programs to local governments, which were constrained by
Proposition 13 and other laws. The largest State program is assistance to
local public school districts. In 1988, an initiative (Proposition 98) was
enacted which (subject to suspension by a two-thirds vote of the Legislature
and the Governor) guarantees local school districts and community college
districts a minimum share of State General Fund revenues (currently about
33%).

Since the start of 1990-91 Fiscal Year, the State has faced adverse economic,
fiscal and budget conditions. The economic recession seriously affected State
tax revenues. It also caused increased expenditures for health and welfare
programs. The State has also faced a structural imbalance in its budget with
the largest programs supported by the General Fund (education, health, welfare
and corrections) growing at rates significantly higher than the growth rates
for the principal revenue sources of the General Fund.

On January 10, 1996, the Governor released his proposed budget for the fiscal
year 1996-97. The Governor requested total General Fund appropriations of
about $45.2 billion, based on projected revenues and transfers of about $45.6
billion, which would leave a budget reserve in the Economic Uncertainties Fund
at June 30, 1997 of about $400 million. The Governor renewed a proposal, which
had been rejected by the Legislature in 1995, for a 15% phased cut in
individual and corporate tax rates over three years (the budget proposal
assumed this would be enacted, reducing revenues in 1996-97 by about $600
million). There was also a proposal to restructure trial court funding in a
way which would result in a $300 million decrease in General Fund revenues.
The Governor requested legislation to make permanent a moratorium on cost of
living increases for welfare payments, and suspension of a renters tax credit,
which otherwise would go back into effect in the 1996-97 fiscal year. The
Governor further proposed additional cuts in certain health and welfare
programs, and assumed that cuts previously approved by the Legislature would
receive federal approval. Other proposals included an increase in funding for
K-12 schools under Proposition 98, for state higher education systems (with a
second year of no student fee increases), and for corrections. The Governor's
budget projected external cash flow borrowing of up to $3.2 billion, to mature
by June 30, 1997. Revised estimates were published in the Governor's Budget
Summary for fiscal year 1997-98. These estimates and projections are based
upon various assumptions which may be affected by numerous factors, including
future economic conditions in the State and the nation, and there can be no
assurance that the estimates will be achieved.

Preliminary General Fund revenues and transfers for fiscal year 1996-97 are
$48.4 billion, a 4.56% increase from the prior year. Expenditures are
estimated at $48.4 billion, a 6.6% increase. The Governor's Budget Summary
for fiscal year 1997-98 projects a positive balance of $197 million in the
budget reserve at June 30, 1997. Special Fund revenues are estimated at $13.54
billion and appropriated Special Fund expenditures at $13.59 billion. As of
June 30, 1996, the General Fund balance was $685.4 million. The estimate for
June 30, 1997 is $648 million.

Overall, General Fund revenues and transfers represent about 78% of total
revenues. The remaining 22% are special funds, dedicated to specific programs.
The three largest revenue sources (personal income, sales, and bank and
corporation) account for about 73% of total revenues.

Several important tax changes were enacted in 1996. The bank and corporation
tax was reduced by 5%, and a number of targeted business tax incentives were
put into place.

The Governor's proposed budget for fiscal year 1997-98 keeps General Fund
spending below revenues. The budget provides for General Fund revenues and
transfers of $50.7 billion, a 4.65% increase from 1996-97, and expenditures of
$50.3 billion, a 4% increase. The budget provides for a General Fund Reserve
for Economic Uncertainties of $553 million. The balance in the General Fund at
the end of fiscal year 1998 is forecast at $1,004 million. Special Fund
revenues are estimated to be $14 billion and appropriated Special Fund
expenditures are projected at $14.3 billion.

K-12 education remains the state's top funding priority -- nearly 42 cents of
every General Fund dollar is spent on K-12 education. Education, public
safety, and health and welfare expenditures constitute nearly 93% of all state
General Fund expenditures. General Fund expenditures for 1997-98 are proposed
in the following amounts and programs: $20.9 billion or 41.6% for K-12
education, $14.6 billion or 28.9% for health and welfare, $6.5 billion or
12.9% for higher education, and $4.3 billion, or 8.5% for youth and
correctional programs. The remaining expenditures are in areas such as
business, transportation, housing, and environmental protection.

The following are principal features of the Governor's 1997-98 budget
proposal:

For fiscal year 1997-98, the Governor's budget proposes a further 10%
reduction in the bank and corporation tax rate phased in over a two-year
period beginning with the 1998 tax year. This would implement the balance of
the Governor's proposal last year for a 15% bank and corporation tax
reduction. In addition, the Governor's Budget proposes that the State conform
with recent federal changes in the allowable number of Subchapter S
shareholders. Combined, these tax reduction proposals are estimated to reduce
taxes by $93 million during 1997-98, and $336 million during 1998-1999.

The Governor has proposed a $200 million bond to capitalize an Infrastructure
Bank to help finance infrastructure projects related to business development.
The budget also proposes $939,000 to create three new offices -- two in Asia
and one in South America -- to provide California companies with
representation and assistance in these emerging markets.

Building on the 1996 class-size reduction initiative, the Budget proposes $304
million to reduce class size in an additional grade, and funding is provided
to meet facilities-related costs of class size reduction in 1996-97. An
additional $57 million is proposed for improved reading instruction in grades
four through eight.

The Budget includes the second year of the Citizens' Option for Public Safety
Program, through which $100 million will be provided to local governments to
increase frontline law enforcement.

The Budget provides a $35 million Infant Health Protection Initiative,
designed to protect children from abuse or neglect from substance-abusing
parents. The budget also provides $15.3 million to increase immunizations for
low-income children.

State general obligation bonds ratings were reduced in July, 1994 to "
A1" by Moody's and "A" by S&P. Both of these ratings were reduced
from "AAA" levels which the State held until late 1991. There can be
no assurance that such ratings will be maintained in the future. It should be
noted that the creditworthiness of obligations issued by local California
issuers may be unrelated to the creditworthiness of obligations issued by the
State of California, and that there is no obligation on the part of the State
to make payment on such local obligations in the event of default.

The State is involved in certain legal proceedings (described in the State's
recent financial statements) that, if decided against the State, may require
the State to make significant future expenditures or may substantially impair
revenues. In the consolidated case of Malibu Video Systems, et al. v. Kathleen
Brown and Abramovitz, et al., a stipulated judgment was entered requiring
return of $119 million plus interest to specified special funds over a period
of up to five years beginning in fiscal year 1996-97. The lawsuit challenges
the transfer of monies from special fund accounts within the State Treasury to
the State's General Fund pursuant to the Budget Acts of 1991, 1992, 1993, and
1994. Plaintiffs allege that the monetary transfers violated various statutes
and provisions of the State Constitution.

There are a number of State agencies, instrumentalities and political
subdivisions of the State that issue Municipal Obligations, some of which may
be conduit revenue obligations payable from payments from private borrowers.
These entities are subject to various economic risks and uncertainties, and
the credit quality of the securities issued by them may vary considerably from
the credit quality of the obligations backed by the full faith and credit of
the State.

Property tax revenues received by local governments declined more than 50%
following passage of Proposition 13. Subsequently, the California Legislature
enacted measures to provide for the redistribution of the State's General Fund
surplus to local agencies, the reallocation of certain State revenues to local
agencies and the assumption of certain governmental functions by the State to
assist municipal issuers to raise revenues. Total local assistance from the
State's General Fund was budgeted at approximately 75% of General Fund
expenditures in recent years, including the effect of implementing reductions
in certain aid programs. To reduce State General Fund support for school
districts, the 1992-93 and 1993-94 Budget Acts caused local governments to
transfer $3.9 billion of property tax revenues to school districts,
representing loss of the post-Proposition 13 "bailout" aid. The
largest share of these transfers came from counties, and the balance from
cities, special districts and redevelopment agencies. In order to make up this
shortfall, the Legislature proposed and voters approved in 1993 dedicating
0.5% of the sales tax to counties and cities for public safety purposes. In
addition, the Legislature has changed laws to relieve local governments of
certain mandates, allowing them to reduce costs.

To the extent the State should be constrained by its Article XIII
appropriations limit, or its obligation to conform to Proposition 98, or other
fiscal considerations, the absolute level, or the rate of growth, of State
assistance to local governments may be further reduced. Any such reductions in
State aid could compound the serious fiscal constraints already experienced by
many local governments, particularly counties. At lease one rural county
(Butte) publicly announced that it might enter bankruptcy proceedings in
August 1990, although such plans were put off after the Governor approved
legislation to provide additional funds for the county. Other counties have
also indicated that their budgetary condition is extremely grave. The Richmond
Unified School District (Contra Costa County) entered bankruptcy proceedings
in May 1991 but the proceedings have been dismissed. Los Angeles County, the
largest in the State, has reported severe fiscal problems, leading to a
nominal $1.2 billion deficit in its $11 billion budget for the 1995-96 Fiscal
Year. To balance the budget, the county has imposed severe cuts in services,
particularly for health care. The Legislature is considering actions to help
alleviate the County's fiscal problems, but none were completed before August
15, 1995. As a result of its bankruptcy proceedings (discussed further below)
Orange County also has implemented stringent cuts in services and has laid off
workers.

California Municipal Obligations which are assessment bonds may be adversely
affected by a general decline in real estate values or a slowdown in real
estate sales activity. In many cases, such bonds are secured by land which is
undeveloped at the time of issuance but anticipated to be developed within a
few years after issuance. In the event of such reduction or slowdown, such
development may not occur or may be delayed, thereby increasing the risk of a
default on the bonds. Because the special assessments or taxes securing these
bonds are not the personal liability of the owners of the property assessed,
the lien on the property is the only security for the bonds. Moreover, in most
cases the issuer of these bonds is not required to make payments on the bonds
in the event of delinquency in the payment of assessments or taxes, except
from amounts, if any, in a reserve fund established for the bonds.

Certain California long-term lease obligations, though typically payable from
the general fund of the municipality, are subject to "abatement" in
the event the facility being leased is unavailable for beneficial use and
occupancy by the municipality during the term of the lease. Abatement is not a
default, and there may be no remedies available to the holders of the
certificates evidencing the lease obligation in the event abatement occurs.
The most common cases of abatement are failure to complete construction of the
facility before the end of the period during which lease payments have been
capitalized and uninsured casualty losses to the facility (e.g., due to
earthquake). In the event abatement occurs with respect to a lease obligation,
lease payments may be interrupted (if all available insurance proceeds and
reserves are exhausted) and the certificates may not be paid when due.

Several years ago the Richmond Unified School District (the "District"
) entered into a lease transaction in which certain existing properties of the
District were sold and leased back in order to obtain funds to cover operating
deficits. Following a fiscal crisis in which the District's finances were
taken over by a State receiver (including a brief period under bankruptcy
court protection), the District failed to make rental payments on this lease,
resulting in a lawsuit by the Trustee for the Certificate of Participation
holders, in which the State was a named defendant (on the grounds that it
controlled the District's finances). One of the defenses raised in answer to
this lawsuit was the invalidity of the original lease transaction. The trial
court has upheld the validity of the District's lease, and the case has been
settled. Any judgment in any future case against the position asserted by the
Trustee in the Richmond case may have adverse implications for lease
transactions of a similar nature by other California entities.

The repayment of industrial development securities secured by real property
may be affected by California laws limiting foreclosure rights of creditors.
Securities backed by health care and hospital revenues may be affected by
changes in State regulations governing cost reimbursements to health care
providers under Medi-Cal (the State's Medicaid program), including risks
related to the policy of awarding exclusive contracts to certain hospitals.

Limitations on ad valorem property taxes may particularly affect "tax
allocation" bonds issued by California redevelopment agencies. Such bonds
are secured solely by the increase in assessed valuation of a redevelopment
project area after the start of redevelopment activity. In the event that
assessed values in the redevelopment project decline (e.g., because of a major
natural disaster such as an earthquake), the tax increment revenue may be
insufficient to make principal and interest payments on these bonds. Both
Moody's and S&P suspended ratings on California tax allocation bonds after the
enactment of Articles XIIIA and XIIIB, and only resumed such ratings on a
selective basis.

Proposition 87, approved by California voters in 1988, requires that all
revenues produced by a tax rate increase go directly to the taxing entity
which increased such tax rate to repay that entity's general obligation
indebtedness. As a result, redevelopment agencies (which, typically, are the
Issuers of tax allocation securities) no longer receive an increase in tax
increment when taxes on property in the project area are increased to repay
voter-approved bonded indebtedness.

The effect of these various constitutional and statutory changes upon the
ability of California municipal securities issuers to pay interest and
principal on their obligations remains unclear. Furthermore, other measures
affecting the taxing or spending authority of California or its political
subdivisions may be approved or enacted in the future. Legislation has been or
may be introduced which would modify existing taxes or other revenue-raising
measures or which either would further limit or, alternatively, would increase
the abilities of state and local governments to impose new taxes or increase
existing taxes. It is not presently possible to determine the impact of any
such legislation on California Municipal Obligations in which the Fund may
invest, future allocations of state revenues to local governments or the
abilities of state or local governments to pay the interest on, or repay the
principal of, such California Municipal Obligations.

Substantially all of California is within an active geologic region subject to
major seismic activity. Northern California in 1989 and Southern California in
1994 experienced major earthquakes causing billions of dollars in damages. The
federal government provided more than $1.8 billion in aid for both
earthquakes, and neither event is expected to have any long-term negative
economic impact. Any California Municipal Obligation in the Portfolio could be
affected by an interruption of revenues because of damaged facilities, or,
consequently, income tax deductions for casualty losses or property tax
assessment reductions. Compensatory financial assistance could be constrained
by the inability of (i) an issuer to have obtained earthquake insurance
coverage at reasonable rates; (ii) an insurer to perform on its contracts of
insurance in the event of widespread losses; or (iii) the Federal or State
government to appropriate sufficient funds within their respective budget
limitations.

On December 7, 1994, Orange County, California (the "County" ),
together with its pooled investment fund (the "Pools" ) filed for
protection under Chapter 9 of the federal Bankruptcy Code, after reports that
the Pools had suffered significant market losses in its investments caused a
liquidity crisis for the Pools and the County. Approximately 180 other public
entities, most but not all located in the County, were also depositors in the
Pools. The County estimated the Pools' loss at about $1.64 billion, or 23%, of
its initial deposits of around $7.5 billion. Many of the entities which kept
moneys in the Pools, including the County, faced cash flow difficulties
because of the bankruptcy filing and may be required to reduce programs or
capital projects. Moody's and Standard & Poor's have suspended, reduced to
below investment grade levels, or placed on "Credit Watch" various
securities of the County and the entities participating in the Pools.

On May 2, 1995, the Bankruptcy Court approved a settlement agreement covering
claims of the other participating entities against the County and the Pools.
Most participants have received in cash 80% (90% for school districts) of
their Pools' investment; the balance is to be paid in the future. The County
succeeded in deferring, by consent, until June 30, 1996, the repayment of $800
million of short-term obligations due in July and August, 1995; these notes
are, however, considered to be in default by Moody's and S&P. On June 27,
1995, County voters turned down a proposal for a temporary 0.5% increase in
the local sales tax, making the County's fiscal recovery much harder.

The State of California has no obligation with respect to any obligations or
securities of the County or any of the other participating entities, although
under existing legal precedents, the State may be obligated to ensure that
school districts have sufficient funds to operate. All school districts were
able to meet their obligations in the 1994-95 Fiscal Year.

At the time of the closing for each California Trust, Special Counsel to each
California Trust for California tax matters, rendered an opinion under then
existing California income tax law applicable to taxpayers whose income is
subject to California income taxation substantially to the effect that:

the California IM-IT Trust is not an association taxable as a corporation and
the income of the California IM-IT Trust will be treated as the income of the
Unitholders under the income tax laws of California;

amounts treated as interest on the underlying Securities in the California
IM-IT Trust which are exempt from tax under California personal income tax and
property tax laws when received by the California IM-IT Trust will, under such
laws, retain their status as tax-exempt interest when distributed to
Unitholders. However, interest on the underlying Securities attributed to a
Unitholder which is a corporation subject to the California franchise tax laws
may be includable in its gross income for purposes of determining its
California franchise tax. Further, certain interest which is attributable to a
Unitholder subject to the California personal income tax and which is treated
as an item of tax preference for purposes of the federal alternative minimum
tax pursuant to Section 57(a)(5) of the Internal Revenue Code of 1986 may also
be treated as an item of tax preference that must be taken into account in
computing such Unitholder's alternative minimum taxable income for purposes of
the California alternative minimum tax enacted by 1987 California Statutes,
chapter 1138. However, because of the provisions of the California
Constitution exempting the interest on bonds issued by the State of
California, or by local governments within the state, from taxes levied on
income, the application of the new California alternative minimum tax to
interest otherwise exempt from the California personal income tax in some
cases may be unclear;

under California income tax law, each Unitholder in the California IM-IT Trust
will have a taxable event when the California IM-IT Trust disposes of a
Security (whether by sale, exchange, redemption, or payment at maturity) or
when the Unitholder redeems or sells Units. Because of the requirement that
tax cost basis be reduced to reflect amortization of bond premium, under some
circumstances a Unitholder may realize taxable gains when Units are sold or
redeemed for an amount equal to, or less than, their original cost. The total
cost of each Unit in the California IM-IT Trust to a Unitholder is allocated
among each of the Bond issues held in the California IM-IT Trust (in
accordance with the proportion of the California IM-IT Trust comprised by each
Bond issue) in order to determine his per Unit tax cost for each Bond issue;
and the tax cost reduction requirements relating to amortization of bond
premium will apply separately to the per Unit tax cost of each Bond issue.
Unitholders' bases in their units, and the bases for their fractional interest
in each Trust asset, may have to be adjusted for their pro rata share of
accrued interest received, if any, on Securities delivered after the
Unitholders' respective settlement dates;

under the California personal property tax laws, bonds (including the
Securities in the California IM-IT Trust) or any interest therein is exempt
from such tax;

any proceeds paid under the insurance policy issued to the California IM-IT
Trust with respect to the Securities which represent maturing interest on
defaulted obligations held by the Trustee will be exempt from California
personal income tax if, and to the same extent as, such interest would have
been so exempt if paid by the issuer of the defaulted obligations; and

under Section 17280(b)(2) of the California Revenue and Taxation Code,
interest on indebtedness incurred or continued to purchase or carry Units of
the California IM-IT Trust is not deductible for the purposes of the
California personal income tax. While there presently is no California
authority interpreting this provision, Section 17280(b)(2) directs the
California Franchise Tax Board to prescribe regulations determining the proper
allocation and apportionment of interest costs for this purpose. The Franchise
Tax Board has not yet proposed or prescribed such regulations. In interpreting
the generally similar Federal provision, the Internal Revenue Service has
taken the position that such indebtedness need not be directly traceable to
the purchase or carrying of Units (although the Service has not contended that
a deduction for interest on indebtedness incurred to purchase or improve a
personal residence or to purchase goods or services for personal consumption
will be disallowed). In the absence of conflicting regulations or other
California authority, the California Franchise Tax Board generally has
interpreted California statutory tax provisions in accord with Internal
Revenue Service interpretations of similar Federal provisions.

At the respective times of issuance of the Securities, opinions relating to
the validity thereof and to the exemption of interest thereon from Federal
income tax and California personal income tax are rendered by bond counsel to
the respective issuing authorities. Except in certain instances in which
Special counsel acted as bond counsel to issuers of Securities, and as such
made a review of proceedings relating to the issuance of certain Securities at
the time of their issuance, Special Counsel has not made any special review
for the California IM-IT Trust of the proceedings relating to the issuance of
the Securities or of the basis for such opinions.

Colorado Trusts

The State Constitution requires that expenditures for any fiscal year not
exceed revenues for such fiscal year. By statute, the amount of General Fund
revenues available for appropriation is based upon revenue estimates which,
together with other available resources, must exceed annual appropriations by
the amount of the unappropriated reserve (the "Unappropriated Reserve"
). The Unappropriated Reserve requirement for fiscal years 1991, 1992 and 1993
was set at 3% of total appropriations from the General Fund. For fiscal years
1994 and thereafter, the Unappropriated Reserve requirement is set at 4%. In
addition to the Unappropriated Reserve, a constitutional amendment approved by
Colorado voters in 1992 requires the State and each local government to
reserve a certain percentage of its fiscal year spending (excluding bonded
debt service) for emergency use (the "Emergency Reserve" ). The minimum
Emergency Reserve is set at 2% for 1994 and 3% for 1995 and later years. For
fiscal year 1992 and thereafter, General Fund appropriations are also limited
by statute to an amount equal to the cost of performing certain required
reappraisals of taxable property plus an amount equal to the lesser of (i)
five percent of Colorado personal income or (ii) 106% of the total General
Fund appropriations for the previous fiscal year. This restriction does not
apply to any General Fund appropriations which are required as a result of a
new federal law, a final state or federal court order or moneys derived from
the increase in the rate or amount of any tax or fee approved by a majority of
the registered electors of the State voting at any general election. In
addition, the statutory limit on the level of General Fund appropriations may
be exceeded for a given fiscal year upon the declaration of a State fiscal
emergency by the State General Assembly.

The 1995 fiscal year ending General Fund balance was $486.7 million, which was
$260.7 million over the combined Unappropriated Reserve and Emergency Reserve
requirement. The 1996 fiscal year ending General Fund balance was $368.5
million, or $211.8 million over the required Unappropriated Reserve and
Emergency Reserve. Based on December 20, 1996 estimates, the 1997 fiscal year
ending General Fund balance is expected to be $396.3 million, or $230.2
million over the required Unappropriated Reserve and Emergency Reserve. The
Governor's proposed fiscal year 1998 budget shows total revenues at $4,772.2
million and expenditures at $4,502.8 million, with an ending balance of $336.4
million, or $159.7 million over the required Unappropriated Reserve and
Emergency Reserve.

On November 3, 1992, voters in Colorado approved a constitutional amendment
(the "Amendment" ) which, in general, became effective December 31,
1992, and which could restrict the ability of the State and local governments
to increase revenues and impose taxes. The Amendment applies to the State and
all local governments, including home rule entities ("Districts" ).
Enterprises, defined as government-owned businesses authorized to issue
revenue bonds and receiving under 10% of annual revenue in grants from all
Colorado state and local governments combined, are excluded from the
provisions of the Amendment.

The provisions of the Amendment are unclear and have required judicial
interpretation. Among other provisions, beginning November 4, 1992, the
Amendment requires voter approval prior to tax increases, creation of debt, or
mill levy or valuation for assessment ratio increases. The Amendment also
limits increases in government spending and property tax revenues to specified
percentages. The Amendment requires that District property tax revenues yield
no more than the prior year's revenues adjusted for inflation, voter approved
changes and (except with regard to school districts) local growth in property
values according to a formula set forth in the Amendment. School districts are
allowed to adjust tax levies for changes in student enrollment. Pursuant to
the Amendment, local government spending is to be limited by the same formula
as the limitation for property tax revenues. The Amendment limits increases in
expenditures from the State General Fund and program revenues (cash funds) to
the growth in inflation plus the percentage change in State population in the
prior calendar year. The basis for initial spending and revenue limits are
fiscal year 1992 spending and 1991 property taxes collected in 1992. The basis
for spending and revenue limits for fiscal year 1994 and later years will be
the prior fiscal year's spending and property taxes collected in the prior
calendar year. Debt service changes, reductions and voter-approved revenue
changes are excluded from the calculation bases. The Amendment also prohibits
new or increased real property transfer tax rates, new State real property
taxes and local District income taxes.

Litigation concerning several issues relating to the Amendment was filed in
the Colorado courts. The litigation dealt with three principal issues: (i)
whether Districts can increase mill levies to pay debt service on general
obligation bonds without obtaining voter approval; (ii) whether a multi-year
lease purchase agreement subject to annual appropriations is an obligation
which requires voter approval prior to execution of the agreement; and (iii)
what constitutes an "enterprise" which is excluded from the provisions
of the Amendment. In September, 1994, the Colorado Supreme Court held that
Districts can increase mill levies to pay debt service on general obligation
bonds issued after the effective date of the Amendment; in June, 1995, the
Colorado Supreme Court validated mill levy increases to pay general obligation
bonds issued prior to the Amendment. In late 1994, the Colorado Court of
Appeals held that multi-year lease-purchase agreements subject to annual
appropriation do not require voter approval. The time to file an appeal in
that case has expired. Finally, in May, 1995, the Colorado Supreme Court ruled
that entities with the power to levy taxes may not themselves be "
enterprises" for purposes of the Amendment; however, the Court did not
address the issue of how valid enterprises may be created. Litigation in the
"enterprise" arena may be filed in the future to clarify these issues.

According to the Colorado Economic Perspective, Second Quarter, FY 1996-97,
December 20, 1996 (the "Economic Report" ), inflation for 1995 was 4.3%
and population grew at the rate of 2.3% in Colorado. Accordingly, under the
Amendment, increases in State expenditures during the 1997 fiscal year will be
limited to 6.6% over expenditures during the 1996 fiscal year. The 1996 fiscal
year is the base year for calculating the limitation for the 1997 fiscal year.
The limitation for the 1998 fiscal year is projected to be 5.9%, based on
projected inflation of 3.9% for 1996 and projected population growth of 2.0%
during 1996. For the 1996 fiscal year, General Fund revenues totalled $4,230.8
million and program revenues (cash funds) totalled $1,893.5 million, resulting
in total estimated base revenues of $6,124.3 million. Expenditures for the
1997 fiscal year, therefore, cannot exceed $6,528.5 million. However, the 1997
fiscal year General Fund and program revenues (cash funds) are projected to be
only $6,499.1 million, or $29.4 million less than expenditures allowed under
the spending limitation.

There is also a statutory restriction on the amount of annual increases in
taxes that the various taxing jurisdictions in Colorado can levy without
electoral approval. This restriction does not apply to taxes levied to pay
general obligation debt.

As the State experienced revenue shortfalls in the mid-1980s, it adopted
various measures, including impoundment of funds by the Governor, reduction of
appropriations by the General Assembly, a temporary increase in the sales tax,
deferral of certain tax reductions and inter-fund borrowings. On a GAAP basis,
the State had unrestricted General Fund balances at June 30 of approximately
$133.3 million in fiscal year 1992, $326.6 million in fiscal year 1993, $405.1
million in fiscal year 1994 and $486.7 million in fiscal year 1995. The fiscal
year 1996 unrestricted General Fund ending balance was $368.5 million with
projections for fiscal year 1997 at $396.3 million.

Revenues for the fiscal year ending June 30, 1996, showed Colorado's general
fund continuing to slow. Revenues grew by $272.3 million, to $4,268.7 million,
a 6.8% increase from 1995. However, this figure was down from the fiscal year
1995 pace of 7.3%. General Fund expenditures rose substantially and exceeded
revenues by $142.5 million. Reasons for this consist of a change in how the
state manages its emergency reserve, and a significant increase in the
transfer of reserves to the Capital Construction Fund, and the Police and Fire
Pension Association (increases of $29 million and $32 million, respectively).

For fiscal year 1996, the following tax categories generated the following
respective revenue percentages of the State's $4,268.7 million total gross
receipts: individual income taxes represented 54.4% of gross fiscal year 1996
receipts; sales, use and excise taxes represented 33.2% of gross fiscal year
1996 receipts; and corporate income taxes represented 4.8% of gross fiscal
year 1996 receipts. The final budget for fiscal year 1997 projects General
Fund revenues of approximately $4,565.0 million and appropriations of
approximately $4,151.9 million. The percentages of General Fund revenue
generated by type of tax for fiscal year 1997 are not expected to be
significantly different from fiscal year 1996 percentages.

For fiscal year 1997, General Fund revenues are projected at $4,565.0 million.
Revenue growth is expected to increase 6.9% over FY1996 actual revenues. Total
general fund expenditures are estimated at $4,422.2 million. The ending
general fund balance, after reserve set-asides, is $230.2 million.

Under its constitution, the State of Colorado is not permitted to issue
general obligation bonds secured by the full faith and credit of the State.
However, certain agencies and instrumentalities of the State are authorized to
issue bonds secured by revenues from specific projects and activities. The
State enters into certain lease transactions which are subject to annual
renewal at the option of the State. In addition, the State is authorized to
issue short-term revenue anticipation notes. Local governmental units in the
State are also authorized to incur indebtedness. The major source of financing
for such local government indebtedness is an ad valorem property tax. In
addition, in order to finance public projects, local governments in the State
can issue revenue bonds payable from the revenues of a utility or enterprise
or from the proceeds of an excise tax, or assessment bonds payable from
special assessments. Colorado local governments can also finance public
projects through leases which are subject to annual appropriation at the
option of the local government. Local governments in Colorado also issue tax
anticipation notes. The Amendment requires prior voter approval for the
creation of any multiple fiscal year debt or other financial obligation
whatsoever, except for refundings at a lower rate or obligations of an
enterprise.

Based on data published by the State of Colorado, Office of State Planning and
Budgeting as presented in the Economic Report, Colorado gained 74,966
employees in 1995. The 1995 increase was down about 10,000 from the 1994 gain,
but mirrored the 1993 employment increase. Services and retail trade were the
number one and two largest growing industries in Colorado in 1995, adding
28,766 (6.0% increase) and 20,905 (6.2% increase) employees, respectively.
Transportation, communications and public utilities reported the largest
percentage gain from 1994 to 1995, at 8.8%. Construction reported the fourth
largest employment gain over the year, at 5.2%, with increases about half of
what they had been in 1994 and 1993 due to the completion of the Denver
International airport. Mining continued to be the weakest industry sector,
with only a 0.5% increase.

The unemployment rate in Colorado remained stable at 4.2% during both 1994 and
1995. In 1996, the Colorado unemployment rate increased to 4.5%, yet still
lower than the 5.4% unemployment rate for the nation. Colorado's job growth
rate increased 2.5% in 1996, a decrease from the 4.7% growth rate in 1995. In
comparison, the job growth rate for the United States in 1995 and 1996 was
2.7% and 2.0%, respectively. The services sector comprised 28% of Colorado's
1995 employment and generated 38% of the State's growth.

Personal income rose 8.0% in Colorado during 1995 as compared with 6.3% for
the nation as a whole. In 1996, Colorado's personal income dropped to 6.3%,
while still higher than the nation's 1996 rate of 5.6%.

Economic conditions in the State may have continuing effects on other
governmental units within the State (including issuers of the Bonds in the
Colorado IM-IT Trust), which, to varying degrees, have also experienced
reduced revenues as a result of recessionary conditions and other factors.

At the time of the closing for each Colorado Trust, Special Counsel to the
Fund for Colorado tax matters rendered an opinion under then existing Colorado
income tax law applicable to taxpayers whose income is subject to Colorado
income taxation substantially to the effect that:

Because Colorado income tax law is based upon the Federal law, the Colorado
IM-IT Trust is not an association taxable as a corporation for purposes of
Colorado income taxation.

With respect to Colorado Unitholders, in view of the relationship between
Federal and Colorado tax computations:

Each Colorado Unitholder will be treated as owning a pro rata share of each
asset of the Colorado IM-IT Trust for Colorado income tax purposes in the
proportion that the number of Units of such Trust held by the Unitholder bears
to the total number of outstanding Units of the Colorado IM-IT Trust, and the
income of the Colorado IM-IT Trust will therefore be treated as the income of
each Colorado Unitholder under Colorado law in the proportion described and an
item of income of the Colorado IM-IT Trust will have the same character in the
hands of a Colorado Unitholder as it would have in the hands of the Trustee;

Interest on Bonds that would not be includable in income for Colorado income
tax purposes when paid directly to a Colorado Unitholder will be exempt from
Colorado income taxation when received by the Colorado IM-IT Trust and
attributed to such Colorado Unitholder and when distributed to such Colorado
Unitholder;

Any proceeds paid under an insurance policy or policies issued to the Colorado
IM-IT Trust with respect to the Bonds in the Colorado IM-IT Trust which
represent maturing interest on defaulted Bonds held by the Trustee will be
excludable from Colorado adjusted gross income if, and to the same extent as,
such interest is so excludable for federal income tax purposes if paid in the
normal course by the issuer notwithstanding that the source of payment is from
insurance proceeds provided that, at the time such policies are purchased, the
amounts paid for such policies are reasonable, customary and consistent with
the reasonable expectation that the issuer of the Bonds, rather than the
insurer, will pay debt service on the Bonds;

Each Colorado Unitholder will realize taxable gain or loss when the Colorado
IM-IT Trust disposes of a Bond (whether by sale, exchange, redemption, or
payment at maturity) or when the Colorado Unitholder redeems or sells Units at
a price that differs from original cost as adjusted for amortization of bond
discount or premium and other basis adjustments (including any basis reduction
that may be required to reflect a Colorado Unitholder's share of interest, if
any, accruing on Bonds during the interval between the Colorado Unitholder's
settlement date and the date such Bonds are delivered to the Colorado IM-IT
Trust, if later);

Tax basis reduction requirements relating to amortization of bond premium may,
under some circumstances, result in Colorado Unitholders realizing taxable
gain when their Units are sold or redeemed for an amount equal to or less than
their original cost; and

If interest on indebtedness incurred or continued by a Colorado Unitholder to
purchase Units in the Colorado IM-IT Trust is not deductible for federal
income tax purposes, it also will be non-deductible for Colorado income tax
purposes.

Unitholders should be aware that all tax-exempt interest, including their
share of interest on the Bonds paid to the Colorado IM-IT Trust, is taken into
account for purposes of determining eligibility for the Colorado Property
Tax/Rent/Heat Rebate.

Chapman and Cutler has expressed no opinion with respect to taxation under any
other provision of Colorado law. Ownership of the Units may result in
collateral Colorado tax consequences to certain taxpayers. Prospective
investors should consult their tax advisors as to the applicability of any
such collateral consequences.

Connecticut Trusts

The following information is only a summary of risk factors associated with
Connecticut. It has been compiled from official government statements and
other publicly available documents. Although the Sponsor has not independently
verified the information, it has no reason to believe that it is not correct
in all material respects.

Connecticut's manufacturing industry, which has historically been of prime
economic importance to the State, its municipalities and its residents, has
been in decline for several years. Although Connecticut's manufacturing
industry is diversified between transportation equipment (primarily aircraft
engines, helicopters and submarines), non-electrical machinery, fabricated
metal products and electrical machinery, defense-related business represents a
relatively high proportion of manufacturing receipts. As a result, reductions
in defense spending have had a substantial adverse effect on Connecticut's
manufacturing industry.

Connecticut's manufacturing employment peaked in 1970 at over 441,000 workers
but had declined 35.5% by 1995. Although the loss of manufacturing jobs was
partially offset by a 69.7% rise in other non-agricultural employment during
the same period, Connecticut's growth in non-manufacturing employment has
lagged behind the New England region and the nation as a whole. Moreover,
Connecticut's largest defense contractors have announced plans to reduce their
labor forces substantially over the next four years.

From 1986 through 1995, Connecticut's unemployment rate was generally lower
than the unemployment rate for the U.S. as a whole, and average per capita
personal income of Connecticut residents was higher than that of residents of
other states. The average unemployment rate (seasonally adjusted) in
Connecticut increased from a low of 3.0% in 1988 to 7.5% in 1992 and, after a
number of important changes in the method of calculation, was reported to be
5.0% in 1996. Average per capita personal income of Connecticut residents
increased in every year from 1985 to 1995, rising from $18,268 to $31,776.
However, pockets of significant unemployment and poverty exist in some
Connecticut cities and towns, and Connecticut is now in a recession, the depth
and duration of which are uncertain.

For the four fiscal years ended June 30, 1991, the General Fund ran operating
deficits of approximately $115,600,000, $28,000,000, $259,000,000 and
$808,500,000, respectively. At the end of the 1990-1991 fiscal year, the
General Fund had an accumulated unappropriated deficit of $965,712,000. For
the five fiscal years ended June 30, 1996, the General Fund ran operating
surpluses of approximately $110,200,000, $113,500,000, $19,700,000,
$80,500,000 and $250,000,000, respectively. General Fund budgets for the
biennium ending June 30, 1997, were adopted in 1995. General Fund expenditures
and revenues are budgeted to be approximately $9,200,000,000 for the 1996-1997
fiscal year.

In 1991, to address the General Fund's growing deficit, legislation was
enacted by which the State imposed an income tax on individuals, trusts and
estates for taxable years generally commencing in 1992. For each fiscal year
starting with the 1991-1992 fiscal year, the General Fund has operated at a
surplus with over 60% of the State's tax revenues being generated by the
income tax and the sales and use tax. However, the State's budgeted
expenditures have more than doubled from approximately $4,300,000 for the
1986-1987 fiscal year to approximately $9,200,000,000 for the 1996-1997 fiscal
year.

The 1991 legislation also authorized the State Treasurer to issue Economic
Recovery Notes to fund the General Fund's accumulated deficit of $965,712,000
as of June 30, 1991, and during 1991 the State issued a total of $965,710,000
Economic Recovery Notes, of which $196,555,000 were outstanding as of February
28, 1997. The notes were to be payable no later than June 30, 1996, but as
part of the budget adopted for the biennium ending June 30, 1997, payment of
the remaining notes scheduled to be paid over the four fiscal years ending
June 30, 1999.

The State's primary method for financing capital projects is through the sale
of general obligation bonds. As of February 28, 1997, the State had authorized
general obligation bonds totaling $11,192,198,000, of which $9,578,911,000 had
been approved for issuance by the State Bond Commission, $8,529,149,000 had
been issued, and $6,335,206,857 were still outstanding.

In 1995, the State established the University of Connecticut as a separate
corporate entity to issue bonds and construct certain infrastructure
improvements. The improvements are to be financed by $18 million of general
obligation bonds of the State and $962 million bonds of the University. The
University's bonds will be secured by a State debt service commitment, the
aggregate amount of which is limited to $382 million for the three fiscal
years ending June 30, 1999, and $580 million for the four fiscal years ending
June 30, 2005.

In addition to the bonds described above, the State also has limited or
contingent liability on a significant amount of other bonds. Such bonds have
been issued by the following quasi-public agencies: the Connecticut Higher
Education Supplemental Loan Authority, the Connecticut Resources Recovery
Authority and the Connecticut Health and Education Facilities Authority. Such
bonds have also been issued by the cities of Bridgeport and West Haven and the
Southeastern Connecticut Water Authority. As of October 15, 1996, the amount
of bonds outstanding on which the State has limited or contingent liability
totaled $3,985,400,000.

In 1984, the State established a program to plan, construct and improve the
State's transportation system (other than Bradley International Airport). The
total cost of the program through June 30, 2000, is currently estimated to be
$11.2 billion, to be met from federal, state, and local funds. The State
expected, as of November 1, 1996, to finance most of its $4.7 billion share of
such cost by issuing $4.2 billion of special tax obligation ("STO" )
bonds. The STO bonds are payable solely from specified motor fuel taxes, motor
vehicle receipts, and license, permit and fee revenues pledged therefor and
credited to the Special Transportation Fund, which was established to budget
and account for such revenues.

As of October 15, 1996, the General Assembly had authorized $4,157,900,000 of
such STO bonds, of which $3,594,700,000 of new money borrowings had been
issued. It is anticipated that additional STO bonds will be authorized
annually in amounts necessary to finance and to complete the infrastructure
program. Such additional bonds may have equal rank with the outstanding bonds
provided certain pledged revenue coverage requirements are met. The State
expects to continue to offer bonds for this program.

On March 29, 1990, Standard & Poor's reduced its ratings of the State's
general obligation bonds from AA+ to AA, and on April 9, 1990, Moody's reduced
its ratings from Aa1 to Aa. On September 13, 1991, Standard & Poor's further
reduced its ratings of the State's general obligation bonds and certain
obligations that depend in part on the creditworthiness of the State to AA-.
On March 17, 1995, Fitch reduced its ratings of the State's general obligation
bonds from AA+ to AA.

The State, its officers and its employees are defendants in numerous lawsuits.
Although it is not possible to determine the outcome of these lawsuits, the
Attorney General has opined that an adverse decision in any of the following
cases might have a significant impact on the State's financial position: (i) a
class action by the Connecticut Criminal Defense Lawyers Association claiming
a campaign of illegal surveillance activity and seeking damages and injunctive
relief; (ii) an action on behalf of all persons with traumatic brain injury,
claiming that their constitutional rights are violated by placement in State
hospitals alleged not to provide adequate treatment and training, and seeking
placement in community residential settings with appropriate support services;
and (iii) litigation involving claims by Indian tribes to a portion of the
State's land area.

As a result of litigation on behalf of black and Hispanic school children in
the City of Hartford seeking "integrated education" within the Greater
Hartford metropolitan area, on July 9, 1996, the State Supreme Court directed
the legislature to develop appropriate measures to remedy the racial and
ethnic segregation in the Hartford public schools. The fiscal impact of this
decision might be significant but is not determinable at this time.

General obligation bonds issued by municipalities are payable primarily from
ad valorem taxes on property located in the municipality. A municipality's
property tax base is subject to many factors outside the control of the
municipality, including the decline in Connecticut's manufacturing industry.
In addition to general obligation bonds backed by the full faith and credit of
the municipality, certain municipal authorities finance projects by issuing
bonds that are not considered to be debts of the municipality. Such bonds may
be repaid only from revenues of the financed project, the revenues from which
may be insufficient to service the related debt obligations.

In recent years, certain Connecticut municipalities have experienced severe
fiscal difficulties and have reported operating and accumulated deficits. The
most notable of these is the City of Bridgeport, which filed a bankruptcy
petition on June 7, 1991. The State opposed the petition. The United States
Bankruptcy Court for the District of Connecticut held that Bridgeport has
authority to file such a petition but that its petition should be dismissed on
the grounds that Bridgeport was not insolvent when the petition was filed.

Regional economic difficulties, reductions in revenues and increases in
expenses could lead to further fiscal problems for the State and its political
subdivisions, authorities and agencies. Difficulties in payment of debt
service on borrowings could result in declines, possibly severe, in the value
of their outstanding obligations, increases in their future borrowing costs,
and impairment of their ability to pay debt service on their obligations.

At the time of the closing for each Connecticut Trust, Special Counsel to the
Fund for Connecticut tax matters rendered an opinion under then existing
Connecticut income tax law applicable to taxpayers whose income is subject to
Connecticut income taxation substantially to the effect that:

The Connecticut IM-IT Trust is not liable for any tax on or measured by net
income imposed by the State of Connecticut.

Interest income of the Connecticut IM-IT Trust from a Bond issued by or on
behalf of the State of Connecticut, any political subdivision thereof, or
public instrumentality, state or local authority, district, or similar public
entity created under the laws of the State of Connecticut (a "Connecticut
Bond" ), or from a Bond issued by United States territories or possessions
the interest on which Federal law would prohibit Connecticut from taxing if
received directly by a Unitholder from the issuer thereof, is not taxable
under the Connecticut tax on the Connecticut taxable income of individuals,
trusts, and estates (the "Connecticut Income Tax" ), when any such
interest is received by the Connecticut IM-IT Trust or distributed by it to
such a Unitholder.

Insurance proceeds received by the Connecticut IM-IT Trust representing
maturing interest on defaulted Bonds held by the Connecticut IM-IT Trust are
not taxable under the Connecticut Income Tax if, and to the same extent as,
such interest would not be taxable thereunder if paid directly to the
Connecticut IM-IT Trust by the issuer of such Bonds.

Gains and losses recognized by a Unitholder for Federal income tax purposes
upon the maturity, redemption, sale, or other disposition by the Connecticut
IM-IT Trust of a Bond held by the Connecticut IM-IT Trust or upon the
redemption, sale, or other disposition of a Unit of the Connecticut IM-IT
Trust held by a Unitholder are taken into account as gains or losses,
respectively, for purposes of the Connecticut Income Tax, except that, in the
case of a Unitholder holding a Unit of the Connecticut IM-IT Trust as a
capital asset, such gains and losses recognized upon the maturity, redemption,
sale or exchange of a Connecticut Bond held by the Connecticut IM-IT Trust are
excluded from gains and losses taken into account for purposes of such tax and
no opinion is expressed as to the treatment for purposes of such tax of gains
and losses recognized to the extent attributable to Connecticut Bonds upon the
redemption, sale, or other disposition by a Unitholder of a Unit of the
Connecticut IM-IT Trust held by him.

The portion of any interest income or capital gain of the Connecticut IM-IT
Trust that is allocable to a Unitholder that is subject to the Connecticut
corporation business tax is includable in the gross income of such Unitholder
for purposes of such tax.

An interest in a Unit of the Connecticut IM-IT Trust that is owned by or
attributable to a Connecticut resident at the time of his death is includable
in his gross estate for purposes of the Connecticut succession tax and the
Connecticut estate tax.

Florida Trusts

Population. Historically, population growth has been a crucial driving force
for Florida's economy. It has accounted for the state's tendency to
outperform the U.S. economy in terms of job creation and total income growth.
Between 1960 and 1995, Florida's population grew by 9.2 million people, a
185% increase. This is more than four times the 46% growth in U.S. population
over the same period. The state's population has accelerated since the FY
1990-91 recession, sparked by improving economies. In 1994, Florida ranked
fourth in population with 13.9 million. By 1996, Florida's population
increased to 14.4 million, with projections of 15 million by 1999. Florida's
attraction, as both a growth and retirement state, has kept net migration
fairly steady with an average of 245,035 new residents a year from 1990
through 1995. The U.S. average population increase since 1984 is about 1%
annually, while Florida's average annual rate of increase is about 2.3%.
However, during 1992-1996, Florida's annual net migration increase has
averaged 1.82% and is predicted at 1.8% for 1997-98. Yet, Florida continues to
be the fastest growing of the eleven largest states. In addition to attracting
senior citizens to Florida as a place for retirement, the State is also
recognized as attracting a significant number of working age individuals.
Since 1985, the prime working age population (18-44) has grown at an average
annual rate of 2.2%. The share of Florida's total working age population
(18-59) to total State population is approximately 54%. This share is not
expected to change appreciably into the twenty-first century.

Income. The State's personal income has been growing strongly the last several
years and has generally outperformed both the United States as a whole and the
southeast in particular, according to the U.S. Department of Commerce and the
Florida Consensus Economic Estimating Conference. This is due to the fact that
Florida's population has been growing at a very strong pace and, since the
early 1970s, the State's economy has diversified so as to provide a broader
economic base. As a result, Florida's real per capita personal income has
tracked closely with the national average and has tracked above the southeast.
In fiscal years 1994-95 and 1995-96, Florida's per capita personal income was
$22,253, and $23,371 respectively, a 5.02% increase. The 1994-95 figure is
6.1% higher than per capita personal income in the southeast region and
represents 99% of the national figure. Florida's per capita personal income
is expected to increase 4.04% in fiscal year 1996-97 and 5.2% in fiscal year
1997-98.

Florida's economy is expected to slow some in the current fiscal year and in
FY 1997-98. An expected rise in interest rates in early 1997 should moderate
housing markets and consumption of durable goods. Overall, consumption can be
expected to stay in line with changes in income and jobs. Also, the
combination of an investment boom in earlier years and decelerating growth in
the overall economy should slow business investment through FY 1997-98.
Nevertheless, Florida's economy will outperform the nation's bolstered by
population growth well in excess of that for the United States.

Total income growth in Florida is expected to stabilize from its cyclical peak
of 4.6% in FY 1994-95, decelerating slightly to 4.5% in FY 1995-96 and falling
to 4.2% in FY 96-97. Total personal income is expected to rise to 4.4% by FY
1997-98 in Florida and 2.3% for the United States. Florida's growth rates for
per capita real income parallel those for total income, though at lower
levels, peaking at 2.6% in 1996, falling in 1997 to 2.3%, then achieving the
peak growth rate again by 1998.

Because Florida has a proportionately greater retirement age population,
property income (dividends, interest, and rent) and transfer payments (Social
Security and pension benefits, among other sources of income) are relatively
more important sources of income. For example, Florida's total wages and
salaries and other labor income in 1996 was 59% of total personal income,
while a similar figure for the nation was 68%. Property income accounted for
24% of total personal income in Florida in 1996 and transfer payments made up
17%. Property income and transfer payments for the U.S. were each 16%.
Transfer payments are typically less sensitive to the business cycle than
employment income and, therefore, act as stabilizing forces in weak economic
periods.

Employment. Since 1985, the State's population has increased an estimated
26.1%. In the same period, Florida's total non-farm employment has grown by
approximately 37.9%. Since 1985, the job creation rate in the State is almost
twice that of the nation as a whole. Contributing to the State's rapid rate of
growth in employment and income is international trade. Changes to its economy
have also contributed to the State's strong performance. The State is now less
dependent on employment from construction, construction-related manufacturing,
and resource-based manufacturing, which have declined as a proportion of total
State employment. The State's private sector employment is 86.4% of total
non-farm employment. While the southeast and the nation have a greater
proportion of manufacturing jobs, which tend to pay higher wages, service jobs
tend to be less sensitive to swings in the business cycle. The State has a
concentration of manufacturing jobs in high-tech and high value-added sectors,
such as electrical and electronic equipment, as well as printing and
publishing. These types of manufacturing jobs tend to be less cyclical. The
State's unemployment rate throughout the 1980's tracked below the nation's. As
the State's economic growth has slowed, its unemployment rate has tracked
above and below the national average. According to the U.S. Department of
Commerce, the Florida Department of Labor and Employment Security, and the
Florida Consensus Economic Estimating Conference (together, the "
Organization" ), the State's unemployment rate was 6.6% during 1994 and
5.5% during 1995. In November, 1996, the unemployment rate was 4.8%, giving an
11-month average in 1996 of 5.3%. The national unemployment rate in 1994 and
1995 was 6.1% and 5.6%, respectively, with an average in 1996 of 5.4%.

Consistent with income growth, Florida's non-farm employment growth increased
4.1%, 3.9%, and 3.2% in fiscal years ending in 1994, 1995, and 1996,
respectively.

The State's economy is expected to decelerate along with the nation, but is
expected to outperform the nation as a whole. Total non-farm employment in
Florida is expected to increase 2.9% or 180,000 new jobs in 1996-97 and remain
stable at 2.9% or 183,500 new jobs in 1997-98. In comparison, the U.S. growth
rate in 1997-98 is predicted at only 1.3%. Trade and services, the two
largest, account for more than half of the total non-farm employment.

The strongest areas in job growth in Florida in FY 1997-98 are expected to be
in services and a combination of retail and wholesale trade. Services is
forecast to lead the economy, growing 4.3% (93,500 jobs) in FY 1997-98, and
accounting for about 51% of total new jobs in that year. Services is the
single largest source of employment in Florida, making up about 35% of total
non-farm employment in FY 1997-98. Health care accounts for about 26% of total
services employment.

Wholesale and retail trade is projected to increase 2.9% in FY 1997-98 (47,100
new jobs), which parallels general economic growth. This sector is the second
largest, with about 25% of all jobs in the state, and will contribute about
26% of the new jobs created in FY 1997-98. Construction will exhibit modest
growth of 2.5% (7,800 new jobs) reflecting stable construction activity
supported by population growth.

The slower growing sectors are expected to account for only 35% of total jobs
in Florida in 1997-98. Of these, government is the largest, with just under
15% of total jobs. Combined federal, state and local government jobs are
expected to grow 2% (19,500 new jobs) with most of this increase at the local
level. Job creation in transportation, communications, and public utilities
combined (less than 5% of total employment) is forecast to slow to 1.4% (4,500
new jobs) in FY 1997-98. This partly reflects current restructuring of the
industry. Manufacturing, with slightly more than 7% of total jobs, will have
the slowest positive growth rate among the major sectors in FY 1997-98, at
less than 1% (2,800 new jobs). However, over the same period, manufacturing
employment in the nation is projected to decline about 1%. This is generally
due to global competitive pressures forcing producers to substitute machinery
and equipment for labor through strong investment.

Tourism. Tourism is one of Florida's most important industries. Approximately
41.8 million tourists visited the State in 1993, as reported by the Florida
Department of Commerce. Although during the next several years the number of
visitors to Florida decreased, in 1995, there were more than 41 million
national and international visitors, and the peak reached in 1993 was almost
reached in 1996. The 1995 tourist industry generated $35.31 billion in sales
by Florida businesses, over $2 billion in sales tax revenue, and more than
732,800 Floridians were directly employed in travel related jobs. Visitors to
the State tend to arrive slightly more by air than by car. The State's tourist
industry over the years has become more sophisticated, attracting visitors
year-round and, to a degree, reducing its seasonality. By the end of fiscal
year 1997-98, 43.9 million domestic and international tourists are expected to
have visited the State, representing 3.2% growth from 1996-97.

Revenues and Expenses. Estimated fiscal year 1996-97 General Revenue plus
Working Capital and Budget Stabilization funds available to the State total
$16,601.7 million. Of the total General Revenue plus Working Capital and
Budget Stabilization funds available to the State, $15,566.9 million of that
is Estimated Revenues. With effective General Revenues plus Working Capital
Fund appropriations at $15,582.2 million, unencumbered reserves at the end of
1996-97 are estimated at $610.1 million with $219.4 million of this amount
from the Working Capital Fund. Estimated fiscal year 1997-98 General Revenue
plus Working Capital and Budget Stabilization funds available total $17,384.9
million, a 4.7% increase over 1996-97. The $16,301.5 million in Estimated
Revenues represents an increase of 4.7% over the previous year's Estimated
Revenues. Total estimated appropriations in the combined General Revenue and
Working Capital Fund for 1997-98 are $16,716.6 million, a 7.3% increase from
1996-97.

In fiscal year 1997-98, approximately 72% of the State's $16,716.6 million
General revenue will come from sales tax collections. Corporate income tax,
intangible personal property tax, and beverage tax will account for 8%, 4% and
3%, respectively, of total General Revenue Funds available during fiscal
1997-98. In that same year, expenditures for education, human services, and
criminal justice and corrections will amount to approximately 52%, 26%, and
16%, respectively, of total expenditures from the General Revenue Fund.

The State's sales and use tax (6%) currently accounts for the State's single
largest source of tax receipts. Slightly less than 10% of the State's sales
and use tax is designated for local governments and is distributed to the
respective counties in which collected for such use by the counties, and the
municipalities therein. In addition to this distribution, local governments
may assess (by referendum) a 0.5% or a 1.0% discretionary sales surtax within
their county. Proceeds from this local option sales tax are earmarked for
funding local infrastructure programs and acquiring land for public recreation
or conservation or protection of natural resources as provided under
applicable Florida law. Certain charter counties have other additional taxing
powers, and non-consolidated counties with a population in excess of 800,000
may levy a local option sales tax to fund indigent health care. It alone
cannot exceed 0.5% and when combined with the infrastructure surtax cannot
exceed 1.0%. For the fiscal year ended June 30, 1998, sales and use tax
receipts (exclusive of the tax on gasoline and special fuels) are expected to
total $12,035.9 million, an increase of 6.6% over fiscal year 1996-97.

The second largest source of State tax receipts is the tax on motor fuels.
However, these revenues are almost entirely dedicated trust funds for specific
purposes and are not included in the State's General Revenue Fund.

The State's second largest funding source for the General Revenue Fund is the
corporate income tax. All receipts of the corporate income tax are credited to
the General Revenue Fund. For the fiscal year ending June 30, 1998, receipts
from this source are estimated to be $1,290.1 million, an increase of 2.3%
from fiscal year 1996-97.

The State imposes an alcoholic beverage wholesale tax (excise tax) on beer,
wine, and liquor. This tax is one of the State's major tax sources, with
revenues estimated at $455.1 million in fiscal year 1997-98. Alcoholic
beverage tax receipts are expected to increase 1.4% from the previous year's
total. This tax generates 3.3% of the State's total General Revenue and the
revenues collected are deposited into the State's General Revenue Fund.

The State imposes a documentary stamp tax on deeds and other documents
relating to realty, corporate shares, bonds, certificates of indebtedness,
promissory notes, wage assignments, and retail charge accounts. The
documentary stamp tax collections are expected to total $870.6 million during
fiscal year 1997-98, a 3.7% increase from the previous fiscal year. In fiscal
year 1997-98, 62.63% of these taxes are to be deposited to the General Revenue
Fund.

The State imposes a gross receipts tax of 2.5% on electric, natural and
manufactured gas, and telecommunications services. All gross receipts
utilities tax collections are credited to the State's Public Education Capital
Outlay and Debt Service Trust Fund. In fiscal year 1997-98, this tax is
estimated at $607.1 million.

The State imposes an intangible personal property tax on stocks, bonds,
including bonds secured by liens in Florida real property, notes, governmental
leaseholds, and certain other intangibles not secured by a lien on Florida
real property. The annual rate of tax is 2 mils. The State also imposes a
non-recurring 2 mil tax on mortgages and other obligations secured by liens on
Florida real property. The intangible personal property tax provides 3.9% of
the revenues for the General Revenue Fund as well as funding the county
revenue sharing program. In fiscal year 1997-98, total intangible personal
property tax collections are estimated at $1,000.6 million, a 2% increase over
the prior year. Of the tax proceeds, 66.5% are distributed to the General
Revenue Fund.

The State began its own lottery in 1988. State law requires that lottery
revenues be distributed 50.0% to the public in prizes, 38.0% for use in
enhancing education, and the balance, 12.0%, for costs of administering the
lottery. Fiscal year 1994-95 lottery ticket sales totalled $2.3 billion,
providing education with approximately $874 million. In fiscal year 1997-98,
sales are estimated at $2,104 million with $799.4 million available for
education enhancements.

Debt-Balanced Budget Requirement. As of June 30, 1996, the state's net
outstanding debt totaled $9.2 billion. Approximately 67% is full faith and
credit bonds while the remaining 33% is comprised of revenue bonds pledging a
specific tax or revenue. The Governor's Recommended Budget for Fiscal Year
1997-98 includes six bond issues totaling $1.38 billion for construction of
schools, roads, bridges, and prisons, and the purchase of environmentally
sensitive lands.

The State Constitution and statutes mandate that the State budget, as a whole,
and each separate fund within the State budget, be kept in balance from
currently available revenues each fiscal year. If the Governor or Comptroller
believe a deficit will occur in any State fund, by statute, he must certify
his opinion to the Administrative Commission, which is then authorized to
reduce all State agency budgets and releases by a sufficient amount to prevent
a deficit in any fund. Additionally, the State Constitution prohibits issuance
of State obligations to fund State operations.

Litigation. Currently under litigation are several issues relating to State
actions or State taxes that put at risk substantial amounts of General Revenue
Fund monies. Accordingly, there is no assurance that any such matters,
individually or in the aggregate, will not have a material adverse affect on
the State's financial position.

Florida law provides preferential tax treatment to insurers who maintain a
home office in the State. Certain insurers challenged the constitutionality of
this tax preference and sought a refund of taxes paid. Recently, the Florida
Supreme Court ruled in favor of the State. This case and others, along with
pending refund claims, total about $150 million.

The State imposes a $295 fee on the issuance of certificates of title for
motor vehicles previously titled outside the State. The State has been sued by
plaintiffs alleging that this fee violates the Commerce Clause of the U.S.
Constitution. The Circuit Court in which the case was filed has granted
summary judgment for the plaintiffs and has enjoined further collection of the
impact fee and has ordered refunds to all those who have paid the fee since
the collection of the fee went into effect. In the State's appeal of the lower
court's decision, the Florida Supreme Court ruled that this fee was
unconstitutional under the Commerce Clause. Thus, the Supreme Court approved
the lower court's order enjoining further collection of the fee and requiring
refund of the previously collected fees. The refund exposure of the State has
been estimated to be in excess of $88 million.

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

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

At the time of the closing for each Florida Trust, Chapman and Cutler, Counsel
to each Florida Trust for Florida tax matters, rendered an opinion under then
existing Florida income tax law applicable to taxpayers whose income is
subject to Florida income taxation substantially to the effect that:

For Florida state income tax purposes, the Florida IM-IT Trust will not be
subject to the Florida income tax imposed by Chapter 220, Florida Statutes.

Because Florida does not impose an income tax on individuals, Non-Corporate
Unitholders residing in Florida will not be subject to any Florida income
taxation on income realized by the Florida IM-IT Trust. Any amounts paid to
the Florida IM-IT Trust or to Non-Corporate Unitholders under an insurance
policy issued to the Florida IM-IT Trust or the Sponsor which represent
maturing interest on defaulted obligations held by the Trustee will not be
subject to the Florida income tax imposed by Chapter 220, Florida Statutes.

Corporate Unitholders with commercial domiciles in Florida will be subject to
Florida income or franchise taxation on income realized by the Florida IM-IT
Trust and on payments of interest pursuant to any insurance policy to the
extent such income constitutes "non business income" as defined by
Chapter 220 or is otherwise allocable to Florida under Chapter 220. Other
Corporate Unitholders will be subject to Florida income or franchise taxation
on income realized by the Florida IM-IT Trust (or on payments of interest
pursuant to any insurance policy) only to the extent that the income realized
does not constitute "non-business income" as defined by Chapter 220
and if such income is otherwise allocable to Florida under Chapter 220.

Units will be subject to Florida estate tax only if held by Florida residents.
However, 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.

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

Chapman and Cutler has expressed no opinion with respect to taxation under any
other provision of Florida law. Ownership of the Units may result in
collateral Florida tax consequences to certain taxpayers. Prospective
investors should consult their tax advisors as to the applicability of any
such collateral consequences.

Georgia Trusts

The following brief summary regarding the economy of Georgia is based upon
information drawn from publicly available sources and is included for purposes
of providing information about general economic conditions that may or may not
affect issuers of the Georgia obligations. The Sponsor has not independently
verified any of the information contained in such publicly available documents.

Constitutional Considerations. The Georgia Constitution permits the issuance
by the State of general obligation debt and of certain guaranteed revenue
debt. The State may incur guaranteed revenue debt by guaranteeing the payment
of certain revenue obligations issued by an instrumentality of the State. The
Georgia Constitution prohibits the incurring of any general obligation debt or
guaranteed revenue debt if the highest aggregate annual debt service
requirement for the then current year or any subsequent fiscal year for
outstanding general obligation debt and guaranteed revenue debt, including the
proposed debt, exceed 10% of the total revenue receipts, less refunds, of the
State treasury in the fiscal year immediately preceding the year in which any
such debt is to be incurred.

The Georgia Constitution also permits the State to incur public debt to supply
a temporary deficit in the State treasury in any fiscal year created by a
delay in collecting the taxes of that year. Such debt must not exceed, in the
aggregate, 5% of the total revenue receipts, less refunds, of the State
treasury in the fiscal year immediately preceding the year in which such debt
is incurred. The debt incurred must be repaid on or before the last day of the
fiscal year in which it is to be incurred out of the taxes levied for that
fiscal year. No such debt may be incurred in any fiscal year if there is then
outstanding unpaid debt from any previous fiscal year which was incurred to
supply a temporary deficit in the State treasury. No such short-term debt has
been incurred under this provision since the inception of the constitutional
authority referred to in this paragraph.

Virtually all of the issues of long-term debt obligations issued by or on
behalf of the State of Georgia and counties, municipalities and other
political subdivisions and public authorities thereof are required by law to
be validated and confirmed in a judicial proceeding prior to issuance. The
legal effect of an approved validation in Georgia is to render incontestable
the validity of the pertinent bond issue and the security therefor.

The State and Its Economy. The State operates on a fiscal year beginning July
1 and ending June 30. The state's recovery from the economic recession of the
early 1900's has been steady and is better tan regional trends, albeit half
the rate of earlier recoveries. While this recovery does not meet the
explosive patterns set in past cycles, recent state data reveal that Georgia
ranks among the top five states in the nation in employment and total
population growth. The top three industries of the 3.417 million
non-agricultural workers employed in Georgia in 1995 were in trade (25.3%),
services (24.5%) and manufacturing (17.2%). The 1996 annual average
unemployment rate for Georgia was 4.5% as compared to the 1995 annual average
unemployment rate of 4.9%.

The national unemployment rate in 1995 and 1996 was 5.6% and 5.4%,
respectively, Georgia's unemployment rate has decreased every year since 1992.

In 1994 and 1995, Georgia's per capita personal income increased 5.5%, from
$20,612 to $21,741, respectively. The national per capita personal income for
1994 and 1995 was $22,047 and $23,208, respectively, an increase of 5.3%.

Recently, the rates of growth in the public and private sectors have dropped.
Revenues (adjusted for inflation) are advancing at around a 4% annual rate.
Income growth during 1996 and 1997 is increasing between 3 and 4 percent and
employment gains are between 2 and 3 percent. In Georgia, growth in employment
in trade and services leads the nation, at 5 to 6 percent; however, this high
percentage does not coincide with the general economic advance.

For fiscal years 1997 and 1998, real growth in income, employment, and
revenues is expected to be about 3 to 4 percent, 1.5 to 2.5 percent, and 3.5
to 4.5 percent, respectively. It is predicted that the growth rate for
Georgia's economy will slow for the remainder of the decade.

Three legislative measures were of significance in 1996. First, Georgia's four
cent sales tax on eligible food and beverage was reduced by half beginning
October 1, 1996 and will be reduced by an additional one cent on October 1,
1997, with the final one cent eliminated on October 1, 1998. Second, in 1995,
the Georgia Department of Revenue issued the first of four, equal yearly
refund checks to eligible federal and military retirees pursuant to House Bill
90. House Bill 3 required the Department of Revenue, in October 1996, to issue
refunds to a second category of eligible retirees. Last, the Georgia
Intangible Tax was formally abolished by voter referendum in November of 1996.

Net collections in fiscal year 1996 totaled $9.928 billion, an increase of
$813.26 million or 8.9% over fiscal year 1995. The top revenue producer was
personal income tax at $4.233 billion or 42.64% of total revenue. This tax
revenue increased 10.3% from fiscal year 1995. The second leader in revenue
was sales and use tax at $3.951 billion, or 39.8% of total revenue. Sales and
use tax revenue increased 8.4% from fiscal year 1995. Income and sales taxes
together have accounted for roughly 85% of total revenues since 1989.
Corporate income tax was the third largest revenue at $696.6 million, or 7.02%
of total fiscal year 1996 revenue. This was an 8.9% increase from fiscal year
1995. The fourth and fifth revenue producers for fiscal year 1996 were motor
fuel taxes at 4% or $396.9 million, and motor vehicle taxes at 2.15% or $213.5
million.

Actual total revenue in fiscal years 1995 and 1996 was $10.304 billion and
$11.167 billion, respectively. Actual expenditures and appropriations for
state funds for fiscal years 1995 and 1996 were $10.03 billion and $10.68
billion, respectively. Total surplus for fiscal years 1995 and 1996 was $104.3
million and $91.45 million, respectively. The Revenue Shortfall Reserve Fund
(3% of revenues) for fiscal years 1995 and 1996 was $288.8 million and $313.4
million, respectively, marking the third consecutive year of buildup in that
reserve.

The first four months of fiscal year 1997 have produced revenue of $3.3057
billion. Estimated total revenue for fiscal years 1997 and 1998 is $11.324
billion and $11.777 billion, respectively. Budgeted expenditures and
appropriations for fiscal year 1997 are $11.341 billion. The first and second
highest expenditures out of the state's operating budget for fiscal year 1997
are education, at 54.2%, and human resources, at 24%, respectively. Total
surplus for fiscal year 1997 is estimated at $476.3 million.

Appropriations totaling $11.777 billion are recommended by the Governor for
expenditure by state agencies during fiscal year 1998. The appropriations
would be funded from the following four sources: $11.12 billion from taxes and
fees, $510 million in lottery proceeds, $148.8 million from the Indigent Care
Trust Fund, and $750,000 from anti-fraud levies.

Georgia's total assets at the end of fiscal years 1995 and 1996 were $9.336
billion and $10.722 billion, respectively. Total liabilities for fiscal year
1995 were $8.577 billion, and for fiscal year 1996 were $9.656 billion. Total
fund equity for fiscal year 1995 was $759 million and for fiscal year 1996,
$1.066 billion.

As of October 31, 1996, Georgia had authorized total aggregate general
obligation debt of $7,995,920,000. In the amended fiscal year 1996 and 1997
appropriations, $495,450,000 in general obligation debt was authorized. For
fiscal year 1998, Governor Miller recommended $508,800,000 in bonds, the
proceeds of which are to be used for various planned capital projects of the
State, its department and agencies. Total direct obligations issued for fiscal
years ended June 30, 1975 through June 30, 1997 is $8,189,495,000. Georgia has
no direct obligations authorized but unissued during that period.

Georgia's total outstanding debt as of October 31, 1996 is $4,727,630,000.
Georgia's aggregate fiscal year debt service on all outstanding bonds as of
October 31, 1996 is approximately $7.15 billion.

Bond Ratings. Currently, Moody's Investors Service, Inc. rates Georgia general
obligation bonds Aaa and Standard & Poor's rates such bonds AA+, and Fitch
rates such bonds as AAA.

Legal Proceedings. Georgia is involved in certain legal proceedings that, if
decided against the State, may require the State to make significant future
expenditures or may substantially impair revenues.

Three suits have been filed against the State of Georgia seeking refunds of
liquor taxes under O.C.G.A. Section 48-2-35, in light of Bacchus Imports, Ltd.
v. Dias, 468 U.S. 263 (1984) under Georgia's pre-Bacchus statute. In the Beam
case, 501 U.S. 529 (decided June 20, 1991) the Supreme Court indicated that
Bacchus was retroactive, but only within the bounds of State statutes of
limitations and procedural bars, and left State courts to determine any remedy
in light of reliance interests, equitable considerations, and other defenses.
Georgia's statute of limitations in O.C.G.A. Section 48-2-35 has run on all
pre-Bacchus claims for refund except five pending claims seeking $31.7 million
dollars in tax plus interest. On remand, the Fulton County Superior Court has
ruled that procedural bars and other defenses bar any recovery by taxpayers on
Beam's claims for refund. The Georgia Supreme Court has affirmed, and Beam's
petition to the United States Supreme Court for a rehearing was denied on
February 21, 1995. Thus the Beam case is now concluded. The state has filed
for a Motion for Summary Judgement, based upon Beam, in the remaining two
suits for refund, i.e., Joseph E. Seagram & Sons, Inc. v. State and Heublein,
Inc. v. State in DeKalb County Superior Court.

Age International, Inc. v. State (two cases) and Age International, Inc. v.
Miller. Three suits (two for refund and one for declaratory and injunctive
relief) have been filed against the State of Georgia by out-of-state producers
of alcoholic beverages. The first suit for refund seeks $96 million in refunds
of alcohol taxes imposed under Georgia's post-Bacchus (see previous note)
statute, O.C.G.A. 3-4-60. These claims constitute 99% of all such taxes paid
during the three years preceding these claims. In addition, the claimants have
filed a second suit for refund for an additional $23 million for later time
periods. These two cases encompass all known or anticipated claims for refund
of such type within the apparently applicable statutes of limitations. The two
Age refund cases are still pending in the trial court. The Age
declaratory/injunctive relief case was dismissed by the federal District
Court. That dismissal was affirmed by the Eleventh Circuit Court of Appeals,
and plaintiffs petition for rehearing was denied August 24, 1995.

In Board of Public Education for Savannah/Chatham County v. State of Georgia,
the local school board claimed that the State should finance the major portion
of the costs of its desegregation program. The Savannah Board originally
requested restitution in the amount of $30 million, but the Federal District
Court set forth a formula which would require a State payment in the amount of
approximately $8.9 million computed through June 30, 1994. Subsequently the
parties agreed to a settlement. In March 1995, the State paid $8.925 million
to the plaintiffs, in partial satisfaction of the settlement agreement. A
similar complaint has been filed by DeKalb County and there are approximately
five other school districts which potentially might attempt to file similar
claims. In the DeKalb County case alone, the plaintiffs appear to be seeking
approximately $67.5 million of restitution, however the State's motion to
reconsider was granted, reducing the required State payment of approximately
$28 million. The DeKalb case has been appealed and is awaiting final argument
and decision in the Eleventh Circuit Court of Appeals.

In Edgar Muellar v. Collins, plaintiff filed suit in Superior Court of Fulton
County, Georgia. Plaintiff challenges the constitutionality of Georgia's
transfer fee provided by O.C.G.A 40-3-21.1 (often referred to as "impact
fee" ) by asserting that the fee violates the Commerce, Due Process, Equal
Protection, and Privileges and Immunities Clause of the United States
Constitution. Plaintiff seeks to prohibit the State from further collections
and to require the State to return to her and those similarly situated all
fees previously collected. A similar lawsuit previously filed in the Superior
Court of Chatham County, Georgia, Johnsen v. Collins, has been voluntarily
dismissed and will likely be joined with the action currently pending in
Fulton County. From May of 1992 to June 7, 1995, the State collected
$24,168,202.72 under the transfer fee provision. All amounts collected after
June 7, 1995, are being paid into an escrow account. As of July 25, 1995, the
escrow account contains $46,070.00. The State continues to collect
approximately $500,000 to $600,000 per month.

In Buskirk and Estill v. State of Georgia, et al., plaintiffs in this case
filed a civil action in the Superior Court of Fulton County, Georgia, (No.
E-31547) on behalf of all "classified employees of the State of Georgia or
its agencies and departments during all or part of fiscal years 1992 through
1995 who were eligible to receive within grade pay increases." Presently
pending before the court is the plaintiffs' motion for class certification,
which is not opposed by the State. Discovery as to liability issues has been
added, the parties will likely file cross motions for summary judgement on
liability issues. If the plaintiffs prevail, the parties will conduct separate
discovery on the issue of damages. The State believes that is has good and
adequate defenses to the claims made, but should the plaintiffs prevail in
every aspect of their claims, the liability of the State in this matter could
be as much as $295,000,000, based on best estimates currently available.

The foregoing information does not purport to be a complete or exhaustive
description of all conditions to which the issuers of Bonds in the Georgia
Insured Trust are subject. Many factors including national economic, social
and environmental policies and conditions, which are not within the control of
the issuers of Bonds could affect or could have an adverse impact on the
financial condition of the State and various agencies and political
subdivisions located in the State. Since Georgia Bonds in the Georgia Insured
Trust (other than general obligation bonds issued by the State) are payable
from revenue derived from a specific source or authority, the impact of a
pronounced decline in the national economy or difficulties in significant
industries within the State could result in a decrease in the amount of
revenues realized from such source or by such authority and thus adversely
affect the ability of the respective issuers of the Georgia Bonds in the
Georgia Insured Trust to pay the debt service requirements on the Georgia
Bonds. Similarly, such adverse economic developments could result in a
decrease in tax revenues realized by the State and thus could adversely affect
the ability of the State to pay the debt service requirements of any Georgia
general obligation bonds in the Georgia Insured Trust.

At the time of the closing for each Georgia Trust, Special Counsel to the Fund
for Georgia tax matters rendered an opinion under then existing Georgia income
tax law applicable to taxpayers whose income is subject to Georgia income
taxation substantially to the effect that:

For Georgia income tax purposes, the Georgia IM-IT Trust is not an association
taxable as a corporation, and the income of the Georgia IM-IT Trust will be
treated as the income of the Unitholders. Interest on the Georgia Bonds which
is exempt from Georgia income tax when received by the Georgia IM-IT Trust,
and which would be exempt from Georgia income tax if received directly by a
Unitholder, will retain its status as tax-exempt interest when distributed by
the Georgia IM-IT Trust and received by the Unitholders.

If the Trustee disposes of a Georgia Bond (whether by sale, exchange, payment
on maturity, retirement or otherwise) or if a Unitholder redeems or sells his
Unit, the Unitholder will recognize gain or loss for Georgia income tax
purposes to the same extent that gain or loss would be recognized for federal
income tax purposes (except in the case of Georgia Bonds issued before March
11, 1987 issued with original issue discount owned by the Georgia IM-IT Trust
in which case gain or loss for Georgia income tax purposes may differ from the
amount recognized for federal income tax purposes because original issue
discount on such Georgia Bonds may be determined by accruing said original
issue discount on a ratable basis). Due to the amortization of bond premium
and other basis adjustments required by the Internal Revenue Code, a
Unitholder, under some circumstances, may realize taxable gain when his or her
Units are sold or redeemed for an amount less than or equal to their original
cost.

Amounts paid under an insurance policy or policies issued to the Georgia IM-IT
Trust, if any, with respect to the Georgia Bonds in the Georgia IM-IT Trust
which represent maturing interest on defaulted obligations held by the Trustee
will be exempt from State income taxes if, and to the extent as, such interest
would have been so exempt if paid by the issuer of the defaulted obligations
provided that, at the time such policies are purchased the amounts paid for
such policies are reasonable, customary and consistent with the reasonable
expectation that the issuer of the obligations, rather than the insurer, will
pay debt service on the obligations.

Neither the Georgia Bonds nor the Units will be subject to Georgia sales or
use tax.

Chapman and Cutler has expressed no opinion with respect to taxation under any
other provision of Georgia law. Ownership of the Units may result in
collateral Georgia tax consequences to certain taxpayers. Prospective
investors should consult their tax advisors as to the applicability of any
such collateral consequences.

Hawaii Trusts

The following discussion regarding constitutional limitations and the economy
of the State of Hawaii is included for the purpose of providing general
information that may or may not affect issuers of the Bonds in Hawaii.

Hawaii was admitted to the Union on August 21,1959 as the 50th state and is
currently the 41st most populous state. Hawaii's population was 1,115,274 in
1990, as reported by the Census. According to the Census, about 75% of this
population lives on Oahu, the site of the State's capital. Hawaii's population
contains great ethnic diversity, consisting of immigrants from the Far East
and Europe, as well as the mainland U.S.

The Hawaiian economy is based primarily on tourism with most employment
located in the service and retail trade sectors and with tourists paying a
large portion of the General Excise Tax and the Transient Accommodation Tax.
The General Excise and Use Tax made up 53.7% of net receipts without
adjustments for 1992 and the Transient Accommodations Tax were the fourth
largest individual tax of net receipts in 1992. Approximately 6.5 million
tourists came to the State in 1992, spending an estimated $9.6 billion while
in the State. This number of tourists decreased 5.2% from 1991, mostly due to
the U.S. recession as westbound visitors (80% from U.S.) fell from 4.7 million
in 1990, to 4.6 million in 1991, to 4.0 million in 1992. Eastbound visitors,
however, increased from 2.2 million in 1990, to 2.3 million in 1991, to 3.5
million in 1992. Total visitors to the State for the first half of 1993 fell
by 6.5% from those of 1992.

The unemployment rate in the state of Hawaii was 4.8% as of June 1993,
significantly below the national rate of 6.8%.

The State's per capita personal income was $24,590 in 1995, higher than the
1995 U.S. figure of $23,208. The per capita personal income in the State
increased 2.4% in 1995, much lower than the 5.3% rate for the nation; yet,
Hawaii's per capita personal income is 6% higher than the U.S. and Hawaii
ranked ninth in the nation in 1995. Hawaii's total personal income in 1995 was
$29,184 million, up 3.1% from $28,304 for 1994.

The General Fund revenues in 1992 grew at an actual annual growth rate of
1.5%. In 1993, the Council on Revenues estimates, as of April 1993, that the
General Fund revenues will increase by 3.2%. Any time the General Fund balance
at the close of each two successive fiscal years exceeds 5% of General Fund
Revenues for the two fiscal years, the Iegislature in the next regular session
will provide a credit to state taxpayers credit has been issued from 1981 to
1992, inclusive. As of May 1993, the Department of Budget and Finance projects
the General Fund balance at fiscal year-end to be $314.8 million.

Inflation adjusted single family home construction fell 9.0% in 1992, but is
expected to be offset by increases in alterations and additions. Employment in
the construction industry has declined, but is expected to return to 1991 peak
levels due to repair work from Hurricane Iniki. The hurricane hit island Kuaui
in September 1992 causing an estimated $1.7 billion worth of property,
agricultural, and commercial damage as estimated by the Department of
Business, Economic Development, and Tourism. The State has not experienced any
materially adverse economic or financial impact so far, as the federal
government has provided additional funding to the state in the form of public
assistance, loans, and grants with minimum state matching requirements from
the General Fund.

Currently, Moody's Investors Service rates Hawaii general obligation bonds
"Aa" and Standard & Poor's Corporation rates Hawaii general obligation
bonds "AA." Although these ratings indicate that the state of Hawaii
is in relatively good economic health, there can, of course, be no assurance
that this will continue or that particular bond issues may not be adversely
affected by changes in state or local economic conditions. Also, it should be
noted that the creditworthiness of obligations issued by local Hawaii issuers
may be unrelated to the creditworthiness of obligations issued by the state of
Hawaii, and that there is no obligation on the part of the State to make
payment on such local obligations in the event of default.

The foregoing information constitutes only a brief summary of some of the
general factors which may impact certain issuers of Bonds and does not purport
to be a complete or exhaustive description of all adverse conditions to which
the issuers of obligations held by the Hawaii Quality Trust are subject.
Additionally, many factors including national economic, social and
environmental policies and conditions, which are not within the control of the
issuers of the Bonds, could affect or could have an adverse impact on the
financial condition of the State and various agencies and political
subdivisions located in the State. The Sponsor is unable to predict whether or
to what extent such factors or other factors may affect the issuers of the
Bonds, the market value or marketability of the Bonds or the ability of the
respective issuers of the Bonds acquired by the Hawaii Quality Trust to pay
interest on or principal on the Bonds.

We understand that the Hawaii Trust will only have income consisting of (1)
interest from bonds issued by the State of Hawaii and its political and
governmental subdivisions, municipalities and governmental agencies and
instrumentalities and bonds issued by possessions of the United States which
would be exempt from federal and Hawaii income taxation when paid directly to
an individual, trust or estate (the "Bonds" ), (ii) gain on the
disposition of such Bonds, and (iii) proceeds paid under certain insurance
policies issued to the Trustee or to the issuers of the Bonds which represent
maturing interest or principal payments on defaulted Bonds held by the Trustee

In the opinion of Chapman and Cutler, Counsel to the Sponsor, under existing
Hawaii income tax law as of the date of this prospectus and based upon the
assumptions above:

The Hawaii Trust is not an association taxable as a corporation and each
Unitholder of the Hawaii Trust will be treated as the owner of a pro rata
portion of the Hawaii Trust, and the income of such portion of the Hawaii
Trust will therefore be treated as the income of the Unitholder for Hawaii
Income Tax purposes;

Income on the Bonds which is exempt from the Hawaii Income Tax when received
by a Unitholder of the Hawaii Trust and which would be exempt from the Hawaii
Income Tax if received directly by a Unitholder, will retain its status as
exempt from such tax when received by the Hawaii Trust and distributed to such
Unitholder;

To the extent that interest on the Bonds, if any, is includible in the
computation of "alternative minimum taxable income" for federal income
tax purposes, such interest will also be includible in the computation of "
alternative minimum taxable income" for purposes of Hawaii's corporate
alternative minimum tax on corporations;

Each Unitholder of the Hawaii Trust will recognize gain or loss for Hawaii
Income Tax purposes if the Trustee disposes of a Bond (whether by redemption,
sale or otherwise) or if the Unitholder redeems or sells Units of the Hawaii
Trust to the extent that such a transaction results in a recognized gain or
loss to such Unitholder for federal income tax purposes;

Tax cost reduction requirements relating to amortization of bond premium may,
under some circumstances, result in Unitholders realizing taxable gain for
Hawaii Income Tax purposes when their Units are sold or redeemed for an amount
equal to or less than their original cost;

Proceeds, if any, paid under individual insurance policies obtained by issuers
of Bonds or the Trustee which represent maturing interest on defaulted
obligations held by the Trustee will be excludible from Hawaii net income if,
and to the same extent as, such interest would have been so excludible if paid
in the normal course by the issuer of the defaulted obligation provided that,
at the time such policies are purchased, the amounts paid for such policies
are reasonable, customary and consistent with the reasonable expectation that
the issuer of the bonds, rather than the insurer, will pay debt service on the
bonds; and

To the extent that interest derived from the Hawaii Trust by a Unitholder with
respect to any Possession Bonds is excludible from gross income for federal
income tax purposes pursuant to 48 U.SC. Section 745, 48 U.S.C. Section 1423a
and 48 U.S.C. Section 1403, such interest will also not be subject to the
Hawaii Income Tax. It should be noted that interest relating to Possession
Bonds is subject to tax in the case of certain banks and financial
institutions subject to the Hawaii's franchise tax and corporations subject to
Hawaii's corporate alternative minimum tax.

We have not examined any of the Bonds to be deposited and held in the Hawaii
Trust or the proceedings for the issuance thereof or the opinions of bond
counsel with respect thereto, and therefore express no opinion as to the
exemption from State income taxes of interest on the Bonds if received
directly by a Unitholder.

Louisiana Trusts

The following discussion regarding the financial condition of the state
government may not be relevant to general obligation or revenue bonds issued
by political subdivisions of and other issuers in the State of Louisiana (the
"State" ). Such information, and the following discussion regarding the
economy of the State, is based upon information about general economic
conditions that may or may not affect issuers of the Louisiana obligations.
The Sponsor has not independently verified any of the information contained in
such publicly available documents, but is not aware of any facts which would
render such information inaccurate.

The current Standard & Poor's rating on the State's general obligation bonds
is A-. The current Moody's rating on the State's general obligation bonds is
Baa1. There can be no assurance that the economic conditions on which these
ratings were based will continue or that particular bond issues may not be
adversely affected by changes in economic or political conditions.

The Revenue Estimating Conference (the "Conference" ) was established
by Act No. 814 of the 1987 Regular Session of the State Legislature. The
Conference was established by the Legislature to provide an official estimate
of anticipated State revenues upon which the executive budget shall be based,
to provide for a more stable and accurate method of financial planning and
budgeting and to facilitate the adoption of a balanced budget as is required
by Article VII, Section 10(E) of the State Constitution. Act No. 814 provides
that the Governor shall cause to be prepared an executive budget presenting a
complete financial and programmatic plan for the ensuing fiscal year based
only upon the official estimate of anticipated State revenues as determined by
the Revenue Estimating Conference. Act No. 814 further provides that at no
time shall appropriations or expenditures for any fiscal year exceed the
official estimate of anticipated State revenues for that fiscal year. During
the 1990 Regular Session of the Louisiana Legislature, a constitutional
amendment was approved (Act No. 1096), granting constitutional status to the
existence of the Revenue Estimating Conference without altering its structure,
powers, duties and responsibilities which are currently provided by statute.

The General Fund expenditure authorization necessary to provide funds to
continue all existing programs through Fiscal Year 1994-95 was approximately
$4.569 billion, while the official revised revenue estimate adopted by the
Revenue Estimating Conference at its June 22, 1994 meeting for Fiscal Year
1994-95 was $4.545 billion. This $24 million shortfall was recognized as
supplementary appropriations which will not be funded unless the revenue
estimate is revised upwards.

Under the provisions of Louisiana Revised Statute 39:75 the division of
administration is required to submit budgetary status reports monthly to the
Joint Legislative Committee on the Budget. The Committee on notification that
a deficit shortfall is projected in turn shall immediately notify the governor
of the projected deficit. The governor then has 30 days within which to take
corrective actions to bring the budget into balance within the limitations of
the 10% aggregate rule required in Louisiana Revised Statute 39:75(C)(1). If
within thirty days the necessary adjustments are not made to eliminate the
projected deficit, the governor must call a special session of the legislature
for this purpose.

From 1994-96, Louisiana experienced significant industrial development; job
opportunities continue to grow as Louisiana expands both domestic and foreign
markets.

In fiscal year 1994-95, the state spent $219.3 million (of which $27.7 million
came from the state's General Fund) for economic development. This accounted
for 1.8% of total state spending and 0.6% of General Fund expenditures.
Louisiana state government is expected to spend $318.4 million for economic
development activities in several departments in fiscal year 1995-96; economic
development will account for 2.7% of total expenditures and 0.6% of General
Fund expenditures.

The 1996-97 budget was adopted without new taxes and without new fees. Taxes
will be reduced by 1% on food and utilities beginning July 1, 1997 and $110
million will be returned to the taxpayers.

The State General Fund is the principal operating fund of the State, and was
established administratively to provide for the distribution of funds
appropriated by the State Legislature for the ordinary expenses of the State
government. Revenue is provided from the direct deposit of federal grants and
the transfer of State revenues from the Bond Security and Redemption Fund
after general obligation debt requirements are met.

The Transportation Trust Fund was established pursuant to (i) Section 27 of
Article VII of the State Constitution and (ii) Act No. 16 of the First
Extraordinary Session of the Louisiana Legislature for the year 1989
(collectively the "Act" ) for the purpose of funding construction and
maintenance of state and federal roads and bridges, the statewide
flood-control program, ports, airports, transit and state police traffic
control projects and to fund the Parish Transportation Fund. The
Transportation Trust Fund is funded by a levy of $0.20 per gallon on gasoline
and motor fuels and on special fuels (diesel, propane, butane and compressed
natural gas) used, sold or consumed in the state (the "Gasoline and Motor
Fuels Taxes and Special Fuels Taxes" ). This levy was increased from $0.16
per gallon (the "Existing Taxes" ) to the current $0.20 per gallon
pursuant to Act No. 16 of the First Extraordinary Session of the Louisiana
Legislature for the year 1989, as amended. The additional tax of $0.04 per
gallon (the "Act 16 Taxes" ) became effective January 1, 1990 and will
expire on the earlier of January 1, 2005 or the date on which obligations
secured by the Act No. 16 taxes are no longer outstanding. The Transportation
Infrastructure Model for Economic Development Account (the "TIME
Account" ) was established in the Transportation Trust Fund. Moneys in the
TIME account will be expended for certain projects identified in the Act
aggregating $1.4 billion and to fund not exceeding $160 million of additional
capital transportation projects. The State issued $263,902,639.95 of Gasoline
and Fuels Tax Revenue Bonds, 1990 Series A, dated April 15, 1990 payable from
the (i) Act No. 16 Taxes, (ii) any Act No. 16 Taxes and Existing Taxes
deposited in the Transportation Trust Fund, and (iii) any additional taxes on
gasoline and motor fuels and special fuels pledged for the payment of said
Bonds.

The Louisiana Recovery District (the "Recovery District" ) was created
pursuant to Act No. 15 of the first Extraordinary Session of the Legislature
of Louisiana of 1988 to assist the State in the reduction and elimination of a
deficit existing at that time and the delivery of essential services to its
citizens and to assist parishes, cities and other units of local government
experiencing cash flow difficulties. The Recovery District is a special taxing
district the boundaries of which are coterminous with the State and is a body
politic and corporate and a political subdivision of the State. The Recovery
District issued $979,125,000 of Louisiana Recovery District Sales Tax Bonds,
Series 1988, dated July 1, 1988, secured by (i) the revenues derived from the
District's 1% statewide sales and use tax remaining after the costs of
collection and (ii) all funds and accounts held under the Recovery District's
General Bond Resolution and all investment earnings on such funds and
accounts. As of June 30, 1990, the principal amount outstanding was
$851,880,000. The Legislature also passed several constitutional amendments
which were approved by the state electorate, resulting in comprehensive
budgetary reforms mandating that: both proposed and adopted budgets be
balanced in accordance with the official forecast of the Revenue Estimating
Conference; any new tax proposal be tied to specific expenditures; all mineral
revenues earned by the State in excess of $750 million be placed in the
Revenue Stabilization Mineral Trust Fund, to be used as a "rainy day
fund" ; and, the regular legislative session must end prior to the
completion of the fiscal year in order to streamline budgetary reporting and
planning. The Legislature also adopted a proposed constitutional amendment
which was approved by the State electorate permitting the creation of a
Louisiana lottery. The lottery is projected to generate approximately $111
million per year in net revenues for the State.

Only local governmental units levy ad valorem taxes at present. Under the 1921
State Constitution, a 5.75 mills ad valorem tax was being levied by the State
until January 1, 1973 at which time a constitutional amendment to the 1921
Constitution abolished the ad valorem tax. Under the 1974 State Constitution,
a State ad valorem tax of up to 5.75 mills was provided for but is not
presently being levied. The property tax is underutilized at the parish level
due to a constitutional homestead exemption from the property tax applicable
to the first $75,000 of the full market value of single family residences.
Homestead exemptions do not apply to ad valorem property taxes levied by
municipalities, with the exception of the City of New Orleans. Since local
governments are also prohibited from levying an individual income tax by the
constitution, their reliance on State government is increased under the
existing tax structure.

In 1993, Louisiana ranked 21st in the nation in population, at 4,290,400. In
1994, Louisiana's total personal income grew at a faster rate (7%) than the
nation as a whole (5%). Louisiana's per capita personal income increased 4.9%
from 1994 to 1995, from $17,615 to $18,981. The 1995 figure is 82% of the
national figure ($23,208).

As of November 1995, over 1.8 million were employed in the non-agricultural
sector in Louisiana. This was an increase of 41,200 from 1994. Approximately
1.4 million are employed in the service sector. Manufacturing accounted for
10.6% of non-agricultural employment in Louisiana in 1995. This was a slight
decrease from the 10.9% rate in 1994. However, manufacturing jobs increased
statewide by 3,300 positions (or 1.79%) from January 1995 to January 1996.
This compares to an overall U.S. gain of just 0.01% during the same period.
Petroleum processing, chemical manufacturing, food processing, and forest
products (including paper, lumber and other wood products) are the leading
industries in Louisiana.

The foregoing information constitutes only a brief summary of some of the
financial difficulties which may impact certain issuers of Bonds and does not
purport to be a complete or exhaustive description of all adverse conditions
to which the issuers of the Louisiana Trust are subject. Additionally, many
factors including national economic, social and environmental policies and
conditions, which are not within the control of the issuers of Bonds, could
affect or could have an adverse impact on the financial condition of the State
and various agencies and political subdivisions located in the State. The
Sponsor is unable to predict whether or to what extent such factors may affect
the issuers of Bonds, the market value or marketability of the Bonds or the
ability of the respective issuers of the Bonds acquired by the Louisiana Trust
to pay interest on or principal of the Bonds.

At the time of the closing for each Louisiana Trust Special Counsel to each
Louisiana Trust for Louisiana tax matters, rendered an opinion under then
existing Louisiana income tax law applicable to taxpayers whose income is
subject to Louisiana income taxation substantially to the effect that:

The Louisiana Trust will be treated as a trust for Louisiana income tax
purposes and not as an association taxable as a corporation.

The Louisiana income tax on resident individuals is imposed upon the "tax
table income" of resident individuals. The calculation of the "tax
table income" of a resident individual begins with federal adjusted gross
income. Certain modifications are specified, but no such modification requires
the addition of interest on obligations of the State of Louisiana and its
political subdivisions, public corporations created by them and constitutional
authorities thereof authorized to issue obligations on their behalf.
Accordingly, amounts representing interest excludable from gross income for
federal income tax purposes received by the Louisiana Trust with respect to
such obligations will not be taxed to the Louisiana Trust, or, except as
provided below, to the resident individual Unitholder, for Louisiana income
tax purposes. In addition to the foregoing, interest on the respective
Securities may also be exempt from Louisiana income taxes pursuant to the
statutes authorizing their issuance.

To the extent that gain from the sale, exchange or other disposition of
obligations held by the Louisiana Trust (whether as a result of a sale or
exchange of such obligations by the Louisiana Trust or as a result of a sale
or exchange of a Unit by a Unitholder) is includable in the federal adjusted
gross income of a resident individual, such gain will be included in the
calculation of the Unitholder's Louisiana taxable income; and

Gain or loss on the Unit or as to underlying bonds for Louisiana income tax
purposes would be determined by taking into account the basis adjustments for
federal income tax purposes described in this Prospectus.

As no opinion is expressed regarding the Louisiana tax consequences of
Unitholders other than individuals who are Louisiana residents, tax counsel
should be consulted by other prospective Unitholders. The Internal Revenue
Code of 1986, as amended (the "1986 Code" ), contains provisions
relating to investing in tax-exempt obligations (including, for example,
corporate minimum tax provisions which treat certain tax-exempt interest and
corporate book income which may include tax-exempt interest, as tax preference
items, provisions affecting the deductibility of interest expense by financial
institutions) which could have a corresponding effect on the Louisiana tax
liability of the Unitholders.

In rendering the opinions expressed above, counsel has relied upon the opinion
of Chapman and Cutler that the Louisiana Trust is not an association taxable
as a corporation for Federal income tax purposes, that each Unitholder of the
Louisiana Trust will be treated as the owner of a pro rata portion of such
Louisiana Trust under the 1986 Code and that the income of the Louisiana Trust
will be treated as income of the Unitholders under the 1986 Code.

Tax counsel should be consulted as to the other Louisiana tax consequences not
specifically considered herein, and as to the Louisiana tax status of
taxpayers other than Louisiana resident individuals who are Unitholders in the
Louisiana Trust. In addition, no opinion is being rendered as to Louisiana tax
consequences resulting from any proposed or future federal or state tax
legislation.

Massachusetts Trusts

As described above, the Massachusetts IM-IT Trust will invest substantially
all of its net assets in obligations issued by or on behalf of the
Commonwealth of Massachusetts, political subdivisions thereof, or agencies or
instrumentalities of the Commonwealth or its political subdivisions (the "
Bonds" ). The Massachusetts IM-IT Trust is therefore susceptible to general
or particular political, economic, or regulatory factors that may affect
issuers of such Massachusetts Investments. The following information
constitutes only a brief summary of some of the many complex factors that may
have an effect. The information may not be applicable to "conduit"
obligations on which the public issuer itself has no financial responsibility.
This information is derived from official statements of the Commonwealth and
certain of its agencies or instrumentalities in connection with the issuance
of securities, and from other publicly available documents, and is believed to
be accurate. No independent verification has been made of any of the following
information.

The Massachusetts Economy. Massachusetts experienced continued economic growth
in 1996, albeit at a slower rate than in 1995. Economic growth at the national
level has been mirrored in Massachusetts, where since the low point of the
recession in 1991, over 250,000 jobs have been created in Massachusetts. The
unemployment rate has fallen in Massachusetts through each of the last five
years, from 9.5% in March 1991, one of the highest in the nation, to 3.9% in
November 1996, one of the lowest of any large industrial state. The national
unemployment rate in November 1996 was 5.4%. Over three million people are
working in the Commonwealth.

Improvements in the employment picture are reflected in increased personal
incomes for Massachusetts residents. During fiscal years 1995 and 1996,
personal income grew at an annual rate of 5.0%. Employment in the Commonwealth
is expected to increase at a rate between 1.1% and 1.6% for fiscal years 1997
and 1998, and personal income is expected to grow at a rate from 4.4% to 5.6%
over the same period.

In recent years, per capita personal income growth in Massachusetts has been
among the highest in the nation. From 1994 to 1995, nominal per capita income
in Massachusetts increased 6.4% as compared to 5.3% for the nation as a whole.
Massachusetts per capita personal income in 1995 was 21% higher than the
national average, and Massachusetts ranked third in the nation.

The Commonwealth, while the third most densely populated state according to
the 1990 census, has experienced only a modest increase in population from
1980 to 1990 at a rate equal to less than one-half the rate of increase in the
United States population as a whole.

Massachusetts possesses a diversified economic base which includes traditional
manufacturing, high technology and service industries, served by an extensive
transportation system and related facilities. The Massachusetts service
sector, at approximately 34.3% of the state work force, is the largest sector
in the Massachusetts economy. In recent years, the construction, manufacturing
and trade sectors have experienced the greatest decreases in employment in
Massachusetts, with more modest declines taking place in the government,
finance, insurance and real estate, and service sectors. From 1990 to November
of 1994, manufacturing employment in Massachusetts declined by some 15.5%. At
the same time, there has occurred a reversal of the dramatic growth which
occurred during the 1980's in the finance, insurance and real estate sector
and in the construction sector of the Massachusetts economy.

Over the next decade, Massachusetts has a very full public construction agenda
which is expected not only to improve mobility, but to provide a substantial
number of construction and related employment opportunities, including the
major Central Artery/Tunnel project involving the construction of a third
tunnel under Boston Harbor linking the MassPike and downtown Boston with Logan
International Airport, and the depression into tunnels of the Central Artery
that traverses the City of Boston. Federal funds are expected to cover
approximately 90% of the cost of this project. The Central Artery/Tunnel
project is expected to employ approximately 5,000 on-site workers and 10,000
auxiliary workers during the peak years of construction in the mid-1990's.

State Finances. The financial condition of the Commonwealth of Massachusetts
continues to reflect the fiscal recovery that began six years ago. Instead of
the debt and the deficit spending characteristic of the late 1980's, the
Commonwealth, according to its December 1996 audited financial statements,
ended fiscal year 1996 with a balance of $1.172 billion in its budgeted funds.
This marks the sixth consecutive year in which revenues exceeded expenditures.
By the end of fiscal year 1996, the GAAP balance in the budgeted funds was
$709.2 million, a marked change from the fiscal year 1990 GAAP deficit balance
of $1.9 billion.

Due to these successive budget surpluses, the Commonwealth's Stabilization
(or "rainy day" ) Fund in fiscal year 1996 reached and then exceeded
its statutory limit of $543.3 million for the first time, triggering a deposit
of $232 million into the Tax Reduction Fund. As a result, the Legislature
approved a one-time $150 million income tax cut for Tax Year 1996 and
legislation has been filed to authorize an $84 million tax cut for Tax Year
1997. Economic recovery is also shown with the retirement in fiscal year 1998
of the last of the Fiscal Recovery Bonds, issued to finance the overspending
of several years ago.

An expanding economy translates directly into a broader tax revenue base.
Increased employment, incomes, housing starts, and business activity directly
impact sales, personal income, corporate, deeds, and other tax collections.
Compared to fiscal year 1995, fiscal year 1996 income tax collections grew
12.3%, and sales tax collections grew 5.2%. Overall, tax revenue available for
the budget totaled almost $12 billion in fiscal year 1996, a 7.9% increase
from fiscal year 1995.

The Massachusetts Department of Revenue estimates that the tax base in fiscal
year 1997 will grow by 5.8% and total tax receipts will reach $12.31 billion.
Total revenues in fiscal year 1997 are projected to total $17.393 billion.
Using conservative assumptions for the total amount of authorizations that
will remain unspent by the end of fiscal year 1997, spending is projected at
$17.703 billion, leaving an ending all funds balance of $862.6 million. In
fiscal year 1997, the Commonwealth's Stabilization Fund balance is expected
to be $563 million.

Fiscal year 1998 total revenues are projected to be $17.998 billion. Tax
revenues are projected to be $12.667 billion, which reflects a reduction of
$82 million for tax cuts proposed in the fiscal year 1998 budget
recommendation and a reduction of $84 million from the Tax Reduction Fund
income tax cut. This represents an increase of 2.9% over fiscal year 1997
projected tax revenues (which includes the impact of any tax law changes).
Overall, the Department of Revenue projects a slowing growth rate of the tax
revenue base from 6.5% in fiscal year 1996 to 5.8% in fiscal year 1997 and
4.6% in fiscal year 1998. Non-tax revenues are projected to be $5.331 billion,
a 3.5% increase over fiscal year 1997. After projected total expenditures of
$18.15 billion in fiscal year 1998, the ending all funds balance is expected
to be $710.6 million.

Important proposals for the 1998 fiscal year include repealing the 5%
telecommunications sales tax over a five year period, reducing the existing
12% tax on "unearned" income to 5.95% over five years, eliminating the
net investment income tax on domestic life insurance companies, and setting
the investment tax credit rate permanently at 3%.

The foregoing information constitutes only a brief summary of some of the
general factors which may impact certain issuers of Bonds and does not purport
to be a complete or exhaustive description of all adverse conditions to which
the issuers of obligations held by the Massachusetts IM-IT Trust are subject.
Additionally, many factors including national economic, social and
environmental policies and conditions, which are not within the control of the
issuers of Bonds, could affect or could have an adverse impact on the
financial condition of the Commonwealth and various agencies and political
subdivisions located in the Commonwealth. The Sponsor is unable to predict
whether or to what extent such factors or other factors may affect the issuers
of the Bonds, the market value or marketability of the Bonds or the ability of
the respective issuers of the Bonds acquired by the Massachusetts IM-IT Trust
to pay interest on or principal of the Bonds.

At the time of the closing for each Massachusetts Trust Special Counsel to
each Massachusetts Trust for Massachusetts tax matters, rendered an opinion
under then existing Massachusetts income tax law applicable to taxpayers whose
income is subject to Massachusetts income taxation substantially to the effect
that:

For Massachusetts income tax purposes, the Massachusetts IM-IT Trust will be
treated as a corporate trust under Section 8 of Chapter 62 of the
Massachusetts General Laws and not as a grantor trust under Section 10(e) of
Chapter 62 of the Massachusetts General Laws.

The Massachusetts IM-IT Trust will not be held to be engaging in business in
Massachusetts within the meaning of said Section 8 and will, therefore, not be
subject to Massachusetts income tax.

Massachusetts Unitholders who are subject to Massachusetts income taxation
under Chapter 62 of Massachusetts General Laws will not be required to include
their respective shares of the earnings of or distributions from the
Massachusetts IM-IT Trust in their Massachusetts gross income to the extent
that such earnings or distributions represent tax-exempt interest for federal
income tax purposes received by the Massachusetts IM-IT Trust on obligations
issued by Massachusetts, its counties, municipalities, authorities, political
subdivisions or instrumentalities, or issued by United States territories or
possessions.

Any proceeds of insurance obtained by the Trustee of the Trust or by the
issuer of a Bond held by the Massachusetts IM-IT Trust which are paid to
Massachusetts Unitholders and which represent maturing interest on defaulted
obligations held by the Trustee will be excludable from Massachusetts gross
income of a Massachusetts Unitholder if, and to the same extent as, such
interest would have been so excludable if paid by the issuer of the defaulted
Bond.

The Massachusetts IM-IT Trust's capital gains and/or capital losses realized
upon disposition of Bonds held by it will be includable pro rata in the
federal gross income of Massachusetts Unitholders who are subject to
Massachusetts income taxation under Chapter 62 of the Massachusetts General
Laws, and such gains and/or losses will be included as capital gains and/or
losses in the Massachusetts Unitholders' Massachusetts gross income, except
where capital gain is specifically exempted from income taxation under acts
authorizing issuance of said Bonds

Gains or losses realized upon sale or redemption of Units by Massachusetts
Unitholders who are subject to Massachusetts income taxation under Chapter 62
of the Massachusetts General Laws will be includable in their Massachusetts
gross income.

In determining such gain or loss Massachusetts Unitholders will, to the same
extent required for Federal tax purposes, have to adjust their tax bases for
their Units for accrued interest received, if any, on Bonds delivered to the
Trustee after the Unitholders pay for their Units and for amortization of
premiums, if any, on obligations held by the Massachusetts IM-IT Trust.

The Units of the Massachusetts IM-IT Trust are not subject to any property tax
levied by Massachusetts or any political subdivision thereof, nor to any
income tax levied by any such political subdivision. They are includable in
the gross estate of a deceased Massachusetts Unitholder who is a resident of
Massachusetts for purposes of the Massachusetts Estate Tax.

Michigan Trusts

Investors should be aware that the economy of the State of Michigan has, in
the past, proven to be cyclical, due primarily to the fact that the leading
sector of the State's economy is the manufacturing of durable goods. While the
State's efforts to diversify its economy have proven successful, as reflected
by the fact that the share of employment in the State in the durable goods
sector has fallen from 33.1 percent in 1960 to 17.9 percent in 1990, durable
goods manufacturing still represents a sizable portion of the State's economy.
As a result, any substantial national economic downturn is likely to have an
adverse effect on the economy of the State and on the revenues of the State
and some of its local governmental units.

Since 1990, total employment in Michigan has climbed by over 500,000. Since
1991, Michigan has had the fastest per capita personal income growth rate in
the nation, growing at 25.2% while the national average rose 18.2%. In 1995,
per person income in Michigan was $23,915, an increase of 5.9% over the
previous year.

Job growth and higher personal income have caused renewed population growth in
Michigan. In 1996, for the second consecutive year, more people moved into
Michigan than left. Michigan has not experienced back-to-back years of
in-migration in over 25 years.

The Michigan economy continued to grow steadily in 1996, with wage and salary
employment estimated to have increased by 1.6%. The preliminary average
unemployment rate is 4.7%, the lowest since 1969, and was below the national
average for the third year in a row. The national unemployment rate for 1996
is 5.4%. Personal income in Michigan grew an estimated 4.2% in 1996, down from
the strong 6.5% growth reported for 1995.

In 1997, Michigan employment is expected to grow by a moderate 63,000 jobs or
1.5%, causing personal income to increase by 5.0%. The inflation rate, as
measured by the Detroit Consumer Price Index (CPI), will decrease to 2.4% and
inflation-adjusted purchasing power will grow 2.5%.

In 1998, employment is forecast to increase by 62,000 jobs or 1.4%. In
addition, 1998 is expected to be the fifth straight year where Michigan's
unemployment rate is below the national average. This follows 28 years of
Michigan having a higher jobless rate than the nation. Income growth is
forecast at 4.9%. The Detroit CPI is forecast to increase by 2.3% with
inflation-adjusted purchasing power to increase by 2.5%.

In July 1995, Moody's Investors Service, Inc. raised the State's general
obligation bond rating to "Aa" . In October 1989, Standard & Poor's
raised its rating on the State's general obligation bonds to "AA" .

The State's economy could continue to be affected by changes in the auto
industry, notably consolidation and plant closings resulting from competitive
pressures and over-capacity. Such actions could adversely affect State
revenues and the financial impact on the local units of government in the
areas in which plants are closed could be more severe.

In addition, the State is a party to various legal proceedings, some of which
could, if unfavorably resolved from the point of view of the State,
substantially affect State programs or finances.

In recent years, the State has reported its financial results in accordance
with generally accepted accounting principles. For the fiscal years ended
September 30, 1990 and 1991, the State reported negative year-end balances in
the General Fund/School Aid Fund of $310.4 million and $169.4 million,
respectively. The State ended each of the 1992, 1993 and 1994 fiscal years
with its General Fund/School Aid Fund in balance, after having made
substantial transfers to the Budget Stabilization Fund in 1993 and 1994.

Actual General Fund-General Purpose (GF-GP) revenue for 1994-95 was $7,903.1
million. The total for the School Aid Fund (SAF) revenue was $7,073.7 million,
giving a combined total GF-GP and SAF revenue of $14,976.8 million.

Preliminary fiscal year 1996 revenues indicate that GF-GP baseline revenue
increased 4.8% to $8,403.0 million. SAF revenue grew 5.4% to $7,377.6 million.
The combined total GF-GP and SAF revenue grew 5.1% to $15,780.7 million.

For fiscal year 1997, GF-GP baseline revenues are projected at $8,334.9
million, an increase of 5.1% and SAF revenues are projected at $8,244.4
million, an increase of 4.0%. Fiscal year 1997 growth rates for both GF-GP and
SAF have been adjusted to reflect the additional 8.6% earmarking of income tax
revenue to the SAF. The combined total GF-GP and SAF revenues are projected at
$16,579.3 million, an increase of 4.5%.

For fiscal year 1998, GF-GP baseline revenues are projected at $8,734.9
million, an increase of 4.8%, and SAF revenues are projected at $8,592.3
million, an increase of 4.2%. The combined total GF-GP and SAF revenues are
projected at $17,327.2 million, an increase of 4.5%.

The Michigan Constitution of 1963 limits the amount of total revenues of the
State raised from taxes and certain other sources to a level for each fiscal
year equal to a percentage of the State's personal income for the prior
calendar year. In the event that the State's total revenues exceed the limit
by 1 percent or more, the Michigan Constitution of 1963 requires that the
excess be refunded to taxpayers.

On March 15, 1994, Michigan voters approved a school finance reform amendment
to the State's Constitution which, among other things, increased the State
sales tax rate from 4% to 6% and placed a cap on property assessment increases
for all property taxes. Concurrent legislation cut the State's income tax rate
from 4.6% to 4.4%, reduced some property taxes and altered local school
funding sources to a combination of property taxes and state revenues, some of
which is provided from other new or increased State taxes. The legislation
also contained other provisions that alter (and, in some cases, may reduce)
the revenues of local units of government, and tax increment bonds could be
particularly affected. As of January 1997, reforms that have occurred under
the amendment have been effective, yet the ultimate impact of the
constitutional amendment and related legislation cannot be accurately
predicted, and investors should be alert to the potential effect of such
measures upon the operations and revenues of Michigan local units of
government.

In addition, the State Legislature recently adopted a package of state tax
cuts, including a phase out of the intangibles tax, an increase in exemption
amounts for personal income tax, and reductions in single business tax. Since
1991, 21 tax cuts have been enacted in Michigan. In 1998, Michigan taxpayers
will have an additional $2 billion available. The cumulative impact of these
21 tax cuts will have resulted in savings of $8.6 billion to taxpayers by the
end of 1998.

Before reflecting enacted tax cuts and other adjustments, the consensus
revenue estimate was for a 4.8% growth in baseline general fund revenue for
fiscal year 1998, or $400.0 million. The continued phase-in of enacted tax
cuts and other adjustments reduced the estimated growth of actual general fund
revenue receipts to 2.9% or $243.0 million.

Although all or most of the Bonds in the Michigan IM-IT Trust are revenue
obligations or general obligations of local governments or authorities rather
than general obligations of the State of Michigan itself, there can be no
assurance that any financial difficulties the State may experience will not
adversely affect the market value or marketability of the Bonds or the ability
of the respective obligors to pay interest on or principal of the Bonds,
particularly in view of the dependency of local governments and other
authorities upon State aid and reimbursement programs and, in the case of
bonds issued by the State Building Authority, the dependency of the State
Building Authority on the receipt of rental payments from the State to meet
debt service requirements upon such bonds. In the 1991 fiscal year, the State
deferred certain scheduled cash payments to municipalities, school districts,
universities and community colleges. While such deferrals were made up at
specified later dates, similar future deferrals could have an adverse impact
on the cash position of some local governmental units. Additionally, the State
reduced revenue sharing payments to municipalities below that level provided
under formulas by $10.9 million in the 1991 fiscal year, $34.4 million in the
1992 fiscal year, $45.5 million in the 1993 fiscal year, $54.5 million in the
1994 fiscal year, and $67.0 million in the 1995 fiscal year.

The Michigan IM-IT Trust may contain general obligation bonds of local units
of government pledging the full faith and credit of the local unit which are
payable from the levy of ad valorem taxes on taxable property within the
jurisdiction of the local unit. Such bonds issued prior to December 22, 1978,
or issued after December 22, 1978 with the approval of the electors of the
local unit, are payable from property taxes levied without limitation as to
rate or amount. With respect to bonds issued after December 22, 1978, and
which were not approved by the electors of the local unit, the tax levy of the
local unit for debt service purposes is subject to constitutional, statutory
and charter tax rate limitations. In addition, several major industrial
corporations have instituted challenges of their ad valorem property tax
assessments in a number of local municipal units in the State. If successful,
such challenges could have an adverse impact on the ad valorem tax bases of
such units which could adversely affect their ability to raise funds for
operation and debt service requirements.

At the time of the closing for each Michigan Trust, Special Counsel to each
Michigan Trust for Michigan tax matters rendered an opinion under then
existing Michigan income tax law applicable to taxpayers whose income is
subject to Michigan income taxation substantially to the effect that:

The Michigan IM-IT Trust and the owners of Units will be treated for purposes
of the Michigan income tax laws and the Single Business Tax in substantially
the same manner as they are for purposes of the Federal income tax laws, as
currently enacted. Accordingly, we have relied upon the opinion of Messrs.
Chapman and Cutler as to the applicability of Federal income tax under the
Internal Revenue Code of 1986 to the Michigan IM-IT Trust and the Holders of
Units.

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

For purposes of the foregoing Michigan tax laws, each Unitholder will be
considered to have received his pro rata share of Bond interest when it is
received by the Michigan IM-IT Trust, and each Unitholder will have a taxable
event when the Michigan IM-IT Trust disposes of a Bond (whether by sale,
exchange, redemption or payment at maturity) or when the Unitholder redeems or
sells his Certificate to the extent the transaction constitutes a taxable
event for Federal income tax purposes. The tax cost of each unit to a
Unitholder will be established and allocated for purposes of these Michigan
tax laws in the same manner as such cost is established and allocated for
Federal income tax purposes.

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

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

Any proceeds paid under an insurance policy issued to the Trustee of the
Trust, or paid under individual policies obtained by issuers of Bonds, which,
when received by the Unitholders, represent maturing interest on defaulted
obligations held by the Trustee, will be excludable from the Michigan income
tax laws and the Single Business Tax if, and to the same extent as, such
interest would have been so excludable if paid by the issuer of the defaulted
obligations. While treatment under the Michigan Intangibles Tax is not
premised upon the characterization of such proceeds under the Internal Revenue
Code, the Michigan Department of Treasury should adopt the same approach as
under the Michigan income tax laws and the Single Business Tax.

As the Tax Reform Act of 1986 eliminates the capital gain deduction for tax
years beginning after December 31, 1986, the federal adjusted gross income,
the computation base for the Michigan Income Tax, of a Unitholder will be
increased accordingly to the extent such capital gains are realized when the
Michigan IM-IT Trust disposes of a Bond or when the Unitholder redeems or
sells a Unit, to the extent such transaction constitutes a taxable event for
Federal income tax purposes.

Minnesota Trusts

In the early 1980's the State of Minnesota experienced financial difficulties
due to a downturn in the State's economy resulting from the national
recession. In recent years, Minnesota has ranked as one of the top five states
in production for dairy products, soy beans, hogs, corn, turkeys, sugar beets,
barley, hay, sweet corn, oats, green peas, and sunflowers. In 1994, Minnesota
ranked first in the nation in cash receipts for sugar beets. Total cash
receipts in 1994 were $6.522 billion, with dairy products and soy beans
contributing 18.3% and 15.6%, respectively.

Between 1985 and 1994, more than 435,000 jobs were added in Minnesota,
resulting in employment growth of 24.1% compared to the national average of
16.9%. The four fastest growing industries in Minnesota were: services;
manufacturing; finance, insurance and real estate (FIRE); and transportation,
communications and public utilities (TCPU).

Employment growth in Minnesota continues to outpace the U.S. economy in fiscal
year 1996. Payroll employment grew by 2.3%, significantly above the U.S.
growth of 2.0%. Between November 1995 and November 1996, Minnesota added
54,800 jobs, growing at a rate of 2.3% for total nonfarm wage and salary
employment. This brings the total number of nonfarm jobs in the state to
2,470,800. In the last year, the services division accounted for almost 38% of
the growth and trade made up another 25%. From November 1995 to November 1996,
the services sector grew 3.2%, or 20,700 jobs, the largest percentage increase
of any industry division in the state. Manufacturing added 2,700 jobs, a .6%
increase. FIRE gained 2,900 jobs for a growth rate of 2.1%. TCPU increased by
2.7%, or 3,200 jobs.

The annual unemployment rate in Minnesota has been below the U.S. and Midwest
rates every year since 1985. In 1995 and 1996, the Minnesota unemployment rate
was 3.7% and 3.6%, respectively, compared to rates of 5.6% and 5.4%,
respectively, for the nation.

In 1995, per capita personal income in Minnesota was $23,271, exceeding the
national average by 3%. In 1996, Minnesota's per capita personal income rose
to $24,498, an increase of 5.3% from 1995. The U.S. increase for 1996 is
predicted at 4.7%.

Total personal income in the state, however, grew more slowly than in the rest
of the nation. Total wage and salary disbursements in the state, which account
for about two-thirds of personal income, grew at a 4.9% rate in fiscal year
1996, noticeably slower than the U.S. wide growth rate of 6.2%. Much of this
difference is attributed to increases in the number of hours worked by part
time employees. During the past year, economic conditions in Minnesota have
been such that part time workers are already working all of the hours they
desire.

The Minnesota economy is expected to track the national economy during fiscal
year 1997. Growth rates for personal income in Minnesota and nationally are
projected to be identical. Job growth in Minnesota is forecast to be only
slightly stronger than that for the entire U.S., while total wage and salary
disbursements are expected to lag slightly, reflecting the belief that part
time workers elsewhere in the nation will continue to add hours at a faster
rate than those in Minnesota. The 1996 farm bill will add to farm income in
the state in both 1996 and 1997.

Minnesota's fiscal period is a biennium. General Fund revenues and
transfers-in totaled $9.619 billion for fiscal year 1996, up 9% from those for
fiscal year 1995. Actual total resources were $10.421 billion. General Fund
expenditures and transfers-out for the year totaled $9.638 billion, an
increase of 11.7% from the previous year. Of this amount, $6.749 billion (70%)
is in the form of grants and subsidies to local governments, individuals and
non-profit organizations.

Total net revenue for the General Fund for the fiscal year ending June 30,
1996 was $9.617 billion. Of this amount, approximately 43% or $4.135 billion
was from individual income taxes, 30.1% or $2.897 billion was from sales tax,
and 7.3% or $702 million was from corporate income tax. Total General Fund
expenditures for fiscal year 1996 were $8.554 billion.

The budgetary fund balance for the General Fund at the end of fiscal year 1996
was $1.357 billion, and the undesignated fund balance was $506 million, a
$47.9 million increase from fiscal year 1995. A budgetary reserve of $570
million was provided for in fiscal year 1996, compared to $500 million in 1995.

Total net revenue for the Special Revenue Fund for the fiscal year ending June
30, 1996 was $1.553 billion. Total expenditures for this fund were $1.026
billion. The budgetary fund balance for the Special Revenue Fund at the end of
fiscal year 1996 was $379.2 million, with the undesignated fund balance at
$298.7 million.

Estimated General Fund revenues for the 1996-97 fiscal year are $19,089
million. Total resources are forecast at $20.110 billion. General Fund
expenditures and transfers for fiscal year 1996-97 are predicted at $18,811
million, leaving an estimated budgetary balance of $502 million.

Total expenditures for the 1996-97 biennium are predicted at $29,801 million.
Of this amount, $18,080 million is from the general fund, $10,127 are from the
special revenue funds, and $563 million is from the Debt Service Fund.

National economic growth for the remainder of the decade is predicted to
generate a corresponding growth in state revenues without increasing tax
rates. Minnesota's revenues are expected to grow by $1.4 billion, 7.4% in the
1998-99 biennium, and 8.1% in the following biennium. Since the state forecast
is based on a strong 2.4% annual growth rate, a return to a more moderate rate
of growth, similar to the 2.0% growth rate in 1995, would materially reduce
forecast revenues.

Spending for fiscal years 1998 and 1999 is estimated at 3.3% and 2.3%,
respectively, both below Minnesota's projected personal income growth rates
of 4.9% and 4.7% for the same periods.

The 1998-99 General Fund beginning balance is estimated at $1.299 billion. The
Governor recommended General Fund revenues for the 1998-99 biennium of $19.99
billion, a 4.7% increase from the previous biennium. The Governor also
recommended total expenditures and transfers for the 1998-99 biennium of
$20.344 billion, an 8.2% increase from the 1996-97 biennium. The budgetary
balance of $3 million at the end of the 1998-99 biennium is $499 million less
than the previous biennium. The State's budget reserve for the 1998-99
biennium is doubled to $522 million (an increase from $261 million in fiscal
year 1997) or 5% of fiscal year 1999 spending to protect against economic
uncertainty.

The November 1996 forecast shows total resources for the 1998-99 biennium at
$21.804 billion, total expenditures and transfers at $19.568 billion, and a
budgetary balance of $1.439 billion.

The state issued $439.6 million of new general obligation bonds, and $170.6
million of general obligation bonds were redeemed during 1996, leaving an
outstanding balance of $2.2 billion. General obligation bonds authorized but
unissued as of June 30, 1996 were $1.101 billion.

Minnesota Statutes, Section 16A.641 provides for an annual appropriation for
transfer to the Debt Service Fund. The amount of the appropriation is to be
such that, when combined with the balance on hand in the Debt Service Fund on
December 1 of each year for state bonds, it will be sufficient to pay all
general obligation bond principal and interest due and to become due through
July 1 in the second ensuing year. If the amount appropriated is insufficient
when combined with the balance on hand in the Debt Service Fund, the state
constitution requires the state auditor to levy a statewide property tax to
cover the deficiency. No such property tax has been levied since 1969 when the
law was enacted requiring the appropriation. In fiscal year 1996, total
operating transfers to the Debt Service Fund were $277.522 million.

The Governor's budget recommends a General Fund appropriation of $545.6
million for fiscal year 1998-99 for debt service on bonds sold for existing
authorizations, bonds authorized but unissued, and new bonds anticipated to be
authorized in the 1998 legislative session. This amount represents 2.8% of
total general fund spending. The Governor also proposed $16.6 million be
appropriated to pay remaining state claims from the Cambridge Bank Litigation
judgment, rather than issuing additional revenue bonds for this purpose.

In May 1996, Moody's Investor Services upgraded Minnesota's general
obligation bond rating to Aaa. S&P's current rating is AA+, and Fitch's
rates Minnesota bonds at AAA.

Litigation. In September 1995, in Minneapolis Branch of the NAACP v. State of
Minnesota, plaintiffs filed suit claiming that the segregation of minority and
poor students in the Minneapolis public schools has deprived the students of
an adequate education in violations of the Minnesota Constitution. It is
impossible at this point to estimate the State's exposure in this case
especially since the plaintiffs have not articulated what relief they are
seeking. While the complaint does not request monetary damages, it does
request injunctive relief that could force the State to spend over $10 million
for additional funding of various items for the Minneapolis schools, and
increased busing expenses. District court proceedings continue.

In Minnesota Home Health Care Association v. Gomez, plaintiffs have sued the
Department of Human Services ("DHS" ) for declaratory and injunctive
relief claiming that DHS violated federal law by failing to determine payment
rates for home health care service providers which are consistent with
efficiency, economy, and quality of care, and which provide adequate patient
access. The potential loss to the State is estimated at $20 million and may
impact the Accounting General Fund. The State prevailed in District Court. The
case is on appeal to the Eighth Circuit Court of Appeals.

In PepsiCo, et al. v. Commissioner of Revenue, twelve corporate taxpayers
claim unconstitutional treatment under certain provisions of Minnesota tax
law. The Department of Revenue has not determined the potential refund
liability should the plaintiffs prevail; however, the aggregate refunds to all
similarly-situated taxpayers could exceed $10 million.

In Rural American Bank - Ada f/k/a First Bank of Ada, et al. v. Commissioner
of Revenue, filed in Ramsey County District Court, taxpayers claim they are
entitled to refunds pursuant to the Court's decision in Cambridge State Bank,
in which the Court struck down a provision of the franchise tax law which
taxed interest income from federal obligations. The complaint and alternative
writ of mandamus seek to require the Commissioner to pay refunds to 130 banks
who were not parties to the Cambridge and Cambridge-related cases. The
Commissioner denies any liability, but it is possible that the State could be
ordered to pay in excess of $10 million dollars.

The foregoing information constitutes only a brief summary of some of the
general factors which may impact certain issuers of Bonds and does not purport
to be a complete or exhaustive description of all adverse conditions to which
the issuers of Bonds held by the Minnesota Trusts are subject. Additionally,
many factors, including national economic, social and environmental policies
and conditions, which are not within the control of the issuers of the Bonds,
could affect or could have an adverse impact on the financial condition of the
issuers. The Sponsor is unable to predict whether or to what extent such
factors or other factors may affect the issuers of the Bonds, the market value
or marketability of the Bonds or the ability of the respective issuers of the
Bonds acquired by the Minnesota Trusts to pay interest on or principal of the
Bonds.

At the time of the closing for each Minnesota Trust, Special Counsel to each
Minnesota Trust for Minnesota tax matters rendered an opinion under then
existing Minnesota income tax law applicable to taxpayers whose income is
subject to Minnesota income taxation substantially to the effect that:

We understand that the Minnesota Trust will only have income consisting of (i)
interest from bonds issued by the State of Minnesota and its political and
governmental subdivisions, municipalities and governmental agencies and
instrumentalities (the "Minnesota Bonds" ) and bonds issued by
possessions of the United States (the "Possession Bonds" and, with the
Minnesota Bonds, the "Bonds" ) which would be exempt from federal and
Minnesota income taxation when paid directly to an individual, trust or
estate, (ii) gain on the disposition of such Bonds, and (iii) proceeds paid
under certain insurance policies issued to the Trustee or to the issuers of
the Bonds which represent maturing interest or principal payments on defaulted
Bonds held by the Trustee.

Neither the Sponsor nor its counsel have independently examined the Bonds to
be deposited in and held in the Trust. However, although no opinion is
expressed herein regarding such matters, it is assumed that: (i) the Bonds
were validly issued, (ii) the interest thereon is excludible from gross income
for federal income tax purposes and (iii) the interest thereon is exempt from
income tax imposed by Minnesota that is applicable to individuals, trusts and
estates (the "Minnesota Income Tax" ). It should be noted that interest
on the Minnesota Bonds is subject to tax in the case of corporations subject
to the Minnesota Corporate Franchise Tax or the Corporate Alternative Minimum
Tax and is a factor in the computation of the Minimum Fee applicable to
financial institutions; no opinion is expressed with respect to the treatment
of interest on the Possession Bonds for purposes of such taxes. The opinion
set forth below does not address the taxation of persons other than full time
residents of Minnesota.

Although Minnesota state law provides that interest on Minnesota bonds is
exempt from Minnesota state income taxation, the Minnesota state legislature
has enacted a statement of intent that interest on Minnesota bonds should be
subject to Minnesota state income taxation if it is judicially determined that
the exemption discriminates against interstate commerce, effective for the
calendar year in which such a decision becomes final. It cannot be predicted
whether a court would render such a decision or whether, as a result thereof,
interest on Minnesota bonds and therefore distributions by the Minnesota Trust
would become subject to Minnesota state income taxation.

In the opinion of Chapman and Cutler, Counsel to the Sponsor, under existing
Minnesota income tax law as of the date of this prospectus and based upon the
assumptions above:

(1)The Minnesota Trust is not an association taxable as a corporation and each
Unitholder of the Minnesota Trust will be treated as the owner of a pro rata
portion of the Minnesota Trust, and the income of such portion of the
Minnesota Trust will therefore be treated as the income of the Unitholder for
Minnesota Income Tax purposes;

(2)Income on the Bonds excludable from Minnesota taxable income for purposes
of the Minnesota Income Tax when received by the Minnesota Trust and which
would be excludable from Minnesota taxable income for purposes of the
Minnesota Income Tax if received directly by a Unitholder will be excludable
from Minnesota taxable income for purposes of the Minnesota Income Tax when
received by the Minnesota Trust and distributed to such Unitholder;

(3)To the extent that interest on certain Bonds, if any, which is includible
in the computation of "alternative minimum taxable income" for federal
income tax purposes, such interest will also be includible in the computation
of "alternative minimum taxable income" for purposes of the Minnesota
Alternative Minimum Tax imposed on individuals, estates and trusts;

(4)Each Unitholder of the Minnesota Trust will recognize gain or loss for
Minnesota Income Tax purposes if the Trustee disposes of a Bond (whether by
redemption, sale or otherwise) or if the Unitholder redeems or sells Units of
the Minnesota Trust to the extent that such a transaction results in a
recognized gain or loss to such Unitholder for federal income tax purposes;

(5)Tax basis reduction requirements relating to amortization of bond premium
may, under some circumstances, result in Unitholders realizing taxable gain
for Minnesota Income Tax purposes when their Units are sold or redeemed for an
amount equal to or less than their original cost;

(6)Proceeds, if any, paid under individual insurance policies obtained by
issuers of Bonds or the Trustee which represent maturing interest on defaulted
obligations held by the Trustee will be excludible from Minnesota net income
if, and to the same extent as, such interest would have been so excludible
from Minnesota net income if paid in the normal course by the issuer of the
defaulted obligation provided that, at the time such policies are purchased,
the amounts paid for such policies are reasonable, customary and consistent
with the reasonable expectation that the issuer of the bonds, rather than the
insurer, will pay debt service on the bonds; and

(7)To the extent that interest derived from the Minnesota Trust by a
Unitholder with respect to any Possession Bonds is excludible from gross
income for federal income tax purposes, such interest will not be subject to
the Minnesota Income Tax. As noted above, we have expressed no opinion as to
the treatment of interest on the Possession Bonds for purposes of the
Minnesota Corporate Franchise Tax or the Alternative Minimum Tax or whether it
is a factor in the computation of the Minimum Fee applicable to financial
institutions. Although a federal statute currently provides that bonds issued
by the Government of Puerto Rico, or by its authority, are exempt from all
state and local taxation, the Supreme Court of Minnesota has held that
interest earned on bonds issued by the Government of Puerto Rico may be
included in taxable net income for purposes of computing the Minnesota bank
excise tax. The State of Minnesota could apply the same reasoning in
determining whether interest on the Possession Bonds is subject to the taxes
listed above on which we express no opinion.

We have not examined any of the Bonds to be deposited and held in the
Minnesota Trust or the proceedings for the issuance thereof or the opinions of
bond counsel with respect thereto, and therefore express no opinions to the
exemption from State income taxes of interest on the Bonds if received
directly by a Unitholder. Chapman and Cutler has expressed no opinion with
respect to taxation under any other provision of Minnesota law. Ownership of
the Units may result in collateral Minnesota tax consequences to certain
taxpayers. Prospective investors should consult their tax advisors as to the
applicability of any such collateral consequences.

Missouri Trusts

The following discussion regarding constitutional limitations and the economy
of the State of Missouri is included for the purpose of providing general
information that may or may not affect issuers of the Bonds in Missouri.

Missouri's population was 5,117,000 according to the 1990 census of the United
States Bureau of the Census, which represented an increase of 200,000 or 4.1%
from the 1980 census of 4,917,000 inhabitants. Based on the 1990 population,
Missouri was the 15th largest state in the national and the third most
populous state west of the Mississippi River, ranking behind California and
Texas. In 1994, the State's population was estimated to be 5,278,000 by the
United States Bureau of the Census.

Agriculture in a significant component of Missouri's economy. According to
data of the United State Department of Agriculture, Missouri ranked 16th in
the nation in 1993 in the value of cash receipts from farm marketing, with
over $4.1 billion. Missouri is one of the nation's leading purebred livestock
producers. In 1993, sales of livestock and livestock products constituted
nearly 56% of the State's total agricultural receipts.

Missouri is one of the leading mineral producers in the Midwest, and ranked
15th nationally in 1993 in the production of nonfuel minerals. Total
preliminary value of mineral production in 1993 was approximately $832
million. The State continues to rank first in the nation in the production of
lead. Lead production in 1993 was valued at over $193 million. Missouri also
ranks first in the production of refractory clay, third in barite, fourth in
production of zinc and is a leading producer of lime, cement and stone.

The Missouri economy has produced exceptional job growth over the past three
years. Missouri total employment in November 1996 reached 2,768,620 jobs. This
is an increase of 13% or over 300,000 jobs since January of 1993. Missouri
personal income grew by 7.1% in Fiscal Year 1995 and by 5.4% in Fiscal Year
1996. The Missouri economy is expected to show solid growth in Fiscal Year
1997. Missouri personal income is predicted to grow approximately 4.25% with
unemployment remaining low.

According to data obtained by the Missouri Division of Employment Security, in
1996, over 2.5 million workers had nonagricultural jobs in Missouri. Over 27%
of these workers were employed in services, approximately 24% were employed in
wholesale and retail trade, and 16.7% were employed in manufacturing. By
October 1996, Missouri had added the most new jobs in non-farm employment of
all the mountain-plains states, with employment growth of 16,400. In the last
ten years, Missouri has experienced a significant increase in employment in
the service sector and in wholesale and retail trade. Missouri led the ten
mountain-plains states in adding the most service jobs between October 1995
and October 1996, at 23,400. From the third quarter of 1995 to the third
quarter of 1996, Missouri experienced total employment increase of 1.4% or
36,400 new jobs.

According to the United States Bureau of Labor Statistics, the 1995
unemployment rate in Missouri was 4.8% and the 1996 rate was 4.1%. This
compares favorably with a nationwide unemployment rate of 5.6% for 1995 and
5.4% for 1996.

In 1995, per capita personal income in Missouri was $21,819, a 5.7% increase
over the 1994 figure of $20,644. For the United States as a whole, per capita
income in 1995 was $23,208, a 5.3% increase over the 1994 per capita income of
$22,047. In 1995, Missouri had the largest pay gain for the mountain-plains
region, at 4.2%, outpacing the percentage gain for the nation.

Fiscal Year 1996 began with a beginning balance in the General Revenue Fund of
$383.38 million. Total resources available at the end of Fiscal Year 1996 were
$6,286.2 million. Total obligations were $5,946.9 million. The Budget
Stabilization Fund transfer to the General Revenue in Fiscal Year 1996 was
$3.865 million, leaving an ending balance in the General Revenue of $333.413
million.

Final calculations made pursuant to Article X of the Missouri Constitution
show that total state revenues for Fiscal Year 1996 exceeded the total state
revenue limit by $229.1 million. Therefore, in accordance with Article X, the
entire amount of excess revenues will be refunded to Missouri income taxpayers
in calendar year 1998. Litigation has delayed the refund of $147.2 million
triggered in Fiscal Year 1995.

Total General Revenue receipts with collections and transfers for fiscal years
1995 and 1996 were $5,443.4 million and $5,813.2 million, respectively. The
total General Revenue expenditures in Fiscal Year 1996 for the operating
budget were $5,287.5 million.

Estimated total resources available in the General Revenue Fund at the end of
Fiscal Year 1997 are estimated at $6,426.1 million. The Budget Stabilization
Fund Transfer to the General Revenue for Fiscal Year 1997 is estimated at
$86.55 million, leaving an ending balance in the General Revenue of $132.78
million. Total General Revenue resources for Fiscal Year 1998 are projected at
$6,500.8 million. Total obligations for Fiscal year 1998 are forecast at
$6,500.8 million, leaving a $0 ending balance.

The office of Administration projects that total state revenues will exceed
the total state revenue limit by approximately $155 million in Fiscal Year
1997, with a net revenue increase of 5.6%. The Office of Administration
projects that revenues will not exceed the revenue limit in Fiscal Year 1998
if the Governor's recommended tax reductions are enacted, although net revenue
growth is predicted at 5.4%. It is projected that total state revenues will be
approximately $140 million below the Article X revenue limit refund threshold
in Fiscal Year 2002.

Total General Revenue receipts with collections and transfers for fiscal year
1997 is estimated at $6,181.6 million. Fiscal year 1997 appropriations are
estimated at $5,941.3 million. For fiscal year 1998, before tax cuts, General
Revenue receipts are estimated at $6,498.9 million, and after proposed tax
cuts, the estimated is $6,281.1 million. The Governor has recommended
appropriations for the operating budget for Fiscal Year 1998 of $6,202.2
million.

For fiscal year 1998, the majority of revenues for the State of Missouri will
be obtained from individual income taxes (56.2%), sales and use taxes (25.1%),
corporate income taxes (8.1%), and corporate franchise taxes (1.2%). Major
expenditures for fiscal year 1998 include elementary and secondary education
(33.5%), human services (25.7%), higher education (13.7%), corrections and
public safety (7.9%) and desegregation (4.7%).

The fiscal year 1998 budget balances resources and obligations based on the
consensus revenue and refund estimate and an opening balance resulting from
revenue variance and anticipated spending in Fiscal Year 1996 as well as
various capital improvements in Fiscal Year 1997. The total general revenue
operating budget for fiscal year 1998 exclusive of desegregation is $5,026.8
million.

Missouri will continue to see a decline in the ongoing costs of desegregation
in Fiscal Year 1997. Beginning with a negotiated joint stipulation reached on
February 22, 1995, Governor Carnahan has attempted to reduce these annual
costs and end court supervision in the Kansas City case. This negotiation
yielded $22.5 million in total savings that were used for state aid to all
Missouri schools beginning in Fiscal year 1996. Following the U.S. Supreme
Court decision on June 12, 1995, further negotiations reduced costs an
additional $57.9 million, bringing the total savings allocated to the school
foundation formula to $80.4 million. In addition, one-time savings of $66.6
million have been redirected to Missouri schools through the formula. State
law requires that desegregation savings go toward the foundation formula for
all Missouri schools.

As of December 31, 1996, the state has spent 2.8 billion on the desegregation
cases in St. Louis and Kansas City. At the end of fiscal year 1997, that total
will rise to an estimated $2.9 billion. The appropriation for Fiscal Year 1997
was $262 million. The revised estimate for fiscal year 1997 is $257.9 million.
The state's obligation for desegregation capital improvement was paid for with
one-time revenue sources set aside in previous fiscal years. Ongoing costs are
primarily from the St. Louis magnet schools, general salary increases ordered
by the federal district court in Kansas City and the costs of voluntary
interdistrict transfers in both cases. These estimates are subject to
variables including actions of the school districts and participating
students, future court orders and the expenditure rates of the school
districts. If the court approves a settlement agreement in the Kansas City
case, State desegregation payments would phase out and end by Fiscal Year 2000.

Currently, each of the general obligation bonds issued by the State of
Missouri is rated "AAA" by Moody's Investors Service, Inc., Standard
and Poor's Corporation and Fitch's Investors Services. Missouri is one of only
six states that have this rating from all three rating organizations. Although
these ratings indicate that the State of Missouri is in relatively good
economic health, there can be, of course, no assurance that this will continue
or that particular bond issues may not be adversely affected by changes in the
State or local economic or political conditions.

Through voter-approved amendments to the state constitution, the people of
Missouri have authorized the issuance of state general obligation bonds for
three purposes: fourth state building bonds (approved in August 1994), water
pollution control bonds, and third state building bonds. As of January 1,
1997, $198,620,000 principal remains outstanding of the $200,000,000 issued
fourth state building bonds; and $137,315,000 principal remains outstanding of
the $349,494,240 issued water pollution control bonds (both amounts excluding
refunding issuances). With the final $75 million issuance on December 1, 1987,
all $600 million in third state building bonds authorized by Missouri voters
in 1982 were issued.

The foregoing information constitutes only a brief summary of some of the
general factors which may impact certain issuers of Bonds and does not purport
to be a complete or exhaustive description of all adverse conditions to which
the issuers of obligations held by the Missouri Trust are subject.
Additionally, many factors including national economic, social and
environmental policies and conditions, which are not within the control of the
issuers of the Bonds, could affect or could have an adverse impact on the
financial condition of the State and various agencies and political
subdivisions located in the State. The Sponsor is unable to predict whether or
to what extent such factors or other factors may affect the issuers of the
Bonds, the market value or marketability of the Bonds or the ability of the
respective issuers of the Bonds acquired by the Missouri Trust to pay interest
on or principal of the Bonds.

At the time of the closing for each Missouri Trust, Special Counsel for
Missouri tax matters rendered an opinion under then existing Missouri income
tax law applicable to taxpayers whose income is subject to Missouri income
taxation substantially to the effect that:

The assets of the Missouri IM-IT Trust will consist of debt obligations issued
by or on behalf of the State of Missouri (the "State" ) or counties,
municipalities, authorities or political subdivisions thereof (the "
Missouri Bonds" ) or by the Commonwealth of Puerto Rico, Guam and the
United States Virgin Islands (the "Possession Bonds" ) (collectively,
the "Bonds" ).

Neither the Sponsor nor its counsel have independently examined the Bonds to
be deposited in and held in the Missouri IM-IT Trust. However, although no
opinion is expressed herein regarding such matters, it is assumed that: (i)
the Bonds were validly issued, (ii) the interest thereon is excludable from
gross income for Federal income tax purposes and (iii) interest on the Bonds,
if received directly by a Unitholder, would be exempt from the Missouri income
tax applicable to individuals and corporations ("Missouri state income
tax" ). The opinion set forth below does not address the taxation of
persons other than full time residents of Missouri.

The Missouri IM-IT Trust is not an association taxable as a corporation for
Missouri income tax purposes, and each Unitholder of the Missouri IM-IT Trust
will be treated as the owner of a pro rata portion of the Missouri IM-IT Trust
and the income of such portion of the Missouri IM-IT Trust will be treated as
the income of the Unitholder for Missouri state income tax purposes.

Interest paid and original issue discount, if any, on the Bonds which would be
exempt from the Missouri state income tax if received directly by a Unitholder
will be exempt from the Missouri state income tax when received by the
Missouri IM-IT Trust and distributed to such Unitholder; however, no opinion
is expressed herein regarding taxation of interest paid and original issue
discount, if any, on the Bonds received by the Missouri IM-IT Trust and
distributed to Unitholders under any other tax imposed pursuant to Missouri
law, including but not limited to the franchise tax imposed on financial
institutions pursuant to Chapter 148 of the Missouri Statutes.

Each Unitholder of the Missouri IM-IT Trust will recognize gain or loss for
Missouri state income tax purposes if the Trustee disposes of a bond (whether
by redemption, sale, or otherwise) or if the Unitholder redeems or sells Units
of the Missouri IM-IT Trust to the extent that such a transaction results in a
recognized gain or loss to such Unitholder for Federal income tax purposes.
Due to the amortization of bond premium and other basis adjustments required
by the Internal Revenue Code, a Unitholder under some circumstances, may
realize taxable gain when his or her Units are sold or redeemed for an amount
less than or equal to their original cost.

Any insurance proceeds paid under policies which represent maturing interest
on defaulted obligations which are excludable from gross income for Federal
income tax purposes will be excludable from the Missouri state income tax to
the same extent as such interest would have been so excludable if paid by the
issuer of such Bonds held by the Missouri IM-IT Trust; however, no opinion is
expressed herein regarding taxation of interest paid and original issue
discount, if any, on the Bonds received by the Missouri IM-IT Trust and
distributed to Unitholders under any other tax imposed pursuant to Missouri
law, including but not limited to the franchise tax imposed on financial
institutions pursuant to Chapter 148 of the Missouri Statutes.

The Missouri state income tax does not permit a deduction of interest paid or
incurred on indebtedness incurred or continued to purchase or carry Units in
the Trust, the interest on which is exempt from such Tax.

The Missouri IM-IT Trust will not be subject to the Kansas City, Missouri
Earnings and Profits Tax and each Unitholder's share of income of the Bonds
held by the Missouri IM-IT Trust will not generally be subject to the Kansas
City, Missouri Earnings and Profits Tax or the City of St. Louis Earnings Tax
(except that no opinion is expressed in the case of certain Unitholders,
including corporations, otherwise subject to the St. Louis City Earnings Tax).

Counsel to the Sponsor has expressed no opinion with respect to taxation under
any other provision of Missouri law. Ownership of the Units may result in
collateral Missouri tax consequences to certain taxpayers. Prospective
investors should consult their tax advisers as to the applicability of any
such collateral consequences.

New Jersey Trusts

As described above, the New Jersey Trust consists of a portfolio of Bonds. The
Trust is therefore susceptible to political, economic or regulatory factors
affecting issuers of the Bonds. The following information provides only a
brief summary of some of the complex factors affecting the financial situation
in New Jersey (the "State" ) and is derived from sources that are
generally available to investors and is believed to be accurate. It is based
in part on information obtained from various State and local agencies in New
Jersey. No independent verification has been made of any of the following
information.

New Jersey is the ninth largest state in population and the fifth smallest in
land area. With an average of 1,062 people per square mile, it is the most
densely populated of all the states. The state's economic base is diversified,
consisting of a variety of manufacturing, construction and service industries,
supplemented by rural areas with selective commercial agriculture.
Historically, New Jersey's average per capita income has been well above the
national average, and in 1994 the State ranked second among states in per
capita personal income ($27,742).

The New Jersey Economic Policy Council, a statutory arm of the New Jersey
Department of Commerce and Economic Development, has reported in New Jersey
Economic Indicators, a monthly publication of the New Jersey Department of
Labor, Division of Labor Market and Demographic Research, that in 1988 and
1989 employment in New Jersey's manufacturing sector failed to benefit from
the export boom experienced by many Midwest states and the State's service
sectors, which had fueled the State's prosperity since 1982, lost momentum. In
the meantime, the prolonged fast growth in the State in the mid 1980s resulted
in a tight labor market situation, which has led to relatively high wages and
housing prices. This means that, while the incomes of New Jersey residents are
relatively high, the State's business sector has become more vulnerable to
competitive pressures.

The onset of the national recession (which officially began in July 1990
according to the National Bureau of Economic Research) caused an acceleration
of New Jersey's job losses in construction and manufacturing. In addition, the
national recession caused an employment downturn in such previously growing
sectors as wholesale trade, retail trade, finance, utilities and trucking and
warehousing. Reflecting the downturn, the rate of unemployment in the State
rose from a low of 3.6% during the first quarter of 1989 to an estimated 5.9%
in January 1997, which is higher than the national average of 5.4% in February
1997. Economic recovery is likely to be slow and uneven in New Jersey, with
unemployment receding at a correspondingly slow pace, due to the fact that
some sectors may lag due to continued excess capacity. In addition, employers
even in rebounding sectors can be expected to remain cautious about hiring
until they become convinced that improved business will be sustained. Also,
certain firms will continue to merge or downsize to increase profitability.

Debt Service. The primary method for State financing of capital projects is
through the sale of the general obligation bonds of the State. These bonds are
backed by the full faith and credit of the State tax revenues and certain
other fees are pledged to meet the principal and interest payments and if
provided, redemption premium payments, if any, required to repay the bonds. As
of June 30, 1995, there was a total authorized bond indebtedness of
approximately $9.48 billion, of which $3.65 billion was issued and
outstanding, $4.0 billion was retired (including bonds for which provision for
payment has been made through the sale and issuance of refunding bonds) and
$1.83 billion was unissued. The appropriation for the debt service obligation
on such outstanding indebtedness was $466.3 million for fiscal year 1996.

New Jersey's Budget and Appropriation System. The State operates on a fiscal
year beginning July 1 and ending June 30. At the end of fiscal year 1989,
there was a surplus in the State's general fund (the fund into which all State
revenues not otherwise restricted by statute are deposited and from which
appropriations are made) of $411.2 million. At the end of fiscal year 1990,
there was a surplus in the general fund of $1 million. At the end of fiscal
year 1991, there was a surplus in the general fund of $1.4 million. New Jersey
closed its fiscal year 1992 with a surplus of $760.8 million and fiscal year
1993 with a surplus of $937.4 million. It is estimated that New Jersey closed
its fiscal year 1994 with a surplus of $926.0 million and fiscal year 1995
with a surplus of $569 million.

In order to provide additional revenues to balance future budgets, to
redistribute school aid and to contain real property taxes, on June 27, 1990,
and July 12, 1990, Governor Florio signed into law legislation which was
estimated to raise approximately $2.8 billion in additional taxes (consisting
of $1.5 billion in sales and use taxes and $1.3 billion in income taxes), the
biggest tax hike in New Jersey history. There can be no assurance that
receipts and collections of such taxes will meet such estimates.

The first part of the tax hike took effect on July 1, 1990, with the increase
in the State's sales and use tax rate from 6% to 7% and the elimination of
exemptions for certain products and services not previously subject to the
tax, such as telephone calls, paper products (which has since been
reinstated), soaps and detergents, janitorial services, alcoholic beverages
and cigarettes. At the time of enactment, it was projected that these taxes
would raise approximately $1.5 billion in additional revenue. Projections and
estimates of receipts from sales and use taxes, however, have been subject to
variance in recent fiscal years.

The second part of the tax hike took effect on January 1, 1991, in the form of
an increased state income tax on individuals. At the time of enactment, it was
projected that this increase would raise approximately $1.3 billion in
additional income taxes to fund a new school aid formula, a new homestead
rebate program and state assumption of welfare and social services costs.
Projections and estimates of receipts from income taxes, however, have also
been subject to variance in recent fiscal years. Under the legislation, income
tax rates increased from their previous range of 2% to 3.5% to a new range of
2% to 7%, with the higher rates applying to married couples with incomes
exceeding $70,000 who file joint returns, and to individuals filing single
returns with incomes of more than $35,000.

The Florio administration had contended that the income tax package will help
reduce local property tax increases by providing more state aid to
municipalities. Under the income tax legislation the State will assume
approximately $289 million in social services costs that previously were paid
by counties and municipalities and funded by property taxes. In addition,
under the new formula for funding school aid, an extra $1.1 billion was
proposed to be sent by the State to school districts beginning in 1991, thus
reducing the need for property tax increases to support education programs.

Effective July 1, 1992, the State's sales and use tax rate decreased from 7%
to 6%. Effective January 1, 1994, an across-the-board 5% reduction in the
income tax rates was enacted and effective January 1, 1995 further reductions
ranging from 1% up to 10% in income tax rates took effect. Governor Whitman
recently signed into law further reductions up to 15% for some taxpayers
effective January 1, 1996, completing her campaign promise to reduce income
taxes by up to 30% for most taxpayers within three years.

On June 28, 1996, Governor Whitman signed the New Jersey Legislature's $16.5
billion budget for Fiscal Year 1997. The balanced budget, which includes $550
million in surplus, is slightly less than the 1996 budget. Whether the State
can achieve a balanced budget depends on its ability to enact and implement
expenditure reductions and to collect the estimated tax revenues.

Litigation. The State is a party in numerous legal proceedings pertaining to
matters incidental to the performance of routine governmental operations. Such
litigation includes, but is not limited to, claims asserted against the State
arising from alleged torts, alleged breaches of contracts, condemnation
proceedings and other alleged violations of State and Federal laws. Included
in the State's outstanding litigation are cases challenging the following: the
funding of teachers' pension funds, the adequacy of medicaid reimbursement for
hospital services, the hospital assessment authorized by the Health Care
Reform Act of 1992, various provisions, and the constitutionality of the Fair
Automobile Insurance Reform Act of 1990, the State's role in a consent order
concerning the construction of a resource facility in Passaic County, actions
taken by the New Jersey Bureau of Securities against an individual, the
State's actions regarding alleged chromium contamination of State-owned
property in Hudson County, the issuance of emergency redirection orders and a
draft permit by the Department of Environmental Protection and Energy, refusal
of the State to share with Camden County federal funding the State recently
received for disproportionate share hospital payments made to county
psychiatric facilities, and the constitutionality of annual A-901 hazardous
and solid waste licensure renewal fees collected by the Department of
Environmental Protection and Energy. Adverse judgments in these and other
matters could have the potential for either a significant loss of revenue or a
significant unanticipated expenditure by the State.

At any given time, there are various numbers of claims and cases pending
against the State, State agencies and employees seeking recovery of monetary
damages that are primarily paid out of the fund created pursuant to the New
Jersey Tort Claims Act. In addition, at any given time, there are various
numbers of contract claims against the State and State agencies seeking
recovery of monetary damages. The State is unable to estimate its exposure for
these claims.

Debt Ratings. For many years, both Moody's Investors Service, Inc. and
Standard and Poor's Corporation rated New Jersey general obligation bonds "
Aaa" and "AAA" , respectively. On July 3, 1991, however, Standard
and Poor's Corporation downgraded New Jersey general obligation bonds to "
AA+." On June 4, 1992, Standard and Poor's Corporation placed New Jersey
general obligation bonds on CreditWatch with negative implications, citing as
its principal reason for its caution the unexpected denial by the federal
government of New Jersey's request for $450 million in retroactive Medicaid
payments for psychiatric hospitals. These funds were critical to closing a $1
billion gap in the State's $15 billion budget for fiscal year 1992 which ended
on June 30, 1992. Under New Jersey state law, the gap in the budget was
required to be closed before the new budget year began on July 1, 1992.
Standard and Poor's suggested the State could close fiscal 1992's budget gap
and help fill fiscal 1993's hole by a reversion of $700 million of pension
contributions to its general fund under a proposal to change the way the State
calculates its pension liability.

On July 6, 1992, Standard and Poor's Corporation reaffirmed its "AA+"
rating for New Jersey general obligation bonds and removed the debt from its
CreditWatch list, although it stated that New Jersey's long-term financial
outlook was negative. Standard and Poor's Corporation was concerned that the
State was entering fiscal 1993 with only a $26 million surplus and remained
concerned about whether the State economy would recover quickly enough to meet
lawmakers' revenue projections. It also remained concerned about the recent
federal ruling leaving in doubt how much the State was due in retroactive
Medicaid reimbursements and a ruling by a federal judge, now on appeal, of the
State's method for paying for uninsured hospital patients. However, on July
27, 1994, Standard and Poor's announced that it was changing the State's
outlook from negative to stable due to a brightening of the State's prospects
as a result of Governor Whitman's effort to trim spending and cut taxes,
coupled with an improving economy. Standard and Poor's reaffirmed its "
AA+" rating at the same time.

On August 24, 1992, Moody's Investors Service, Inc. downgraded New Jersey
general obligation bonds to "Aa1," stating that the reduction
reflected a developing pattern of reliance on nonrecurring measures to achieve
budgetary balance, four years of financial operations marked by revenue
shortfalls and operating deficits, and the likelihood that serious financial
pressures will persist. On August 5, 1994, Moody's reaffirmed its "Aa1"
rating, citing on the positive side New Jersey's broad-based economy, high
income levels, history of maintaining a positive financial position and
moderate (albeit rising) debt ratios, and on the negative side, a continued
reliance on one-time revenue and a dependence on pension-related savings to
achieve budgetary balance.

At the time of the closing for each New Jersey Trust, Special Counsel to each
New Jersey Trust for New Jersey tax matters rendered an opinion under then
existing New Jersey income tax law applicable to taxpayers whose income is
subject to New Jersey income taxation substantially to the effect that:

The New Jersey IM-IT Trust will be recognized as a trust and not an
association taxable as a corporation. The New Jersey IM-IT Trust will not be
subject to the New Jersey Corporation Business Tax or the New Jersey
Corporation Income Tax.

With respect to the non-corporate Unitholders who are residents of New Jersey,
the income of the New Jersey IM-IT Trust which is allocable to each such
Unitholder will be treated as the income of such Unitholder under the New
Jersey Gross Income Tax. Interest on the underlying Bonds which would be
exempt from New Jersey Gross Income Tax if directly received by such
Unitholder will retain its status as tax-exempt interest when received by the
New Jersey IM-IT Trust and distributed to such Unitholder. Any proceeds paid
under the insurance policy issued to the Trustee of the New Jersey IM-IT Trust
with respect to the Bonds or under individual policies obtained by issuers of
Bonds which represent maturing interest on defaulted obligations held by the
Trustee will be exempt from New Jersey Gross Income Tax if, and to the same
extent as, such interest would have been so exempt if paid by the issuer of
the defaulted obligations.

A non-corporate Unitholder will not be subject to the New Jersey Gross Income
Tax on any gain realized either when the New Jersey IM-IT Trust disposes of a
Bond (whether by sale, exchange, redemption, or payment at maturity), when the
Unitholder redeems or sells his Units or upon payment of any proceeds under
the insurance policy issued to the Trustee of the New Jersey IM-IT Trust with
respect to the Bonds or under individual policies obtained by issuers of Bonds
which represent maturing principal on defaulted obligations held by the
Trustee. Any loss realized on such disposition may not be utilized to offset
gains realized by such Unitholder on the disposition of assets the gain on
which is subject to the New Jersey Gross Income Tax.

Units of the New Jersey IM-IT Trust may be taxable on the death of a
Unitholder under the New Jersey Transfer Inheritance Tax Law or the New Jersey
Estate Tax Law.

If a Unitholder is a corporation subject to the New Jersey Corporation
Business Tax or New Jersey Corporation Income Tax, interest from the Bonds in
the New Jersey IM-IT Trust which is allocable to such corporation will be
includable in its entire net income for purposes of the New Jersey Corporation
Business Tax or New Jersey Corporation Income Tax, less any interest expense
incurred to carry such investment to the extent such interest expense has not
been deducted in computing Federal taxable income. Net gains derived by such
corporation on the disposition of the Bonds by the New Jersey IM-IT Trust or
on the disposition of its Units will be included in its entire net income for
purposes of the New Jersey Corporation Business Tax or New Jersey Corporation
Income Tax. Any proceeds paid under the insurance policy issued to the Trustee
of the New Jersey IM-IT Trust with respect to the Bonds or under individual
policies obtained by issuers of Bonds which represent maturing interest or
maturing principal on defaulted obligations held by the Trustee will be
included in its entire net income for purposes of the New Jersey Corporation
Business Tax or New Jersey Corporation Income Tax if, and to the same extent
as, such interest or proceeds would have been so included if paid by the
issuer of the defaulted obligations.

New Mexico Trusts

New Mexico is the nation's fifth largest State in terms of geographic size. As
of 1989 the federal government owned 34.1% of New Mexico's land, State
government, 11.8% and Indian tribes, 8.3%, leaving 45.8% in private ownership.
New Mexico has 33 counties and 99 incorporated areas.

Major industries in the State are energy resources, services, construction,
trade, tourism, agriculture-agribusiness, manufacturing, mining, and
government. From 1994-95, the value of construction contracts increased 6.9%
to $2.1 billion. In 1995, the total of gas and oil sales was $3.12 billion,
however, this was a 9.7% decrease from 1994. In 1994, the value of mineral
production (i.e., crude petroleum, natural gas, uranium, and coal) was
approximately $5.05 billion. Major federally funded scientific research
facilities at Los Alamos, Albuquerque and White Sands are also a notable part
of the State's economy.

The State has a thriving tourist industry. In 1994, there were approximately
2.29 million visits to national parks and about 4.9 million visits to State
parks. According to a 1991 estimate by the U.S. Travel Data Center, the
State's tourist industry generated about $2.3 billion in revenue and more
than 38,370 jobs. However, 1995 was a slower year for tourism and travel in
New Mexico. Total gross receipts for hotels and other lodging places dropped
1.4%, compared with a 5.6% gain in 1994. Air travel was also down 0.4%. In
addition, visits to New Mexico's national parks and monuments, affected
partly by federal government shutdowns in the fall and winter, dropped 1.7%.

Agriculture is a major part of the State's economy, producing $1.521 billion
in 1995. This was a 0.4% decrease from 1994. As a high, relatively dry region
with extensive grasslands, the State is ideal for raising cattle, sheep, and
other livestock. Livestock receipts dropped 3.0% from 1994-95, to $1.066
billion due to significant declines in prices for beef cattle and calves.
Because of irrigation and a variety of climatic conditions, the State's
farmers are able to produce a diverse assortment of quality products. The
State's farmers are major producers of alfalfa hay, wheat, chile peppers,
cotton, fruits, and pecans. Crop revenues in 1995 rose 6.4% to $455 million.
Agricultural businesses include chile canneries, wineries, alfalfa pellets,
chemical and fertilizer plants, farm machinery, feed lots, and commercial
slaughter plants.

Job growth in New Mexico in 1993 was the highest since 1984. However, in 1995,
the total employment growth rate was 1.7%, less than half the 1994 growth rate
of 4.2%, while the unemployment rate stabilized, remaining level at 6.3% in
1994 and 1995 after reaching a seven year high of 7.7% in 1993. The fact that
the State's 1995 unemployment rate is higher than the national rate of 5.6%
can be partially explained by population growth in New Mexico that is well in
excess of the national average. New Mexico's population growth is 1.8%, about
twice the national rate. Job growth in New Mexico has increased migration
which has kept the unemployment rate higher than it otherwise would have been.
New Mexico ranks 5th in the nation in unemployment as of April 1996, up from
10th highest in April 1995.

The New Mexico economy recorded solid gains in 1995, but the rate of expansion
had slowed by the end of the year. Nonagricultural wage and salary employment
rose 4.9%, or 32,500 jobs, for all of 1995, reaching 689,700 jobs. This was
about the same as the 1994 increase (5.0%) and marked the third year in a row
that job growth surpassed 4%. Total personal income was up 8.1% to $30.4
billion, exceeding the 6.9% gain in 1994, and the U.S. gain of 6.0%. State job
growth and personal income gain have exceeded the national rate since 1988.

However, the rapid growth of New Mexico's population has had a negative
impact on per capita income. The 1995 per capita income of $18,055 was
approximately 79% of the national figure of $22,788 and ranked 48th out of the
50 states and the District of Columbia. Yet, New Mexico's per capita income
growth rate of 6.0% was 1.0% above the national rate and ranked ninth
nationally.

Construction, services and trade were the job growth leaders in 1995.
Construction employment rose by 4,200 jobs, or 10.1%. Although this was a
sizable jump, it was down from the previous annual increase, 16.5%. The
advance in services increased by 15,200 jobs, or 8.6%, while growth in trade
employment rose 5.5%, or 8,600 jobs. Transportation and public utilities
placed fourth, with an increase of 3.7%. Finance, insurance and real estate
recorded gains of only 1.7%. Government and manufacturing were the weakest
industries, at 1.3% each. Mining employment remained unchanged at 15,700 for
both 1994 and 1995.

The state's economy will still expand at a healthy pace in 1996, but not as
fast as last year. The slowing trend is expected to continue into 1997.

From Fiscal Year 1989 through Fiscal Year 1992, the annual base revenue growth
in New Mexico (recurring revenues adjusted to exclude legislative changes or
extraordinary receipts) was in the range of 3.0% to 4.5%. In Fiscal Year 1993,
base revenue growth was about 5.5%, exclusive of gains in the volatile
energy-related areas. For Fiscal Year 1994, base revenues were forecast to
increase by 6.5%, reflecting the State's economic strength. The outlook was
for stronger economic and revenue growth to continue for several years.

Because of this strong revenue growth, cash balances and recurring revenues
were substantially higher in 1994 than expected from 1993. Prior to 1994
appropriations, New Mexico's Department of Finance and Administration
projected the Fiscal Year 1994 ending General Fund balances to be about $300
million, which was almost 13% of total appropriations. Since the State
typically tries to maintain a 5% reserve ration, this anticipated total was
two and one-half times the usual reserve objective. Thus, substantial funds
were available for nonrecurring appropriations or tax cuts. Total recurring
expenditures for Fiscal Year 1994 were $2,368.8 million. Total general fund
revenue for 1994 was $2.559 billion.

Reflecting strength in the economy and sufficient revenues, the 1994
Legislature cut General Fund revenues for Fiscal Year 1995 by almost $60
million by restoring low income/personal income tax rebates, lowering personal
income tax rates, especially for married filers, suspending 2 cents of the
gasoline tax for a 3-year period and diverting the governmental gross receipts
tax to an infrastructure fund. Scheduled personal income tax rate cuts in 1995
and 1996 were to reduce personal income tax revenues an additional $25 million
by Fiscal Year 1997.

The fiscal plan adopted by the 1994 legislature overstated fiscal year 1995
and 1996 general fund revenue by more than $100 million. While state revenue
was growing, it was not growing as fast as estimated. In September of 1995,
the Governor ordered a reduction of general fund allotments to all state
agencies.

Total general fund revenue for FY95 was $2.630 billion, a 2.7% increase from
FY94. Recurring revenue for FY95 totaled $2.643 billion, an increase of 3.3%
from FY94. Recurring appropriations for Fiscal Year 1995 totaled $2.623
billion, up 9.3% from Fiscal Year 1994. Total expenditures for FY95 were
$2.715 billion, 5.0% higher than 1994, with a total ending balance of $58.822
million.

For the Fiscal Year ending June 30, 1996, recurring revenue totaled $2.809
billion, an increase of 6.3% over the previous fiscal year. Total General Fund
Revenue was $2.757 billion, up 4.9% from FY95. The FY96 revenue was below a
December 1995 estimate by approximately $2 million, or 0.1%. In general,
weakness in broad-based taxes was offset by strength in revenue related to the
production of natural gas and crude oil. Strength relative to the estimate was
also evident for interest earnings, miscellaneous receipts and reversions.

Preliminary results for FY96 show recurring appropriations at $2.77 billion,
up 5.7% from the previous fiscal year. Nonrecurring appropriations for FY96
were $22 million, down 76% from FY95. The net transfer necessary from the
operating reserve is $19.4 million and is within the $30 million transfer
authority authorized by the 1996 legislature.

The 1996 legislature also established the risk reserve fund within the general
fund. General fund balances including the risk reserve fund are projected to
total $144 million. Without the risk reserve, balances would be $28.1 million.
The FY96 balance in the operating reserve is $21.6 million, or only 0.8% of
FY96 total revenue.

The state support reserve received a $3.37 million transfer from public school
support and the ending balance is $4.7 million for FY96.

Disaster allotments from the appropriation contingency fund totaled over $5.4
million, primarily due to the drought and the severe wildfires experienced
during 1996 and the ending balance in the appropriation contingency fund is a
$500,000 due to a reversion.

For fiscal year 1997, the Governor proposed a budget which took into
consideration spending requirements in Medicaid (an 18.2% increase, or $30.9
million) and in the criminal justice system (a 5.7% increase, or $6.9
million), and placed a high priority on public school funding (a 2.0%
increase, or $26.2 million).

Estimated results for FY97 show general fund total receipts of $2.995 billion
and recurring appropriations of $2.862 billion with expenditures totaling
$2.96 billion. The estimated FY97 total ending balance is $175 million, an
increase of 23% over the preliminary FY96 results of $144 million.

The foregoing information constitutes only a brief summary of information
about New Mexico. It does not describe the financial difficulties which may
impact certain issuers of Bonds and does not purport to be a complete or
exhaustive description of adverse conditions to which the issuers in the New
Mexico IM-IT Trust are subject. Additionally, many factors including national
economic, social and environmental policies and conditions, which are not
within the control of the issuers of Bonds, could have an adverse impact on
the financial condition of the State and various agencies and political
subdivisions located in the State. The Sponsor is unable to predict whether or
to what extent such factors or other factors may affect the issuers of Bonds,
the market value or marketability of the Bonds or the ability of the
respective issuers of the Bonds acquired by the New Mexico IM-IT Trust to pay
interest on or principal of the bonds.

For a discussion of the Federal tax status of income earned on New Mexico
Trust Units, see "Other Matters--Federal Tax Status" .

The assets of the New Mexico IM-IT Trust will consist of interest-bearing
obligations issued by or on behalf of the State of New Mexico ("New
Mexico" ) or counties, municipalities, authorities or political
subdivisions thereof (the "New Mexico Bonds" ), and by or on behalf of
the government of Puerto Rico, the government of the Guam, or the government
of the Virgin Islands (collectively the "Possession Bonds" )
(collectively the New Mexico Bonds and the Possession Bonds shall be referred
to herein as the "Bonds" ) the interest on which is expected to qualify
as exempt from New Mexico income taxes.

Neither the Sponsor nor its counsel have independently examined the Bonds to
be deposited in and held in the New Mexico IM-IT Trust. However, although no
opinion is expressed herein regarding such matters, it is assumed that: (i)
the Bonds were validly issued, (ii) the interest thereon is excludable from
gross income for federal income tax purposes and (iii) interest on the Bonds,
if received directly by a Unitholder, would be exempt from the New Mexico
income taxes applicable to individuals and corporations (collectively, the
"New Mexico State Income Tax" ). At the respective times of issuance of
the Bonds, opinions relating to the validity thereof and to the exemption of
interest thereon from federal income tax were rendered by bond counsel to the
respective issuing authorities. In addition, with respect to the Bonds, bond
counsel to the issuing authorities rendered opinions as to the exemption of
interest from the New Mexico State Income Tax. Neither the Sponsor nor its
counsel has made any review for the New Mexico IM-IT Trust of the proceedings
relating to the issuance of the Bonds or of the bases for the opinions
rendered in connection therewith. The opinion set forth below does not address
the taxation of persons other than full time residents of New Mexico.

In the opinion of Chapman and Cutler, Special Counsel to the Fund for New
Mexico tax matters, under existing law as of the date of this Prospectus and
based upon the assumptions set forth above:

The New Mexico IM-IT Trust will not be subject to tax under the New Mexico
State Income Tax.

Income on the Bonds which is exempt from the New Mexico State Income Tax when
received by the New Mexico IM-IT Trust, and which would be exempt from the New
Mexico State Income Tax if received directly by a Unitholder, will retain its
status as exempt from such tax when received by the New Mexico IM-IT Trust and
distributed to such Unitholder provided that the New Mexico Trust complies
with the reporting requirements contained in the New Mexico State Income Tax
regulations.

To the extent that interest income derived from the New Mexico IM-IT Trust by
a Unitholder with respect to Possession Bonds is excludable from gross income
for federal income tax purposes pursuant to 48 U.S.C. Section 745, 48 U.S.C.
Section 1423a or 48 U.S.C. Section 1403, such interest income will not be
subject to New Mexico State Income Tax.

Each Unitholder will recognize gain or loss for New Mexico Income Tax purposes
if the Trustee disposes of a bond (whether by redemption, sale or otherwise)
or if the Unitholder redeems or sells Units of the New Mexico IM-IT Trust to
the extent that such a transaction results in a recognized gain or loss to
such Unitholder for federal income tax purposes.

The New Mexico State Income Tax does not permit a deduction of interest paid
on indebtedness or other expenses incurred (or continued) in connection with
the purchase or carrying of Units in the New Mexico IM-IT Trust to the extent
that interest income related to the ownership of Units is exempt from the New
Mexico State Income Tax.

Investors should consult their tax advisors regarding collateral tax
consequences under New Mexico law relating to the ownership of the Units,
including, but not limited to, the inclusion of income attributable to
ownership of the Units in "modified gross income" for purposes of
determining eligibility for and the amount of the low income comprehensive tax
rebate, the child day care credit, and the elderly taxpayers' property tax
rebate and the applicability of other New Mexico taxes, such as the New Mexico
estate tax.

New York Trusts

A resident of New York State (or New York City) will be subject to New York
State (or New York City) personal income tax with respect to gains realized
when New York Obligations held in the New York IM-IT Trust are sold, redeemed
or paid at maturity or when his Units are sold or redeemed, such gain will
equal the proceeds of sale, redemption or payment less the tax basis of the
New York Obligation or Unit (adjusted to reflect (a) the amortization of
premium or discount, if any, on New York Obligations held in the Trust, (b)
accrued original issue discount, with respect to each New York Obligation
which, at the time the New York Obligation was issued had original issue
discount, and (c) the deposit of New York Obligations with accrued interest in
the Trust after the Unitholder's settlement date).

Interest or gain from the New York IM-IT Trust derived by a Unitholder who is
not a resident of New York State (or New York City) will not be subject to New
York State (or New York City) personal income tax, unless the Units are
property employed in a business, trade, profession or occupation carried on in
New York State (or New York City).

Amounts paid on defaulted New York Obligations held by the Trustee under
policies of insurance issued with respect to such New York Obligations will be
excludable from income for New York State and New York City income tax
purposes, if and to the same extent as, such interest would have been
excludable if paid by the respective issuer.

For purposes of the New York State and New York City franchise tax on
corporations, Unitholders which are subject to such tax will be required to
include in their entire net income any interest or gains distributed to them
even though distributed in respect of New York obligations.

If borrowed funds are used to purchase Units in the Trust, all (or part) of
the interest on such indebtedness will not be deductible for New York State
and New York City tax purposes. The purchase of Units may be considered to
have been made with borrowed funds even though such funds are not directly
traceable to the purchase of Units in any New York Trust.

The Portfolio of the New York IM-IT Trust includes obligations issued by New
York State (the "State" ), by its various public bodies (the "
Agencies" ), and/or by other entities located within the State, including
the City of New York (the "City" ).

Some of the more significant events relating to the financial situation in New
York are summarized below. This section provides only a brief summary of the
complex factors affecting the financial situation in New York and is based in
part on Official Statements issued by, and on other information reported by
the State, the City and the Agencies in connection with the issuance of their
respective securities.

There can be no assurance that future statewide or regional economic
difficulties, and the resulting impact on State or local government finances
generally, will not adversely affect the market value of New York Municipal
Obligations held in the portfolio of the Trust or the ability of particular
obligors to make timely payments of debt service on (or relating to) those
obligations.

The State has historically been one of the wealthiest states in the nation.
For decades, however, the State economy has grown more slowly than that of the
nation as a whole, gradually eroding the State's relative economic affluence.
Statewide, urban centers have experienced significant changes involving
migration of the more affluent to the suburbs and an influx of generally less
affluent residents. Regionally, the older Northeast cities have suffered
because of the relative success that the South and the West have had in
attracting people and business. The City has also had to face greater
competition as other major cities have developed financial and business
capabilities which make them less dependent on the specialized services
traditionally available almost exclusively in the City.

The State has for many years had a very high state and local tax burden
relative to other states. The 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. However, the State's 1995-96 budget
reflected significant actions to reduce the burden of State taxation,
including adoption of a 3-year, 20 percent reduction in the State's personal
income tax. During 1996-97, New York led the nation in tax cuts, at 54.1%,
bringing the total value of tax reductions in effect for the 1997 year to over
$6 billion. When measured as a percentage of personal income, state-imposed
taxes in New York should be below the national median in 1997. The budget for
fiscal year 1997-98 reflects an additional $170 million in tax reductions.

A national recession commenced in mid-1990. The downturn continued throughout
the State's 1990-91 fiscal year and was followed by a period of weak economic
growth during the 1991 calendar year. Economic recovery started considerably
later in the State than in the nation as a whole due in part to the
significant retrenchment in the banking and financial services industries,
cutbacks in defense spending, downsizing by several major corporations, and an
oversupply of office buildings. In the last few years, New York has shown
signs of economic resurgence. Since 1994, New York has jumped from 15th to 6th
in terms of total private sector employment growth compared to other states,
gaining 140,000 private sector jobs since December 1994, despite banking
layoffs and closure of a major automotive plant. Overall employment growth was
close to 0.7%, almost 60,000 jobs, for 1996. National employment growth in
1996 was 2.0%. The New York economy in 1997 is expected to grow at about the
same rate as in 1996. Many uncertainties exist in forecasts of both the
national and State economies and there can be no assurance that the State
economy will perform at a level sufficient to meet the State's projections of
receipts and disbursements.

1997-98 Fiscal Year. The Governor presented the recommended Executive Budget
for the 1997-98 fiscal year in January 1997. The 1997-98 budget gap is smaller
than the previous two fiscal year projections. The baseline budget forecast
produced an estimated $2.3 billion budget imbalance, before reflecting any
actions taken by the Governor to produce a balanced 1997-98 Financial Plan.
Projections of baseline revenue growth showed a decline of almost $2 billion,
reflecting the loss of non-recurring receipts used in 1996-97 and
implementation of previously enacted tax reduction programs.

The 1996-97 surplus of $943 million reduced the 1997-98 budget gap to $1.3
billion. Proposals included in the Executive Budget for 1997-98 close this
remaining gap, reducing State spending for the third straight year, and
permitting three new tax reduction proposals: the $1.7 billion, multi-year
property tax reduction portion of STAR (School Tax Relief initiative); a
three-year phased reduction in the estate and gift tax; and a $50 million
reserve for additional targeted job-creating tax reductions. The budget also
makes a significant investment in school aid -- a proposed increase of $302
million on a school year basis as the first step toward implementing the $1.7
billion school aid portion of STAR.

The 1997-98 Financial Plan includes approximately $66 million in non-recurring
resources, or only 0.2% of the General Fund budget -- the lowest level in more
than a decade. As compared to 1996-97, non-recurring resources are a much
smaller component of the budget: down over $1 billion from last year's
adopted budget. The loss of these resources in future years is more than
offset by recommendations which provide higher annualized savings in 1998-99
and beyond.

Assuming these gap-closing actions, the Financial Plan projects receipts of
$32.9 billion and spending of $32.8 billion in fiscal year 1997-98, with a
required deposit of $15 million to the Tax Stabilization Reserve Fund (TSRF)
and an increase of $24 million in the Contingency Reserve Fund (CRF). The
closing fund balance in the General Fund is projected to be $332 million, the
largest amount ever on deposit.

1996-97 Fiscal Year. The 1996-97 State Financial Plan projected General Fund
receipts and transfers from other funds at $32.966 billion and disbursements
and transfers to other funds at $32.895 billion. The 1996-97 General Fund
Financial Plan continues to be balanced, with a projected surplus of $1.3
billion. This will be the second consecutive material budget surplus generated
by the Governor's administration. Of this amount, $250 million is being used
to accelerate the last portion of the Governor's personal income tax cut
through changes to the 1997 withholding tables. This raises taxpayers'
current take-home pay rather than issuing larger refunds in 1998. Of the
remainder, $943 million is being used to help close the projected 1997-98
budget gap, and $65 million is being deposited into the Tax Stabilization
Reserve Fund (the State's "rainy day" fund) as provided by the
Constitution. This is the maximum amount that can be deposited, and increases
the size of that fund to $332 million by the end of 1997-98, the highest
balance ever achieved.

The surplus results primarily from growth in projected receipts. As compared
to the enacted budget, revenues increased by more than $1 billion, while
disbursements fell by $228 million. These changes from original Financial Plan
projections reflect actual results through December 1996 as well as modified
economic and caseload projections for the balance of the fiscal year.

The General Fund closing balance is expected to be $358 million at the end of
1996-97. Of this amount, $317 million will be on deposit in the TSRF, while
another $41 million will remain on deposit in the CRF. The TSRF has an opening
balance of $287 million, supplemented by a required payment of $15 million and
an extraordinary deposit of $65 million from surplus 1996-97 monies. The $9
million on deposit in the Revenue Accumulation Fund will be drawn down as
planned. The previously planned deposit of $85 million to the CRF, projected
earlier to be received from contractual efforts to maximize Federal revenue,
is not expected to materialize this year.

Future Fiscal Years. There can be no assurance that the State will not face
substantial potential budget gaps in the future resulting from a significant
disparity between tax revenues projected from a lower recurring receipts base
and the spending required to maintain State programs at current levels. To
address any potential budgetary imbalance, the State may need to take
significant actions to align recurring receipts and disbursements.

Indebtedness. As of March 31, 1995, the total amount of long-term State
general obligation debt authorized but unissued stood at $1.789 billion. As of
the same date, the State had approximately $5.181 billion in general
obligation debt and $149.3 million of Bond Anticipation Notes ("BANS" )
outstanding.

As of March 31, 1995, $17.980 billion of bonds, issued in connection with
lease-purchase and contractual obligation financings of State capital
programs, were outstanding. The total amount of outstanding State-supported
debt as of March 31, 1995 was $27.913 billion. Total State-related debt (which
includes the State-supported debt, moral obligation and certain other
financings and State-guaranteed debt) was $36.1 billion.

The State projects that its borrowings for capital purposes during the
State's 1995-96 fiscal year will consist of $248 million in general obligation
bonds and BANS and $186 million in general obligation commercial paper. The
State's commercial paper program is expected to have an average of $287
million outstanding during 1997-98. The projection of the State regarding its
borrowings for the 1995-96 fiscal year may change if actual receipts fall
short of State projections or if other circumstances require.

In June 1990, legislation was enacted creating the "New York Local
Government Assistance Corporation" ("LGAC" ), a public benefit
corporation empowered to issue long-term obligations to fund certain payments
to local governments traditionally funded through the State's annual seasonal
borrowing. As of June 1995, LGAC has issued its bonds to provide net proceeds
of $4.7 billion. LGAC has been authorized to issue additional bonds to provide
net proceeds of up to $529 million during the State's 1995-96 fiscal year to
redeem notes sold in June 1995. The LGAC program was completed in 1995-96 with
the issuance of the last installment of authorized bond sales.

The Legislature passed a proposed constitutional amendment which would permit
the State subject to certain restrictions to issue revenue bonds without voter
referendum. Among the restrictions proposed is that such bonds would not be
backed by the full faith and credit of the State. Changes to the proposed
amendment may be submitted, which before becoming effective, must be passed
again by the next separately-elected Legislature and approved by voter
referendum at a general election. The earliest such an amendment could take
effect would be in November 1995.

Ratings. Moody's rating of the State's general obligation bonds stood at A as
of September 1995, and S&P's rating stood at A-. Previously, Moody's lowered
its rating to A on June 6, 1990, its rating having been A1 since May 27, 1986.
S&P lowered its rating from A to A- on January 13, 1992. S&P's previous
ratings were A from March 1990 to January 1992, AA- from August 1987 to March
1990 and A+ from November 1982 to August 1987.

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.

In response to the City's fiscal crisis in 1975, the State took a number of
steps to assist the City in returning to fiscal stability. Among other
actions, the State Legislature (i) created MAC to assist with long-term
financing for the City's short-term debt and other cash requirements and (ii)
created the State Financial Control Board (the "Control Board" ) to
review and approve the City's budgets and City four-year financial plans (the
financial plans also apply to certain City-related public agencies (the "
Covered Organizations" )).

Over the past three years, the rate of economic growth in the City has slowed
substantially, and the City's economy is currently in recession. The Mayor is
responsible for preparing the City's four-year financial plan, including the
City's current financial plan. The City Comptroller has issued reports
concluding that projected revenues may be less and future expenditures may be
greater than those forecast in the financial plan.

Pursuant to State law, the City prepares a four-year annual financial plan,
which is reviewed and revised on a quarterly basis and which includes the
City's capital, revenue and expense projections. The City is required to
submit its financial plans to review bodies, including the Control Board. If
the City were to experience certain adverse financial circumstances, including
the occurrence or the substantial likelihood and imminence of the occurrence
of an annual operating deficit of more than $100 million or the loss of access
to the public credit markets to satisfy the City's capital and seasonal
financial requirements, the Control Board would be required by State law to
exercise certain powers, including prior approval of City financial plans,
proposed borrowings and certain contracts.

The City depends on the State for State aid both to enable the City to balance
its budget and to meet its cash requirements. If the State experiences revenue
shortfalls or spending increases beyond its projections during its 1996 fiscal
year or subsequent years, such developments could result in reductions in
projected State aid to the City. In addition, there can be no assurance that
State budgets in future fiscal years will be adopted by the April 1 statutory
deadline and that there will not be adverse effects on the City's cash flow
and additional City expenditures as a result of such delays.

The City's projections set forth in its 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 timing of any regional and local economic recovery,
the absence of wage increases in excess of the increases assumed in its
financial plan, employment growth, provision of State and Federal aid and
mandate relief, State legislative approval of future State budgets, levels of
education expenditures as may be required by State law, adoption of future
City budgets by the New York City Council, and approval by the Governor or the
State Legislature and the cooperation of MAC with respect to various other
actions proposed in such financial plan.

The City's ability to maintain a balanced operating budget is dependent on
whether it can implement necessary service and personnel reduction programs
successfully. As discussed above, the City must identify additional
expenditure reductions and revenue sources to achieve balanced operating
budgets for fiscal years 1996 and thereafter. Any such proposed expenditure
reductions will be difficult to implement because of their size and the
substantial expenditure reductions already imposed on City operations in
recent years.

Attaining a balanced budget is also dependent upon the City's ability to
market its securities successfully in the public credit markets. The City's
financing program for fiscal years 1996 through 1999 contemplates issuance of
$9.7 billion of general obligation bonds primarily to reconstruct and
rehabilitate the City's infrastructure and physical assets and to make capital
investments. In addition, the City issues revenue and tax anticipation notes
to finance its seasonal working capital requirements. The terms and success of
projected public sales of City general obligation bonds and notes will be
subject to prevailing market conditions at the time of the sale, and no
assurance can be given that the credit markets will absorb the projected
amounts of public bond and note sales. Future developments concerning the City
and public discussion of such developments, the City's future financial needs
and other issues may affect the market for outstanding City general obligation
bonds and notes. If the City were unable to sell its general obligation bonds
and notes, it would be prevented from meeting its planned operating and
capital expenditures.

1996-99 Financial Plan. On July 11, 1995, the City submitted to the
Control Board the 1996-99 Financial Plan, which relates to the City, the Board
of Education and the City University of New York. The 1996-99 Financial Plan
is based on the City's expense and capital budgets for the City's 1996
fiscal year, which were adopted on June 14, 1995, and sets forth proposed
actions by the City for the 1996 fiscal year to close substantial projected
budget gaps resulting from lower than projected tax receipts and other
revenues and greater than projected expenditures. In addition to substantial
proposed agency expenditure reductions and productivity, efficiency and labor
initiatives negotiated with the City's labor unions, the 1996-99 Financial
Plan reflects a strategy to substantially reduce spending for entitlements for
the 1996 and subsequent fiscal years.

The 1996-99 Financial Plan also sets forth projections for the 1997 through
1999 fiscal years and outlines a proposed gap-closing program to close
projected budget gaps of $888 million, $1.5 billion and $1.4 billion for the
1997, 1998 and 1999 fiscal years, respectively, after successful
implementation of the $3.1 billion gap-closing program for the 1996 fiscal
year. The proposed gap-closing actions, a substantial number of which are not
specified in detail, include various actions which may be subject to State or
Federal approval.

On July 24, 1995, the City Comptroller issued a report on the 1996-99
Financial Plan. The report concluded that the 1996-99 Financial Plan includes
total risks of $749 million to $1.034 billion for the 1996 fiscal year. With
respect to the 1997-99 fiscal years, the report noted that the gap-closing
program in the 1996-99 Financial Plan does not include information about how
the City will implement the various gap- closing programs, and that the
entitlement cost containment and revenue initiatives will require approval of
the State legislature. The report estimated that the 1996-99 Financial Plan
includes total risks of $2.0 billion to $2.5 billion in the 1997 fiscal year,
$2.8 billion to $3.3 billion in the 1998 fiscal year, and $2.9 billion to $3.4
billion in the 1999 fiscal year.

On December 16, 1994, the City Comptroller issued a report noting that the
capacity of the City to issue general obligation debt could be greatly reduced
in future years due to the decline in value of taxable real property. The
report concluded that the debt incurring power of the City would likely be
curtailed substantially in the 1997 and 1998 fiscal years.

On July 21, 1995, the staff of the Control Board issued a report on the
1996-99 Financial Plan which identified risks of $873 million, $2.1 billion,
$2.8 billion and $2.8 billion for the 1996 through 1999 fiscal years,
respectively.

On July 24, 1995, the staff of the OSDC issued a report on the 1996- 99
Financial Plan. The report concluded that there remains a budget gap for the
1996 fiscal year of $392 million, largely because the City and its unions have
yet to reach an agreement on how to achieve $160 million in unspecified labor
savings and the remaining $100 million in recurring health insurance savings
from last year's agreement. The report further noted that growth in City
revenues is being constrained by the weak economy in the City, which is likely
to be compounded by the slowing national economy, and that there is a
likelihood of a national recession during the course of the 1996-99 Financial
Plan. Moreover, the report noted that State and Federal budgets are undergoing
tumultuous changes, and that the potential for far-reaching reductions in
intergovernmental assistance is clearly on the horizon, with greater
uncertainty about the impact on City finances and services.

Given the foregoing factors, there can be no assurance that the City will
continue to maintain a balanced budget, or that it can maintain a balanced
budget without additional tax or other revenue increases or reductions in City
services, which could adversely affect the City's economic base.

The City is a defendant in a significant number of lawsuits. Such litigation
includes, but is not limited to, actions commenced and claims asserted against
the City arising out of alleged constitutional violations, torts, breaches of
contracts, and other violations of law and condemnation proceedings. While the
ultimate outcome and fiscal impact, if any, on the 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 its
financial plan. As of June 30, 1994, the City estimated its potential future
liability in respect of outstanding claims to be approximately $2.6 billion.
The 1996-99 Financial Plan includes provisions for judgments and claims of
$279 million, $236 million, $251 million and $264 million for the 1996 through
1999 fiscal years, respectively.

As of March 1996, Moody's rating of the City's general obligation bonds stood
at Baa1 and S&P's rating stood at A-.

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

On February 11, 1991, Moody's had lowered its rating from A. Previously,
Moody's had raised its rating to A in May 1988, to Baa1 in December 1986, to
Baa in November 1983 and to Ba1 in November 1981. S&P had raised its rating to
A- in November 1987, to BBB+ in July 1985 and to BBB in March 1981.

As of June 30, 1995, the City and MAC had, respectively, $23.258 billion and
$4.033 billion of outstanding net long-term indebtedness.

Certain Agencies of the State have faced substantial financial difficulties
which could adversely affect the ability of such Agencies to make payments of
interest on, and principal amounts of, their respective bonds. The
difficulties have in certain instances caused the State (under so-called "
moral obligation" provisions which are non-binding statutory provisions
for State appropriations to maintain various debt service reserve funds) to
appropriate funds on behalf of the Agencies. Moreover, it is expected that the
problems faced by these Agencies will continue and will require increasing
amounts of State assistance in future years. Failure of the State to
appropriate necessary amounts or to take other action to permit those Agencies
having financial difficulties to meet their obligations could result in a
default by one or more of the Agencies. Such default, if it were to occur,
would be likely to have a significant adverse effect on investor confidence
in, and therefore the market price of, obligations of the defaulting Agencies.
In addition, any default in payment on any general obligation of any Agency
whose bonds contain a moral obligation provision could constitute a failure of
certain conditions that must be satisfied in connection with Federal
guarantees of City and MAC obligations and could thus jeopardize the City's
long-term financing plans.

As of September 30, 1993, the State reported that there were eighteen Agencies
that each had outstanding debt of $100 million or more. These eighteen
Agencies had an aggregate of $63.5 billion of outstanding debt, including
refunding bonds, of which $7.7 billion was moral obligation debt of the State
and $19.3 billion was financed under lease-purchase or contractual obligation
financing arrangements.

The State is a defendant in numerous legal proceedings pertaining to matters
incidental to the performance of routine governmental operations. Such
litigation includes, but is not limited to, claims asserted against the State
arising from alleged torts, alleged breaches of contracts, condemnation
proceedings and other alleged violations of State and Federal laws. Included
in the State's outstanding litigation are a number of cases challenging the
constitutionality or the adequacy and effectiveness of a variety of
significant social welfare programs primarily involving the State's mental
hygiene programs. Adverse judgments in these matters generally could result in
injunctive relief coupled with prospective changes in patient care which could
require substantial increased financing of the litigated programs in the
future.

The State is also engaged in a variety of claims wherein significant monetary
damages are sought. Actions commenced by several Indian nations claim that
significant amounts of land were unconstitutionally taken from the Indians in
violation of various treaties and agreements during the eighteenth and
nineteenth centuries. The claimants seek recovery of approximately six million
acres of land as well as compensatory and punitive damages.

Adverse developments in the foregoing proceedings or new proceedings could
adversely affect the financial condition of the State in the future.

Certain localities in addition to New York City could have financial problems
leading to requests for additional State assistance. The potential impact on
the State of such actions by localities is not included in projections of
State receipts and expenditures in the State's 1996-97 and 1997-1998 fiscal
years.

Fiscal difficulties experienced by the City of Yonkers ("Yonkers" )
resulted in the creation of the Financial Control Board for the City of
Yonkers (the "Yonkers Board" ) by the State in 1984. The Yonkers Board
is charged with oversight of the fiscal affairs of Yonkers. Future actions
taken by the Governor or the State Legislature to assist Yonkers could result
in allocation of State resources in amounts that cannot yet be determined.

Municipalities and school districts have engaged in substantial short-term and
long-term borrowings. In 1993, the total indebtedness of all localities in the
State was approximately $17.7 billion. State law requires the Comptroller to
review and make recommendations concerning the budgets of those local
government units other than New York City authorized by State law to issue
debt to finance deficits during the period that such deficit financing is
outstanding. Fifteen localities had outstanding indebtedness for state
financing at the close of their fiscal year ending in 1993.

Certain proposed Federal expenditure reductions could reduce, or in some cases
eliminate, Federal funding of some local programs and accordingly might impose
substantial increased expenditure requirements on affected localities. If the
State, New York City or any of the Agencies were to suffer serious financial
difficulties jeopardizing their respective access to the public credit
markets, the marketability of notes and bonds issued by localities within the
State, including notes or bonds in the New York IM-IT Trust, could be
adversely affected. Localities also face anticipated and potential problems
resulting from certain pending litigation, judicial decisions, and long-range
economic trends. The longer-range potential problems of declining urban
population, increasing expenditures, and other economic trends could adversely
affect localities and require increasing State assistance in the future.

At the time of the closing for each New York Trust, Special Counsel to each
New York Trust for New York tax matters rendered an opinion under then
existing New York income tax law applicable to taxpayers whose income is
subject to New York income taxation substantially to the effect that:

The New York Trust is not an association taxable as a corporation and the
income of the New York Trust will be treated as the income of the Unitholders
under the income tax laws of the State and City of New York. Individuals who
reside in New York State or City will not be subject to State and City tax on
interest income which is exempt from Federal income tax under section 103 of
the Internal Revenue Code of 1986 and derived from obligations of New York
State or a political subdivision thereof, although they will be subject to New
York State and City tax with respect to any gains realized when such
obligations are sold, redeemed or paid at maturity or when any such Units are
sold or redeemed.

Ohio Trusts

As described above, the Ohio IM-IT will invest most of its net assets in
securities issued by or on behalf of (or in certificates of participation in
lease-purchase obligations of) the State of Ohio, political subdivisions of
the State, or agencies or instrumentalities of the State or its political
subdivisions ("Ohio Obligations" ). The Ohio IM-IT is therefore
susceptible to general or particular economic, political or regulatory factors
that may affect issuers of Ohio Obligations. The following information
constitutes only a brief summary of some of the many complex factors that may
have an effect. The information does not apply to "conduit"
obligations on which the public issuer itself has no financial responsibility.
This information is derived from official statements of certain Ohio issuers
published in connection with their issuance of securities and from other
publicly available information, and is believed to be accurate. No independent
verification has been made of any of the following information.

Generally, creditworthiness of Ohio Obligations of local issuers is unrelated
to that of obligations of the State itself, and the State has no
responsibility to make payments on those local obligations. There may be
specific factors that at particular times apply in connection with investment
in particular Ohio Obligations or in those obligations of particular Ohio
issuers. It is possible that the investment may be in particular Ohio
Obligations, or in those of particular issuers, as to which those factors
apply. However, the information below is intended only as a general summary,
and is not intended as a discussion of any specific factors that may affect
any particular obligation or issuer.

The timely payment of principal of and interest on Ohio Obligations has been
guaranteed by bond insurance purchased by the issuers, the Ohio IM-IT or other
parties. Ohio Obligations may not be subject to the factors referred to in
this section of the Prospectus.

Ohio is the seventh most populous state. The 1990 Census count of 10,847,000
indicated a 0.5% population increase from 1980. The Census estimate for 1995
is 11,157,000.

While diversifying more into the service and other non-manufacturing areas,
the Ohio economy continues to rely in part on durable goods manufacturing
largely concentrated in motor vehicles and equipment, steel, rubber products
and household appliances. As a result, general economic activity, as in many
other industrially-developed states, tends to be more cyclical than in some
other states and in the nation as a whole. Agriculture is an important segment
of the economy, with over half the State's area devoted to farming and
approximately 16% of total employment in agribusiness.

In prior years, the State's overall unemployment rate was commonly somewhat
higher than the national figure. For example, the reported 1990 average
monthly State rate was 5.7%, compared to the 5.5% national figure. However,
for the last six years the State rates were below the national rates (4.8%
versus 5.6% in 1995). The unemployment rate and its effects vary among
geographic areas of the State.

There can be no assurance that future national, regional or state-wide
economic difficulties, and the resulting impact on State or local government
finances generally, will not adversely affect the market value of Ohio
Obligations held in the Ohio IM-IT portfolio or the ability of particular
obligors to make timely payments of debt service on (or lease payments
relating to) those Obligations.

The State operates on the basis of a fiscal biennium for its appropriations
and expenditures, and is precluded by law from ending its July 1 to June 30
fiscal year ("FY" ) or fiscal biennium in a deficit position. Most
State operations are financed through the General Revenue Fund ("GRF"
), for which personal income and sales-use taxes are the major sources. Growth
and depletion of GRF ending fund balances show a consistent pattern related to
national economic conditions, with the ending FY balance reduced during less
favorable and increased during more favorable economic periods. The State has
well-established procedures for, and has timely taken, necessary actions to
ensure resource/expenditure balances during less favorable economic periods.
Those procedures included general and selected reductions in appropriations
spending.

Key biennium ending fund balances at June 30, 1989 were $475.1 million in the
GRF and $353 million in the Budget Stabilization Fund ("BSF" , a cash
and budgetary management fund). June 30, 1991 ending fund balances were $135.3
million (GRF) and $300 million (BSF).

The next biennium, 1992-1993, presented significant challenges to State
finances, successfully addressed. To allow time to resolve certain budget
differences an interim appropriations act was enacted effective July 1, 1991;
it included GRF debt service and lease rental appropriations for the entire
biennium, while continuing most other appropriations for a month. Pursuant to
the general appropriations act for the entire biennium, passed on July 11,
1991, $200 million was transferred from the BSF to the GRF in FY 1992.

Based on updated results and forecasts in the course of that FY, both in light
of a continuing uncertain nationwide economic situation, there was projected
and then timely addressed an FY 1992 imbalance in GRF resources and
expenditures. In response, the Governor ordered most State agencies to reduce
GRF spending in the last six months of FY 1992 by a total of approximately
$184 million; the $100.4 million BSF balance, and additional amounts from
certain other funds were transferred late in the FY to the GRF, and
adjustments made in the timing of certain tax payments.

A significant GRF shortfall (approximately $520 million) was then projected
for FY 1993. It was addressed by appropriate legislative and administrative
actions, including the Governor's ordering $300 million in selected GRF
spending reductions and subsequent executive and legislative action (a
combination of tax revisions and additional spending reductions). The June 30,
1993 ending GRF fund balance was approximately $111 million, of which, as a
first step to BSF replenishment, $21 million was deposited in the BSF.

None of the spending reductions were applied to appropriations needed for debt
service or lease rentals relating to any State obligations.

The 1994-1995 biennium presented a more affirmative financial picture. Based
on June 30, 1994 balances, an additional $260 million was deposited in the
BSF. The biennium ended June 30, 1995 with a GRF ending fund balance of $928
million, of which $535.2 million was transferred into the BSF (which had an
October 7, 1996 balance of over $828 million).

The GRF appropriations act for the 1996-97 biennium was passed on June 28,
1995 and promptly signed (after selective vetoes) by the Governor. All
necessary GRF appropriations for State debt service and lease rental payments
then projected for the biennium were included in that act. In accordance with
the appropriations act, the significant June 30, 1995 GRF fund balance, after
leaving in the GRF an unreserved and undesignated balance of $70 million, was
transferred to the BSF and other funds including school assistance funds and,
in anticipation of possible federal program changes, a human services
stabilization fund.

The State's incurrence or assumption of debt without a vote of the people is,
with limited exceptions, prohibited by current State constitutional
provisions. The State may incur debt, limited in amount to $750,000, to cover
casual deficits or failures in revenues or to meet expenses not otherwise
provided for. The Constitution expressly precludes the State from assuming the
debts of any local government or corporation. (An exception is made in both
cases for any debt incurred to repel invasion, suppress insurrection or defend
the State in war.)

By 14 constitutional amendments, approved from 1921 to date (the latest
adopted in 1995), Ohio voters authorized the incurrence of State debt and the
pledge to taxes or excises to its payment. At January 22, 1997, $958 million
(excluding certain highway bonds payable primarily from highway use receipts)
of this debt was outstanding. The only such State debt at that date still
authorized to be incurred were portions of the highway bonds, and the
following: (a) up to $100 million of obligations for coal research and
development may be outstanding at any one time ($34.9 million outstanding);
(b) $240 million of obligations previously authorized for local infrastructure
improvements, no more than $120 million of which may be issued in any calendar
year ($879 million outstanding); and (c) up to $200 million in general
obligation bonds for parks, recreation and natural resources purposes which
may be outstanding at any one time ($44.2 million outstanding, with no more
than $50 million to be issued in any one year).

The Electors in 1995 approved a constitutional amendment extending the local
infrastructure bond program (authorizing an additional $1.2 billion of State
full faith and credit obligations to be issued over 10 years for the purpose),
and authorizing additional highway bonds (expected to be payable primarily
from highway use receipts). The latter supersedes the prior $500 million
outstanding authorization, and authorizes not more that $1.2 billion to be
outstanding at any time and not more than $220 million to be issued in a
fiscal year.

The Constitution also authorizes the issuance of State obligations for certain
purposes, the owners of which do not have the right to have excises or taxes
levied to pay debt service. Those special obligations include obligations
issued by the Ohio Public Facilities Commission and the Ohio Building
Authority, and certain obligations issued by the State Treasurer, over $4.6
billion of which were outstanding or sold and awaiting delivery at January 22,
1997.

A 1990 constitutional amendment authorizes greater State and political
subdivision participation (including financing) in the provision of housing.
The General Assembly may for that purpose authorize the issuance of State
obligations secured by a pledge of all or such portion as it authorizes of
State revenues or receipts (but not by a pledge of the State's full faith and
credit).

A 1994 constitutional amendment pledges the full faith and credit and taxing
power of the State to meeting certain guarantees under the State's tuition
credit program which provides for purchase of tuition credits, for the benefit
of State residents, guaranteed to cover a specified amount when applied to the
cost of higher education tuition. (A 1965 constitutional provision that
authorized student loan guarantees payable from available State moneys has
never been implemented, apart from a "guarantee fund" approach funded
especially from program revenues.)

State and local agencies issue obligations that are payable from revenues from
or relating to certain facilities (but not from taxes). By judicial
interpretation, these obligations are not "debt" within constitutional
provisions. In general, payment obligations under lease-purchase agreements of
Ohio public agencies (in which certificates of participation may be issued)
are limited in duration to the agency's fiscal period, and are renewable only
upon appropriations being made available for the subsequent fiscal period.

Local school districts in Ohio receive a major portion (state-wide aggregate
approximately 44% in recent years) of their operating moneys from State
subsidies, but are dependent on local property taxes, and in 117 districts
from voter-authorized income taxes, for significant portions of their budgets.
Litigation, similar to that in other states, is pending questioning the
constitutionality of Ohio's system of school funding. The trial court
concluded that aspects of the system (including basic operating assistance)
are unconstitutional and ordered the State to provide for and fund a system
complying with the Ohio Constitution. The State appealed and a court of
appeals reversed the trial court's findings for plaintiff districts. The case
is now pending on appeal in the Ohio Supreme Court. A small number of the
State's 612 local school districts have in any year required special
assistance to avoid year-end deficits. A current program provides for school
district cash need borrowing directly from commercial lenders, with diversion
of State subsidy distributions to repayment if needed. Recent borrowings under
this program totalled $94.5 million for 27 districts (including $75 million
for one) in FY 1993, and $41.1 million for 28 districts in FY 1994, $71.1
million for 29 districts in FY 1995 (including $29.5 million for one), and
$87.2 million for 20 districts in FY 1996 (including $42.1 million for one).

Ohio's 943 incorporated cities and villages rely primarily on property and
municipal income taxes for their operations. With other subdivisions, they
also receive local government support and property tax relief moneys
distributed by the State.

For those few municipalities and school districts that on occasion have faced
significant financial problems, there are statutory procedures for a joint
State/local commission to monitor the fiscal affairs and for development of a
financial plan to eliminate deficits and cure any defaults. Since inception
for municipalities in 1979, these procedures have been applied to 24 cities
and villages; for 19 of them the fiscal situation was resolved and the
procedures terminated. As of January 22, 1997, the 1996 school district "
fiscal emergency" provision has been applied to two districts and five
districts have been placed on preliminary "fiscal watch" status.

At present the State itself does not levy ad valorem taxes on real or tangible
personal property. Those taxes are levied by political subdivisions and other
local taxing districts. The Constitution has since 1934 limited to 1% of true
value in money the amount of the aggregate levy (including a levy for unvoted
general obligations) of property taxes by all overlapping subdivisions,
without a vote of the electors or a municipal charter provision, and statutes
limit the amount of that aggregate levy to 10 mills per $1 of assessed
valuation (commonly referred to as the "ten-mill limitation" ). Voted
general obligations of subdivisions are payable from property taxes that are
unlimited as to amount or rate.

At the time of the closing for each Ohio Trust, Special Council to each Ohio
Trust for Ohio tax matters rendered an opinion under then existing Ohio income
tax law applicable to taxpayers whose income is subject to Ohio income
taxation substantially to the effect that:

The Ohio IM-IT Trust is not taxable as a corporation or otherwise for purposes
of the Ohio personal income tax, school district income taxes in Ohio, the
Ohio corporation franchise tax, or the Ohio dealers in intangibles tax.

Distributions with respect to Units of the Ohio IM-IT Trust ("
Distributions" ) will be treated as the income of the Unitholders for
purposes of the Ohio personal income tax, and school district and municipal
income taxes in Ohio and the Ohio corporation franchise tax in proportion to
the respective interest therein of each Unitholder.

Distributions properly attributable to interest on obligations issued by or on
behalf of the State of Ohio, political subdivisions thereof, or agencies or
instrumentalities thereof ("Ohio Obligations" ), or by the governments
of Puerto Rico, the Virgin Islands or Guam ("Territorial Obligations" )
held by the Trust are exempt from the Ohio personal income tax, school
district and municipal income taxes, and are excluded from the net income base
of the Ohio corporation franchise tax when distributed or deemed distributed
to Unitholders.

Distributions properly attributable to proceeds of insurance paid to the Ohio
IM-IT Trust that represent maturing or matured interest on defaulted
obligations held by the Ohio IM-IT Trust and that are excluded from gross
income for federal income tax purposes will be exempt from Ohio personal
income tax, and school district and municipal income taxes in Ohio and the net
income base of the Ohio corporation franchise tax.

Distributions of profit made on the sale, exchange or other disposition by the
Ohio IM-IT Trust of Ohio Obligations including Distributions of "capital
gain dividends" as defined in Section 852(b)(3)(C) of the Code, properly
attributable to the sale, exchange or other disposition of Ohio Obligations
are exempt from Ohio personal income tax, and school district and municipal
income taxes in Ohio, and are excluded from the net income base of the Ohio
corporation franchise tax.

Oklahoma Trusts

Investors in the Oklahoma IM-IT Trust should consider that the economy of the
State has been experiencing difficulties as a result of an economic recession
largely attributable to a decline in the agricultural industry and a rapid
decline that was experienced in the early and mid 1980s in the energy industry
which have, in turn, caused declines in the real estate industry, the banking
industry and most other sectors of the State's economy. Continued low levels
of economic activity, another decline in oil and gas production prices, low
growth in the State's major industries or private or public financial
difficulties could adversely affect Bonds in the Portfolio and consequently
the value of Units in the Oklahoma IM-IT Trust.

The Oklahoma economy has undergone significant diversification over the past
fifteen years, and has grown to resemble the national economy more closely. In
keeping with this development, it is expected that the fairly strong signals
which the Oklahoma economy has been showing during the most recent quarters
will continue into the first half of 1995 before beginning to weaken, as the
national economy begins to slow down.

Oklahoma's real gross state product, which grew by 2.8% to $54,292 million in
fiscal year 1995, is projected to grow by 2.5% in fiscal year 1996 and 2.7% in
fiscal year 1997.

The growth in Oklahoma's manufacturing sector is noteworthy and contrary to a
national trend. Specifically, while manufacturing employment fell by 8.2%
nationally between 1987 and 1993, it grew in Oklahoma by 2.3%. The
manufacturing sector continues to perform well with a growth rate of 4.8%
projected for fiscal year 1995 before a slowing of growth in fiscal year 1996
to 3.5%. The service sector is also performing well with growth for fiscal
year 1995 and fiscal year 1996 projected to be 3.0% and 2.6%, respectively.

Oklahoma's international exports have accounted for a growing part of this
trend. Manufactured exports to foreign countries increased by 8% in 1993,
three percentage points higher than the U.S. average. The National Association
of Manufacturers estimates that each dollar gain in exports results in a $2
gain in Gross Domestic Product within two years.

Non-agricultural wage and salary employment has been growing in Oklahoma since
mid-1993, and April 1994 employment reached l,253,800, surpassing the April
high of 1,241,000 reached in 1982. Of the employment increase in the past
year, 81% has been in the service-producing industries, and that trend is
anticipated to continue.

Non-agricultural wage and salary employment growth is expected to decline from
its projected 2.0% level in fiscal year 1995 to 1.8% in fiscal year 1996. This
translates into the production of 24,000 new jobs in fiscal year 1995 and
23,000 new jobs in fiscal year 1996. Unemployment in Oklahoma is expected to
average 5.95% in fiscal year 1995, and improve slightly to a rate of 5.7% in
fiscal year 1996, just below the projected national level. Oklahoma
historically has an unemployment rate below the national level.

Total personal income growth of 4.9% in fiscal year 1995 is expected to be
followed by growth of 4.3% in fiscal year 1996.

The OU College of Business Leading Economic Indicator ("OUCBI" ) is a
leading economic indicator which has recently been developed for the Oklahoma
economy. It is designed to support general business decision making and public
policy planning in the State. The OUCBI shows that Oklahoma has seen good
year-over-year gains in employment and these gains are expected to continue
through 1995. As the U.S. economy slows during 1996, the Oklahoma economy is
also projected to slow, thus reinforcing the idea that the U.S. and Oklahoma
economies will continue to move in the same direction.

The key economic indicators point to an Oklahoma rate of growth paralleling
the nation's, suggesting that fiscal year 1994 and fiscal year 1995 will be
peak growth years with a gradual cooling of the economy in fiscal year 1996.

According to the United States Bureau of Labor Statistics, the average
unemployment rate in Oklahoma in 1995 was 4.8%, and the preliminary seasonally
adjusted projected rate for 1996 is 4.7%. This compares to the national
average unemployment rate for 1995 of 5.6%, and the national preliminary
seasonally adjusted projected rate for 1996 of 5.6%.

Governmental expense budgeting provisions in Oklahoma are conservative,
basically requiring a balanced budget each fiscal year unless a debt is
approved by a vote of the people providing for the collection of a direct
annual tax to pay the debt. Certain limited exceptions include: deficiency
certificates issued in the discretion of the Governor (however, the deficiency
certificates may not exceed $500,000 in any fiscal year); and debts to repel
invasion, suppress insurrection or to defend the State in the event of war.

To ensure a balanced annual budget, the State Constitution provides procedures
for certification by the State Board of Equalization of revenues received in
the previous fiscal year and amounts available for appropriation based on a
determination of revenues to be received by the State in the General Revenue
Fund in the next ensuing fiscal year.

Beginning July 1, 1985, surplus funds were placed in a Constitutional Reserve
Fund until the Reserve Fund equaled 10% of the General Revenue Fund
certification for the preceding fiscal year. This Fund balance currently
stands at $45.6 million, with $78.5 million projected for fiscal year 1997.

Oklahoma's General Revenue Fund forecast for fiscal year 1996 estimated
receipts would total $3.673 billion, an increase of $160 million or 4.5% above
the actual collections for fiscal year 1995.

The estimate anticipated that total revenue in fiscal year 1997 from the
General Revenue Fund's four major tax sources would show an increase of
$142.7 million or 4.5% above the 1996 projection. Revenue from the four major
taxes was estimated at 86.3% of total General Revenue Fund receipts.

Other receipts are expected to yield $525.1 million, which is 13.7% of the
fiscal year 1997 General Revenue Fund. Several sources in the "other
receipts" category were expected to show increases with earnings on
investments estimated at $73.4 million for 1997.

Beginning July 1, 1985, surplus funds were to be placed in a Constitutional
Reserve Fund until the Reserve Fund equals 10% of the General Revenue Fund
certification for the preceding fiscal year.

The foregoing information constitutes only a brief summary of some of the
financial difficulties which may impact certain issuers of Bonds and does not
purport to be a complete or exhaustive description of all adverse conditions
to which the issuers in the Oklahoma IM-IT Trust are subject. Additionally,
many factors including national economic, social and environmental policies
and conditions, which are not within the control of the issuers of Bonds,
could affect or could have an adverse impact on the financial condition of the
State and various agencies and political subdivisions located in the State.
The Sponsor is unable to predict whether or to what extent such factors or
other factors may affect the issuers of Bonds, the market value or
marketability of the Bonds or the ability of the respective issuers of the
Bonds acquired by the Oklahoma IM-IT Trust to pay interest on or principal of
the Bonds.

For a discussion of the Federal tax status of income earned on Oklahoma Trust
Units, see "Other Matters--Federal Tax Status" .

The assets of the Oklahoma IM-IT Trust will consist of interest-bearing
obligations issued by or on behalf of the State of Oklahoma (the "
State" ) or counties, municipalities, authorities or political subdivisions
thereof (the "Oklahoma Bonds" ) or by the Commonwealth of Puerto Rico,
Guam and the United States Virgin Islands (the "Possession Bonds" )
(collectively, the "Bonds" ). At the respective times of issuance of
the Oklahoma Bonds, certain, but not necessarily all, of the issues of the
Oklahoma Bonds may have been accompanied by an opinion of bond counsel to the
respective issuing authorities that interest on such Oklahoma Bonds (the "
Oklahoma Tax-Exempt Bonds" ) are exempt from the income tax imposed by the
State of Oklahoma that is applicable to individuals and corporations (the "
Oklahoma State Income Tax" ). The Trust may include Oklahoma Bonds the
interest on which is subject to the Oklahoma State Income Tax (the "
Oklahoma Taxable Bonds" ). See "Portfolio" which indicates by
footnote which Oklahoma Bonds are Oklahoma Tax-Exempt Bonds (all other
Oklahoma Bonds included in the portfolio are Oklahoma Taxable Bonds).

Neither the Sponsor nor its counsel has independently examined the Bonds to be
deposited in and held in the Trust. However, although no opinion is expressed
herein regarding such matters, it is assumed that: (i) the Bonds were validly
issued, (ii) the interest thereon is excludable from gross income for Federal
income tax purposes and (iii) interest on the Oklahoma Tax-Exempt Bonds, if
received directly by a Unitholder, would be exempt from the Oklahoma State
Income Tax. At the respective times of issuance of the Bonds, opinions
relating to the validity thereof and to the exemption of interest thereon from
Federal income tax were rendered by bond counsel to the respective issuing
authorities. In addition, with respect to the Oklahoma Tax-Exempt Bonds, bond
counsel to the issuing authorities rendered opinions as to the exemption of
interest from the Oklahoma State Income Tax. Neither the Sponsor nor its
counsel has made any review for the Trust of the proceedings relating to the
issuance of the Bonds or of the bases for the opinions rendered in connection
therewith. The opinion set forth below does not address the taxation of
persons other than full time residents of Oklahoma.

In the opinion of Chapman and Cutler, Special Counsel to the Fund for Oklahoma
tax matters, under existing laws as of the date of this Prospectus and based
upon the assumptions set forth above:

For Oklahoma State Income Tax purposes, the Trust is not an association
taxable as a corporation, each Unitholder of the Trust will be treated as the
owner of a pro rata portion of the Trust and the income of such portion of the
Trust will be treated as the income of the Unitholder.

Interest paid and original issue discount, if any, on the Bonds which would be
exempt from the Oklahoma State Income Tax if received directly by a Unitholder
will be exempt from the Oklahoma State Income Tax when received by the Trust
and distributed to such Unitholder. A Unitholder's pro rata portion of any
interest paid and original issue discount, if any, on the Bonds which would be
subject to the Oklahoma State Income Tax if received directly by a Unitholder,
including, for example interest paid and original issue discount, if any, on
the Oklahoma Taxable Bonds, will be taxable to such Unitholder for Oklahoma
State Income Tax purposes when received by the Trust.

To the extent that interest paid and original issue discount, if any, derived
from the Trust by a Unitholder with respect to Possession Bonds is excludable
from gross income for Federal income tax purposes pursuant to 48 U.S.C.
Section 745, 48 U.S.C. Section 1423a, and 48 U.S.C. Section 1403, such
interest paid and original issue discount, if any, will not be subject to the
Oklahoma State Income Tax.

Each Unitholder of the Trust will recognize gain or loss for Oklahoma State
Income Tax purposes if the Trustee disposes of a Bond (whether by redemption,
sale, or otherwise) or if the Unitholder redeems or sells Units of the Trust
to the extent that such a transaction results in a recognized gain or loss to
such Unitholder for Federal income tax purposes. Due to the amortization of
bond premium and other basis adjustments required by the Internal Revenue
Code, a Unitholder, under some circumstances, may realize taxable gain when
his or her Units are sold or redeemed for an amount equal to their original
cost.

Although no opinion is expressed herein, we have been informally advised by
the Oklahoma Tax Commission that any insurance proceeds paid under policies
which represent maturing interest on defaulted obligations which are
excludable from gross income for Federal income tax purposes should be
excludable from the Oklahoma State Income Tax to the same extent as such
interest would have been if paid by the issuer of such Bonds held by the Trust
provided that, at the time such policies are purchased, the amounts paid for
such policies are reasonable, customary and consistent with the reasonable
expectation that the issuer of the obligations, rather than the insurer, will
pay debt service on the obligations.

The Oklahoma State Income Tax does not permit a deduction of interest paid or
incurred on indebtedness incurred or continued to purchase or carry Units in
the Trust, the interest on which is exempt from such tax.

Although no opinion is expressed herein, we have been informally advised by
the Oklahoma Tax Commission that the Trust, in part because of its status as a
"grantor trust" for Federal income tax purposes, should not be subject
to the Oklahoma state franchise tax.

The scope of this opinion is expressly limited to the matters set forth
herein, and we express no other opinions of law with respect to the state or
local taxation of the Trust, the purchase, ownership or disposition of Units
or the Unitholders under Oklahoma law.

Pennsylvania Trusts

Investors should be aware of certain factors that might affect the financial
conditions of the Commonwealth of Pennsylvania. Pennsylvania historically has
been identified as a heavy industry state although that reputation has changed
recently as the industrial composition of the Commonwealth diversified when
the coal, steel and railroad industries began to decline. A more diversified
economy was necessary as the traditionally strong industries in the
Commonwealth declined due to a long-term shift in jobs, investment and workers
away from the northeast part of the nation. The major sources of growth in
Pennsylvania are in the service sector, including trade, medical and the
health services, education and financial institutions. Pennsylvania's
agricultural industries are also an important component of the Commonwealth's
economic structure, accounting for more than $3.6 billion in crop and
livestock products annually, while agribusiness and food related industries
support $39 billion in economic activity annually.

Non-agricultural employment in the Commonwealth over the ten years ending in
1995 increased at an annual rate of 1.02%. This rate compares to a 0.36% rate
for the Middle Atlantic region and a 1.8% rate for the United States during
the same period. For the last three years employment in the Commonwealth has
increased 3.4%.

Non-manufacturing employment has increased in recent years to 82.1% of total
Commonwealth employment in 1995 and to 82.5% as of December 1996.
Consequently, manufacturing employment constitutes a diminished share of total
employment within the Commonwealth. Manufacturing, contributing 17.9% of 1995
non-agricultural employment and 17.5% as of December 1996, has fallen behind
both the services sector and the trade sector as the largest single source of
employment within the Commonwealth. In 1995 the services sector accounted for
30.4% of all non-agricultural employment while the trade sector accounted for
22.8%.

From 1983 to 1989, Pennsylvania's annual average unemployment rate dropped
from 11.8% to 4.5%, falling below the national rate in 1986 for the first time
in over a decade. Pennsylvania's annual average unemployment rate remained
below the national average from 1986 until 1990. Slower economic growth caused
the unemployment rate in the Commonwealth to rise to 6.9% in 1991 and 7.5% in
1992. The resumption of faster economic growth resulted in a decrease in the
Commonwealth's unemployment rate to 7.1% in 1993. As of January 1997, the
seasonally adjusted unemployment rate for the Commonwealth was 4.7% compared
to 5.4% for the United States.

It should be noted that the creditworthiness of obligations issued by local
Pennsylvania issuers may be unrelated to the creditworthiness of obligations
issued by the Commonwealth of Pennsylvania, and there is no obligation on the
part of the Commonwealth to make payment on such local obligations in the
event of default.

Financial information for the principal operating funds of the Commonwealth is
maintained on a budgetary basis of accounting. A budgetary basis of accounting
is used for the purpose of ensuring compliance with the enacted operating
budget and is governed by applicable statutes of the Commonwealth and by
administrative procedures. The Commonwealth also prepares annual financial
statements in accordance with generally accepted accounting principles ("
GAAP" ). The budgetary basis financial information maintained by the
Commonwealth to monitor and enforce budgetary control is adjusted at fiscal
year-end to reflect appropriate accruals for financial reporting in conformity
with GAAP.

Financial Condition and Results of Operations. The fiscal years 1992 through
1996 were years of recovery for Pennsylvania from the recession in 1990 and
1991. The recovery fiscal years were characterized by modest economic growth
and low inflation rates in the Commonwealth. These economic conditions,
combined with several years of tax reductions following the various tax rate
increases and tax base expansions enacted in fiscal 1991 for the General Fund,
produced modest increases in Pennsylvania's tax revenues during the period.
Tax revenues from fiscal 1992 through fiscal 1996 rose at an annual average
rate of 2.8 percent. Total revenues and other income sources increased during
this period by an average annual rate of 3.3 percent. Expenditures and other
uses during the fiscal 1992 through fiscal 1996 period rose at a 4.4 percent
annual rate, led by annual average increases of 14.2 percent for protection of
persons and property program costs and 11.4 percent for capital outlay costs.
Expenditure reductions for fiscal 1996 from the previous fiscal year for
operating transfers out and for conservation of natural resources program
costs were the result of accounting changes affecting the General Fund and the
Motor License Fund and a recategorization of expenditures due to a
departmental restructuring in the General Fund. At the close of fiscal 1996,
the fund balance for the governmental fund types totaled $1,986.3 million, an
increase of $58.7 million over fiscal 1995 and $758.5 million over fiscal 1992.

Financial Results for Recent Fiscal Years (GAAP Basis). The five- year period
from fiscal 1992 through fiscal 1996 recorded a 4.6 percent average annual
increase in revenues and other sources, led by an average annual increase of
13.2 percent for intergovernmental revenues. The increase for
intergovernmental revenues in fiscal 1996 is partly due to an accounting
change. Tax revenues during the five-year period increased an average of 2.5
percent as modest economic growth, low inflation rates and several tax rate
reductions and other tax reduction measures constrained the growth of tax
revenues. The tax reduction measures followed a $2.7 billion tax increase
measure adopted for the 1992 fiscal year.

Expenditures and other uses during the fiscal 1992 through fiscal 1996 period
rose at an average annual rate of 6.0 percent led by increases of 14.2 percent
for protection of persons and property program costs. The costs of a prison
expansion program and other correctional program expenses are responsible for
the large percentage increase. A reduction in debt service costs at an average
annual rate of 29.1 percent over the five-year period is a result of reduced
short-term borrowing for cash flow purposes. Improved financial results and
structural cash flow modifications contributed to the lower borrowing. Efforts
to control costs for various social welfare programs and the presence of
favorable economic conditions have led to a modest 5.6 percent increase for
public health and welfare costs for the five year period.

The fund balance at June 30, 1996 totaled $635.2 million, a $547.7 million
increase from a balance of $87.5 million at June 30, 1992.

Fiscal 1994 Financial Results. GAAP Basis: The fund balance increased $194.0
million due largely to an increased reserve for encumbrances and an increase
in other designated funds. The unreserved-undesignated balance increased by
$14.8 million to $72.2 million. Revenues and other sources increased by 1.8%
over the prior fiscal year while expenditures and other uses increased by
4.3%. Consequently, the operating surplus declined to $179.4 million for
fiscal 1994 from $686.3 million for fiscal 1993.

Budgetary Basis: Commonwealth revenues during the fiscal year totalled
$15,210.7 million, $38.6 million above the fiscal year estimate, and 3.9% over
Commonwealth revenues during the previous fiscal year. The sales tax was an
important contributor to the higher than estimated revenues. Collections from
the sales tax were $5.124 billion, a 6.1% increase from the prior fiscal year
and $81.3 million above estimate. The strength of collections from the sales
tax offset the lower than budgeted performance of the personal income tax
which ended the fiscal year $74.4 million below estimate. The shortfall in the
personal income tax was largely due to shortfalls in income not subject to
withholding such as interest, dividends and other income.

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

The Commonwealth maintained an operating balance on a budgetary basis for
fiscal 1994 producing a fiscal year ending unappropriated surplus of $335.8
million.

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

Commonwealth revenues during the 1995 fiscal year were $459.4 million, 2.9
percent above the estimate of revenues used at the time the 1995 fiscal year
budget was enacted. Corporation taxes contributed $329.4 million of the
additional receipts largely due to higher receipts from the corporate net
income tax. Fiscal 1995 revenues from the corporate net income tax were 22.6
percent over collections in fiscal 1994 and include the effects of the
reduction of the tax rate from 12.25 percent to 11.99 percent that became
effective with tax years beginning on and after January 1, 1994. The sales and
use tax and miscellaneous revenues also showed strong year-over-year growth
that produced above-estimate revenue collections. Sales and use tax revenues
were $5,526.9 million, $128.8 million above the enacted budget estimate and
7.9 percent over fiscal 1994 collections. Tax receipts from both motor vehicle
and non-motor vehicle sales contributed to the higher collections.
Miscellaneous revenue collections for fiscal 1995 were $183.5 million, $44.9
million above estimate and were largely due to additional investment earnings,
escheat revenues and other miscellaneous revenues.

Fiscal 1996 Financial Results (Budgetary Basis). Commonwealth revenues (prior
to tax refunds) for the 1996 fiscal year increased by $113.9 million over the
prior fiscal year to $16,338.5 million representing a growth rate of 0.7
percent. Tax rate reductions and other tax law changes substantially reduced
the amount and rate of revenue growth for the fiscal year. The Commonwealth
has estimated that tax changes enacted for the 1996 fiscal year reduced
Commonwealth revenues by $283.4 million representing 1.7 percentage points of
fiscal 1996 growth in Commonwealth revenues. The most significant tax changes
enacted for the 1996 fiscal year were (i) the reduction of the corporate net
income tax rate to 9.99 percent; (ii) double weighing of the sales factor of
the corporate net income apportionment calculation; (iii) an increase in the
maximum annual allowance for a net operating loss deduction from $0.5 million
to $1.0 million; (iv) an increase in the basic exemption amount for the
capital stock and franchise tax; (v) the repeal of the tax on annuities; and
(vi) the elimination of inheritance tax on transfers of certain property to
surviving spouses.

Among the major sources of Commonwealth revenues for the 1996 fiscal year,
corporate tax receipts declined $338.4 million from receipts in the prior
fiscal year, largely due to the various tax changes enacted for these taxes.
Corporate tax changes were enacted to reduce the cost of doing business in
Pennsylvania for the purpose of encouraging business to remain in Pennsylvania
and to expand employment opportunities within the state. Sales and use tax
receipts for the fiscal year increased $155.5 million, or 2.8 percent, over
receipts during fiscal 1995. All of the increase was produced by the non-motor
vehicle portion of the tax as receipts from the sale of motor vehicles
declined slightly for fiscal 1996. Personal income tax receipts for the fiscal
year increased $291.1 million, or 5.7 percent, over receipts during fiscal
1995. Personal income tax receipts were aided by a 10.2 percent increase in
nonwithholding tax payments which generally are comprised of quarterly
estimated and annual final return tax payments. Non-tax receipts for the
fiscal year increased $23.7 million for the fiscal year. Included in that
increase was $67 million in net receipts from a tax amnesty program that was
available for a portion of the 1996 fiscal year. Some portion of the tax
amnesty receipts represent normal collections of delinquent taxes. The tax
amnesty program is not expected to be repeated.

The unappropriated surplus (prior to transfers to Tax Stabilization Reserve
Fund) at the close of the fiscal year for the General Fund was $183.8 million,
$65.5 million above estimate. Transfers to the Tax Stabilization Reserve Fund
from fiscal 1996 operations will be $27.6 million. This amount represents the
fifteen percent of the fiscal year ending unappropriated surplus transfer
provided under current law. With the addition of this transfer and anticipated
interest earnings, the Tax Stabilization Reserve Fund balance will be $211
million.

Fiscal 1997 Budget. The enacted fiscal 1997 budget provides for expenditures
from Commonwealth revenues of $16,375.8 million, an increase of 0.6% over
appropriated amounts from Commonwealth revenues for fiscal 1996. The fiscal
1997 budget is based on anticipated Commonwealth revenues before refunds of
$16,744.5 million, an increase over actual fiscal 1996 revenues of 2.5 percent.

Increased authorized spending for fiscal 1997 is driven largely by increased
costs of the corrections and the probation and parole programs. Continuation
of the trend of rapidly rising inmate populations increases operating costs
for correctional facilities and requires the opening of new facilities. The
fiscal 1997 budget contains an appropriation increase in excess of $110
million for these programs. The approved budget also contains some
departmental restructurings. The Department of Community Affairs was
eliminated with certain of its programs transferred to the Department of
Commerce that has been renamed the Department of Community and Economic
Development. In addition to assuming some of the community programs, a
significant restructuring of the economic development programs was completed
with the establishment of the new Department of Community and Economic
Development. Although the departmental restructurings are estimated to save
approximately $8 million, a $25 million increase in funds was committed to
economic and community development programs for fiscal 1997.

Providing funding for these program increases in a fiscal year budget where
appropriations increased by only $96.7 million, or 0.6 percent, required
reductions and savings in other programs funded from the General Fund. A major
reform of the current welfare system was enacted in May 1996 to encourage
recipients toward self-sufficiency through work requirements, to provide
temporary support for families showing personal responsibility and to maintain
safeguards for those who cannot help themselves. Net savings to the fiscal
1997 budget of $176.5 million is anticipated. Many of these savings are
redirected in the fiscal 1997 budget toward providing additional support
services to those working and seeking work. Of the net savings, $21 million is
committed to job training opportunities and an additional $69 million towards
making day care services available to welfare recipients for work
opportunities. The fiscal 1997 budget also provides additional funding without
requiring additional appropriations. An actuarial reduction of 112 basis
points in the employer contribution rate is estimated to save school districts
approximately $21 million for the fiscal year. Additional savings can be
expected to be realized by school districts from legislated changes to teacher
sabbatical leaves and worker's compensation insurance.

Proposed Fiscal 1998 Budget. On February 4, 1997, the Governor presented his
proposed General Fund budget for fiscal 1998 to the General Assembly. Revenue
estimates in the proposed budget were developed using a national economic
forecast with projected annual growth rates below two percent. Total
Commonwealth revenues before reductions for refunds and proposed tax changes
are estimated to be $17,339.2 billion, 2.4 percent above revised estimates for
fiscal 1997. Proposed appropriations against those revenues total $16,915.7
million, a 2.7 percent increase over currently estimated fiscal 1997
appropriations. As proposed, the fiscal 1998 budget assumes the draw down of
the currently estimated $177.6 million unappropriated surplus at June 30,
1997; however, no appropriation lapses are included in this projection. Four
tax law proposals and a proposed increase transfer of taxes to a special
purpose are included in the proposed budget. Together these items are
estimated to reduce fiscal 1998 Commonwealth revenues by $66.9 million. All
require legislative enactment. The General Assembly is reviewing the proposed
budget in hearings before its committees. The General Assembly may change,
eliminate or add amounts and items to the Governor's proposed budget and
there can be no assurance that the budget, as prepared by the Governor, will
be enacted into law.

All outstanding general obligation bonds of the Commonwealth are rated AA- by
S&P and A1 by Moody's.

Any explanation concerning the significance of such ratings must be obtained
from the rating agencies. There is no assurance that any ratings will continue
for any period of time or that they will not be revised or withdrawn.

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

For the fiscal year ending June 30, 1992, Philadelphia experienced a
cumulative General Fund balance deficit of $71.4 million.

Legislation providing for the establishment of the Pennsylvania
Intergovernmental Cooperation Authority ("PICA" ) to assist first class
cities in remedying fiscal emergencies was enacted by the General Assembly and
approved by the Governor in June, 1991. PICA is designed to provide assistance
through the issuance of funding debt to liquidate budget deficits and to make
factual findings and recommendations to the assisted city concerning its
budgetary and fiscal affairs. An intergovernmental cooperation agreement
between Philadelphia and PICA was approved by City Council on January 3, 1992,
and approved by the PICA Board and signed by the Mayor on January 8, 1992. At
this time, Philadelphia is operating under a five year fiscal plan approved by
PICA on April 30, 1996.

As of February 28, 1997, PICA has issued approximately $1,761.7 million of its
Special Tax Revenue Bonds to provide financial assistance to Philadelphia, to
liquidate the cumulative General Fund balance deficit, to refund certain
general obligation bonds of the City and to fund additional capital projects.
No further PICA bonds are to be issued by PICA for the purpose of financing a
capital project or deficit as the authority for such bond sales expired on
December 31, 1994. PICA's authority to issue debt for the purpose of
financing a cash flow deficit expired on December 31, 1996. Its ability to
refund existing outstanding debt is unrestricted. PICA had $1,146.2 million in
Special Tax Revenue Bonds outstanding as of June 30, 1996.

The audited General fund balance of the City as of June 30, 1994, 1995 and
1996 showed a surplus of approximately $15.4 million, $80.5 million and $118.5
million, respectively.

As of the date hereof, the ratings on the City's long-term obligations
supported by payments from the City's General Fund are rated Ba by Moody's
and BB by S&P. S&P's rating on Philadelphia's general obligation bonds is
"BBB-" and Moody's rating is "Baa." Any explanation
concerning the significance of such ratings must be obtained from the rating
agencies. There is no assurance that any ratings will continue for any period
of time or that they will not be revised or withdrawn.

The foregoing information constitutes only a brief summary of some of the
financial difficulties which may impact certain issuers of bonds and does not
purport to be a complete or exhaustive description of all adverse conditions
to which the issuers of the Bonds in the Pennsylvania IM-IT Trust are subject.
Additionally, many factors including national economic, social and
environmental policies and conditions, which are not within the control of the
issuers of Bonds, could have an adverse impact on the financial condition of
the State and various agencies and political subdivisions located in the
State. The Sponsor is unable to predict whether or to what extent such factors
or other factors may affect the issuers of Bonds, the market value or
marketability of the Bonds or the ability of the respective issuers of the
Bonds acquired by the Pennsylvania IM-IT Trust to pay interest on or principal
of the Bonds.

At the time of the closing for each Pennsylvania Trust, Special Counsel to
each Pennsylvania Trust for Pennsylvania tax matters rendered an opinion under
then existing Pennsylvania income tax law applicable to taxpayers whose income
is subject to Pennsylvania income taxation substantially to the effect that:

In the opinion of Chapman and Cutler, special counsel for the Pennsylvania
Trust for Pennsylvania tax matters, under existing law:

We have examined certain laws of the State of Pennsylvania (the "State"
) to determine their applicability to the Pennsylvania Trust (the "
Pennsylvania Trust" ) and to the holders of Units in the Pennsylvania Trust
who are residents of the State of Pennsylvania (the "Unitholders" ).
The assets of the Pennsylvania Trust will consist of interest-bearing
obligations issued by or on behalf of the State, any public authority,
commission, board or other agency created by the State or a political
subdivision of the State, or political subdivisions thereof (the "
Bonds" ). Distributions of income with respect to the Bonds received by the
Pennsylvania Trust will be made monthly.

Although we express no opinion with respect thereto, in rendering the opinion
expressed herein, we have assumed that: (i) the Bonds were validly issued by
the State or its municipalities, as the case may be, (ii) the interest thereon
is excludable from gross income for federal income tax purposes, (iii) the
interest thereon is exempt from Pennsylvania State and local taxes and (iv)
the Bonds are exempt from county personal property taxes. This opinion does
not address the taxation of persons other than full-time residents of
Pennsylvania.

Based on the foregoing, and review and consideration of existing State laws as
of this date, it is our opinion, and we herewith advise you, as follows:

(1)The Pennsylvania Trust will have no tax liability for purposes of the
personal income tax (the "Personal Income Tax" ), the corporate income
tax (the "Corporate Income Tax" ) and the capital stock-franchise tax
(the "Franchise Tax" ), all of which are imposed under the Pennsylvania
Tax Reform Code of 1971, or the Philadelphia School District Investment Net
Income Tax (the "Philadelphia School Tax" ) imposed under Section
19-1804 of the Philadelphia Code of Ordinances.

(2)Interest on the Bonds, net of Pennsylvania Trust expenses, which is exempt
from the Personal Income Tax when received by the Pennsylvania Trust and which
would be exempt from such tax if received directly by a Unitholder, will
retain its status as exempt from such tax when received by the Pennsylvania
Trust and distributed to such Unitholder. Interest on the Bonds which is
exempt from the Corporate Income Tax and the Philadelphia School Tax when
received by the Pennsylvania Trust and which would be exempt from such taxes
if received directly by a Unitholder, will retain its status as exempt from
such taxes when received by the Pennsylvania Trust and distributed to such
Unitholder.

(3)Distributions from the Pennsylvania Trust attributable to capital gains
recognized by the Pennsylvania Trust upon its disposition of a Bond issued on
or after February 1, 1994, will be taxable for purposes of the Personal Income
Tax and the Corporate Income Tax. No opinion is expressed with respect to the
taxation of distributions from the Pennsylvania Trust attributable to capital
gains recognized by the Pennsylvania Trust upon its disposition of a Bond
issued before February 1, 1994.

(4)Distributions from the Pennsylvania Trust attributable to capital gains
recognized by the Pennsylvania Trust upon its disposition of a Bond will be
exempt from the Philadelphia School Tax if the Bond was held by the
Pennsylvania Trust for a period of more than six months and the Unitholder
held his Unit for more than six months before the disposition of the Bond. If,
however, the Bond was held by the Pennsylvania Trust or the Unit was held by
the Unitholder for a period of less than six months, then distributions from
the Pennsylvania Trust attributable to capital gains recognized by the
Pennsylvania Trust upon its disposition of a Bond issued on or after February
1, 1994 will be taxable for purposes of the Philadelphia School Tax; no
opinion is expressed with respect to the taxation of any such gains
attributable to Bonds issued before February 1, 1994.

(5)Insurance proceeds paid under policies which represent maturing interest on
defaulted obligations will be exempt from the Corporate Income Tax to the same
extent as such amounts are excluded from gross income for federal income tax
purposes. No opinion is expressed with respect to whether such insurance
proceeds are exempt from the Personal Income Tax or the Philadelphia School
Tax.

(6)Each Unitholder will recognize gain for purposes of the Corporate Income
Tax if the Unitholder redeems or sells Units of the Pennsylvania Trust to the
extent that such a transaction results in a recognized gain to such Unitholder
for federal income tax purposes and such gain is attributable to Bonds issued
on or after February 1, 1994. No opinion is expressed with respect to the
taxation of gains realized by a Unitholder on the sale or redemption of a Unit
to the extent such gain is attributable to Bonds issued prior to February 1,
1994.

(7)A Unitholder's gain on the sale or redemption of a Unit will be subject to
the Personal Income Tax, except that no opinion is expressed with respect to
the taxation of any such gain to the extent it is attributable to Bonds issued
prior to February 1, 1994.

(8)A Unitholder's gain upon a redemption or sale of Units will be exempt from
the Philadelphia School Tax if the Unitholder held his Unit for more than six
months and the gain is attributable to Bonds held by the Pennsylvania Trust
for a period of more than six months. If, however, the Unit was held by the
Unitholder for less than six months or the gain is attributable to Bonds held
by the Pennsylvania Trust for a period of less than six months, then the gains
will be subject to the Philadelphia School Tax; except that no opinion is
expressed with respect to the taxation of any such gains attributable to Bonds
issued before February 1, 1994.

(9)The Bonds will not be subject to taxation under the County Personal
Property Tax Act of June 17, 1913 (the "Personal Property Tax" ).
Personal property taxes in Pennsylvania are imposed and administered locally,
and thus no assurance can be given as to whether Units will be subject to the
Personal Property Tax in a particular jurisdiction. However, in our opinion,
Units should not be subject to the Personal Property Tax.

Unitholders should be aware that, generally, interest on indebtedness incurred
or continued to purchase or carry Units is not deductible for purposes of the
Personal Income Tax, the Corporate Income Tax or the Philadelphia School Tax.

We have not examined any of the Bonds to be deposited and held in the
Pennsylvania Trust or the proceedings for the issuance thereof or the opinions
of bond counsel with respect thereto, and therefore express no opinion as to
the exemption from federal or state income taxation of interest on the Bonds
if interest thereon had been received directly by a Unitholder.

Chapman and Cutler has expressed no opinion with respect to taxation under any
other provision of Pennsylvania law. Ownership of the Units may result in
collateral Pennsylvania tax consequences to certain taxpayers. Prospective
investors should consult their tax advisors as to the applicability of any
such collateral consequences.

Tennessee Trusts

The following brief summary regarding the economy of Tennessee is based upon
information drawn from publicly available sources and is included for the
purpose of providing information about general economic conditions that may or
may not affect issuers of the Tennessee obligations. The Sponsor has not
independently verified any of the information contained in such publicly
available documents.

The State Constitution of Tennessee requires a balanced budget. No legal
authority exists for deficit spending from operating purposes beyond the end
of a fiscal year. Tennessee law permits tax anticipation borrowing but any
amount borrowed must be repaid during the fiscal year for which the borrowing
was done. Tennessee has not issued any debt for operating purposes during
recent years with the exception of some advances which were made from the
Federal Unemployment Trust Fund in 1984. No such advances are now outstanding
nor is borrowing of any type for operating purposes contemplated.

The State Constitution of Tennessee forbids the expenditure of the proceeds of
any debt obligation for a purpose other than the purpose for which it was
authorized by statute. Under State law, the term of bonds authorized and
issued cannot exceed the expected life of the projects being financed.
Furthermore, the amount of a debt obligation cannot exceed the amount
authorized by the General Assembly.

Tennessee has a diverse agricultural sector. Both corn and nursery operations
have ranked fourth and fifth (often switching places) in terms of cash
receipts for Tennessee farmers since 1990. Other important crops include
wheat, floriculture, hay, and vegetables. Moreover, cattle operations generate
more income in the aggregate than any other single commodity in Tennessee. In
all, production agriculture generates more than $2 billion in annual cash
receipts for Tennessee farmers. Farm profit in recent years, however, has
fluctuated sharply from a $799 million peak in net cash income for 1992's
record production year to $614.7 million in 1995. Net cash income for 1996 was
expected to be substantially higher than 1995 due to the second consecutive
year of high prices for many crops.

The 1997 year is the first full year under the 1996 farm bill, which radically
changed the character of federal income support for agriculture. Overall,
Tennessee will benefit from the bill, especially in the next few years when
federal payments are substantially higher than what farmers would have
received under the old policy regime. Yet, production shifting (i.e., cotton
to corn and wheat) is expected to cost the state $29.1 million in total income
and output, as well as a loss of an estimated 231 jobs. These changes may
result in significant economic impacts for the regions and industries in which
they are centralized.

Tennessee has experienced a slowdown in the economy during the last several
years. The most prominent is the loss of over 14,000 jobs in the state's
nondurable goods manufacturing sector between the third quarter of 1995 and
the third quarter of 1996. According to the University of Tennessee's Center
for Business and Economic Research, job growth between the third period of
1995 and 1996, at 2.3%, fell a full percentage point below the growth
registered in the prior three years. Also, state sales tax collections grew
only 5.9% in 1995-96 and are growing at a similar rate in 1997, versus 9.7% in
1994-95. Despite these trouble spots, the state's unemployment rate in 1995
and 1996 was 5.2% and 4.9%, respectively, compared to the national
unemployment rates of 5.6% and 5.4%, respectively. Also, there is strong job
growth outside of the manufacturing sector and significant population growth
of 7.8% between 1990 and 1995 versus 5.6% for the U.S.

Overall, employment growth has slipped by a full percentage point, with few
sectors avoiding the slowdown. Only the government and construction sectors
show stronger growth than in earlier years. At the end of 1996,
non-agricultural employment is expected to grow 2.5% and nominal personal
income is expected to have increased 4.6%. Thus, Tennessee will have
outperformed the U.S. job growth rate of 2.0%, but trail in personal growth of
5.4%.

The short-term economic outlook calls for stable and moderate economic growth
for Tennessee through 1998, similar to projections for the national economy.
Nonagricultural employment is expected to grow 2.0% in 1997 and 2.1% in 1998,
considerably lower than the 3.4% average gain registered between 1993 and
1996. Job growth is expected to be somewhat slower for the national economy,
climbing 1.7% in 1997 and 1.4% in 1998.

Tennessee's construction sector is expected to lead all sectors in job
growth, predicted at over 4% in the next two years. The trade sector will grow
3.2% in 1997 and 3.0% in 1998. The services sector, the largest employment
sector of the state economy (accounting for one of four nonagricultural jobs
in 1996) will expand at a 3.4% pace in 1997 and will grow 3.2% in 1998. Job
growth in finance, insurance and real estate will be in the 2.0-2.3% range,
while employment in transportation, communication and public utilities will be
1.0% in 1997 and 1998. The state's manufacturing sector, contributing one out
of every five state jobs, will fall 0.1% in 1997 and rebound 0.5% in 1998.
Unfortunately, nondurable goods employment is expected to decrease over the
next few years, with job losses totaling 3,300 in 1997 and 1,500 in 1998. The
textile, apparel and leather sectors have borne most of the recent job losses.
The job losses in 1995-96 came as a surprise and further unanticipated losses
may arise in the future. The state's durable goods manufacturing sector,
however, is forecast to increase 1.0% in 1997 and 1.4% in 1998.

Tennessee's unemployment rate is predicted at 5.1% in both 1997 and 1998. The
U.S. unemployment rate is projected to be 5.5% in 1997, rising to 5.8% in 1998.

The state economy has enjoyed strong growth in personal income in the last
several years. In particular, total personal income growth and per capita
personal income growth between 1993 and 1995 have surpassed growth for the
U.S. economy. However, the margin narrowed in 1995 as U.S. economic growth
accelerated and Tennessee's strong growth slowed.

Tennessee led all of the southeastern states in per capita personal income
growth between 1985 and 1993 and surpassed U.S. growth by a full percentage
point. From 1994-95, Tennessee's per capita personal income increased 5.3% to
$21,038, which was slightly higher than the southeast's average of $20,970.
In 1995-96, Tennessee's per capita personal income increased 3.16% to
$21,705. In both 1995 and 1996, Tennessee's per capita personal income was
91% of the national average.

Growth in nominal Tennessee personal income is projected at 5.5% and 5.4% in
1997 and 1998, respectively. This is much slower than the 7% rate in both 1994
and 1995, but an improvement over the 4.5% rate in 1996. Nominal per capita
personal income is forecast to be up 4.2% and 4.1% in 1997 and 1998,
respectively, comparing well to the 3.5% and 3.8% growth rates projected for
the national economy.

Wage and salary income will advance 5.6% in 1997 and 5.3% in 1998. Roughly
comparable growth will be recorded by other labor income. Proprietor's income
is expected to increase 5.7% and 7.1% in the following two years, while rent,
interest and dividend income will grow 5.5% and 4.8% in 1997 and 1998,
respectively.

Sales tax revenue grew nearly 14% in 1992-93. This figure sharply declined for
fiscal year 1995-96 when the growth rate was only 5.9%. Taxable sales are
forecast to increase 4.5% in 1997 and 4.6% in 1998.

The actual state budget for fiscal year 1995-96 was $13.331 billion and the
estimated state budget for 1996-97 is $14.529 billion. Actual General Fund
revenue for fiscal year 1995-96 was $11,343.9 million. Actual General Fund
appropriations were $5,311.5 million. Estimated revenue for the General Fund
for fiscal year 1996-97 is $12,061.0 million, an increase of $717.1 million or
6.3%. Estimated appropriations in the General Fund for 1996-97 are $5,735
million, an increase of $423.5 million or 8%.

Total state revenue for fiscal year 1996-97 is estimated at $6,887.5 million,
an increase of 4.7% from 1995-96. Of this amount, approximately 91.8% or
$6,323.1 million is scheduled to be obtained from taxes, each of which will
generate a certain percentage of the total revenues as follows: sales (56.2%);
franchise and excise (12.7%); gasoline and gasoline inspection (8.8%); gross
receipts and privilege (4.2%); motor vehicle (3%); income and inheritance
(2.5%); motor fuel (1.9%); tobacco, beer, and alcoholic beverages (1.9%) and
all other taxes (.6%). Of the total state revenue, approximately 41.5% or
$2,854.7 is estimated from the general fund.

The recommended state budget for fiscal year 1997-98 is $14.420 billion which
is $109.6 million less than 1996-97. Recommended General Fund revenues for
fiscal year 1997-98 are $12,329.2 million and appropriations are $5,993.3
million. The revenue increase from the prior fiscal year is $268.2 million or
2.2% and the increase in appropriations is $258.4 million, or 4.5%.

Total state revenue for fiscal year 1997-98 is estimated at $7,156 million.
Approximately 92% or $6,588.8 million of this amount is projected to be from
taxes. The top three state tax revenue producers are expected to be sales and
use tax at 56.7% or $4,057.1 million of total state revenue, franchise and
excise tax at 12.8% or $913.2 million, and gasoline/gasoline inspection tax at
8.6% or $615.7 million. Approximately 41.5% or $2,966.4 million of the total
state revenue is expected to be in the General Fund.

For Fiscal Year 1997-98, State revenues are scheduled to be allocated in the
following percentages: education (45%); health and social services (23.5%);
transportation, business, and economic development (10.4%); law, safety and
correction (9.2%); general government (2.6%); and resources and regulation
(2.5%).

Tennessee's general obligation bonds are rated Aaa by Moody's and AA+ by
Standard & Poor's. Tennessee's smallest counties have Moody's lowest rating
due to these rural counties' limited economies that make them vulnerable to
economic downturns. Tennessee's four largest counties have the second highest
of Moody's nine investment grades.

The state sold general obligation bonds in the amount of $113.2 million in
fiscal year 1995-96. This issue increased Tennessee's total general
obligation bond debt at June 30, 1996 to $767,971,000. Approximately 99.9% of
this debt was issued to provide funding for institutional and building
construction with the remaining .1% for highways. Total authorized but
unissued bonds for fiscal year 1996-97 is $1,413,755,000. The 1997-98 proposed
fiscal year budget recommends the authorization of an additional $75 million
in highway bonds, and $60.8 million in institutional and building bonds to
finance capital projects.

Tennessee is involved in certain legal proceedings that, if decided against
the State, may require the State to make significant future expenditures or
may substantially impair revenues. The Tennessee Supreme Court affirmed a case
in which the lower court found that the Tennessee Department of Revenue
improperly defined non-business earnings for tax purposes. Although this case
involved only $925,000, its outcome could affect future cases and could have a
detrimental impact to Tennessee's revenue base. The Tennessee Supreme Court
also reversed a similar case in which the lower court found that the
taxpayer's partial sale of business holdings resulted in taxable business
income. Although the Tennessee Supreme Court differentiated this case from the
previous one, these cases may create future litigation challenging
Tennessee's corporate tax and impacting revenue.

The foregoing information does not purport to be a complete or exhaustive
description of all the conditions to which the issuers of Bonds in the
Tennessee IM-IT Trust are subject. Many factors including national economic,
social and environmental policies and conditions, which are not within the
control of the issuers of Bonds, could affect or could have an adverse impact
on the financial condition of the State and various agencies and political
subdivisions located in the State. Since certain Bonds in the Tennessee IM-IT
Trust (other than general obligation bonds issued by the State) are payable
from revenue derived from a specific source or authority, the impact of a
pronounced decline in the national economy or difficulties in significant
industries within the State could result in a decrease in the amount of
revenues realized from such source or by such authority and thus adversely
affect the ability of the respective issuers of the Bonds in the Tennessee
IM-IT Trust to pay the debt service requirements on the Bonds. Similarly, such
adverse economic developments could result in a decrease in tax revenues
realized by the State and thus could adversely affect the ability of the State
to pay the debt service requirements of any Tennessee general obligation bonds
in the Tennessee IM-IT Trust. The Sponsor is unable to predict whether or to
what extent such factors or other factors may affect the issuers of Bonds, the
market value or marketability of the Bonds or the ability of the respective
issuers of the Bonds acquired by the Tennessee IM-IT Trust to pay interest on
or principal of the Bonds.

For a discussion of the federal tax status of income earned on Tennessee Trust
Units, see "Federal Tax Status."

The assets of the Tennessee IM-IT Trust will consist of bonds issued by the
State of Tennessee (the "State" ) or any county or any municipality or
political subdivision thereof, including any agency, board, authority or
commission, the interest on which is exempt from the Hall Income Tax imposed
by the State of Tennessee ("Tennessee Bonds" ) or by the Commonwealth
of Puerto Rico (the "Puerto Rico Bonds" ) (collectively, the "
Bonds" ).

Under Tennessee law, a unit investment trust taxable as a grantor trust for
federal income tax purposes is entitled to special Tennessee State tax
treatment (as more fully described below) with respect to its proportionate
share of interest income received or accrued with respect to the Tennessee
Bonds. Tennessee law also provides an exemption for distributions made by a
unit investment trust or mutual fund that are attributable to "bonds or
securities of the United States government or any agency or instrumentality
thereof" ("U.S. Government, Agency or Instrumentality Bonds" ). If
it were determined that the Trust held assets other than Tennessee Bonds or
U.S. Government, Agency or Instrumentality Bonds, a proportionate share of
distributions from the Trust would be taxable to Unitholders for Tennessee
Income Tax purposes.

Further, this provision appears only to provide an exemption for distributions
that relate to interest income, distributions by the Trust that relate to
capital gains realized from the sale or redemption of Tennessee Bonds or U.S.
Government, Agency or Instrumentality Bonds are likely to be treated as
taxable dividends for purposes of the Hall Income Tax. However, capital gains
realized directly by a Unitholder when the Unitholder sells or redeems his
Unit will not be subject to the Hall Income Tax. The opinion set forth below
assumes that the interest on the Tennessee Bonds, if received directly by a
Unitholder, would be exempt from the Hall Income Tax under Tennessee State
law. This opinion does not address the taxation of persons other than
full-time residents of the State of Tennessee.

Because this provision only provides an exemption for distributions
attributable to interest on Tennessee Bonds or U.S. Government, Agency or
Instrumentality Bonds, it must be determined whether bonds issued by the
Government of Puerto Rico qualify as U.S. Government, Agency or
Instrumentality Bonds. For Hall Income Tax purposes, there is currently no
published administrative interpretation or opinion of the Attorney General of
Tennessee dealing with the status of distributions made by unit investment
trusts such as the Tennessee Trust that are attributable to interest paid on
bonds issued by the Government of Puerto Rico. However, in a letter dated
August 14, 1992 (the "Commissioner's Letter" ), the Commissioner of
the State of Tennessee Department of Revenue advised that Puerto Rico would be
an "instrumentality" of the U.S. Government and treated bonds issued
by the Government of Puerto Rico as U.S. Government, Agency or Instrumentality
Bonds. Based on this conclusion, the Commissioner advised that distributions
from a mutual fund attributable to investments in Puerto Rico Bonds are exempt
from the Hall Income Tax. Both the Sponsor and Chapman and Cutler, for
purposes of its opinion (as set forth below), have assumed, based on the
Commissioner's Letter, that bonds issued by the Government of Puerto Rico are
U.S. Government, Agency or Instrumentality Bonds. However, it should be noted
that the position of the Commissioner is not binding, and is subject to
change, even on a retroactive basis.

The Sponsor cannot predict whether new legislation will be enacted into law
affecting the tax status of Tennessee IM-IT Trusts. The occurrence of such an
event could cause distributions of interest income from the Trust to be
subject to the Hall Income Tax. Investors should consult their own tax
advisors in this regard.

In the opinion of Special Counsel to the Sponsor, under existing Tennessee
State law as of the date of this prospectus:

For purposes of the Hall Income Tax, the Tennessee Excise Tax imposed by
Section 67-4-806 (the "State Corporate Income Tax" ), and the Tennessee
Franchise Tax imposed by Section 67-4-903, the Tennessee IM-IT Trust will not
be subject to such taxes.

For Hall Income Tax purposes, a proportionate share of such distributions from
the Tennessee IM-IT Trust to Unitholders, to the extent attributable to
interest on the Tennessee Bonds (based on the relative proportion of interest
received or accrued attributable to Tennessee Bonds) will be exempt from the
Hall Income Tax when distributed to such Unitholders. Based on the
Commissioner's Letter, distributions from the Trust to Unitholders, to the
extent attributable to interest on the Puerto Rico Bonds (based on the
relative proportion of interest received or accrued attributable to the Puerto
Rico Bonds) will be exempt from the Hall Income Tax when distributed to such
Unitholders. A proportionate share of distributions from the Tennessee IM-IT
Trust attributable to assets other than the Bonds would not, under current
law, be exempt from the Hall Income Tax when distributed to Unitholders.

For Tennessee State Corporate Income Tax Purposes, Tennessee law does not
provide an exemption for interest on Tennessee Bonds and requires that all
interest excludible from Federal gross income must be included in calculating
"net earnings" subject to the State Corporate Income Tax. No opinion
is expressed regarding whether such tax would be imposed on the earnings or
distributions of the Tennessee IM-IT Trust (including interest on the Bonds or
gain realized upon the disposition of the Bonds by the Tennessee IM-IT Trust)
attributable to Unitholders subject to the State Corporate Income Tax.
However, based upon prior written advice from the Tennessee Department of
Revenue, earnings and distributions from the Tennessee IM-IT Trust (including
interest on the Tennessee Bonds or gain realized upon the disposition of the
Tennessee Bonds by the Tennessee IM-IT Trust) attributable to the Unitholders
should be exempt from the State Corporate Income Tax. The position of the
Tennessee Department of Revenue is not binding, and is subject to change, even
on a retroactive basis.

Each Unitholder will realize taxable gain or loss for State Corporate Income
Tax purposes when the Unitholder redeems or sells his Units, at a price that
differs from original cost as adjusted for accretion or any discount or
amortization of any premium and other basis adjustments, including any basis
reduction that may be required to reflect a Unitholder's share of interest,
if any, accruing on Bonds during the interval between the Unitholder's
settlement date and the date such Bonds are delivered to the Tennessee IM-IT
Trust, if later. Tax basis reduction requirements relating to amortization of
bond premium may, under some circumstances, result in Unitholders realizing
taxable gain when the Units are sold or redeemed for an amount equal to or
less than their original cost.

For purposes of the Tennessee Property Tax, the Tennessee IM-IT Trust will be
exempt from taxation with respect to the Bonds it holds. As for the taxation
of the Units held by the Unitholders, although intangible personal property is
not presently subject to Tennessee taxation, no opinion is expressed with
regard to potential property taxation of the Unitholders with respect to the
Units because the determination of whether property is exempt from such tax is
made on a county by county basis.

No opinion is expressed herein regarding whether insurance proceeds paid in
lieu of interest on the Bonds held by the Tennessee IM-IT Trust (including the
Tennessee Bonds) are exempt from the Hall Income Tax. Distributions of such
proceeds to Unitholders may be subject to the Hall Income Tax.

The Bonds and the Units held by the Unitholder will not be subject to
Tennessee sales and use taxes.

We have not examined any of the Bonds to be deposited and held in the
Tennessee Trust or the proceedings for the issuance thereof or the opinions of
bond counsel with respect thereto, and therefore express no opinion as to the
exemption from State income taxes of interest on the Bonds if received
directly by a Unitholder.

Counsel to the Sponsor has expressed no opinion with respect to taxation under
any other provision under Tennessee law. Ownership of the Units may result in
collateral tax consequences to certain taxpayers. Prospective investors should
consult their tax advisors as to the applicability of any such collateral
consequences.

Texas Trusts

Historically, the primary sources of the State's revenues have been sales
taxes, mineral severance taxes and federal grants. Due to the collapse of oil
and gas prices in 1986 and a resulting enactment by recent legislatures of new
tax measures, including those increasing the rates of existing taxes and
expanding the tax base for certain taxes, there has been a reordering in the
relative importance of the State's taxes in terms of their contribution to the
State's revenue in any year. Due to the State's expansion in Medicaid spending
and other Health and Human Services programs requiring federal matching
revenues, federal receipts was the State's number one source of income in
fiscal 1995. Sales tax, which had been the main source of revenue for the
previous 12 years prior to fiscal 1993, was second, accounting for 26.5% of
total revenues in fiscal 1995. Licenses, fees and permits is now the third
largest revenue source, contributing 9.7% of total revenues in fiscal 1995.
The motor fuels tax is now the State's fourth largest revenue source and the
second largest tax, accounting for approximately 5.8% of total revenue in
fiscal year 1995. Motor vehicle sales/rental taxes, the State's fifth largest
revenue source, accounted for 4.6% of the total revenue in fiscal year 1995.
The remainder of the State's revenues are derived primarily from interest and
investment income and other excise taxes. The State currently has no personal
or corporate income tax. The State does, however, impose a corporate franchise
tax based in certain circumstances in part on a corporation's profit.

The Comptroller's estimate of total available General Revenues for 1996-97 is
$48.65 billion. Of this amount, 76.2% or $37.05 billion comes from taxes, with
sales tax of $21.9 billion or 59% of total taxes, motor vehicle sales and rent
taxes at $4 billion or 10.8%, and the corporation franchise tax at $3.34
billion or 9%. Licenses, fees, and permits is expected to contribute $3.51
billion or 7.2% to the total General Revenue. Total available General Revenues
are expected to grow to $49.97 billion in fiscal year 1998-99, a 2.7%
increase. Total tax revenue is expected to increase 4.9% in the same period.

Heavy reliance on the energy and agricultural sectors for jobs and income
resulted in a general downturn in the Texas economy beginning in 1982 as those
industries suffered significantly. The effects of this downturn continued to
adversely affect the State's real estate industry and its financial
institutions for several years. As a result of these problems, the general
revenue fund had a $231 million cash deficit at the beginning of the 1987
fiscal year and ended the 1987 fiscal year with a $745 million cash deficit.
In 1987, the Texas economy began to move toward a period of recovery. The
expansion continued in 1988 and 1989. In fiscal year 1995, the State ended the
year with a general revenue fund cash surplus of $2,110 million. This was the
eighth consecutive year that Texas ended a fiscal year with a positive balance.

The 73rd Legislature meeting in 1993 passed the 1994-1995 biennial all funds
budget of $70.1 billion without increasing state taxes. This was accomplished
by cutting spending in certain areas and increasing federal funding. The state
Comptroller estimated that total state revenues from all sources would total
$74.1 billion for the 1994-1995 biennium. Actual total net revenue for fiscal
year 1995 was $38.68 billion, compared to $36.7 billion for fiscal year 1994.
Total expenditures for fiscal year 1995 were $39.34 billion, compared to
$35.64 billion for fiscal year 1994. At the end of fiscal year 1995, the
General Revenue Fund had a balance of $2.11 billion.

The 74th Legislature, which convened in 1995, passed the 1996-97 biennial
budget, totaling $79.9 billion, also without raising additional taxes. The
74th Legislature relied, in part, on the State Comptroller's 1996-97 biennial
estimate of a $3.0 billion balance from the 1994-95 biennium. The Comptroller
has estimated that total revenues for fiscal 1996 and 1997 will be $39.2
billion and $40.6 billion, respectively. The revenue estimate for the 1996-97
biennium is based on an assumption that the Texas economy will show a steady
growth.

The Biennial Revenue Estimate for 1996-97 includes a projected ending balance
of $1.7 billion which is based, in part, on an assumption that all fiscal year
1997 general revenue appropriations will be spent. Thus, no estimate of
unexpended balances from fiscal year 1997 general revenue appropriations is
included in the forecast of revenues available for the 1998-99 biennium.
Analysis of current spending needs at major state agencies revealed that a
significant amount of fiscal year 1997 general revenue appropriations are not
required to meet current-year needs. The Governor's Budget proposes the
carry-forward of fiscal year 1997 general revenue appropriations to fiscal
year 1998 in the following agencies and amounts: Department of Health $150
million, Department of Human Services $50 million, and Department of Criminal
Justice $100 million, giving a total of $300 million.

The Governor's proposed budget for the 1998-99 biennium provides $84.7
billion from all funds, a $4.0 billion, or 4.9% increase from 1996- 97.
Spending from general revenue for the 1997-98 biennium is expected to total
$47.4 billion, a 6.3% or $2,830.7 million increase from 1996-97. Without the
$1 billion in state funds for school property tax relief in 1997-98, the
spending increase from the current biennium would only be 3.7% for all funds
and 4.1% for the general revenue. Both percentage increases are below the
Comptroller's projection of 11.1% growth in state personal income over the
same period.

The Governor's proposed 1998-99 budget leaves $237.2 million unspent and
available. This amount would be higher if there were no court actions
affecting the sales tax. The revenue impact of two court challenges relating
to the sales tax exemption for manufacturing equipment and machinery result in
the potential loss of $500 million, which has been removed from the estimated
revenue amounts. Should the state amend statutory tax law to reflect the
historical state application of the exemption, this could restore in excess of
$150 million to the revenue stream.

Because of the $1 billion provided for property tax relief and due to enhanced
use of federal block grant funds, the proposed 1998-99 budget exceeds the all
funds recommendations of the Legislative Budget Board, introduced in the 75th
Legislature. As for the general revenue, the Governor's budget proposal is
almost $530 million below the recommendations of the Legislative Budget Board,
adjusting for the property tax relief. Yet, the proposed budget for 1998-99 is
within the estimate of available revenues prepared by the Comptroller of
Public Accounts, even while reserving $1 billion for the Governor's property
tax relief initiative.

Currently, the service-producing sectors (i.e., transportation and public
utilities, insurance and real estate, government, trade) are the major sources
of job growth in Texas, accounting for 80% of total non-farm employment and
over 90% of employment growth since 1990. Also, the number of manufacturing
jobs has increased 7% since 1992. This job growth is expected to be
significant to future growth in Texas.

Total nonagricultural wage and salary employment (seasonally adjusted) grew
2.44% from December 1995 to December 1996. During this period, the
goods-producing industry showed job growth of 1.52% and the service-producing
industry showed job growth of 2.67%. Of the goods- producing industries,
construction grew 3.9% and manufacturing showed 1.01% growth. Only mining
showed a decrease in employment of 1.55%. Of the service-producing industries,
services showed the most growth, at 3.9%. Transportation, communications and
utilities grew 2.77%, trade grew 2.16%, and finance, insurance and real estate
showed 1.32% job growth. Texas is predicted to create an average of 180,000
jobs per year until 2000. Most of this growth is expected to occur in
service-producing industries.

Texas's unemployment rate in 1995 of 6.0% was its lowest rate in ten years.
The unemployment rate for the United States in 1995 was 5.6%. Texas's
unemployment rate has dropped from 5.7% in December of 1995 to 5.0% in
December 1996. The unemployment rates for the U.S. in December 1995 and
December 1996 were 5.2% and 5.0% respectively.

The Texas Constitution prohibits the State from levying ad valorem taxes on
property for general revenue purposes and limits the rate of such taxes for
other purposes to $.35 per $100 of valuation. The Constitution also permits
counties to levy, in addition to all other ad valorem taxes permitted by the
Constitution, ad valorem taxes on property within the county for flood control
and road purposes in an amount not to exceed $.30 per $100 of valuation. The
Constitution prohibits counties, cities and towns from levying a tax rate
exceeding $.80 per $100 of valuation for general fund and other specified
purposes.

With certain specific exceptions, the Texas Constitution generally prohibits
the creation of debt by or on behalf of the State unless the voters of the
State, by constitutional amendment, authorize the issuance of debt (including
general obligation indebtedness backed by the State's taxing power and full
faith and credit). In excess of $9.0 billion of general obligation bonds have
been authorized in Texas and almost $5.4 billion of such bonds, including
revenue bonds, are currently outstanding. Many of these were issued by the
Veterans' Land Board and the Texas Public Finance Authority.

Though the full faith and credit of the State are pledged for the payment of
all general obligations issued by the State, much of that indebtedness is
designed to be eventually self-supporting from fees, payments, and other
sources of revenues; in some instances, the receipt of such revenues by
certain issuing agencies has been in sufficient amounts to pay the principal
of and interest on the issuer's outstanding bonds without requiring the use of
appropriated funds.

Pursuant to Article 717k-2, Texas Revised Civil Statutes, as presently
amended, the net effective interest rate for any issue or series of Bonds in
the Texas IM-IT Trust is limited to 15%.

From the time Standard & Poor's began rating Texas general obligation bonds in
1956 until early 1986, that firm gave such bonds its highest rating, "
AAA." In April 1986, in response to the State economic problems, Standard
& Poor's downgraded its rating of Texas general obligation bonds to "
AA+." Such rating was further downgraded in July 1987 to "AA."
Moody's Investors Service, Inc. has rated Texas bonds since prior to the Great
Depression. Moody's upgraded its rating of Texas general obligation bonds in
1962 from "Aa" to "Aaa" , its highest rating, following the
imposition of a statewide sales tax by the Legislature. Moody's downgraded
such rating to "Aa" in March 1987. No prediction can be made
concerning future changes in ratings by national rating agencies of Texas
general obligation bonds or concerning the effect of such ratings changes on
the market for such issues.

The same economic and other factors affecting the State of Texas and its
agencies also have affected cities, counties, school districts and other
issuers of bonds located throughout the State. Declining revenues caused by
the downturn in the Texas economy in the mid-1980s forced these various other
issuers to raise taxes and cut services to achieve the balanced budget
mandated by their respective charters or applicable State law requirements.
Standard & Poor's and Moody's Investors Service, Inc. assign separate ratings
to each issue of bonds sold by these other issuers. Such ratings may be
significantly lower than the ratings assigned by such rating agencies to Texas
general obligation bonds.

In March 1993, the Legislature passed a proposed constitutional amendment
which would allow a limited amount of money to be "recaptured" from
wealthy school districts and redistributed to property-poor school districts.
However, the amendment was rejected by the voters on May 1, 1993, requiring
the Legislature to develop a new school finance plan. At the end of May 1993,
the legislature passed a new school finance bill that provides school
districts with certain choices to achieve funding equalization. The Texas
Supreme Court upheld this school finance law in January 1995.

A wide variety of Texas laws, rules and regulations affect, directly, or
indirectly, the payment of interest on, or the repayment of the principal of,
Bonds in the Texas IM-IT Trust. The impact of such laws and regulations on
particular Bonds may vary depending upon numerous factors including, among
others, the particular type of Bonds involved, the public purpose funded by
the Bonds and the nature and extent of insurance or other security for payment
of principal and interest on the Bonds. For example, Bonds in the Texas IM-IT
Trust which are payable only from the revenues derived from a particular
facility may be adversely affected by Texas laws or regulations which make it
more difficult for the particular facility to generate revenues sufficient to
pay such interest and principal, including, among others, laws and regulations
which limit the amount of fees, rates or other charges which may be imposed
for use of the facility or which increase competition among facilities of that
type or which limit or otherwise have the effect of reducing the use of such
facilities generally, thereby reducing the revenues generated by the
particular facility. Bonds in the Texas IM-IT Trust, the payment of interest
and principal on which is payable from annual appropriations, may be adversely
affected by local laws or regulations that restrict the availability of monies
with which to make such appropriations. Similarly, Bonds in the Texas IM-IT
Trust, the payment of interest and principal on which is secured, in whole or
in part, by an interest in real property may be adversely affected by declines
in real estate values and by Texas laws that limit the availability of
remedies or the scope of remedies available in the event of a default on such
Bonds. Because of the diverse nature of such laws and regulations and the
impossibility of predicting the nature or extent of future changes in existing
laws or regulations or the future enactment or adoption of additional laws or
regulations, it is not presently possible to determine the impact of such laws
and regulations on the Bonds in the Texas IM-IT Trust and, therefore, on the
Units.

The foregoing information constitutes only a brief summary of some of the
financial difficulties which may impact certain issuers of Bonds in the Texas
IM-IT Trust and does not purport to be a complete or exhaustive description of
all adverse conditions to which the issuers in the Texas IM-IT Trust are
subject. Additionally, many factors including national economic, social and
environmental policies and conditions, which are not within the control of the
issuers of Bonds, could affect or could have an adverse impact on the
financial condition of the State and various agencies and political
subdivisions located in the State. The Sponsor is unable to predict whether or
to what extent such factors or other factors may affect the issuers of the
Bond, the market value or marketability of the Bonds or the ability of the
respective issuers of the Bonds acquired by the Texas IM-IT Trust to pay
interest on or principal of the Bonds.

For a discussion of the Federal tax status of income earned on Texas Trust
Units, see "Other Matters--Federal Tax Status" .

In the opinion of special counsel to the Fund, under existing Texas law:

Neither the State nor any political subdivision of the State currently imposes
an income tax on individuals. Therefore, no portion of any distribution
received by an individual Unitholder of the Trust in respect of his Units,
including a distribution of the proceeds of insurance in respect of such
Units, is subject to income taxation by the State or any political subdivision
of the State;

Except in the case of certain transportation businesses, savings and loan
associations and insurance companies, no Unit of the Trust is taxable under
any property tax levied in the State;

The "inheritance tax" of the State, imposed upon certain transfers of
property of a deceased resident individual Unitholder, may be measured in part
upon the value of Units of the Trust included in the estate of such
Unitholder; and

With respect to any Unitholder which is subject to the State corporate
franchise tax, Units in the Trust held by such Unitholder, and distributions
received thereon, will be taken into account in computing the "taxable
capital" of the Unitholder allocated to the State, one of the bases by
which such franchise tax is currently measured (the other being a
corporation's "net capital earned surplus" , which is, generally, its
net corporate income plus officers and directors income).

The opinion set forth in clause (2), above, is limited to the extent that
Units of the Trust may be subject to property taxes levied in the State if
held on the relevant date: (i) by a transportation business described in
V.T.C.A., Tax Code, Subchapter A, Chapter 24; (ii) by a savings and loan
association formed under the laws of the State (but only to the extent
described in section 11.09 of the Texas Savings and Loan Act, Vernon's Ann.
Civ. St. art. 852a); or (iii), by an insurance company incorporated under the
laws of the State (but only to the extent described in V.A.T.S., Insurance
Code, Art. 4.01). Each Unitholder described in the preceding sentence should
consult its own tax advisor with respect to such matters.

Corporations subject to the State franchise tax should be aware that in its
first called 1991 session, the Texas Legislature adopted, and the Governor has
signed into law, certain substantial amendments to the State corporate
franchise tax, the effect of which may be to subject to taxation all or a
portion of any gains realized by such a corporate Unitholder upon the sale,
exchange or other disposition of a Unit. The amendments are applicable to
taxable periods commencing January 1991, and to each taxable period
thereafter. Because no authoritative judicial, legislative or administrative
interpretation of these amendments has issued, and there remain many
unresolved questions regarding its potential effect on corporate franchise
taxpayers, each corporation which is subject to the State franchise tax and
which is considering the purchase of Units should consult its tax advisor
regarding the effect of these amendments.

Washington Trusts

Based on the U.S. Census Bureau's 1990 Census, the State is the 18th largest
by population. From 1980 to 1990, the State's population increased at an
average annual rate of 1.8% while the United States' population grew at an
average annual rate of 1.1%. In 1996, the State's population reached an
estimated 5,516,800, with an annual growth rate of approximately 2% despite
slower economic growth since 1990.

State Economic Overview. The State's economic performance over the past few
years has been relatively strong when compared to that of the United States as
a whole. Washington's economy has steadily diversified resulting in a healthy
climate for business investment, as well as creating markets for a wide array
of services and products. Washington's gross business income was $294.5
billion in 1994, up 6.1% from the previous year. Per capita personal income in
1995 was $23,774, an increase of 4.5% from 1994 and 102% of the national
figure in 1995.

The economic base of the State includes manufacturing and service industries
as well as agricultural and timber production. Employment has declined in
traditional industries like agriculture, lumber and wood products, and mining,
while sharp increases have occurred in instruments, electrical and
nonelectrical machinery, wholesale and retail trade, and many service sectors.
In recent years, Washington's economy has significantly expanded its
manufacturing base and growth in the service sector, which has greatly reduced
the state's sensitivity to cyclic changes in manufacturing demand.
Significant goods-producing industries in 1994 included aircraft and parts
($20.8 billion in gross business income), lumber and wood products ($8.2
billion), food products ($7.3 billion), primary metals production ($3.2
billion), paper and allied products ($2.9 billion), and printing, publishing,
etc. ($2.6 billion).

The State's leading export industries are aerospace, forest products,
agriculture and food processing. On a combined basis, the aerospace, timber
and food processing industries employ about 9% of the State's non-farm
workers. In recent years, however, the non-manufacturing sector has played an
increasingly significant role in contributing to the State's economy.

The Boeing Company ("Boeing" ), the State's largest employer, is
preeminent in aircraft manufacturing and exerts a significant impact on
overall State production, employment and labor earnings. After six years of
downsizing, Boeing increased its work force by 3,800 employees in the last two
quarters of fiscal year 1996, with plans to hire 10,000 more by the end of
calendar year 1996. This marked a dramatic turn-around for the state's
aerospace industry, which lost a total of 25,000 jobs between the first
quarter of 1993 and the second quarter of 1996. In 1995, Boeing had $19.515
billion in sales and net earnings of $329 million, and a backlog of orders
totaling $72.3 billion.

State Revenues, Expenditures and Fiscal Controls. The State's tax revenues are
primarily comprised of excise and ad valorem taxes. By constitutional
provision, the aggregate of all unvoted tax levies upon real and personal
property by State and local taxing districts may not exceed 1% of the true and
fair value of such property.

By law, State tax revenue growth is limited so that it does not exceed the
growth rate of State personal income averaged over a three-year period. To
date, State revenue increases have remained substantially below the State's
revenue limit.

Expenditures of general State revenues are made pursuant to constitutional and
statutory mandates. Most general State revenue is deposited in the State's
General Fund. During the 1995-97 biennium, money in the General Fund is
expected to be spent on public schools (36.5%), social and health services
(39.5%), higher education (8.5%) and other human services (5.5%).

State law requires a balanced biennial budget. Whenever it appears that
disbursements will exceed the aggregate of estimated receipts plus beginning
cash surplus, the Governor is required to reduce expenditures of appropriated
funds. To assist in its financial planning, the State, through its Economic
and Revenue Forecast Council, prepares quarterly economic and revenue
forecasts.

State Debt. The State currently has outstanding general obligation bonds in
the aggregate principal amount of approximately $4.98 billion. Issuance of
additional general obligation bonds is subject to constitutional and statutory
debt limitations. By statute, additional general obligation bonds (with
certain exceptions) may not be issued if, after giving effect thereto, maximum
annual debt service would exceed 7% of the arithmetic mean of general State
revenues for the preceding three fiscal years.

State Budget. The State operates on a July 1 to June 30 fiscal year and on a
biennial budget basis. For the 1993-95 biennium, revenues in the General Fund
increased 11.5%. Based on the November 1996 forecast by the Estimating Revenue
Conference, General Fund-State revenues for the 1995-97 biennium are forecast
to be about $18.3 billion, an increase of 6.2% over the previous biennium. Tax
changes enacted during the 1995 legislative session reduced revenues for the
1995-97 biennium by $228 million; additional changes during the 1996
legislative session reduced revenues for the 1995-97 biennium by $175 million.
Without these legislative reductions, the revenue growth for the 1995-97
biennium would have been 10%. The 1995-97 biennium is expected to have an
ending balance of $404.6 million in the State's General Fund.

The General Fund November 1996 revenue forecast for the 1997-99 biennium is
$19,433.7 million. The Governor is recommending $19.238 billion in General
Fund-State operating budget for the 1997-99 biennium, which is below the
Initiative 601 expenditure limits authorized in current law. The Governor
proposes appropriations of $9.374 billion in fiscal year 1998 and $9.864
billion in fiscal year 1999. Approximately 58% of all General Fund-State
expenditures would be used to fund public schools, community and technical
colleges, and four year universities. When all funds are considered, including
federal funds and dedicated revenues, the total proposed operating budget for
the 1997-99 biennium is $36.069 billion.

The Governor's proposal represents the smallest percentage increase in
General Fund-State expenditures in over 25 years, and holds $304 million in
reserve to address any unanticipated future costs. The Governor's plan
proposes to increase spending by $1.49 billion for the 1997-99 biennium, for
an annual average of only 4.1%.

State Bond Ratings. The State's most recent general obligation bond issue was
rated "Aa" by Moody's and "AA" by S&P and Fitch. No assurance
can be given that the State's recent or projected economic and budgetary
problems will not result in a review or downgrading of these ratings.

The foregoing information constitutes only a brief summary of some of the
general factors which may impact certain issuers of bonds and does not purport
to be a complete or exhaustive description of all adverse conditions to which
the issuers of obligations held by the Washington Trust are subject.
Additionally, many factors including national economic, social and
environmental policies and conditions, which are not within the control of the
Issuers of the Bonds, could affect or could have an adverse impact on the
financial condition of the State and various agencies and political
subdivisions located in the State. The Sponsor is unable to predict whether or
to what extent such factors or other factors may affect the issuers of the
Bonds, the market value or marketability of the Bonds or the ability of the
respective issuers of the Bonds acquired by the Washington Trust to pay
interest on or principal of the Bonds.

At the time of closing for each Washington Trust, Special Counsel to the Fund
for Washington tax matters, rendered an opinion under then existing Washington
law substantially to the effect that:

Neither the State of Washington nor any of its political subdivisions imposes
an income tax.

The State imposes a business and occupation tax on the gross receipts of all
business activities conducted within the State, with certain exceptions. The
Washington Trust will not be subject to this tax. Distributions of the
Washington Trust income paid to Unit holders who are not engaged in a banking,
loan, securities, or other financial business in the State (which businesses
have been broadly defined) will not be subject to the tax. Unit holders that
are engaged in any of such financial businesses will be subject to the tax.
Currently the business and occupation tax rate is $1.5%. Several cities impose
comparable business and occupation taxes on financial businesses conducted
within such cities. The current rate in Seattle is .415%.

The Units will not be subject to the State's ad valorem property tax, nor will
any sale, transfer or possession of the Units be subject to State or local
sales or use taxes.

Persons considering the purchase of Units should be aware that proposals have
recently been suggested by the Governor and other officials of the State that
would, if enacted, subject interest income received by persons resident in (or
doing business within) the State to the business and occupation tax, whether
or not such persons are engaged in a banking, loan, securities, or other
financial business. It is unclear whether such proposals would exclude
interest income derived from obligations of the State and its political
subdivisions.

The foregoing is an abbreviated summary of certain of the provisions of
Washington statutes and administrative rules presently in effect, with respect
to the taxation of Unit holders of the Washington Trust. These provisions are
subject to change by legislative or administrative actions, or by court
decisions, and any such change may be retroactive with respect to Washington
Trust transactions. Unit holders are advised to consult with their own tax
advisors for more detailed information concerning Washington State and local
tax matters. The foregoing summary assumes that the Washington Trust will not
conduct business activities within Washington.

West Virginia Trusts

The assets of the West Virginia Trust will consist of interest-bearing
obligations issued by or on behalf of the State of West Virginia ("West
Virginia" ) or counties, municipalities, authorities or political
subdivisions thereof the interest on which is expected to qualify as exempt
from West Virginia income taxes (the "West Virginia Bonds" ) or by the
Commonwealth of Puerto Rico, Guam or the United States Virgin Islands (the
"Possession Bonds" ) (collectively, the "Bonds" ).

Neither the Sponsor nor its counsel have independently examined the Bonds to
be deposited in and held in the Trust. However, although no opinion is
expressed herein regarding such matters, it is assumed that: (i) the Bonds
were validly issued, (ii) the interest thereon is excludable from gross income
for federal income tax purposes and (iii) interest on the Bonds, if received
directly by a Unitholder would be exempt from the West Virginia personal
income tax applicable to individuals (the "West Virginia Personal Income
Tax" ). At the respective times of issuance of the Bonds, opinions relating
to the validity thereof and to the exemption of interest thereon from Federal
income tax were rendered by bond counsel to the respective issuing
authorities. In addition, with respect to the West Virginia Bonds, bond
counsel to the issuing authorities rendered opinions as to the exemption of
interest from the West Virginia Personal Income Tax and, with respect to the
Possession Bonds, bond counsel to the issuing authorities rendered opinions as
to the exemption from all state and local income taxation. Neither the Sponsor
nor its counsel has made any review for the West Virginia Trust of the
proceedings relating to the issuance of the Bonds or of the bases for the
opinions rendered in connection therewith. The opinion set forth below does
not address the taxation of persons other than full-time residents of West
Virginia.

At the time of closing for each West Virginia Trust, Special Counsel to the
Fund for West Virginia tax matters rendered an opinion, based upon the
assumptions set forth above, under then existing West Virginia law
substantially to the effect that:

The West Virginia Trust will not be subject to tax under the West Virginia
Corporation Net Income Tax, the West Virginia Business Franchise Tax, or the
West Virginia Personal Income Tax.

Income on the Bonds which is exempt from the West Virginia Personal Income Tax
when received by the West Virginia Trust, and which would be exempt from the
West Virginia Personal Income Tax if received directly by a Unitholder, will
retain its status as exempt from such tax when received by the West Virginia
Trust and distributed to such Unitholder.

For Unitholders subject to the West Virginia Corporation Net Income Tax,
income of the West Virginia Trust received by them (except interest income
with respect to Possession Bonds, as to which no opinion is expressed) is not
exempt from the West Virginia Corporation Net Income Tax. However, such
Unitholders may be entitled to a credit against the tax imposed under the West
Virginia Corporation Net Income Tax Law based on their ownership of Units in
the West Virginia Trust. Unitholders should consult their own advisors
regarding the applicability and computation of any such credit.

Each Unitholder will recognize gain or loss for West Virginia Personal Income
Tax purposes if the Trustee disposes of a bond (whether by redemption, sale or
otherwise) or if the Unitholder redeems or sells Units of the West Virginia
Trust to the extent that such a transaction results in a recognized gain or
loss to such Unitholder for federal income tax purposes.

Insurance proceeds paid under policies which represent maturing interest on
defaulted obligations which are excludable from gross income for federal
income tax purposes should be excludable from the West Virginia Personal
Income Tax to the same extent as such interest would have been if paid by the
issuer of such Bonds held by the West Virginia Trust.

The West Virginia Personal Income Tax does not permit a deduction of interest
paid on indebtedness incurred or continued to purchase or carry Units in the
West Virginia Trust to the extent that interest income related to the
ownership of Units is exempt from the West Virginia Personal Income Tax.

We have not examined any of the Bonds to be deposited and held in the West
Virginia Trust or the proceedings for the issuance thereof or the opinions of
bond counsel with respect thereto, and therefore express no opinion as to the
exemption from federal or state income taxation of interest on the Bonds if
interest thereon had been received directly by a Unitholder.

Counsel to the Sponsor has expressed no opinion with respect to taxation under
any other provision of West Virginia law. Ownership of the Units may result in
collateral West Virginia tax consequences to certain taxpayers. Prospective
investors should consult their tax advisors as to the applicability of any
such collateral consequences. We have been informally advised by the Legal
Division of the West Virginia Department of Tax and Revenue that Units may be
subject to the West Virginia property tax (regardless of whether the Bonds
held by the West Virginia Trust would be exempt from such tax if held directly
by a Unitholder).

TRUST ADMINISTRATION AND EXPENSES

Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trusts. The Sponsor is an indirect
subsidiary of VK/AC Holding, Inc. Prior to October 31, 1996, VK/AC Holding,
Inc. was controlled, through the ownership of a substantial majority of its
common stock, by The Clayton & Dubilier Private Equity IV Limited Partnership.
On October 31, 1996, VK/AC Holding, Inc. became a wholly owned indirect
subsidiary of Morgan Stanley Group Inc. pursuant to the closing of an
Agreement and Plan of Merger among Morgan Stanley Group Inc., MSAM Holding II,
Inc. and MSAM Acquisition Inc., whereby MSAM Acquisition Inc. was merged with
and into VK/AC Holding, Inc. and VK/AC Holding, Inc. was the surviving
corporation (the "Acquisition" ).

As a result of the Acquisition, VK/AC Holding, Inc. became a wholly owned
subsidiary of MSAM Holdings II, Inc. which, in turn, is a wholly owned
subsidiary of Morgan Stanley Group Inc. Morgan Stanley Group Inc. and various
of its directly or indirectly owned subsidiaries, including Morgan Stanley
Asset Management Inc., an investment adviser ("MSAM" ), Morgan Stanley
& Co. Incorporated, a registered broker-dealer and investment adviser, and
Morgan Stanley International, are engaged in a wide range of financial
services. Their principal businesses include securities underwriting,
distribution and trading; merger, acquisition, restructuring and other
corporate finance advisory activities; merchant banking; stock brokerage and
research services; asset management; trading of futures, options, foreign
exchange commodities and swaps (involving foreign exchange, commodities,
indices and interest rates); real estate advice, financing and investing; and
global custody, securities clearance services and securities lending. As of
September 30, 1996, MSAM, together with its affiliated investment advisory
companies, had approximately $103.5 billion of assets under management and
fiduciary advice.

Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.

Van Kampen American Capital Distributors, Inc. specializes in the underwriting
and distribution of unit investment trusts and mutual funds with roots in
money management dating back to 1926. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and has offices at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, (630) 684-6000 and 2800 Post Oak Boulevard,
Houston, Texas, 77056, (713) 993-0500. It maintains a branch office in
Philadelphia and has regional representatives in Atlanta, Dallas, Los Angeles,
New York, San Francisco, Seattle and Tampa. As of November 30, 1996, the total
stockholders' equity of Van Kampen American Capital Distributors, Inc. was
$129,451,000 (unaudited). (This paragraph relates only to the Sponsor and not
to the Fund or to any Series thereof or to any other Underwriter. The
information is included herein only for the purpose of informing investors as
to the financial responsibility of the Sponsor and its ability to carry out
its contractual obligations. More detailed financial information will be made
available by the Sponsor upon request.)

As of December 31, 1996, the Sponsor and its Van Kampen American Capital
affiliates managed or supervised approximately $59 billion of investment
products, of which over $21.78 billion is invested in municipal securities.
The Sponsor and its Van Kampen American Capital affiliates managed $48 billion
of assets, consisting of $29.9 billion for 59 open end mutual funds (of which
46 are distributed by Van Kampen American Capital Distributors, Inc.), $13.12
billion for 38 closed-end funds and $4.99 billion for 114 institutional
accounts. The Sponsor has also deposited approximately $26 billion of unit
investment trusts. All of Van Kampen American Capital's open-end funds,
closed-end funds and unit investment trusts are professionally distributed by
leading financial firms nationwide. Based on cumulative assets deposited, the
Sponsor believes that it is the largest sponsor of insured municipal unit
investment trusts, primarily through the success of its Insured Municipals
Income Trust(R)or the IM-IT(R)trust. The Sponsor also provides
surveillance and evaluation services at cost for approximately $13 billion of
unit investment trust assets outstanding. Since 1976, the Sponsor has serviced
over two million investor accounts, opened through retail distribution firms.

If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or become bankrupt or its affairs are
taken over by public authorities, then the Trustee may (i) appoint a successor
Sponsor at rates of compensation deemed by the Trustee to be reasonable and
not exceeding amounts prescribed by the Securities and Exchange Commission,
(ii) terminate the Trust Agreement and liquidate the Fund as provided therein
or (iii) continue to act as Trustee without terminating the Trust Agreement.

All costs and expenses incurred in creating and establishing the Fund,
including the cost of the initial preparation, printing and execution of the
Trust Agreement and the certificates, legal and accounting expenses,
advertising and selling expenses, expenses of the Trustee, initial evaluation
fees and other out-of-pocket expenses have been borne by the Sponsor at no
cost to the Fund.

Compensation of Sponsor and Evaluator. The Sponsor will not receive any fees
in connection with its activities relating to the Trusts. However, American
Portfolio Evaluation Services, a division of Van Kampen American Capital
Investment Advisory Corp., which is an affiliate of the Sponsor, will receive
an annual supervisory fee as indicated under "Summary of Essential
Financial Information" in Part One of this Prospectus for providing
portfolio supervisory services for such series. Such fee may exceed the actual
costs of providing such supervisory services for such series, but at no time
will the total amount received for portfolio supervisory services rendered to
all such series in any calendar year exceed the aggregate cost to the
Evaluator of supplying such services in such year. In addition, the Evaluator
shall receive an annual evaluation fee as indicated under "Summary of
Essential Financial Information" in Part One of this Prospectus for
regularly evaluating each Trust's portfolio. Such fees are based on the
outstanding principal amount of Securities in each Trust on the Date of
Deposit for the first year and as of the close of business on January 1 for
each year thereafter. Both of the foregoing fees may be increased without
approval of the Unitholders by amounts not exceeding proportionate increases
under the category "All Services Less Rent of Shelter" in the Consumer
Price Index published by the United States Department of Labor or, if such
category is no longer published, in a comparable category. The Sponsor and the
dealers will receive sales commissions and may realize other profits (or
losses) in connection with the sale of Units as described under "Public
Offering" .

Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its offices at 101 Barclay
Street, New York, New York 10286, telephone (800-221-7668). The Bank of New
York is subject to supervision and examination by the Superintendent of Banks
of the State of New York and the Board of Governors of the Federal Reserve
System, and its deposits are insured by the Federal Deposit Insurance
Corporation to the extent permitted by law.

The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Bonds for the portfolio of any Trust.

In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for the Fund. Such
records shall include the name and address of, and the certificates issued by
the Fund to, every Unitholder of the Fund. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or Federal statute,
rule or regulation (see "Public Offering Reports Provided" ). The
Trustee is required to keep a certified copy or duplicate original of the
Trust Agreement on file in its office available for inspection at all
reasonable times during the usual business hours by any Unitholder, together
with a current list of the Securities held in the Fund. Under the Trust
Agreement, the Trustee or any successor trustee may resign and be discharged
of the Trusts created by the Trust Agreement by executing an instrument in
writing and filing the same with the Sponsor. The Trustee or successor trustee
must mail a copy of the notice of resignation to all Fund Unitholders then of
record, not less than 60 days before the date specified in such notice when
such resignation is to take effect. The Sponsor upon receiving notice of such
resignation is obligated to appoint a successor trustee promptly. If, upon
such resignation, no successor trustee has been appointed and has accepted the
appointment within 30 days after notification, the retiring Trustee may apply
to a court of competent jurisdiction for the appointment of a successor. The
Sponsor may remove the Trustee and appoint a successor trustee as provided in
the Trust Agreement at any time with or without cause. Notice of such removal
and appointment shall be mailed to each Unitholder by the Sponsor. 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. The resignation or removal of a Trustee
becomes effective only when the successor trustee accepts its appointment as
such or when a court of competent jurisdiction appoints a successor trustee.

Trustee's Fee. For its services the Trustee will receive a fee based on the
aggregate outstanding principal amount of Securities in each Trust as of the
opening of business on January 2 and July 2 of each year as set forth under
"Per Unit Information" for the applicable Trust in Part I of this
Prospectus. The Trustee's fees are payable monthly on or before the
twenty-fifth day of each month from the Interest Account of each Trust to the
extent funds are available and then from the Principal Account of each Trust,
with such payments being based on each Trust's portion of such expenses. Since
the Trustee has the use of the funds being held in the Principal and Interest
Accounts for future distributions, payment of expenses and redemptions and
since such Accounts are non-interest bearing to Unitholders, the Trustee
benefits thereby. Part of the Trustee's compensation for its services to each
Trust is expected to result from the use of these funds. Such fees may be
increased without approval of the Unitholders by amounts not exceeding
proportionate increases under the category "All Services Less Rent of
Shelter" in the Consumer Price Index published by the United States
Department of Labor or, if such category is no longer published, in a
comparable category. The Trustee's fees will not be increased in future years
in order to make up any reduction in the Trustee's fees described under "
Per Unit Information" for the applicable Trust in Part I of this
Prospectus. For a discussion of the services rendered by the Trustee pursuant
to its obligations under the Trust Agreement, see "Rights of Unitholders
Reports Provided" and "Trust Administration" .

Portfolio Administration. The Trustee is empowered to sell, for the purpose of
redeeming Units tendered by any Unitholder, and for the payment of expenses
for which funds may not be available, such of the Bonds designated by the
Evaluator as the Trustee in its sole discretion may deem necessary. The
Evaluator, in designating such Securities, will consider a variety of factors,
including (a) interest rates, (b) market value and (c) marketability. To the
extent that Bonds are sold which are current in payment of principal and
interest in order to meet redemption requests and defaulted Bonds are retained
in the portfolio in order to preserve the related insurance protection
applicable to said Bonds, the overall quality of the Bonds remaining in a
Trust's portfolio will tend to diminish. Except as described below and in
certain other unusual circumstances for which it is determined by the Trustee
to be in the best interests of the Unitholders or if there is no alternative,
the Trustee is not empowered to sell Bonds which are in default in payment of
principal or interest or in significant risk of such default and for which
value has been attributed for the insurance obtained by a Trust. Because of
such restrictions on the Trustee under certain circumstances, the Sponsor may
seek a full or partial suspension of the right of Unitholders to redeem their
Units. See "Public Offering Redemption of Units" . The Sponsor is
empowered, but not obligated, to direct the Trustee to dispose of Bonds in the
event of an advanced refunding.

The Sponsor is required to instruct the Trustee to reject any offer made by an
issuer of any of the Securities to issue new obligations in exchange or
substitution for any Security pursuant to a refunding or refinancing plan,
except that the Sponsor may instruct the Trustee to accept or reject such an
offer or to take any other action with respect thereto as the Sponsor may deem
proper if (1) the issuer is in default with respect to such Security or (2) in
the written opinion of the Sponsor the issuer will probably default with
respect to such Security in the reasonably foreseeable future. Any obligation
so received in exchange or substitution will be held by the Trustee subject to
the terms and conditions of the Trust Agreement to the same extent as
Securities originally deposited thereunder. Within five days after the deposit
of obligations in exchange or substitution for underlying Securities, the
Trustee is required to give notice thereof to each Unitholder of the Trust
thereby affected, identifying the Securities eliminated and the Securities
substituted therefor. Except as provided herein, the acquisition by the Fund
of any securities other than the Securities initially deposited is not
permitted.

If any default in the payment of principal or interest on any Security occurs
and no provision for payment is made therefor within 30 days, the Trustee is
required to notify the Sponsor thereof. If the Sponsor fails to instruct the
Trustee to sell or to hold such Security within 30 days after notification by
the Trustee to the Sponsor of such default, the Trustee may in its discretion
sell the defaulted Security and not be liable for any depreciation or loss
thereby incurred.

The offering price of any Units acquired by the Sponsor will be in accord with
the Public Offering Price described in the then currently effective prospectus
describing such Units. Any profit resulting from the resale of such Units will
belong to the Sponsor which likewise will bear any loss resulting from a lower
offering or Redemption Price subsequent to its acquisition of such Units.

Insurance Premiums. Insurance premiums, which are obligations of each Trust,
are payable monthly by the Trustee on behalf of the respective Trust so long
as such Trust retains the Bonds. The cost of the portfolio insurance obtained
by the respective Trust is set forth in Part One of this Prospectus. As Bonds
in the portfolio of a Trust are redeemed by their respective issuers or are
sold by the Trustee, the amount of the premium will be reduced in respect of
those Bonds no longer owned by and held in such Trust. If the Trustee
exercises the right to obtain permanent insurance, the premiums payable for
such permanent insurance will be paid solely from the proceeds of the sale of
the related Bonds. The premiums for such permanent insurance with respect to
each Bond will decline over the life of the Bond. A Trust does not incur any
expense for Preinsured Bond Insurance, since the premium or premiums for such
insurance have been paid by the respective issuers or the Sponsor, prior to
the deposit of such Preinsured Bonds in a Trust. Preinsured Bonds are not
additionally insured by such Trust.

Miscellaneous Expenses. The following additional charges are or may be
incurred by the Trusts: (a) fees of the Trustee for extraordinary services,
(b) expenses of the Trustee (including legal and auditing expenses) and of
counsel designated by the Sponsor, (c) various governmental charges, (d)
expenses and costs of any action taken by the Trustee to protect the Trusts
and the rights and interests of Unitholders, (e) indemnification of the
Trustee for any loss, liability or expenses incurred by it in the
administration of the Fund without negligence, bad faith or willful misconduct
on its part, (f) any special custodial fees payable in connection with the
sale of any of the Bonds in a Trust, (g) expenditures incurred in contacting
Unitholders upon termination of the Trusts and (h) costs incurred to reimburse
the Trustee for advancing funds to the Trusts to meet scheduled distributions
(which costs may be adjusted periodically in response to fluctuations in
short-term interest rates).

The fees and expenses set forth herein are payable out of the Trusts. When
such fees and expenses are paid by or owing to the Trustee, they are secured
by a lien on the portfolio of the applicable Trust. If the balances in the
Interest and Principal Accounts are insufficient to provide for amounts
payable by a Trust, the Trustee has the power to sell Securities to pay such
amounts.

GENERAL

Amendment or Termination. The Sponsor and the Trustee have the power to amend
the Trust Agreement without the consent of any of the Unitholders when such an
amendment is (a) to cure an ambiguity or to correct or supplement any
provision of the Trust Agreement which may be defective or inconsistent with
any other provision contained therein or (b) to make such other provisions as
shall not adversely affect the interest of the Unitholders (as determined in
good faith by the Sponsor and the Trustee), provided that the Trust Agreement
may not be amended to increase the number of Units issuable thereunder or to
permit the deposit or acquisition of securities either in addition to or in
substitution for any of the Securities initially deposited in the Fund, except
for the substitution of certain refunding securities for such Securities. In
the event of any amendment, the Trustee is obligated to notify promptly all
Unitholders of the substance of such amendment.

A Trust may be terminated at any time by consent of Unitholders of 51% of the
Units of such Trust then outstanding or by the Trustee when the value of such
Trust, as shown by any semi-annual evaluation, is less than that indicated
under "Summary of Essential Financial Information" in Part One of this
Prospectus. The Trust Agreement provides that each Trust shall terminate upon
the redemption, sale or other disposition of the last Security held in such
Trust, but in no event shall it continue beyond the end of the year preceding
the fiftieth anniversary of the Trust Agreement (except in the case of a State
Intermediate Laddered Maturity Trust which shall in no event continue beyond
the end of the year preceding the twentieth anniversary of the Trust
Agreement). In the event of termination of any Trust, written notice thereof
will be sent by the Trustee to each Unitholder of such Trust at his address
appearing on the registration books of the Fund maintained by the Trustee,
such notice specifying the time or times at which the Unitholder may surrender
his certificate or certificates for cancellation. Within a reasonable time
thereafter the Trustee shall liquidate any Securities then held in such Trust
and shall deduct from the funds of such Trust any accrued costs, expenses or
indemnities provided by the Trust Agreement, including estimated compensation
of the Trustee and costs of liquidation and any amounts required as a reserve
to provide for payment of any applicable taxes or other governmental charges.
The sale of Securities in the Trust upon termination may result in a lower
amount than might otherwise be realized if such sale were not required at such
time. For this reason, among others, the amount realized by a Unitholder upon
termination may be less than the principal amount of Securities represented by
the Units held by such Unitholder. The Trustee shall then distribute to each
Unitholder his share of the balance of the Interest and Principal Accounts.
With such distribution the Unitholder shall be furnished a final distribution
statement of the amount distributable. At such time as the Trustee in its sole
discretion shall determine that any amounts held in reserve are no longer
necessary, it shall make distribution thereof to Unitholders in the same
manner.

Notwithstanding the foregoing, in connection with final distributions to
Unitholders, it should be noted that because the portfolio insurance obtained
by a Trust is applicable only while Bonds so insured are held by a Trust, the
price to be received by such Trust upon the disposition of any such Bond which
is in default, by reason of nonpayment of principal or interest, will not
reflect any value based on such insurance. Therefore, in connection with any
liquidation, it shall not be necessary for the Trustee to, and the Trustee
does not currently intend to, dispose of any Bond or Bonds if retention of
such Bond or Bonds, until due, shall be deemed to be in the best interest of
Unitholders, including, but not limited to, situations in which a Bond or
Bonds so insured are in default and situations in which a Bond or Bonds so
insured have a deteriorated market price resulting from a significant risk of
default. Since the Preinsured Bonds will reflect the value of the related
insurance, it is the present intention of the Sponsor not to direct the
Trustee to hold any of such Preinsured Bonds after the date of termination.
All proceeds received, less applicable expenses, from insurance on defaulted
Bonds not disposed of at the date of termination will ultimately be
distributed to Unitholders of record as of such date of termination as soon as
practicable after the date such defaulted Bond or Bonds become due and
applicable insurance proceeds have been received by the Trustee.

The Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Securities or upon the interest thereon or
upon it as Trustee under the Trust Agreement or upon or in respect of the Fund
which the Trustee may be required to pay under any present or future law of
the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee.

The Trustee, Sponsor and Unitholders 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,
Sponsor or Unitholders for errors in judgment. This provision shall not
protect the Evaluator in any case of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.

Unit Distribution. Units repurchased in the secondary market, if any, may be
offered by this Prospectus at the secondary Public Offering Price plus
interest accrued to the date of settlement.

Broker-dealers or others will be allowed a concession or agency commission in
connection with secondary market transactions in the amount of 70% of the
applicable sales charge as determined using the table found in "Public
Offering--General" . Certain commercial banks are making Units of the Fund
available to their customers on an agency basis. A portion of the sales charge
paid by these customers (equal to the agency commission referred to above) is
retained by or remitted to the banks. Under the Glass-Steagall Act, banks are
prohibited from underwriting Units of the Fund; however, the Glass-Steagall
Act does permit certain agency transactions and the banking regulators have
not indicated that these particular agency transactions are not 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 minimum purchase in the secondary market will be one Unit.

Broker-dealers of a Trust, banks and/or others are eligible to participate in
a program in which such firms receive from the Sponsor a nominal award for
each of their representatives who have sold a minimum number of units of unit
investment trusts created by the Sponsor during a specified time period. In
addition, at various times the Sponsor may implement other programs under
which the sales forces of brokers, dealers, banks and/or others may be
eligible to win other nominal awards for certain sales efforts, or under which
the Sponsor will reallow to any such broker-dealers, banks and /or others that
sponsor sales contests or recognition programs conforming to criteria
established by the Sponsor, or participate in sales programs sponsored by the
Sponsor, an amount not exceeding the total applicable sales charges on the
sales generated by such persons at the public offering price during such
programs. Also, the Sponsor in its discretion may from time to time pursuant
to objective criteria established by the Sponsor pay fees to qualifying
brokers, dealers, banks and/or others for certain services or activities which
are primarily intended to result in sales of Units of the Trust. Such payments
are made by the Sponsor out of its own assets, and not out of the assets of
the Trust. These programs will not change the price Unitholders pay for their
Units or the amount that the Trust will receive from the Units sold.

Sponsor and Dealer Compensation. Dealers will receive the gross sales
commission as described under "Public Offering General" .

As stated under "Public Offering--Market for Units" , the Sponsor
intends to, and certain of the dealers may, maintain a secondary market for
the Units of the Fund. In so maintaining a market, such person or persons will
also realize profits or sustain losses in the amount of any difference between
the price at which Units are purchased and the price at which Units are resold
(which price is based on the bid prices of the Securities in such Trust and
includes a sales charge). In addition, such person or persons will also
realize profits or sustain losses resulting from a redemption of such
repurchased Units at a price above or below the purchase price for such Units,
respectively.

OTHER MATTERS

Legal Opinions. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. The counsel which has provided a state tax opinion to
the respective Trust under "Risk Factors and State Tax Status of the
Trusts" has acted as special counsel to the Fund for the tax matters of
such state. Various counsel have acted as counsel for the Trustee and as
special counsel for the Fund for New York tax matters. None of the special
counsel for the Fund has expressed any opinion regarding the completeness or
materiality of any matters contained in this Prospectus other than the tax
opinions set forth by such special counsel.

Independent Certified Public Accountants. The statements of condition and the
related securities portfolios included in this Prospectus have been audited at
the date indicated therein by Grant Thornton LLP, independent certified public
accountants, as set forth in their report in Part One of this Prospectus, and
are included herein in reliance upon the authority of said firm as experts in
accounting and auditing.

DESCRIPTION OF SECURITIES RATINGS

Standard & Poor's. A Standard & Poor's, A Division of the McGraw-Hill
Companies, Inc. ("Standard & Poor's" ) 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, in varying degrees, on the following considerations:

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

II.Nature of and provisions of the obligation.

III.Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization or other arrangements 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 in the majority of instances
they differ from AAA issues only in small degree.

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
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

Provisional Ratings: A provisional rating ("p" ) 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, Inc. A brief description of the applicable Moody's
Investors Service, Inc. ("Moody's" ) rating symbols and their meanings
follow:

Aaa--Bonds which are rated Aaa are judged to be 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.
With the occasional exception of oversupply in a few specific instances, the
safety of obligations of this class is so absolute that their market value is
affected solely by money market fluctuations.

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 fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities. These Aa bonds are high grade, their market value virtually immune
to all but money market influences, with the occasional exception of over
supply in a few specific instances.

A--Bonds which are rated A possess many favorable investment attributes and
are considered as higher 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. The
market value of A rated bonds may be influenced to some degree by credit
circumstances during a sustained period of depressed business conditions.
During periods of normalcy, bonds of this quality frequently move in parallel
with Aaa and Aa obligations, with the occasional exception of oversupply in a
few specific instances.

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.

Con--Bonds for which the security depends upon the completion of some act or
the fulfillment of some condition are rated conditionally. These are bonds
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. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.

<TABLE>
<CAPTION>
Table of Contents Page
<S> <C>
Introduction...............................................1
Description of the Fund....................................2
Objectives and Securities Selection........................2
Trust Portfolio............................................2
Risk Factors...............................................2
Bond Redemptions...........................................4
Distributions..............................................4
Change of Distribution Option..............................4
Certificates...............................................5
Estimated Current Returns and Estimated Long-Term Return...5
Public Offering............................................5
General....................................................5
Accrued Interest (Accrued interest to Carry)...............6
Purchased and Accrued Interest.............................6
Purchased Interest.........................................6
Accrued Interest...........................................6
Offering Price.............................................7
Market for Units...........................................7
Distributions of Interest and Principal....................7
Reinvestment Option........................................8
Redemption of Units........................................8
Reports Provided...........................................8
Insurance on the Bonds.....................................9
Federal Tax Status of the Trusts...........................10
Risk Factors and State Tax Status of the Trusts............12
Alabama Trusts.............................................12
Arizona Trusts.............................................13
California Trusts..........................................15
Colorado Trusts............................................20
Connecticut Trusts.........................................22
Florida Trusts.............................................23
Georgia Trusts.............................................26
Hawaii Trusts..............................................28
Louisiana Trusts...........................................29
Massachusetts Trusts.......................................31
Michigan Trusts............................................33
Minnesota Trusts...........................................34
Missouri Trusts............................................37
New Jersey Trusts..........................................39
New Mexico Trusts..........................................41
New York Trusts............................................43
Ohio Trusts................................................46
Oklahoma Trusts............................................48
Pennsylvania Trusts........................................50
Tennessee Trusts...........................................53
Texas Trusts...............................................56
Washington Trusts..........................................58
West Virginia Trusts.......................................60
Trust Administration and Expenses..........................60
Sponsor....................................................60
Compensation of Sponsor and Evaluator......................61
Trustee....................................................61
Trustee's Fee..............................................61
Portfolio Administration...................................62
Sponsor Purchases of Units.................................62
Insurance Premiums.........................................62
Miscellaneous Expenses.....................................62
General....................................................62
Amendment or Termination...................................62
Limitation on Liabilities..................................63
Unit Distribution..........................................63
Sponsor and Dealer Compensation............................63
Other Matters..............................................64
Legal Opinions.............................................64
Independent Certified Public Accountants...................64
Description of Securities Ratings..........................64
</TABLE>

This Prospectus contains information concerning the Fund and the Sponsor, but
does not contain all of the information set forth in the registration
statements and exhibits relating thereto, which the Fund has filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933 and the Investment Company Act of 1940, and to which reference is
hereby made.

STATE INSURED MUNICIPALS INCOME TRUST

PROSPECTUS PART TWO

Note: This Prospectus May Be Used Only When Accompanied by Part One. Both
Parts of this Prospectus should be retained for future reference. Dated as
of the date of the Prospectus Part I accompanying this Prospectus Part II.

Sponsor: VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.

One Parkview Plaza
Oakbrook Terrace, Illinois 60181

2800 Post Oak Boulevard
Houston, Texas 77056

A Wealth of Knowledge A Knowledge of Wealth

VAN KAMPEN AMERICAN CAPITAL

Contents of Post-Effective Amendment
to Registration Statement

This Post-Effective Amendment to the Registration Statement
comprises the following papers and documents:

The facing sheet

The prospectus

The signatures

The Consent of Independent Accountants
Signatures

Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Insured Municipals Income Trust, 97th Insured Multi-Series,
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment to its
Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the City of Chicago and State of Illinois on the 24th
day of December, 1997.

Insured Municipals Income Trust, 97th Insured
Multi-Series
(Registrant)

By Van Kampen American Capital Distributors,
Inc.
(Depositor)

By Gina Costello
Assistant Secretary

(Seal)

Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on December
24, 1997 by the following persons who constitute a majority of the Board
of Directors of Van Kampen American Capital Distributors, Inc.:

Signature Title

Don G. Powell Chairman and Chief )
Executive Officer )

William R. Molinari President and Chief Operating)
Officer )

Ronald A. Nyberg Executive Vice President and )
General Counsel )

William R. Rybak Senior Vice President and )
Chief Financial Officer )

Gina Costello ) (Attorney in Fact)*
____________________

* An executed copy of each of the related powers of attorney was filed
with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Van Kampen American Capital
Equity Opportunity Trust, Series 64 (File No. 333-33087) and the
same are hereby incorporated herein by this reference.

Consent of Independent Certified Public Accountants

We have issued our report dated October 17, 1997 accompanying the
financial statements of Insured Municipals Income Trust, 97th Insured
Multi-Series as of August 31, 1997, and for the period then ended,
contained in this Post-Effective Amendment No. 6 to Form S-6.

We consent to the use of the aforementioned report in the Post-
Effective Amendment and to the use of our name as it appears under the
caption "Auditors".

Grant Thornton LLP

Chicago, Illinois
December 24, 1997

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<INTEREST-INCOME> 230944
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<EXPENSES-NET> 6255
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<REALIZED-GAINS-CURRENT> 4506
<APPREC-INCREASE-CURRENT> (18128)
<NET-CHANGE-FROM-OPS> 211067
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (229300)
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<AVERAGE-NET-ASSETS> 3803800
<PER-SHARE-NAV-BEGIN> 1034.45
<PER-SHARE-NII> 63.009
<PER-SHARE-GAIN-APPREC> (3.82)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1030.755
<EXPENSE-RATIO> 0.002
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
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<NUMBER> 140
<NAME> I-PA

<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-START> SEP-01-1996
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 5074904
<INVESTMENTS-AT-VALUE> 5503334
<RECEIVABLES> 0
<ASSETS-OTHER> 115156
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5618490
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25185
<TOTAL-LIABILITIES> 25185
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5593305
<SHARES-COMMON-STOCK> 5368
<SHARES-COMMON-PRIOR> 5810
<ACCUMULATED-NII-CURRENT> 94509
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 20581
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 428430
<NET-ASSETS> 5593305
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 374073
<OTHER-INCOME> 0
<EXPENSES-NET> 10042
<NET-INVESTMENT-INCOME> 364031
<REALIZED-GAINS-CURRENT> 8600
<APPREC-INCREASE-CURRENT> 24548
<NET-CHANGE-FROM-OPS> 397179
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (371157)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 442
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (426766)
<ACCUMULATED-NII-PRIOR> 101635
<ACCUMULATED-GAINS-PRIOR> 11981
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 1678
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10042
<AVERAGE-NET-ASSETS> 5806688
<PER-SHARE-NAV-BEGIN> 1036.16
<PER-SHARE-NII> 67.815
<PER-SHARE-GAIN-APPREC> 6.175
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1041.972
<EXPENSE-RATIO> 0.002
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>