MUNICIPAL SECURITIES TRUST SERIES 54 & MULTI STATE SERIES 43, 485BPOS, 1997-04-28

MUNICIPAL SECURITIES TRUST SERIES 54 & MULTI STATE SERIES 43
485BPOS, 1997-04-28

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As filed with the Securities and Exchange Commission on April 28, 1997

Registration No. 33-55996*

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

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

POST-EFFECTIVE AMENDMENT
To
FORM S-6

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

A. Exact name of trust: MUNICIPAL SECURITIES TRUST,
SERIES 54 (INTERMEDIATE) &
MULTI-STATE SERIES 43 (LONG),
SERIES 55 (INTERMEDIATE) &
MULTI-STATE SERIES 45, AND
MULTI-STATE SERIES 46

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

C. Complete address of depositors' principal executive offices:

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

D. Name and complete address of agent for service:

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

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

/ / immediately upon filing pursuant to paragraph (b) of Rule 485
/ x / on April 30, 1997 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / on ( date ) pursuant to paragraph (a) of Rule 485

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

* The Prospectus included in this Registration Statement constitutes a
combined Prospectus as permitted by the provisions of Rule 429 of the
General Rules and Regulations under the Securities Act of 1933 (the "Act").
Said Prospectus covers units of undivided interest in Municipal Securities
Trust, Series 54 (Intermediate) & Multi-State Series 43 (Long), Series 55
(Intermediate) & Multi- State Series 45, and Multi-State Series 46 covered
by prospectuses heretofore filed as part of separate registration
statements on Form S-6 (Registration Nos. 33-55996, 33-52397 and 33-58167,
respectively) under the Act. This filing constitutes Post-Effective
Amendment No. 4 for Series 54 (Intermediate) & Multi- State Series 43
(Long), Post-Effective Amendment No. 3 for Series 55 (Intermediate) &
Multi-State Series 45, and Post-Effective Amendment No. 2 for Multi-State
Series 46.

Each of the Registrants declares that an indefinite number of its Units are
being registered by this Registration Statement pursuant to Section 24(f)
under the Investment Company Act of 1940, as amended, and Rule 24f-2
thereunder, and each of the Registrants filed a Rule 24f-2 Notice for its
fiscal year ended December 31, 1996 on February 28, 1997.

** Gruntal & Co., L.L.C. acted as Co-Sponsor for all of the above-referenced
trusts, except Series 55 (Intermediate), Multi-State Series 45, and
Multi-State Series 46.

175584.1

<PAGE>

Prospectus Part A Dated April 30, 1997

MUNICIPAL SECURITIES TRUST

SERIES 54

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

The Trust is a unit investment trust designated Series 54
("Municipal Trust") with an underlying portfolio of long-term tax-exempt bonds
issued by or on behalf of states, municipalities and public authorities, and was
formed to preserve capital and to provide interest income (including, where
applicable, earned original issue discount) which, in the opinions of bond
counsel to the respective issuers, is, with certain exceptions, currently exempt
from regular Federal income tax (including where applicable earned original
discount) under existing law but may be subject to state and local taxes. There
can be no assurance that the Trust's objectives will be achieved. Although the
Supreme Court has determined that Congress has the authority to subject interest
on bonds such as the Bonds in the Trust to regular federal income taxation,
existing law excludes such interest from regular federal income tax. Such
interest income may, however, be subject to the federal corporate alternative
minimum tax and to state and local taxes. (See "Description of Portfolio" in
this Part A for a description of those Bonds which pay interest income subject
to the federal individual alternative minimum tax.) In addition, capital gains
are subject to tax. (See "Tax Status" and "The Trust--Portfolio" in Part B of
this Prospectus.) The Sponsors are Reich & Tang Distributors L.P. and Gruntal &
Co., L.L.C. The value of the Units of the Trust will fluctuate with the value of
the underlying bonds. Minimum purchase: 1 Unit.

This Prospectus consists of two parts. Part A contains the
Summary of Essential Information as of December 31, 1996 (the "Evaluation
Date"), a summary of certain specific information regarding the Trust and
audited financial statements of the Trust, including the related portfolio, as
of the Evaluation Date. Part B of this Prospectus contains a general summary of
the Trust. Part A of this Prospectus may not be distributed unless accompanied
by Part B. Investors should retain both parts of this Prospectus for future
reference.

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

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

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

Some of the Bonds in the portfolio may have been purchased at
an aggregate premium over par. Some of the Bonds in the Trust have been issued
with optional refunding or refinancing provisions ("Refunded Bonds") whereby

346044.1

<PAGE>

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

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

Each Unit in the Trust represents a 1/3181st undivided
interest in the principal and net income of the Trust. The principal amount of
Bonds deposited in the Trust per Unit is reflected in the Summary of Essential
Information. (See "The Trust--Organization" in Part B of this Prospectus.) The
Units being offered hereby are issued and outstanding Units which have been
purchased by the Sponsor in the secondary market.

PUBLIC OFFERING PRICE. The secondary market Public Offering
Price of each Unit is equal to the aggregate bid price of the Bonds in the Trust
divided by the number of Units outstanding, plus a sales charge of 2.4% of the
Public Offering Price, which is the same as 2.504% of the net amount invested in
Bonds per Unit. In addition, accrued interest to expected date of settlement is
added to the Public Offering Price. If Units had been available for sale on the
Evaluation Date, the Public Offering Price per Unit would have been $969.30 plus
accrued interest of $7.98 under the monthly distribution plan, $11.61 under the
semi-annual distribution plan and $11.60 under the annual distribution plan, for
a total of $977.28, $980.90 and $980.91, respectively. The Public Offering Price
per Unit can vary on a daily basis in accordance with fluctuations in the
aggregate bid price of the Bonds. (See the "Summary of Essential Information"
and "Public Offering--Offering Price" in Part B of this Prospectus.)

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

A-2
346044.1

<PAGE>

the Bond but also the amortization of premiums or accretion of discounts, if
any; (2) calculating the average of the yields for the Bonds in the Trust's
portfolio by weighing each Bond's yield by the market value of the Bond and by
the amount of time remaining to the date to which the Bond is priced (thus
creating an average yield for the portfolio of the Trust); and (3) reducing the
average yield for the portfolio of the Trust in order to reflect estimated fees
and expenses of the Trust and the maximum sales charge paid by investors. The
resulting Estimated Long Term Return represents a measure of the return to
investors earned over the estimated life of the Trust. (For the Estimated Long
Term Return to Certificateholders under the monthly, semi-annual and annual
distribution plans, see "Summary of Essential Information".)

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

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

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

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

MARKET FOR UNITS. The Sponsor, although not obligated to do
so, intends to maintain a market for the Units at prices based upon the
aggregate bid price of the Bonds in the portfolio of the Trust. The Secondary
Market repurchase price is based on the aggregate bid price of the Bonds in the
Trust portfolio, and the reoffer price is based on the aggregate bid price of
the Bonds plus a sales charge of 2.4% of the Public Offering Price (2.504% of
the net amount invested) plus net accrued interest. If such a market is not
maintained, a Certificateholder will be able to redeem his or her Units with the
Trustee at a price also based upon the aggregate bid price of the Bonds. (See
"Sponsor Repurchase" and "Public Offering--Offering Price" in Part B of this
Prospectus.)

A-3
346044.1

<PAGE>

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

A-4
346044.1

<PAGE>

MUNICIPAL SECURITIES TRUST
SERIES 54

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1996

<TABLE>
<S> <C> <C>
Date of Deposit: April 22, 1993 Minimum Principal Distribution:
Principal Amount of Bonds ... $2,980,000 $1.00 per Unit.
Number of Units ............. 3,181 Weighted Average Life to
Fractional Undivided Inter- Maturity: 3.1 Years.
est in Trust per Unit ..... 1/3181 Minimum Value of Trust: Trust
Principal Amount of may be terminated if value of
Bonds per Unit ............ $936.81 Trust is less than $1,600,000
Secondary Market Public in principal amount of Bonds.
Offering Price** Mandatory Termination Date: The
Aggregate Bid Price earlier of December 31, 2042 or
of Bonds in Trust ....... $3,008,007+++ the disposition of the last
Divided by 3,181 Units .... $945.62 Bond in the Trust.
Plus Sales Charge of 2.4% Trustee***: The Chase Manhattan
of Public Offering Price $23.68 Bank.
Public Offering Price Trustee's Annual Fee: Monthly
per Unit ................ $969.30+ plan $1.10 per $1,000; semi-
Redemption and Sponsor's annual plan $.63 per $1,000;
Repurchase Price and annual plan is $.36 per
per Unit .................. $945.62+ $1,000.
+++ Evaluator: Kenny S&P Evaluation
++++ Services.
Excess of Secondary Market Evaluator's Fee for Each
Public Offering Price Evaluation: Minimum of $8 plus
over Redemption and $.25 per each issue of Bonds in
Sponsor's Repurchase excess of 50 issues (treating
Price per Unit ............ $23.68++++ separate maturities as separate
Difference between Public issues).
Offering Price per Unit Sponsors: Reich & Tang
and Principal Amount per Distributors L.P. & Gruntal &
Unit Premium/(Discount) ... $32.49 Co., L.L.C.
Evaluation Time: 4:00 p.m. Sponsor's Annual Fee: Maximum of
New York Time. $.25 per $1,000 principal
amount of Bonds (see "Trust
Expenses and Charges" in Part B
of this Prospectus).
</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual Annual
Option Option Option

Gross annual interest income# ......... $45.58 $45.58 $45.58
Less estimated annual fees and
expenses ............................ 2.32 1.87 2.01
Estimated net annual interest _____ _____ ______
income (cash)# ...................... $43.26 $43.71 $43.57
Estimated interest distribution# ...... 3.60 21.85 43.57
Estimated daily interest accrual# ..... .1201 .1214 .1210
Estimated current return#++ ........... 4.46% 4.51% 4.49%
Estimated long term return++ .......... 3.55% 3.59% 3.58%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15

A-5
346044.1

<PAGE>

FOOTNOTES TO SUMMARY OF ESSENTIAL INFORMATION

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

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

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

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $7.98 monthly, $11.61
semi-annually and $11.60 annually.

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

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

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

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

FINANCIAL AND STATISTICAL INFORMATION

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

Distribu-
tions of
Distributions of Interest Principal
During the Period (per Unit) During
Net Asset* Semi- the
Units Out- Value Monthly Annual Annual Period
Period Ended standing Per Unit Option Option Option (Per Unit)
- ------------ ---------- ---------- ------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1994 3,971 $ 962.43 $46.44 $47.04 $47.33 -0-
December 31, 1995 3,854 1,013.87 51.89 52.51 52.83 -0-
December 31, 1996 3,181 956.60 46.54 47.01 47.36 $56.89
</TABLE>

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

A-6
346044.1

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1996

DESCRIPTION OF PORTFOLIO

The portfolio of the Trust consists of 9 issues representing
obligations of issuers located in 8 states. The Sponsors have not participated
as a sole underwriter or manager, co-manager or member of an underwriting
syndicate from which any of the initial aggregate principal amount of the Bonds
were acquired. None of the Bonds are obligations of state and local housing
authorities; approximately 33.5%+ are hospital revenue bonds; none are issued in
connection with the financing of nuclear generating facilities. One issue
comprising 11.9% of the aggregate principal amount of the Trust is a mortgage
revenue bond. All of the Bonds in the Trust are subject to redemption prior to
their stated maturity dates pursuant to sinking fund or optional call
provisions. The Bonds may also be subject to other calls, which may be permitted
or required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or unanticipated
revenues). Two issues representing $505,000 of the principal amount of the Bonds
are general obligation bonds. All seven of the remaining issues representing
$2,475,000 of the principal amount of the Bonds are payable from the income of a
specific project or authority and are not supported by the issuer's power to
levy taxes. The portfolio is divided for purpose of issue as follows: Hospital
2, Office Building 1, School 1, Single Family Mortgage Revenue 1, Solid Waste 1
and Utility 1. For an explanation of the significance of these factors see "The
Trust--Portfolio" in Part B of this Prospectus.

As of December 31, 1996, $200,000 (approximately 6.7% of the
aggregate principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, $200,000 (approximately 6.7% of the
aggregate principal amount of the Bonds) are Zero Coupon Bonds. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at par value unless sooner sold or redeemed. The market
values of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. None of the aggregate principal amount
of the Bonds in the Trust were purchased at a discount from par value at
maturity, approximately 17.4% were purchased at a premium and approximately
75.9% were purchased at par. For an explanation of the significance of these
factors see "Discount and Zero Coupon Bonds" in Part B of this Prospectus.

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

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

A-7
346044.1

<PAGE>

Report of Independent Accountants

To the Sponsor, Trustee and Certificateholders of
Municipal Securities Trust, Series 54 (Intermediate)

In our opinion, the accompanying statement of net assets, including the
portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Municipal Securities Trust, Series
54 (Intermediate) (the "Trust") at December 31, 1996, the results of its
operations, the changes in its net assets and the financial highlights for the
year then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit, which included confirmation of securities at December
31, 1996 by correspondence with the Trustee, provides a reasonable basis for the
opinion expressed above. The financial statements for the prior periods
presented were audited by other independent accountants whose report dated March
31, 1996 expressed an unqualified opinion on those financial statements.

PRICE WATERHOUSE LLP
160 Federal Street
Boston, MA 02110
March 28, 1997

<PAGE>

Municipal Securities Trust, Series 54 (Intermediate)
Portfolio
December 31, 1996
- --------------------------------------------------------------------------------

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

<S> <C> <C> <C> <C> <C> <C>
1 $ 350,000 Delaware Solid Waste Auth. Solid A 5.400% No Sinking Fund $ 358,285
Waste Sys. Rev. Bonds Series 1992 7/01/1999 None

2 500,000 Palm Beach Cnty. Fla. Hlth. Facs. Auth. A+ 5.400 No Sinking Fund 512,210
Rev. Bonds (Good Samaratan Hosp. 10/01/2000 None
Hlth. Sys.) Series 1993

3 500,000 Ill. Hlth. Facs. Auth. Rev. Rendg. Bonds AAA 5.000 No Sinking Fund 509,250
Series 1993A (The Univ. of Chicago 8/15/2000 None
Hosps. Prjt.) (MBIA Corp.)

4 400,000 Mo. Econ. Dev. Export & Infrastucture A 5.375 No Sinking Fund 405,748
Bd. Ind. Rev. Rfndg. Bonds (Mark 5/01/2000 5/01/00 @ 100 Ref.
Twain Tower Prjt.) Series 1993B

5 260,000 N.Y. City Genl. Oblig. Rev. Bonds BBB+ 5.500 No Sinking Fund 265,400
Fiscal 1993 Series D 8/01/2000 None

6 170,000 Putnam Cy. Schl. Dstrct. Ok. Cnty. A+ 5.100 No Sinking Fund 172,406
Ok. (The Bd. of Ed. Indpndnt. Sch. 2/01/1998 None
Dstrct. No. 1) Genl. Oblig. Bldg. Bonds
1993A

7 355,000 Houston Tx. Hsg. Finc. Corp. Sngle. AAA 4.900 No Sinking Fund 357,556
Fam. Mtg. Rev. Rfndg. Bonds Series 6/01/1999 None
1993A (Financial Security Assurance)

8 45,000 Cy. of Racine Wi. Genl. Oblig. AA 5.000 No Sinking Fund 45,976
Promissory Notes (TIF No. 7-93) 12/01/2000 None

9 200,000 Cy. of Racine Wi. Genl. Oblig. AA 5.000 No Sinking Fund 204,340
Promissory Notes (TIF No. 8-93) 12/01/2000 None

10 110,000 Kansas Cy. Mo. Util. Sys. Rfndg. & AAA 0.000 No Sinking Fund 95,512
Imprvmnt. Rev. Bonds Series 1991 3/01/2000 None
(AMBAC)

10a 90,000 Kansas Cy. Mo. Util. Sys. Rfndg. & AAA 0.000 No Sinking Fund 78,315
Imprvment. Rev. Bonds Series 1991 3/01/2000 None
(AMBAC)

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

$2,980,000 Total Investments (Cost $2,945,863) $ 3,004,998
========== =============

</TABLE>

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

Municipal Securities Trust, Series 54 (Intermediate)
Footnotes to Portfolio
- --------------------------------------------------------------------------------

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

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

3. At December 31, 1996, the net unrealized appreciation of all the bonds
was comprised of the following:

Gross unrealized appreciation $ 63,366
Gross unrealized depreciation (4,231)
-------------

Net unrealized appreciation $ 59,135
=============

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

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

<PAGE>

Municipal Securities Trust, Series 54 (Intermediate)

Statement of Net Assets
December 31, 1996
- --------------------------------------------------------------------------------

Investments in Securities,
at Market Value (Cost $2,945,863) $ 3,004,998
--------------

Other Assets
Accrued Interest 41,269
--------------
Total Other Assets 41,269
--------------
Liabilities
Accrued Expenses 951
Advance from Trustee 2,366
--------------
Total Liabilities 3,317
--------------
Excess of Other Assets over Total Liabilities 37,952
--------------
Net Assets (3,181 Units of Fractional Undivided
Interest Outstanding, $956.60 per Unit) $ 3,042,950
==============

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

<PAGE>

Municipal Securities Trust, Series 54 (Intermediate)

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

For the Years Ended December 31,
1996 1995 1994

Investment Income
<S> <C> <C> <C>
Interest $ 165,098 $ 193,213 $ 219,636
----------- ----------- ----------

Expenses
Trustee's Fees 4,864 5,148 5,380
Evaluator's Fees 2,200 2,000 2,057
Sponser's Advisory Fee 951 983 992
----------- ----------- ----------
Total Expenses 8,015 8,131 8,429
----------- ----------- ----------
Net Investment Income 157,083 185,082 211,207
----------- ----------- ----------
Realized and Unrealized Gain (Loss)
Realized (Loss) on
Investments (1,392) (876) ----

Change in Unrealized Appreciation
(Depreciation) on Investments (2,774) 222,539 (251,665)
----------- ----------- ----------
Net Gain (Loss) on Investments (4,166) 221,663 (251,665)
----------- ----------- ----------
Net Increase (Decrease)
in Net Assets
Resulting From Operations $ 152,917 $ 406,745 $ (40,458)
=========== =========== ===========

</TABLE>

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

<PAGE>

Municipal Securities Trust, Series 54 (Intermediate)

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

For the Years Ended December 31,
1996 1995 1994

Operations
<S> <C> <C> <C>
Net Investment Income $ 157,083 $ 185,082 $ 211,207
Realized (Loss)
on Investments (1,392) (876) ----
Change in Unrealized Appreciation
(Depreciation) on Investments (2,774) 222,539 (251,665)
------------ ------------- -------------

Net Increase (Decrease) in
Net Assets Resulting
From Operations 152,917 406,745 (40,458)
------------ ------------- -------------

Distributions to Certificateholders
Investment Income 158,534 204,513 185,205
Principal 181,991 ---- 25,851

Redemptions
Interest 7,861 1,439 ----
Principal 669,018 115,148 ----
------------ ------------- -------------

Total Distributions
and Redemptions 1,017,404 321,100 211,056
------------ ------------- -------------

Total Increase (Decrease) (864,487) 85,645 (251,514)

Net Assets
Beginning of Year 3,907,437 3,821,792 4,073,306
------------ ------------- -------------

End of Year (Including
Undistributed Net Investment
Income of $41,446, $50,758
and $71,628, Respectively) $ 3,042,950 $ 3,907,437 $ 3,821,792
============ ============ ============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Series 54 (Intermediate)

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

1. Organization

Municipal Securities Trust, Series 54 (Intermediate) (the "Trust") was
organized on April 22, 1993 by Bear, Stearns & Co. Inc. and Gruntal &
Co., Incorporated under the laws of the State of New York by a Trust
Indenture and Agreement, and is registered under the Investment Company
Act of 1940. The Trust was formed to preserve capital and to provide
interest income.

Effective September 28, 1995, Reich & Tang Distributors L.P. ("Reich &
Tang") has become the successor sponsor (the "Sponsor") to certain of
the unit investment trusts previously sponsored by Bear, Stearns & Co.
Inc. As successor Sponsor, Reich & Tang has assumed all of the
obligations and rights of Bear, Stearns & Co. Inc., the previous
sponsor. Effective September 2, 1995, United States Trust Company of
New York was merged into The Chase Manhattan Bank (the "Trustee").
Accordingly, Chase is the successor trustee of the Trust.

2. Summary of Significant Accounting Policies

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

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

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

<PAGE>

Municipal Securities Trust, Series 54 (Intermediate)

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

3. Income Taxes

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

4. Trust Administration

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

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

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

The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. For the years ended December 31, 1996 and 1995, 673 and
117 units were redeemed, respectively. No units were redeemed during
the year ended December 31, 1994.

The Trust pays an annual fee for trustee services rendered by the
Trustee that ranges from $.63 to $1.10 per $1,000 of outstanding
investment principal. In addition, a minimum fee of $8.00 is paid to a
service bureau for each portfolio valuation. A maximum fee of $.25 per
$1,000 of outstanding investment principal is paid to the Sponsor. For
the year ended December 31, 1996, the "Trustee's Fees" are comprised of
Trustee fees of $3,328 and other expenses of $1,536. The other expenses
include professional, printing and miscellaneous fees.

<PAGE>

Municipal Securities Trust, Series 54 (Intermediate)

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

5. Net Assets

At December 31, 1996, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $ 4,109,610
Less Initial Gross Underwriting Commission 143,836
---------------
3,965,774
Accumulated Cost of Securities Sold,
Matured or Called (1,026,414)
Net Unrealized Appreciation 59,135
Undistributed Net Investment Income 41,446
Undistributed Proceeds From Investments 3,009
---------------
Total $ 3,042,950
===============

The original cost to Certificateholders, less the initial gross
underwriting commission, represents the aggregate initial public
offering price net of the applicable sales charge on 4,000 units of
fractional undivided interest of the Trust as of the date of deposit.

Undistributed net investment income includes accumulated accretion of
original issue discount of $6,503.

6. Concentration of Credit Risk

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

<PAGE>

Municipal Securities Trust, Series 54 (Intermediate)

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

7. Financial Highlights (per unit)*

Selected data for a unit of the Trust outstanding for the year ended
December 31, 1996:

Net Asset Value, Beginning of Year** $ 1,013.87
--------------

Interest Income 46.93
Expenses (2.28)
--------------
Net Investment Income 44.65
--------------
Net Gain or Loss on Investments(1) (2.90)
--------------
Total from Investment Operations 41.75
--------------
Less Distributions
to Certificateholders
Income 45.06
Principal 51.73
for Redemptions
Interest 2.23
--------------
Total Distributions 99.02
--------------
Net Asset Value, End of Year** $ 956.60
===============

See "Financial and Statistical Information" in Part A of this
Prospectus for amounts of per unit distributions during the years ended
December 31, 1996, 1995 and 1994 based on actual units.

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

- ---------------------
* Unless otherwise stated, based upon average units outstanding during
the year of 3,518 ([3,181+3,854]/2).

**Based upon actual units outstanding.

<PAGE>

Prospectus Part A Dated April 30, 1997

MUNICIPAL SECURITIES TRUST

MULTI-STATE SERIES 43
(MULTIPLIER PORTFOLIO)

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

This Prospectus consists of two parts. Part A contains the
Summary of Essential Information including descriptive material relating to the
Trust as of December 31, 1996 (the "Evaluation Date"), a summary of certain
specific information regarding the Trust and audited financial statements of the
Trust, including the related portfolio, as of the Evaluation Date. Part B of
this Prospectus contains a general summary of the State Trusts. Part A of this
Prospectus may not be distributed unless accompanied by Part B. Investors should
read and retain both parts of this Prospectus for future reference.

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

Principal Secondary Market
Number of Amount of Offering Price
Units Bonds per Unit (12/31/96)

Virginia Trust 2,995 $3,000,000 $1,035.68

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

181353.1

<PAGE>

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

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

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

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

A-2
181353.1

<PAGE>

the Public Offering Price. If Units of the Trust had been purchased on the
Evaluation Date, the Public Offering Price per Unit would have been $1,035.68
plus accrued interest of $7.55 under the monthly distribution plan, $12.15 under
the semi-annual distribution plan and $12.17 under the annual distribution plan,
for a total of $1,043.23, $1,047.83 and $1,047.85, respectively. The Public
Offering Price per Unit can vary on a daily basis in accordance with
fluctuations in the aggregate bid price of the Bonds. (See "Summary of Essential
Information" and "Public Offering--Offering Price" in Part B of this
Prospectus.)

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

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

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

A-3
181353.1

<PAGE>

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

MARKET FOR UNITS. The Sponsor, although not obligated to do
so, intends to maintain a secondary market for the Units at prices based on the
aggregate bid price of the Bonds in the Trust portfolio. The secondary market
repurchase price is based on the aggregate bid price of the Bonds in the Trust
portfolio, and the reoffer price is based on the aggregate bid price of the
Bonds plus a sales charge of 5.3% of the Public Offering Price (5.562% of the
net amount invested) plus net accrued interest. If a market is not maintained, a
Certificateholder will be able to redeem his or her Units with the Trustee at a
price also based on the aggregate bid price of the Bonds. (See "Sponsor
Repurchase" and "Public Offering--Offering Price" in Part B of this Prospectus.)

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

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

A-4
181353.1

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 43

VIRGINIA TRUST (LONG)

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1996

<TABLE>
<S> <C> <C>
Date of Deposit: April 22, 1993 Minimum Principal Distribution:
Principal Amount of Bonds . $3,000,000 $1.00 per Unit.
Number of Units ........... 2,995 Weighted Average Life
Fractional Undivided Inter- to Maturity: 21.8 Years.
est in Trust per Unit ... 1/2995 Minimum Value of Trust: Trust
Principal Amount of may be terminated if value of
Bonds per Unit .......... $1,001.67 Trust is less than $1,200,000
Secondary Market Public in principal amount of Bonds.
Offering Price** Mandatory Termination Date:
Aggregate Bid Price The earlier of December 31,
of Bonds in Trust ..... $2,938,423+++ 2042 or the disposition of
Divided by 2,995 Units .. $981.11 the last Bond in the Trust.
Plus Sales Charge of 5.3% Trustee***: The Chase
of Public Offering Manhattan Bank.
Price.................. $54.57 Trustee's Annual Fee: Monthly
Public Offering Price plan $1.10 per $1,000; semi-
per Unit .............. $1,035.68+ annual plan $.63 per $1,000;
Redemption and Sponsor's and annual plan is $.36 per
Repurchase Price $1,000.
per Unit ................ $981.11+ Evaluator: Kenny S&P
+++ Evaluation
++++ Services.
Excess of Secondary Market Evaluator's Fee for Each
Public Offering Price Evaluation: Minimum of $8
over Redemption and plus $.25 per each issue of
Sponsor's Repurchase Bonds in excess of 50 issues
Price per Unit .......... $54.57++++ (treating separate maturities
Difference between Public as separate issues).
Offering Price per Unit Sponsor: Reich & Tang
and Principal Amount per Distributors L.P. and Gruntal
Unit Premium/(Discount) . $34.01 & Co., L.L.C.
Evaluation Time: 4:00 p.m. Sponsor's Annual Fee: Maximum
New York Time. of $.25 per $1,000 principal
amount of Bonds (see "Trust
Expenses and Charges" in
Part B of this Prospectus).
</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual Annual
Option Option Option

<S> <C> <C> <C>
Gross annual interest income# ......... $57.21 $57.21 $57.21
Less estimated annual fees and
expenses ............................ 2.45 1.92 1.80
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $54.76 $55.29 $55.41
Estimated interest distribution# ...... 4.56 27.64 55.41
Estimated daily interest accrual# ..... .1521 .1535 .1539
Estimated current return#++ ........... 5.29% 5.34% 5.35%
Estimated long term return++ .......... 5.18% 5.23% 5.24%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15
</TABLE>

A-5
181353.1

<PAGE>

Footnotes to Summary of Essential Information

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

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

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $7.55 monthly, $12.15
semi-annually and $12.17 annually for the Virginia Trust.

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

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

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

FINANCIAL AND STATISTICAL INFORMATION

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

<TABLE>
<CAPTION>
Distribu-
tions of
Distributions of Interest Principal
During the Period (per Unit) During
Net Asset* Semi- the
Units Out- Value Monthly Annual Annual Period
Period Ended standing Per Unit Option Option Option (Per Unit)
- ------------ ---------- ---------- ------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1994 3,000 $1,018.62 $23.20 23.38 $23.46 -0-
December 31, 1995 3,000 891.69 54.60 55.14 55.43 -0-
December 31, 1996 2,995 992.50 54.60 55.18 55.28 -0-
</TABLE>

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

A-6

181353.1

<PAGE>

INFORMATION REGARDING THE TRUSTS
AS OF DECEMBER 31, 1996

DESCRIPTION OF PORTFOLIO

Each Unit in the Trust consists of a 1/2995th undivided
interest in the principal and net income of the Trust in the ratio of one Unit
for each $1,000.67 of principal amount of the Bonds currently held in the Trust.
The Sponsor has not participated as a sole underwriter or manager, co-manager or
member of an underwriting syndicate from which any of the initial aggregate
principal amount of the Bonds were acquired. The portfolio of the Virginia Trust
consists of 10 issues of 9 issuers located in Virginia and 1 in Puerto Rico.
None of the Bonds are obligations of state and local housing authorities;
approximately 13.3% are hospital revenue bonds; and none were issued in
connection with the financing of nuclear generating facilities. None of the
issues comprising the aggregate principal amount of the Trust are mortgage
revenue bonds. All of the Bonds are subject to redemption prior to their stated
maturity dates pursuant to sinking fund or optional call provisions. The Bonds
may also be subject to other calls, which may be permitted or required by events
which cannot be predicted (such as destruction, condemnation, termination of a
contract, or receipt of excess or unanticipated revenues). One issue
representing $250,000 of the principal amount of the Bonds is a general
obligation bond. All nine of the remaining issues representing $2,750,000 of the
principal amount of the Bonds are payable from the income of a specific project
or authority and are not supported by the issuer's power to levy taxes. The
portfolio is divided for purpose of issue as follows: Bridge and Tunnel 1,
College 1, Electric 1, Expressway Improvement 1, Hospital 1, Office Building 1,
Waste Improvement 1, Water and Sewer 1, and Water Improvement 1. For an
explanation of the significance of these factors see "The State
Trusts--Portfolios" in Part B of this Prospectus.

As of December 31, 1996, $1,005,000 (approximately 33.5% of
the aggregate principal amount of the Bonds) were original issue discount bonds.
Of these original issue discount bonds, $140,000 (approximately 4.7% of the
aggregate principal amount of the Bonds) were Zero Coupon Bonds. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at par value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. None of the aggregate principal amount
of the Bonds in the Trust were purchased at a "market" discount from par value
at maturity, approximately 66.5% were purchased at a premium and none were
purchased at par. For an explanation of the significance of these factors see
"The Portfolios--Discount and Zero Coupon Bonds" in Part B of this Prospectus.

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

A-7
181353.1

<PAGE>

Report of Independent Accountants

To the Sponsor, Trustee and Certificateholders of
Municipal Securities Trust, Multi-State Series 43, Virgina Trust

In our opinion, the accompanying statement of net assets, including the
portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Municipal Securities Trust,
Multi-State Series 43, Virginia Trust (the "Trust") at December 31, 1996, the
results of its operations, the changes in its net assets and the financial
highlights for the year then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit, which included
confirmation of securities at December 31, 1996 by correspondence with the
Trustee, provides a reasonable basis for the opinion expressed above. The
financial statements for the prior periods presented were audited by other
independent accountants whose report dated March 31, 1996 expressed an
unqualified opinion on those financial statements.

PRICE WATERHOUSE LLP
160 Federal Street
Boston, MA 02110
March 28, 1997

<PAGE>

Municipal Securities Trust, Multi-State Series 43,
Virginia Trust
Portfolio
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

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

<S> <C> <C> <C> <C> <C> <C>
1 $ 330,000 Chesapeake Bay Va. Bridge & Tunnel AAA 5.750% 7/01/23 @ 100 S.F. $ 331,036
Commsn. Dist. Rev. Rfndg. Bonds 1991 7/01/2025 7/01/01 @ 100 Ref.
(MBIA Corp.)

2 350,000 Hampton Roads Va. Med. CIIg. Gen. A- 6.875 11/15/03 @ 100 S.F. 374,738
Rev. Bonds Series 1991B 11/15/2016 11/15/01 @ 102 Ref.

3 400,000 Prince William Cnty. Va. Serv. Auth. AAA 6.000 7/01/22 @ 100 S.F. 407,400
Wtr. & Swr. Sys. Rev. Bonds Series 7/01/2029 7/01/01 @ 100 Ref.
1991 (Financial Guaranty)

4 340,000 Richmond Va Metro. Auth. Expwy. AAA 5.750 7/15/17 @ 100 S.F. 341,268
Rev. Rfndg. Bonds 1992 Series A 7/15/2022 7/15/02 @ 100 Ref.
(Financial Guranty)

5 165,000 Roanoke Cnty. Va. Ind. Dev. Auth. A1* 5.625 4/15/07 @ 100 S.F. 164,550
Lease Rev. Bonds (Roanoke Cnty. 4/15/2013 4/15/03 @ 102 Ref.
Admnstion. Cntr.) Series 1993

6 325,000 Roanoke Cnty. Va. Wtr. Sys. Rev. AAA 6.000 7/01/22 @ 100 S.F. 345,475
Bonds Series 1991 (Financial 7/01/2031 7/01/01 @ 100 Ref.
Guaranty) (5)

7 300,000 S.E. Va. Pub. Serv. Auth. of Va. Sr. A- 6.000 7/01/05 @ 100 S.F. 298,950
Rev. Bonds Rgnl. Solid Waste Sys. 7/01/2017 7/01/03 @ 102 Ref.
Series 1993 (AMT)

8 250,000 City of Suffolk Va. Genl. Oblig. Pub. A1* 6.000 No Sinking Fund 257,070
Imprvmnt. & Rfndg. Bonds Series 1993 8/01/2013 8/01/03 @ 102 Ref.

9 400,000 Williamsburg Va. Ind. Dev. Auth. Hosp. A 5.750 10/01/13 @ 100 S.F. 379,904
Fac. Rev. Bonds (Williamsburg 10/01/2022 10/01/03 @ 102 Ref.
Commnty Hosp.) Series 1993

10 100,000 P.R. Elec. Pwr. Auth. Pwr. Rev. Rfndg. BBB+ 0.000 7/01/15 @ 87.06 S.F. 30,665
Bonds 1989 Series N 7/01/2017 None

11 40,000 P.R. Elec. Pwr. Auth. Pwr. Rev. Bonds BBB+ 0.000 No Sinking Fund 12,266
1989 Series O 7/01/2017 None
----------
-------------

$3,000,000 Total Investments (Cost $2,934,490) $ 2,943,322
========== =============

</TABLE>

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

Municipal Securities Trust, Multi-State Series 43,
Virginia Trust
Footnotes to Portfolio
- --------------------------------------------------------------------------------

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

3. At December 31, 1996, the net unrealized appreciation of all the bonds
was comprised of the following:

Gross unrealized appreciation $ 22,696
Gross unrealized depreciation (13,864)
-------------

Net unrealized appreciation $ 8,832
=============

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

<PAGE>

Municipal Securities Trust, Multi-State Series 43,

Virginia Trust
Statement of Net Assets
December 31, 1996
- --------------------------------------------------------------------------------

Investments in Securities,
at Market Value (Cost $2,934,490) $ 2,943,322
--------------

Other Assets
Accrued Interest 66,286
--------------
Total Other Assets 66,286
--------------
Liabilities
Accrued Expenses 731
Advance from Trustee 36,326
--------------
Total Liabilities 37,057
--------------
Excess of Other Assets over Total Liabilities 29,229
--------------

Net Assets (2,995 Units of Fractional Undivided
Interest Outstanding, $992.50 per Unit) $ 2,972,551
==============

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

<PAGE>

Municipal Securities Trust, Multi-State Series 43,

Virginia Trust
Statement of Operations
- --------------------------------------------------------------------------------

For the Years Ended December 31,
1996 1995 1994

Investment Income
<S> <C> <C> <C>
Interest $ 173,396 $ 173,396 $ 177,800
----------- ----------- ----------

Expenses
Trustee's Fees 4,407 4,047 3,928
Evaluator's Fees 2,063 1,876 2,278
Sponser's Advisory Fee 731 750 750
----------- ----------- ----------
Total Expenses 7,201 6,673 6,956
----------- ----------- ----------
Net Investment Income 166,195 166,723 170,844
----------- ----------- ----------
Realized and Unrealized Gain (Loss)
Change in Unrealized Appreciation
(Depreciation) on Investments (41,676) 348,183 (386,928)
----------- ----------- ----------
Net Gain (Loss) on Investments (41,676) 348,183 (386,928)
----------- ----------- ----------
Net Increase (Decrease)
in Net Assets
Resulting From Operations $ 124,519 $ 514,906 $ (216,084)
=========== =========== ==========

</TABLE>

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

<PAGE>

Municipal Securities Trust, Multi-State Series 43,

Virginia Trust
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------

For the Years Ended December 31,
1996 1995 1994

Operations
<S> <C> <C> <C>
Net Investment Income $ 166,195 $ 166,723 $ 170,844
Change in Unrealized Appreciation
(Depreciation) on Investments (41,676) 348,183 (386,928)
------------ ------------- -------------

Net Increase (Decrease) in
Net Assets Resulting
From Operations 124,519 514,906 (216,084)
------------ ------------- -------------

Distributions to Certificateholders
Investment Income 164,724 172,277 164,699

Redemptions
Interest 54 ---- ----
Principal 4,899 ---- ----
------------ ------------- -------------

Total Distributions
and Redemptions 169,677 172,277 164,699
------------ ------------- -------------

Total Increase (Decrease) (45,158) 342,629 (380,783)

Net Assets
Beginning of Year 3,017,709 2,675,080 3,055,863
------------ ------------- -------------

End of Year (Including
Undistributed Net Investment
Income of $41,405, $39,988
and $45,542, Respectively) $ 2,972,551 $ 3,017,709 $ 2,675,080
============ ============ ============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Multi-State Series 43,

Virginia Trust
Notes to Financial Statements
- --------------------------------------------------------------------------------

1. Organization

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

2. Summary of Significant Accounting Policies

<PAGE>

Municipal Securities Trust, Multi-State Series 43,
Virginia Trust
Notes to Financial Statements
- --------------------------------------------------------------------------------

3. Income Taxes

4. Trust Administration

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

The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. For the year ended December 31,1996, 5 units were
redeemed. No units were redeemed during the years ended December 31,
1995 and 1994.

The Trust pays an annual fee for trustee services rendered by the
Trustee that ranges from $.63 to $1.10 per $1,000 of outstanding
investment principal. In addition, a minimum fee of $8.00 is paid to a
service bureau for each portfolio valuation. A maximum fee of $.25 per
$1,000 of outstanding investment principal is paid to the Sponsor. For
the year ended December 31, 1996, the "Trustee's Fees" are comprised of
Trustee fees of $2,545 and other expenses of $1,862. The other expenses
include professional, printing and miscellaneous fees.

<PAGE>

Municipal Securities Trust, Multi-State Series 43,
Virginia Trust
Notes to Financial Statements
- --------------------------------------------------------------------------------

5. Net Assets

At December 31, 1996, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $ 3,078,037
Less Initial Gross Underwriting Commission 150,824
---------------
2,927,213
Accumulated Cost of Securities Sold,
Matured or Called ----
Net Unrealized Appreciation 8,832
Undistributed Net Investment Income 41,405
Undistributed Proceeds From Investments (4,899)
---------------
Total $ 2,972,551
==============

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

Undistributed net investment income includes accumulated accretion of
original issue discount of $7,277.

6. Concentration of Credit Risk

<PAGE>

Municipal Securities Trust, Multi-State Series 43,
Virginia Trust
Notes to Financial Statements
- --------------------------------------------------------------------------------

7. Financial Highlights (per unit)*

Selected data for a unit of the Trust outstanding for the year ended
December 31, 1996:

Net Asset Value, Beginning of Year** $ 1,005.90
---------------
Interest Income 57.84
Expenses (2.40)
---------------
Net Investment Income 55.44
---------------
Net Gain or Loss on Investments(1) (13.88)
---------------

Total from Investment Operations 41.56
---------------
Less Distributions
to Certificateholders
Income 54.94
for Redemptions
Interest .02
---------------
Total Distributions 54.96
---------------
Net Asset Value, End of Year** $ 992.50
===============

See "Financial and Statistical Information" in Part A of this
Prospectus for amounts of per unit distributions during the years ended
December 31, 1996, 1995 and 1994 based on actual units.

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

- -----------------------------
* Unless otherwise stated, based upon average units outstanding during
the year of 2,998 ([2,995 + 3,000]/2).

**Based upon actual units outstanding.

Prospectus Part A Dated April 30, 1997

MUNICIPAL SECURITIES TRUST

SERIES 55

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

The Trust is a unit investment trust designated Series 55
("Municipal Trust") with an underlying portfolio of long-term tax-exempt bonds
issued by or on behalf of states, municipalities and public authorities, and was
formed to preserve capital and to provide interest income (including, where
applicable, earned original issue discount) which, in the opinions of bond
counsel to the respective issuers, is, with certain exceptions, currently exempt
from regular Federal income tax (including where applicable earned original
discount) under existing law but may be subject to state and local taxes. There
can be no assurance that the Trust's objectives will be achieved. Although the
Supreme Court has determined that Congress has the authority to subject interest
on bonds such as the Bonds in the Trust to regular federal income taxation,
existing law excludes such interest from regular federal income tax. Such
interest income may, however, be subject to the federal corporate alternative
minimum tax and to state and local taxes. (See "Description of Portfolio" in
this Part A for a description of those Bonds which pay interest income subject
to the federal individual alternative minimum tax.) In addition, capital gains
are subject to tax. (See "Tax Status" and "The Trust--Portfolio" in Part B of
this Prospectus.) The Sponsors are Reich & Tang Distributors L.P. and Gruntal &
Co., L.L.C. The value of the Units of the Trust will fluctuate with the value of
the underlying bonds. Minimum purchase: 1 Unit.

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

263870.1

<PAGE>

Each Unit in the Trust represents a 1/2249th undivided
interest in the principal and net income of the Trust. The principal amount of
Bonds deposited in the Trust per Unit is reflected in the Summary of Essential
Information. (See "The Trust--Organization" in Part B of this Prospectus.) The
Units being offered hereby are issued and outstanding Units which have been
purchased by the Sponsor in the secondary market.

PUBLIC OFFERING PRICE. The secondary market Public Offering
Price of each Unit is equal to the aggregate bid price of the Bonds in the Trust
divided by the number of Units outstanding, plus a sales charge of 3.9% of the
Public Offering Price, which is the same as 4.073% of the net amount invested in
Bonds per Unit. In addition, accrued interest to expected date of settlement is
added to the Public Offering Price. If Units had been available for sale on the
Evaluation Date, the Public Offering Price per Unit would have been $1,061.74
plus accrued interest of $1.59 under the monthly distribution plan and $5.82
under the semi-annual distribution plan, for a total of $1,063.33 and $1,067.56,
respectively. The Public Offering Price per Unit can vary on a daily basis in
accordance with fluctuations in the aggregate bid price of the Bonds. (See the
"Summary of Essential Information" and "Public Offering--Offering Price" in Part
B of this Prospectus.)

A-2
263870.1

<PAGE>

any; (2) calculating the average of the yields for the Bonds in the Trust's
portfolio by weighing each Bond's yield by the market value of the Bond and by
the amount of time remaining to the date to which the Bond is priced (thus
creating an average yield for the portfolio of the Trust); and (3) reducing the
average yield for the portfolio of the Trust in order to reflect estimated fees
and expenses of the Trust and the maximum sales charge paid by investors. The
resulting Estimated Long Term Return represents a measure of the return to
investors earned over the estimated life of the Trust. (For the Estimated Long
Term Return to Certificateholders under the monthly, semi-annual and annual
distribution plans, see "Summary of Essential Information".)

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

MARKET FOR UNITS. The Sponsor, although not obligated to do
so, intends to maintain a market for the Units at prices based upon the
aggregate bid price of the Bonds in the portfolio of the Trust. The Secondary
Market repurchase price is based on the aggregate bid price of the Bonds in the
Trust portfolio, and the reoffer price is based on the aggregate bid price of
the Bonds plus a sales charge of 3.9% of the Public Offering Price (4.073% of
the net amount invested) plus net accrued interest. If such a market is not
maintained, a Certificateholder will be able to redeem his or her Units with the
Trustee at a price also based upon the aggregate bid price of the Bonds. (See
"Sponsor Repurchase" and "Public Offering--Offering Price" in Part B of this
Prospectus.)

TOTAL REINVESTMENT PLAN. Certificateholders under the
semi-annual and annual plans of distribution have the opportunity to have
their interest

A-3
263870.1

<PAGE>

distributions and principal distributions, if any, reinvested in available
series of "Insured Municipal Securities Trust" or "Municipal Securities Trust."
(See "Total Reinvestment Plan" and for residents of Texas, see "Total
Reinvestment Plan for Texas Residents" in Part B of this Prospectus.) The Plan
is not designed to be a complete investment program.

A-4
263870.1

<PAGE>

MUNICIPAL SECURITIES TRUST
SERIES 55

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1996

Date of Deposit: April 14, 1994 Minimum Principal Distribution:
Principal Amount of Bonds ... $2,250,000 $1.00 per Unit.
Number of Units ............. 2,249 Weighted Average Life to
Fractional Undivided Inter- Maturity: 7.1 Years.
est in Trust per Unit ..... 1/2249 Minimum Value of Trust: Trust
Principal Amount of may be terminated if value of
Bonds per Unit ............ $1,000.44 Trust is less than $1,200,000
Secondary Market Public in principal amount of Bonds.
Offering Price** Mandatory Termination Date: The
Aggregate Bid Price earlier of December 31, 2,044
of Bonds in Trust ....... $2,294,416+++ or the disposition of the last
Divided by 2,249 Units .... $1,020.19 Bond in the Trust.
Plus Sales Charge of 3.9% Trustee***: The Chase Manhattan
of Public Offering Price $41.55 Bank.
Public Offering Price Trustee's Annual Fee: Monthly
per Unit ................ $1,061.74+ plan $1.36 per $1,000 and semi-
Redemption and Sponsor's annual plan $.91 per $1,000.
Repurchase Price Evaluator: Kenny S&P Evaluation
per Unit .................. $1,020.19+ Services.
+++ Evaluator's Fee for Each
++++ Evaluation: Minimum of $3 plus
Excess of Secondary Market $.25 per each issue of Bonds in
Public Offering Price excess of 50 issues (treating
over Redemption and separate maturities as separate
Sponsor's Repurchase issues).
Price per Unit ............ $41.55++++ Sponsor: Reich & Tang
Difference between Public Distributors L.P.
Offering Price per Unit Sponsor's Annual Fee: Maximum of
and Principal Amount per $.25 per $1,000 principal
Unit Premium/(Discount) ... $61.30 amount of Bonds (see "Trust
Evaluation Time: 4:00 p.m. Expenses and Charges" in Part B
New York Time. of this Prospectus).
</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual
Option Option

Gross annual interest income# ......... $53.58 $53.58
Less estimated annual fees and
expenses ............................ 2.45 2.67
Estimated net annual interest _____ _____
income (cash)# ...................... $51.13 $50.91
Estimated interest distribution# ...... 4.26 25.45
Estimated daily interest accrual# ..... .1420 .1414
Estimated current return#++ ........... 4.81% 4.79%
Estimated long term return++ .......... 4.20% 4.18%
Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15

A-5
263870.1

<PAGE>

Footnotes to Summary of Essential Information

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

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

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $1.59 monthly and $5.82
semi-annually.

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

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

FINANCIAL AND STATISTICAL INFORMATION

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

Distribu-
Distributions of Interest tions of
During the Period (per Unit) Principal
During
Net Asset* the
Units Out- Value Monthly Semi-Annual Period
Period Ended standing Per Unit Option Option (Per Unit)
<S> <C> <C> <C> <C> <C>
December 31, 1995 2,468 $1,032.56 $51.63 $52.02 -0-
December 31, 1996 2,249 1,024.82 51.46 51.22 $5.53

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

A-6
263870.1

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1996

DESCRIPTION OF PORTFOLIO

The portfolio of the Trust consists of 12 issues representing
obligations of issuers located in 8 states, 1 issuer in the District of Columbia
and 1 issuer in Puerto Rico. The Sponsors have not participated as a sole
underwriter or manager, co-manager or member of an underwriting syndicate from
which any of the initial aggregate principal amount of the Bonds were acquired.
None of the Bonds are obligations of state and local housing authorities;
approximately 3.3% are hospital revenue bonds; approximately 27.8%+ are issued
in connection with the financing of nuclear generating facilities. None of the
issues comprising the aggregate principal amount of the Trust are mortgage
revenue bonds. All of the Bonds in the Trust are subject to redemption prior to
their stated maturity dates pursuant to sinking fund or optional call
provisions. The Bonds may also be subject to other calls, which may be permitted
or required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or unanticipated
revenues). Four issues representing $900,000 of the principal amount of the
Bonds are general obligation bonds. All eight of the remaining issues
representing $1,350,000 of the principal amount of the Bonds are payable from
the income of a specific project or authority and are not supported by the
issuer's power to levy taxes. The portfolio is divided for purpose of issue as
follows: Electric 2, Hospital 1, Jails 1, Lease Revenue 2 and Nuclear 2. For an
explanation of the significance of these factors see "The Trust--Portfolio" in
Part B of this Prospectus.

As of December 31, 1996, $1,595,000 (approximately 70.9% of
the aggregate principal amount of the Bonds) were original issue discount bonds.
Of these original issue discount bonds, none were Zero Coupon Bonds. None of the
aggregate principal amount of the Bonds in the Trust were purchased at a
discount from par value at maturity, approximately 29.1% were purchased at a
premium and none were purchased at par. For an explanation of the significance
of these factors see "Discount and Zero Coupon Bonds" in Part B of this
Prospectus.

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

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

A-7
263870.1

<PAGE>

Report of Independent Accountants

To the Sponsor, Trustee and Certificateholders of
Municipal Securities Trust, Series 55 (Intermediate)

In our opinion, the accompanying statement of net assets, including the
portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Municipal Securities Trust, Series
55 (Intermediate) (the "Trust") at December 31, 1996, the results of its
operations, the changes in its net assets and the financial highlights for the
year then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit, which included confirmation of securities at December
31, 1996 by correspondence with the Trustee, provides a reasonable basis for the
opinion expressed above. The financial statements for the prior periods
presented were audited by other independent accountants whose report dated March
31, 1996 expressed an unqualified opinion on those financial statements.

PRICE WATERHOUSE LLP
160 Federal Street
Boston, MA 02110
March 28, 1997

<PAGE>

Municipal Securities Trust, Series 55 (Intermediate)
Portfolio
December 31, 1996
- --------------------------------------------------------------------------------

Redemption
Aggregate Coupon Rate/ Feature (2)(4)
Portfolio Principal Name of Issuer and Ratings Date(s) of S.F.-Sinking Fund Market
No. Amount Title of Bonds (1) Maturity (2) Ref.-Refunding Value (3)
<S> <C> <C> <C> <C> <C> <C>
1 $ 100,000 Ca. Pub. Works. Bd. Lease Rntl. (Dept of A 5.900% No Sinking Fund $ 105,590
Vets. Affrs.) 1994 Series A (So. Ca. 10/01/2002 None
Vets. Home-Barstow Fac.)

2 40,000 Ca. Pub. Works Bd. Lease Rntl. (Dept of A 6.050 No Sinking Fund 42,710
Vets. Affrs.) 1994 Series A (So. Ca. 10/01/2003 None
Vets. Home-Barstow Fac.)

3 300,000 D.C. (Wash, D.C.) Genl. Oblig. Ref. AAA 4.650 No Sinking Fund 297,174
Bonds Series 1994 A-2 (AMBAC) 6/01/2002 None

4 75,000 City of Venice, Fla. Hlth. Facs. Rev. NR 5.500 No Sinking Fund 79,077
Bonds Series 1994 (Venice Hosp. Inc. 12/01/2004 None
Proj.)

5 20,000 Ga Muni. Elec. Pwr. Rev. Gen. Ser. D. AAA 4.750 No Sinking Fund 19,988
(Financial Guaranty) 1/01/2004 None

6 300,000 St. of Ill Genl. Oblig. Ref. Bonds Series A1* 4.600 No Sinking Fund 291,609
of January, 1994 12/01/2005 12/01/03 @ 102 Opt.

7 205,000 The City of N.Y. Gen. Oblig. Bonds. BBB+ 5.700 No Sinking Fund 210,045
Fiscal 1994 Series H 8/01/2003 None

8 95,000 The City of N.Y. Gen Oblig. Bonds. BBB+ 5.800 No Sinking Fund 97,632
Fiscal 1994 Series H 8/01/2004 None

9 325,000 N.C. Eastern Muni Pwr. Agcy. Pwr. Sys. Baa1* 6.000 No Sinking Fund 334,133
Rev. Bond Series 1993 B 1/01/2005 1/01/03 @ 102

10 300,000 Charleston Cnty., S.C. Charleston Pub. AAA 5.700 No Sinking Fund 317,013
Facs. Corp. Rfndg. Certs. of Part Series 6/01/2005 6/01/04 @ 102 Opt.
1994

11 300,000 Wa Pub. Pwr. Spply. Systm. Nuc. Proj. Aa1* 4.600 No Sinking Fund 295,281
No. 2 Rev. Rfndg. Series A 7/01/2002 None

12 190,000 P.R. Elec. Pwr. Auth. Pwr. Rev. Bonds BBB+ 6.200 No Sinking Fund 204,156
1992 Series Q 7/01/2004 7/01/02 @ 101.5
----------
--------------

$2,250,000 Total Investments (Cost $2,179,333) $ 2,294,408
========== ==============

</TABLE>

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

Municipal Securities Trust, Series 55 (Intermediate)
Footnotes to Portfolio
- --------------------------------------------------------------------------------

3. At December 31, 1996, the net unrealized appreciation of all the bonds
was comprised of the following:

Gross unrealized appreciation $ 115,075
Gross unrealized depreciation -
-------------

Net unrealized appreciation $ 115,075
=============

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

<PAGE>

Municipal Securities Trust, Series 55 (Intermediate)

Statement of Net Assets
December 31, 1996
- --------------------------------------------------------------------------------

Investments in Securities,
<S> <C>
at Market Value (Cost $2,179,333) $ 2,294,408
--------------

Other Assets
Accrued Interest 36,341
--------------
Total Other Assets 36,341
--------------
Liabilities
Accrued Expenses 619
Advance from Trustee 25,321
------
Total Liabilities 25,940
------

Excess of Other Assets over Total Liabilities 10,401
--------------
Net Assets (2,249 Units of Fractional Undivided
Interest Outstanding, $1,024.82 per Unit) $ 2,304,809
==============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Series 55 (Intermediate)

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

For the Years Ended December 31, For the Period from
1996 1995 April 14, 1994 (Date
of Deposit) to
December 31, 1994

Investment Income
<S> <C> <C> <C>
Interest $ 125,292 $ 153,745 $ 115,742
----------- ----------- ----------

Expenses
Trustee's Fees 5,443 6,054 1,790
Evaluator's Fees 825 770 ----
Sponser's Advisory Fee 619 750 535
----------- ----------- ----------
Total Expenses 6,887 7,574 2,325
----------- ----------- ----------
Net Investment Income 118,405 146,171 113,417
----------- ----------- ----------
Realized and Unrealized Gain (Loss)
Realized Gain on
Investments 10,162 17,837 ----

Change in Unrealized Appreciation
(Depreciation) on Investments (16,319) 229,687 (98,293)
----------- ----------- ----------
Net Gain (Loss) on Investments (6,157) 247,524 (98,293)
----------- ----------- ----------
Net Increase in Net Assets
Resulting From Operations $ 112,248 $ 393,695 $ 15,124
=========== =========== ===========

</TABLE>

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

<PAGE>

Municipal Securities Trust, Series 55 (Intermediate)

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

For the Years Ended December 31, For the Period from
1996 1995 April 14, 1994 (Date
of Deposit) to
December 31, 1994

Operations
<S> <C> <C> <C>
Net Investment Income $ 118,405 $ 146,171 $ 113,417
Realized Gain
on Investments 10,162 17,837 ----
Change in Unrealized Appreciation
(Depreciation) on Investments (16,319) 229,687 (98,293)
------------ ------------- -------------

Net Increase in Net Assets
Resulting From Operations 112,248 393,695 15,124
------------ ------------- -------------

Distributions to Certificateholders
Investment Income 118,212 146,198 94,855
Principal 12,499 ---- 3,147

Redemptions
Interest 1,971 3,214 ----
Principal 223,122 535,376 ----
------------ ------------- -------------

Total Distributions
and Redemptions 355,804 684,788 98,002
------------ ------------- -------------

Total (Decrease) (243,556) (291,093) (82,878)

Net Assets
Beginning of Year 2,548,365 2,839,458 2,922,336
--------- --------- ---------

End of Year (Including
Undistributed Net Investment
Income of $10,395, $12,173
and $15,414, Respectively) $ 2,304,809 $ 2,548,365 $ 2,839,458
============ ============ ============

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

</TABLE>

<PAGE>

Municipal Securities Trust, Series 55 (Intermediate)

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

1. Organization

Municipal Securities Trust, Series 55 (Intermediate) (the "Trust") was
organized on April 14, 1994 by Bear, Stearns & Co. Inc. under the laws
of the State of New York by a Trust Indenture and Agreement, and is
registered under the Investment Company Act of 1940. The Trust was
formed to preserve capital and to provide interest income.

2. Summary of Significant Accounting Policies

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

3. Income Taxes

<PAGE>

Municipal Securities Trust, Series 55 (Intermediate)

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

4. Trust Administration

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

The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. For the years ended December 31, 1996 and 1995, 219 and
532 units were redeemed, respectively. No units were redeemed during
the period ended December 31,1994.

The Trust pays an annual fee for trustee services rendered by the
Trustee that ranges from $.91 to $1.36 per $1,000 of outstanding
investment principal. In addition, a minimum fee of $3.00 is paid to a
service bureau for each portfolio valuation. A maximum fee of $.25 per
$1,000 of outstanding investment principal is paid to the Sponsor. For
the year ended December 31, 1996, the "Trustee's Fees" are comprised of
Trustee fees of $2,877 and other expenses of $2,566. The other expenses
include professional, printing and miscellaneous fees.

<PAGE>

Municipal Securities Trust, Series 55 (Intermediate)

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

5. Net Assets

At December 31, 1996, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $ 3,040,932
Less Initial Gross Underwriting Commission 118,596
---------------
2,922,336
Accumulated Cost of Securities Sold,
Matured or Called (743,003)
Net Unrealized Appreciation 115,075
Undistributed Net Investment Income 10,395
Undistributed Proceeds From Investments 6
---------------
Total $ 2,304,809
---------------
---------------

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

6. Concentration of Credit Risk

<PAGE>

Municipal Securities Trust, Series 55 (Intermediate)

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

7. Financial Highlights (per unit)*

Selected data for a unit of the Trust outstanding for the year ended
December 31, 1996:

Net Asset Value, Beginning of Year** $ 1,032.56
--------------

Interest Income 53.11
Expenses (2.92)
--------------
Net Investment Income 50.19
--------------
Net Gain or Loss on Investments(1) (1.68)
--------------

Total from Investment Operations 48.51
--------------
Less Distributions
to Certificateholders
Income 50.11
Principal 5.30
for Redemptions
Interest .84
--------------
Total Distributions 56.25
--------------
Net Asset Value, End of Year** $ 1,024.82
===============

See "Financial and Statistical Information" in Part A of this
Prospectus for amounts of per unit distributions during the years ended
December 31, 1996, 1995 and 1994 based on actual units.

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

- ------------------------------
* Unless otherwise stated, based upon average units outstanding during
the year of 2,359 ([2,249 + 2,468]/2).

**Based upon actual units outstanding.

<PAGE>

Prospectus Part A Dated April 30, 1997

MUNICIPAL SECURITIES TRUST

MULTI-STATE SERIES 45
(MULTIPLIER PORTFOLIO)

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

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

This Prospectus consists of two parts. Part A contains the
Summary of Essential Information including descriptive material relating to each
State Trust as of December 31, 1996 (the "Evaluation Date"), a summary of
certain specific information regarding each State trust and audited financial
statements of each State Trust, including the related portfolio, as of the
Evaluation Date. Part B of this Prospectus contains a general summary of the
State Trust. Part A of this Prospectus may not be distributed unless accompanied
by Part B. Investors should read and retain both parts of this Prospectus for
future reference.

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

Principal Secondary Market
Number of Amount of Offering Price
Units Bonds per Unit (12/31/96)

Virginia Trust 2,972 $2,960,000 $1,051.43

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

263868.1

<PAGE>

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

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

A-2
263868.1

<PAGE>

the Public Offering Price. If Units of the Virginia Trust had been purchased on
the Evaluation Date, the Public Offering Price per Unit would have been
$1,051.43 plus accrued interest of $1.12 under the monthly distribution plan and
$5.79 under the semi-annual distribution plan, for a total of $1,052.55 and
$1,057.22. The Public Offering Price per Unit can vary on a daily basis in
accordance with fluctuations in the aggregate bid price of the Bonds. (See
"Summary of Essential Information" and "Public Offering--Offering Price" in Part
B of this Prospectus.)

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

DISTRIBUTIONS. Distributions of interest income, less
expenses, will be made by the Trust either monthly, semi-annually or annually
depending

A-3
263868.1

<PAGE>

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

MARKET FOR UNITS. The Sponsor, although not obligated to do
so, intends to maintain a secondary market for the Units at prices based on the
aggregate bid price of the Bonds in the Trust portfolio. The secondary market
repurchase price is based on the aggregate bid price of the Bonds in the Trust
portfolio, and the reoffer price is based on the aggregate bid price of the
Bonds plus a sales charge of 5.1% of the Public Offering Price (5.331% of the
net amount invested) plus net accrued interest. If a market is not maintained, a
Certificateholder will be able to redeem his or her Units with the Trustee at a
price also based on the aggregate bid price of the Bonds. (See "Sponsor
Repurchase" and "Public Offering--Offering Price" in Part B of this Prospectus.)

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

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

A-4
263868.1

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 45

VIRGINIA TRUST

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1996

<TABLE>

Date of Deposit: April 14, 1994 Minimum Principal Distribution:
Principal Amount of Bonds ... $2,960,000 $1.00 per Unit.
Number of Units ............. 2,972 Weighted Average Life
Fractional Undivided Inter- to Maturity: 21.4 Years.
est in Trust per Unit ..... 1/2972 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $995.96 value of Trust is less than
Secondary Market Public $1,200,000 in principal amount
Offering Price** of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust ....... $2,964,884+++ The earlier of December 31,
Divided by 2,972 units .... $997.61 2044 or the disposition of the
Plus Sales Charge of 5.1% last Bond in the Trust.
of Public Offering Price $53.82 Trustee***: The Chase Manhattan
Public Offering Price Bank.
per Unit ................ $1,051.43+ Trustee's Annual Fee: Monthly
Redemption and Sponsor's plan $1.37 per $1,000 and semi-
Repurchase Price annual plan $.92 per $1,000.
per Unit .................. $997.61+ Evaluator: Kenny S&P Evaluation
+++ Services.
++++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $3 plus
Public Offering Price $.25 per each issue of Bonds in
over Redemption and excess of 50 issues (treating
Sponsor's Repurchase separate maturities as separate
Price per Unit ............ $53.82++++ issues).
Difference between Public Sponsor: Reich & Tang
Offering Price per Unit Distributors L.P.
and Principal Amount per Sponsor's Annual Fee: Maximum of
Unit Premium/(Discount) ... $55.47 $.25 per $1,000 principal
Evaluation Time: 4:00 p.m. amount of Bonds (see "Trust
New York Time. Expenses and Charges" in Part B
of this Prospectus).
</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual
Option Option

Gross annual interest income# ......... $57.37 $57.37
Less estimated annual fees and
expenses ............................ 2.35 1.85
Estimated net annual interest ______ ______
income (cash)# ...................... $55.02 $55.52
Estimated interest distribution# ...... 4.58 27.76
Estimated daily interest accrual# ..... .1528 .1542
Estimated current return#++ ........... 5.23% 5.28%
Estimated long term return++ .......... 5.07% 5.12%
Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15

A-5
263868.1

<PAGE>

Footnotes to Summary of Essential Information

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

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

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $1.12 monthly and $5.79
semi-annually for the Virginia Trust.

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

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

FINANCIAL AND STATISTICAL INFORMATION

Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>
Distribu-
tions of
Distributions of Interest Principal
During the Period (per Unit) During
Net Asset* Semi- the
Units Out- Value Monthly Annual Period
Period Ended standing Per Unit Option Option (Per Unit)
<S> <C> <C> <C> <C> <C>
December 31, 1994 3,000 $ 870.25 $33.73 $34.08 -0-
December 31, 1995 2,985 1,009.30 55.32 55.92 -0-
December 31, 1996 2,972 1,002.66 55.56 56.11 -0-
</TABLE>

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

A-6
263868.1

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1996

DESCRIPTION OF PORTFOLIO

Each Unit in the Virginia Trust consists of a 1/2972nd
undivided interest in the principal and net income of the Trust in the ratio of
one Unit for each $995.96 of principal amount of the Bonds currently held in the
Trust. The Sponsor has not participated as a sole underwriter or manager,
co-manager or member of an underwriting syndicate from which any of the initial
aggregate principal amount of the Bonds were acquired. The portfolio of the
Virginia Trust consists of 9 issues of 7 issuers located in Virginia and 2 in
Puerto Rico. Approximately 11.8% of the Bonds are obligations of state and local
housing authorities; approximately 23.6% are hospital revenue bonds; and none
were issued in connection with the financing of nuclear generating facilities.
None of the issues comprising the aggregate principal amount of the Trust are
mortgage revenue bonds. All of the Bonds are subject to redemption prior to
their stated maturity dates pursuant to sinking fund or optional call
provisions. The Bonds may also be subject to other calls, which may be permitted
or required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or unanticipated
revenues). One issue representing $360,000 of the principal amount of the Bonds
is a general obligation bond. All eight of the remaining issues representing
$2,600,000 of the principal amount of the Bonds are payable from the income of a
specific project or authority and are not supported by the issuer's power to
levy taxes. The portfolio is divided for purpose of issue as follows: Building
Authority 1, Electric 1, Expressway 1, Highway 1, Hospital 2, Multi-Family
Housing 1 and Water 1. For an explanation of the significance of these factors
see "The State Trust--Portfolio" in Part B of this Prospectus.

As of December 31, 1996, $2,200,000 (approximately 74.3% of
the aggregate principal amount of the Bonds) were original issue discount bonds.
Of these original issue discount bonds, none were Zero Coupon Bonds. None of the
aggregate principal amount of the Bonds in the Trust were purchased at a
"market" discount from par value at maturity, approximately 25.7% were purchased
at a premium and none were purchased at par. For an explanation of the
significance of these factors see "The Portfolios--Discount and Zero Coupon
Bonds" in Part B of this Prospectus.

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

A-7
263868.1

<PAGE>

Report of Independent Accountants

To the Sponsor, Trustee and Certificateholders of
Municipal Securities Trust, Multi-State Series 45, Virginia Trust

In our opinion, the accompanying statement of net assets, including the
portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Municipal Securities Trust,
Multi-State Series 45, Virginia Trust (the "Trust") at December 31, 1996, the
results of its operations, the changes in its net assets and the financial
highlights for the year then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit, which included
confirmation of securities at December 31, 1996 by correspondence with the
Trustee, provides a reasonable basis for the opinion expressed above. The
financial statements for the prior periods presented were audited by other
independent accountants whose report dated March 31, 1996 expressed an
unqualified opinion on those financial statements.

PRICE WATERHOUSE LLP
160 Federal Street
Boston, MA 02110
March 28, 1997

<PAGE>

Municipal Securities Trust, Multi-State Series 45,
Virginia Trust
Portfolio
December 31, 1996
- --------------------------------------------------------------------------------

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

<S> <C> <C> <C> <C> <C> <C>
1 $ 400,000 Albermarle Cnty. Va. Ind. Dev. Auth. A* 5.500% 10/01/03 @ 100 S.F. $ 378,488
Hosp. Rfndg. Rev. Bonds (Martha 10/01/2015 10/01/03 @ 102 Opt.
Jefferson Hosp.) Series 1993

2 400,000 Indus Dev. Auth. of the City of A 5.375 No Sinking Fund 389,672
Alexandria, Va. Poll Cntl. Rev. Rfndg. 2/15/2024 2/15/04 @ 102 Opt.
Bonds

3 300,000 Fairfax Cnty. Va. Dev. Auth. Hosp. Rev. Aa* 5.000 8/15/20 @ 100 S.F. 271,770
Rfndg. Bonds (Inova Hlth. Sys. Hosps. 8/15/2023 None
Prjt.) Series 1993A

4 400,000 Fairfax Cnty. Wtr. Auth. Wtr. Rfndg. Aa* 5.750 4/01/23 @ 100 S.F. 395,904
Rev. Bonds Series 1992 4/01/2029 4/01/02 @ 100 Opt.

5 350,000 Harrisonburg Va. Redev. & Hsg. Auth. AA 6.150 3/01/04 @ 100 S.F. 358,988
Multifam. Hsg. Rev. Rfndg. Bonds 3/01/2029 3/01/03 @ 102 Opt.
(Hannover Crossing Aprtmts. Prjt.)
Series 1993

6 360,000 Richmond Va. Genl. Oblig. Pub. AA 6.250 1/15/12 @ 100 S.F. 390,290
Imprvmt. Rev. Bonds Series 1991A 1/15/2021 1/15/01 @ 102 Opt.

7 400,000 Richmond Metro. Auth. Expy. Rev. AAA 6.250 7/15/04 @ 100 S.F. 422,592
& Rfndg. Bonds, Series 1992B 7/15/2022 7/15/02 @ 102 Opt.

8 150,000 P.R. Hwy. Auth. Rev. Hwy. Rfndg. A 6.000 7/01/18 @ 100 S.F. 150,704
Bonds (Series Q) 7/01/2020 7/01/00 @ 100 Opt.

9 200,000 P.R. Pub. Bldgs. Auth. Pub. Ed. & Hlth. A 5.500 7/01/17 @ 100 S.F. 191,198
Facs. Rev. Rfndg. Bonds Gtd. By the 7/01/2021 7/01/03 @ 101.5 Opt.
Cmmnwlth. of P.R. Series 1993 M
----------
--------------

$2,960,000 Total Investments (Cost $2,770,544) $ 2,949,606
========== =============

</TABLE>

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

Municipal Securities Trust, Multi-State Series 45,
Virginia Trust
Footnotes to Portfolio
- --------------------------------------------------------------------------------

3. At December 31, 1996, the net unrealized appreciation of all the bonds
was comprised of the following:

Gross unrealized appreciation $ 179,062
Gross unrealized depreciation -
-------------

Net unrealized appreciation $ 179,062
=============

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

<PAGE>

Municipal Securities Trust, Multi-State Series 45,

Virginia Trust
Statement of Net Assets
December 31, 1996
- --------------------------------------------------------------------------------

Investments in Securities,
at Market Value (Cost $2,770,544) $ 2,949,606
--------------

Other Assets
Accrued Interest 64,117
--------------
Total Other Assets 64,117
--------------
Liabilities
Accrued Expenses 645
Advance from Trustee 33,163
--------------
Total Liabilities 33,808
--------------
Excess of Other Assets over Total Liabilities 30,309
--------------
Net Assets (2,972 Units of Fractional Undivided
Interest Outstanding, $1,002.66 per Unit) $ 2,979,915
==============

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

<PAGE>

Municipal Securities Trust, Multi-State Series 45,

Virginia Trust
Statement of Operations
- --------------------------------------------------------------------------------

For the Years Ended December 31, For the Period from
1996 1995 April 14, 1994 (Date
of Deposit) to
December 31, 1994

Investment Income
<S> <C> <C> <C>
Interest $ 172,970 $ 173,025 $ 123,521
----------- ----------- ----------
Expenses
Trustee's Fees 5,298 5,370 2,699
Evaluator's Fees 825 809 ----
Sponser's Advisory Fee 645 751 535
----------- ----------- ----------
Total Expenses 6,768 6,930 3,234
----------- ----------- ----------
Net Investment Income 166,202 166,095 120,287
----------- ----------- ----------
Realized and Unrealized Gain (Loss)
Realized Gain on
Investments 2,125 ---- ----

Change in Unrealized Appreciation
(Depreciation) on Investments (21,878) 416,648 (215,708)
----------- ----------- ----------
Net Gain (Loss) on Investments (19,753) 416,648 (215,708)
----------- ----------- ----------
Net Increase (Decrease)
in Net Assets
Resulting From Operations $ 146,449 $ 582,743 $ (95,421)
=========== =========== ===========

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

</TABLE>

<PAGE>

Municipal Securities Trust, Multi-State Series 45,

Virginia Trust
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------

For the Years Ended December 31, For the Period from
1996 1995 April 14, 1994 (Date
of Deposit) to
December 31, 1994

Operations
<S> <C> <C> <C>
Net Investment Income $ 166,202 $ 166,095 $ 120,287
Realized Gain
on Investments 2,125 ---- ----
Change in Unrealized Appreciation
(Depreciation) on Investments (21,878) 416,648 (215,708)
------------ ------------- -------------

Net Increase (Decrease) in
Net Assets Resulting
From Operations 146,449 582,743 (95,421)
------------ ------------- -------------

Distributions to Certificateholders
Investment Income 166,316 166,284 101,523
To Sponsor of Accrued Interest
to Date of Settlement ---- ---- 3,365

Redemptions
Interest 35 31 ----
Principal 12,930 14,424 ----
------------ ------------- -------------

Total Distributions
and Redemptions 179,281 180,739 104,888
------------ ------------- -------------

Total Increase (Decrease) (32,832) 402,004 (200,309)

Net Assets
Beginning of Year 3,012,747 2,610,743 2,811,052
------------ ------------- -------------

End of Year (Including
Undistributed Net Investment
Income of $15,030, $15,179
and $15,399, Respectively) $ 2,979,915 $ 3,012,747 $ 2,610,743
============ ============ ============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Multi-State Series 45,

Virginia Trust
Notes to Financial Statements
- --------------------------------------------------------------------------------

1. Organization

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

2. Summary of Significant Accounting Policies

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

<PAGE>

Municipal Securities Trust, Multi-State Series 45,
Virginia Trust
Notes to Financial Statements
- --------------------------------------------------------------------------------

3. Income Taxes

4. Trust Administration

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

The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. For the years ended December 31, 1996 and1995, 13 and
15 units were redeemed, respectively. No units were redeemed during the
period ended December 31, 1994.

The Trust pays an annual fee for trustee services rendered by the
Trustee that ranges from $.92 to $1.37 per $1,000 of outstanding
investment principal. In addition, a minimum fee of $3.00 is paid to a
service bureau for each portfolio valuation. A maximum fee of $.25 per
$1,000 of outstanding investment principal is paid to the Sponsor. For
the year ended December 31, 1996, the "Trustee's Fees" are comprised of
Trustee fees of $2,545 and other expenses of $2,753. The other expenses
include professional, printing and miscellaneous fees.

<PAGE>

Municipal Securities Trust, Multi-State Series 45,
Virginia Trust
Notes to Financial Statements
- --------------------------------------------------------------------------------

5. Net Assets

At December 31, 1996, the net assets of the Trust represented the
interest of Certificateholders as follows:

Original cost to Certificateholders $ 2,955,891
Less Initial Gross Underwriting Commission 144,839
---------------
2,811,052
Accumulated Cost of Securities Sold,
Matured or Called (40,508)
Net Unrealized Appreciation 179,062
Undistributed Net Investment Income 15,030
Undistributed Proceeds From Investments 15,279
---------------
Total $ 2,979,915
===============

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

6. Concentration of Credit Risk

<PAGE>

Municipal Securities Trust, Multi-State Series 45,
Virginia Trust
Notes to Financial Statements
- --------------------------------------------------------------------------------

7. Financial Highlights (per unit)*

Selected data for a unit of the Trust outstanding for the year ended
December 31, 1996:

Net Asset Value, Beginning of Year** $ 1,009.30
--------------

Interest Income 58.06
Expenses (2.27)
--------------
Net Investment Income 55.79
--------------
Net Gain or Loss on Investments(1) (6.59)
--------------
Total from Investment Operations 49.20
--------------
Less Distributions
to Certificateholders
Income 55.83
for Redemptions
Interest .01
--------------
Total Distributions 55.84
--------------
Net Asset Value, End of Year** $ 1,002.66
===============

See "Financial and Statistical Information" in Part A of this
Prospectus for amounts of per unit distributions during the years ended
December 31, 1996, 1995 and 1994 based on actual units.

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

- -------------------
* Unless otherwise stated, based upon average units outstanding during
the year of 2,979 ([2,972 + 2,985]/2).

**Based upon actual units outstanding.

<PAGE>

Prospectus Part A Dated April 30, 1997

MUNICIPAL SECURITIES TRUST

MULTI-STATE SERIES 46
(MULTIPLIER PORTFOLIO)

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

This Prospectus consists of two parts. Part A contains the
Summary of Essential Information including descriptive material relating to each
State Trust as of December 31, 1996 (the "Evaluation Date"), a summary of
certain specific information regarding each State trust and audited financial
statements of each State Trust, including the related portfolio, as of the
Evaluation Date. Part B of this Prospectus contains a general summary of the
State Trusts. Part A of this Prospectus may not be distributed unless
accompanied by Part B. Investors should read and retain both parts of this
Prospectus for future reference.

Principal Secondary Market
Number of Amount of Offering Price
Units Bonds per Unit (12/31/96)

<S> <C> <C> <C>
California Trust 1,993 $2,000,000 $1,050.05
Florida Trust 2,000 $1,885,000 $ 986.21
Virginia Trust 1,635 $1,635,000 $1,066.97

</TABLE>

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

A-1
352541.1

<PAGE>

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

PUBLIC OFFERING PRICE. The secondary market Public Offering
Price of each Unit is equal to the aggregate bid price of the Bonds in the Trust
divided by the number of Units outstanding, plus a sales charge of 5.4% for the
California Trust, 5.4% for the Florida Trust and 5.5% for the Virginia Trust of
the Public Offering Price, or 5.752% for the California Trust, 5.676%

A-2
352541.1

<PAGE>

for the Florida Trust and 5.820% for the Virginia Trust of the net amount
invested in Bonds per Unit. In addition, accrued interest to the expected date
of settlement is added to the Public Offering Price. If Units of the California
Trust had been purchased on the Evaluation Date, the Public Offering Price per
Unit would have been $1,050.05 plus accrued interest of $.91 under the monthly
distribution plan and $5.59 under the semi-annual distribution plan, for a total
of $1,050.96 and $1,055.64, respectively. If Units of the Florida Trust had been
purchased on the Evaluation Date, the Public Offering Price per Unit would have
been $986.21 plus accrued interest of $.75 under the monthly distribution plan
and $5.25 under the semi-annual distribution plan, for a total of $986.96 and
$991.46, respectively. If Units of the Virginia Trust had been purchased on the
Evaluation Date, the Public Offering Price per Unit would have been $1,066.97
plus accrued interest of $.83 under the monthly distribution plan and $5.78
under the semi-annual distribution plan, for a total of $1,067.80 and $1,072.75,
respectively. The Public Offering Price per Unit can vary on a daily basis in
accordance with fluctuations in the aggregate bid price of the Bonds. (See
"Summary of Essential Information" and "Public Offering--Offering Price" in Part
B of this Prospectus.)

A-3
352541.1

<PAGE>

assurance that the present Estimated Current Return or Estimated Long Term
Return will be realized in the future. (For the Estimated Current Return to
Certificateholders under the monthly, semi-annual and annual distribution plans,
see "Summary of Essential Information". See "Estimated Long Term Return and
Estimated Current Return" in Part B of this Prospectus.)

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

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

MARKET FOR UNITS. The Sponsor, although not obligated to do
so, intends to maintain a secondary market for the Units at prices based on the
aggregate bid price of the Bonds in the Trust portfolio. The secondary market
repurchase price is based on the aggregate bid price of the Bonds in the Trust
portfolio, and the reoffer price is based on the aggregate bid price of the
Bonds plus a sales charge of 5.4% for the California Trust, 5.4% for the Florida
Trust and 5.5% for the Virginia Trust of the Public Offering Price (5.752% for
the California Trust, 5.678% for the Florida Trust and 5.820% for the Virginia
Trust of the net amount invested) plus net accrued interest. If a market is not
maintained, a Certificateholder will be able to redeem his or her Units with the
Trustee at a price also based on the aggregate bid price of the Bonds. (See
"Sponsor Repurchase" and "Public Offering--Offering Price" in Part B of this
Prospectus.)

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

A-4
352541.1

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46

CALIFORNIA TRUST

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>

<S> <C>

Date of Deposit: April 6, 1995 Minimum Principal Distribution:
- --------------- ------------------------------
Principal Amount of Bonds ... $2,000,000 $1.00 per Unit.
- -------------------------
Number of Units ............. 1,993 Weighted Average Life to
- --------------- ------------------------
Fractional Undivided Inter- Maturity: 21.0 Years.
- -------------------------- --------
est in Trust per Unit ..... 1/1993 Minimum Value of Trust:
--------------------- ----------------------
Principal Amount of Trust may be terminated if
- -------------------
Bonds per Unit ............ $1,003.51 value of Trust is less than
--------------
Secondary Market Public $800,000 in principal amount
Offering Price** of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust ....... $1,978,933+++ The earlier of December 31,
Divided by 1,993 units .... $992.94 2044 or the disposition of
Plus Sales Charge of 5.4% the last Bond in the Trust.
of Public Offering Price $57.11 Trustee***: The Chase
Public Offering Price Manhattan Bank.
per Unit ................ $1,050.05+ Trustee's Annual Fee: Monthly
--------------------
Redemption and Sponsor's plan $1.46 per $1,000; and
- ------------------------
Repurchase Price semi-annual plan $1.01 per
----------------
per Unit .................. $992.94+ $1,000.
--------
+++ Evaluator: Kenny S&P
++++ Evaluation Services.
Excess of Secondary Market Evaluator's Fee for Each
- -------------------------- ------------------------
Public Offering Price Evaluation: Minimum of $2.83
--------------------- ----------
over Redemption and plus $.25 per each issue of
-------------------
Sponsor's Repurchase Bonds in excess of 50 issues
--------------------
Price per Unit ............ $57.11++++ (treating separate maturities
--------------
Difference between Public as separate issues).
Offering Price per Unit Sponsor: Reich & Tang
----------------------- -------
and Principal Amount per Distributors L.P.
------------------------
Unit Premium/(Discount) ... $50.02 Sponsor's Annual Fee: Maximum
----------------------- --------------------
Evaluation Time: 4:00 p.m. of $.25 per $1,000 principal
Florida Time. amount of Bonds (see "Trust
Expenses and Charges" in Part
B of this Prospectus).

</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

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

Gross annual interest income# ......... $58.38 $58.38
Less estimated annual fees and
expenses ............................ 2.58 2.13
Estimated net annual interest ______ ______
income (cash)# ...................... $55.80 $56.25
Estimated interest distribution# ...... 4.65 28.12
Estimated daily interest accrual# ..... .1550 .1562
Estimated current return#++ ........... 5.31% 5.36%
Estimated long term return++ .......... 5.07% 5.12%

Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15
</TABLE>

A-5
352541.1

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46

FLORIDA TRUST

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1996

Date of Deposit: April 6, 1995 Minimum Principal Distribution:
- --------------- ------------------------------
<S> <C> <C>
Principal Amount of Bonds ... $1,885,000 $1.00 per Unit.
- -------------------------
Number of Units ............. 2,000 Weighted Average Life to
- --------------- ------------------------
Fractional Undivided Inter- Maturity: 25.4 Years.
- -------------------------- --------
est in Trust per Unit ..... 1/2000 Minimum Value of Trust:
--------------------- ----------------------
Principal Amount of Trust may be terminated if
- -------------------
Bonds per Unit ............ $942.50 value of Trust is less than
--------------
Secondary Market Public $800,000 in principal amount
Offering Price** of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust........ $1,866,472+++ The earlier of December 31,
Divided by 2,000 units .... $933.24 2044 or the disposition of
Plus Sales Charge of 5.4% the last Bond in the Trust.
of Public Offering Price $52.97 Trustee***: The Chase
Public Offering Price Manhattan Bank.
per Unit ................ $986.21+ Trustee's Annual Fee: Monthly
--------------------
Redemption and Sponsor's plan $1.47 per $1,000; and
- ------------------------
Repurchase Price semi-annual plan $1.02 per
----------------
per Unit .................. $933.24+ $1,000.
--------
+++ Evaluator: Kenny S&P
++++ Evaluation Services.
Excess of Secondary Market Evaluator's Fee for Each
- -------------------------- ------------------------
Public Offering Price Evaluation: Minimum of $2.83
--------------------- ----------
over Redemption and plus $.25 per each issue of
-------------------
Sponsor's Repurchase Bonds in excess of 50 issues
--------------------
Price per Unit ............ $52.97++++ (treating separate maturities
--------------
Difference between Public as separate issues).
Offering Price per Unit Sponsor: Reich & Tang
----------------------- -------
and Principal Amount per Distributors L.P.
------------------------
Unit Premium/(Discount) ... $43.71 Sponsor's Annual Fee: Maximum
----------------------- --------------------
Evaluation Time: 4:00 p.m. of $.25 per $1,000 principal
Florida Time. amount of Bonds (see "Trust
Expenses and Charges" in Part
B of this Prospectus).

</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual
Option Option

Gross annual interest income# ......... $56.00 $56.00
Less estimated annual fees and
expenses ............................ 2.52 2.07
Estimated net annual interest ______ ______
income (cash)# ...................... $53.48 $53.93
Estimated interest distribution# ...... 4.56 26.96
Estimated daily interest accrual# ..... .1485 .1498
Estimated current return#++ ........... 5.42% 5.47%
Estimated long term return++ .......... 5.24% 5.29%

Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15
</TABLE>

A-6
352541.1

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46

VIRGINIA TRUST

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1996

Date of Deposit: April 6, 1995 Minimum Principal Distribution:
- --------------- ------------------------------
<S> <C> <C>
Principal Amount of Bonds ... $1,635,000 $1.00 per Unit.
- -------------------------
Number of Units ............. 1,635 Weighted Average Life
- --------------- ---------------------
Fractional Undivided Inter- to Maturity: 23.79 Years.
- -------------------------- -----------
est in Trust per Unit ..... 1/1635 Minimum Value of Trust:
--------------------- ----------------------
Principal Amount of Trust may be terminated if
- -------------------
Bonds per Unit ............ $1,000.00 value of Trust is less than
--------------
Secondary Market Public $800,000 in principal amount
Offering Price** of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust ....... $1,648,556+++ The earlier of December 31,
Divided by 1,635 units .... $1,008.29 2044 or the disposition of
Plus Sales Charge of 5.5% the last Bond in the Trust.
of Public Offering Price $58.68 Trustee***: The Chase
Public Offering Price Manhattan Bank.
per Unit ................ $1,066.97+ Trustee's Annual Fee: Monthly
--------------------
Redemption and Sponsor's plan $1.45 per $1,000; and
- ------------------------
Repurchase Price semi-annual plan $1.00 per
----------------
per Unit .................. $1,008.29+ $1,000.
--------
+++ Evaluator: Kenny S&P
++++ Evaluation Services.
Excess of Secondary Market Evaluator's Fee for Each
- -------------------------- ------------------------
Public Offering Price Evaluation: Minimum of $2.83
--------------------- ----------
over Redemption and plus $.25 per each issue of
-------------------
Sponsor's Repurchase Bonds in excess of 50 issues
--------------------
Price per Unit ............ $58.68++++ (treating separate maturities
--------------
Difference between Public as separate issues).
Offering Price per Unit Sponsor: Reich & Tang
----------------------- -------
and Principal Amount per Distributors L.P.
------------------------
Unit Premium/(Discount) ... $72.25 Sponsor's Annual Fee: Maximum
----------------------- --------------------
Evaluation Time: 4:00 p.m. of $.25 per $1,000 principal
Florida Time. amount of Bonds (see "Trust
Expenses and Charges" in Part
B of this Prospectus).

</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

Monthly Semi-Annual
Option Option

Gross annual interest income# ......... $61.54 $61.54
Less estimated annual fees and
expenses ............................ 2.74 2.27
Estimated net annual interest ______ ______
income (cash)# ...................... $58.80 $59.27
Estimated interest distribution# ...... 4.90 29.63
Estimated daily interest accrual# ..... .1633 .1646
Estimated current return#++ ........... 5.51% 5.55%
Estimated long term return++ .......... 5.16% 5.21%

Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15

</TABLE>

A-7
352541.1

<PAGE>

Footnotes to Summary of Essential Information

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

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

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $.91 monthly and $5.59
semi-annually for the California Trust, $.75 monthly and $5.25
semi-annually for the Florida Trust, and $.83 monthly and $5.78
semi-annually for the Virginia Trust.

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

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

FINANCIAL AND STATISTICAL INFORMATION

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

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

California Trust

<S> <C> <C> <C> <C> <C>
December 31, 1995 2,000 $1,007.24 $35.04 $35.39 -0-
December 31, 1996 1,993 998.30 55.46 55.98 -0-

Florida Trust

December 31, 1995 2,000 $1,008.41 $41.02 $36.48 -0-
December 31, 1996 2,000 938.32 54.94 55.40 $57.50

Virginia Trust

December 31, 1995 1,635 $1,023.25 $36.88 $37.23 -0-
December 31, 1996 1,635 1,013.61 58.73 59.30 -0-
- --------
* Net Asset Value per Unit is calculated by dividing net assets as
disclosed in the "Statement of Net Assets" by the number of Units
outstanding as of the date of the Statement of Net Assets. See Note 5
of Notes to Financial Statements for a description of the components of
Net Assets.

</TABLE>

A-8
352541.1

<PAGE>

INFORMATION REGARDING THE TRUSTS
AS OF DECEMBER 31, 1996

DESCRIPTION OF PORTFOLIOS

California Trust

Each Unit in the California Trust consists of a 1/1993rd
undivided interest in the principal and net income of the Trust in the ratio of
one Unit for each $992.94 of principal amount of the Bonds currently held in the
Trust. The Sponsor has not participated as a sole underwriter or manager,
co-manager or member of an underwriting syndicate from which any of the Bonds
were acquired. The portfolio of the California Trust consists of 8 issues of 7
issuers located in California and 1 in Puerto Rico. None of the Bonds are
obligations of state and local housing authorities; approximately 15% are
hospital revenue bonds; and approximately 15% were issued in connection with the
financing of nuclear generating facilities. One issue comprising approximately
5.8% of the aggregate principal amount of the Bonds is a mortgage subsidy bond.
All of the Bonds are subject to redemption prior to their stated maturity dates
pursuant to sinking fund or optional call provisions. The Bonds may also be
subject to other calls, which may be permitted or required by events which
cannot be predicted (such as destruction, condemnation, termination of a
contract, or receipt of excess or unanticipated revenues). One issue
representing $300,000 of the aggregate principal amount of the Bonds is a
general obligation bond. All 7 of the remaining issues representing $1,700,000
of the principal amount of the Bonds are payable from the income of a specific
project or authority and are not supported by the issuer's power to levy taxes.
The portfolio is divided for purpose of issue as follows: Hospital 1, Lease
Revenue 1, Nuclear 1, Sales Tax 1, Single Family Mortgage Revenue 1, Solid Waste
1 and Transit 1. For an explanation of the significance of these factors see
"The State Trusts-Portfolios" in Part B of this Prospectus.

As of December 31, 1996, $1,470,000 (approximately 73.5% of
the aggregate principal amount of the Bonds) were original issue discount bonds.
Of these original issue discount bonds, none were Zero Coupon Bonds. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at par value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. None of the aggregate principal amount
of the Bonds in the Trust were purchased at a "market" discount from par value
at maturity, approximately 26.5% were purchased at a premium and none were
purchased at par. For an explanation of the significance of these factors see
"The Portfolios--Discount and Zero Coupon Bonds" in Part B of this Prospectus.

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

Florida Trust

Each Unit in the Florida Trust consists of a 1/2000th
undivided interest in the principal and net income of the Trust in the ratio of
one Unit for each $933.24 of principal amount of the Bonds currently held in the
Trust. The Sponsor has not participated as a sole underwriter or manager,
co-manager or member of an underwriting syndicate from which any of the Bonds
were acquired. The portfolio of the Florida Trust consists of 10 issues of 9
issuers located in Florida and 1 in Puerto Rico. None of the Bonds are
obligations of state and local housing authorities; approximately 24.4% are
hospital revenue bonds; and none were issued in connection with the financing

A-9
352541.1

<PAGE>

of nuclear generating facilities. Two issues comprising approximately 25.7%+ of
the aggregate principal amount of the Bonds are mortgage subsidy bonds. All of
the Bonds are subject to redemption prior to their stated maturity dates
pursuant to sinking fund or optional call provisions. The Bonds may also be
subject to other calls, which may be permitted or required by events which
cannot be predicted (such as destruction, condemnation, termination of a
contract, or receipt of excess or unanticipated revenues). One issue
representing $200,000 of the principal amount of the Bonds is a general
obligation bond. All 9 of the remaining issues representing $1,685,000 of the
principal amount of the Bonds are payable from the income of a specific project
or authority and are not supported by the issuer's power to levy taxes. The
portfolio is divided for purpose of issue as follows: Airport 1, Education 1,
Hospital 2, Public Facility 1, Single Family Mortgage Revenue 2, Solid Waste 1
and University 1. For an explanation of the significance of these factors see
"The State Trusts--Portfolios" in Part B of this Prospectus.

As of December 31, 1996, $790,000 (approximately 41.9% of the
aggregate principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, $100,000 (approximately 5.3% of the
aggregate principal amount of the Bonds) were Zero Coupon Bonds. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at par value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. None of the aggregate principal amount
of the Bonds in the Trust were purchased at a "market" discount from par value
at maturity, approximately 36.4% were purchased at a premium and approximately
21.7% were purchased at par. For an explanation of the significance of these
factors see "The Portfolios--Discount and Zero Coupon Bonds" in Part B of this
Prospectus.

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

Virginia Trust

Each Unit in the Virginia Trust consists of a 1/1635th
undivided interest in the principal and net income of the Trust in the ratio of
one Unit for each $1,008.29 of principal amount of the Bonds currently held in
the Trust. The Sponsor has not participated as a sole underwriter or manager,
comanager or member of an underwriting syndicate from which any of the Bonds
were acquired. The portfolio of the Virginia Trust consists of 8 issues of 6
issuers located in Virginia and 2 in Puerto Rico. None of the Bonds are
obligations of state and local housing authorities; approximately 18.3% are
hospital revenue bonds; and none were issued in connection with the financing of
nuclear generating facilities. One of the issues comprising approximately 18.3%
of the aggregate principal amount of the Bonds in the trust is a mortgage
subsidy bond. All of the Bonds are subject to redemption prior to their stated
maturity dates pursuant to sinking fund or optional call provisions. The Bonds
may also be subject to other calls, which may be permitted or required by events
which cannot be predicted (such as destruction, condemnation, termination of a
contract, or receipt of excess or unanticipated revenues). One issue
representing $125,000 of the principal amount of the Bonds is a general
obligation bond. All 7 of the remaining issues representing $1,510,000 of the
principal amount of the Bonds are payable from the income of a specific project
or authority and are not
- --------
+ A trust is considered to be "concentrated" in a particular category or
industry when the securities in that category or industry constitute
25% or more of the aggregate face amount of the portfolio. See Part B
for disclosure, including risk factors, regarding this concentration.

A-10
352541.1

<PAGE>

supported by the issuer's power to levy taxes. The portfolio is divided for
purpose of issue as follows: Bridge and Tunnel 1, Correctional Facility 1,
Electrical 1, Hospital 1, Single Family Mortgage Revenue 1 and Solid Waste 2.
For an explanation of the significance of these factors see "The State
Trusts--Portfolios" in Part B of this Prospectus.

As of December 31, 1996, $360,000 (approximately 22% of the
aggregate principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, $60,000 (approximately 3.7% of the
aggregate principal amount of the Bonds) were Zero Coupon Bonds. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at par value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. None of the aggregate principal amount
of the Bonds in the Trust were purchased at a "market" discount from par value
at maturity, approximately 78% were purchased at a premium and none were
purchased at par. For an explanation of the significance of these factors see
"The Portfolios--Discount and Zero Coupon Bonds" in Part B of this Prospectus.

Portfolio Nos. 1, 4 and 6 in the Virginia Trust are subject to the
federal individual alternative minimum tax under the Tax Reform Act of 1986.
See "Tax Status" in Part B of this Prospectus.

A-11
352541.1

<PAGE>
Report of Independent Accountants

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

In our opinion, the accompanying statement of net assets, including the
portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of each of the portfolios of Municipal
Securities Trust, Multi-State Series 46 (the "Trust") at December 31, 1996, the
results of their operations, the changes in their net assets and the financial
highlights for the year then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1996 by correspondence with the
Trustee, provide a reasonable basis for the opinion expressed above. The
financial statements for the prior periods presented were audited by other
independent accountants whose report dated March 31, 1996 expressed an
unqualified opinion on those financial statements.

PRICE WATERHOUSE LLP
160 Federal Street
Boston, MA 02110
March 28, 1997

<PAGE>

Municipal Securities Trust, Multi-State Series 46,
California Trust
Portfolio
December 31, 1996
- --------------------------------------------------------------------------------

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

<S> <C> <C> <C> <C> <C> <C>
1 $ 115,000 Ca. Hsg. Fincg. Agency Home Mtg. Rev. Bonds Aa* 6.500% None $ 121,433
1995 Series C 8/1/2009 2/1/05 @ 102 Ref.

2 300,000 Ins. Hlth. Fac. Ref. Rev. COP (Eskaton Prop. A+ 5.800 5/1/05 @ 100 S.F. 299,346
Inc.) Series 1993 Ca. Statewide C.D.A. 5/1/2013 5/1/03 @ 102 Ref.

3 270,000 Costa Mesa Pub. Fincg. Auth. Orange Cnty, Ca. A+ 5.250 10/1/05 @ 100 S.F. 251,440
Rfndg. Rev. Bonds, 1993 Series A (Pub. Facs. Prjt.) 10/1/2018 10/1/03 @ 102 Ref.

4 300,000 Redding JT. Pwrs. Fincg. Auth. Solid Waste and A* 5.500 1/1/06 @ 100 S.F. 288,582
Corp. Yard Rev. Bonds, 1993 Series A 1/1/2013 1/1/04 @ 102 Ref.

5 300,000 San Diego Ca. Muni. Trans. Dstrct. Bd. Auth. Aa* 5.375 6/1/05 @ 100 S.F. 283,242
1993 Lease Rev. Bonds (Old Town Light Rail Trans. 6/1/2023 6/1/03 @ 101 Ref.
Ext.)

6 115,000 Santa Clara Ca. Trans. Dstrct. Sales Tax AA 6.250 6/1/14 @ 100 S.F. 117,590
Rev. Bonds 1991 Series A 6/1/2021 12/1/00 @ 100 Ref.

7 300,000 So. Ca. Pub. Pwr. Auth. Multiple Prjt. Rev. Bonds,A 6.000 7/1/14 @ 100 S.F. 302,631
1989 Series 7/1/2018 7/1/00 @ 100 Ref.

8 300,000 Cmmnwlth. of P.R. Pub. Imprvmnt. Ref. Bonds ofA 6.500 7/1/06 @ 100 321,612
1994 (Gen. Obg. Bonds) 7/1/2023 7/1/04 @ 101.5
---------
-------------

$2,000,000 Total Investments (Cost $1,883,374) $ 1,985,876
=========== =============

</TABLE>

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

Municipal Securities Trust, Multi-State Series 46,
Florida Trust
Portfolio
December 31, 1996
- --------------------------------------------------------------------------------

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

<S> <C> <C> <C> <C> <C> <C>
1 $ 150,000 State of Fla. Full Faith and Credit State Bd. AA 6.100% 6/1/06 @ 100 S.F. $ 154,869
of Ed. Pub. Ed. Cap. Outlay Bonds, 1993 6/1/2024 6/1/05 @ 101 Ref.
Series F

2 185,000 Brevard Cnty. Fla. Hsg. Fin. Auth. S.F.M.R. Aaa* 6.800 3/1/07 @ 100 S.F. 191,425
(AMT) 3/1/2028 3/1/05 @ 102 Ref.

3 240,000 Brevard Cnty. Fla. Solid Waste Sys. Rev. A 5.700 No Sinking Fund 242,649
Bonds Series 1993 4/1/2009 4/1/03 @ 102 Ref.

4 150,000 Dade Cnty. Fla. Aviation Rev. Bonds Series AAA 6.000 10/1/07 @ 100 S.F. 153,564
1995 B (AMT) (MBIA) 10/1/2024 10/1/05 @ 102 Ref.

5 100,000 Dade Cnty. Fla. Ed. Facs. Auth. Rev. Rfndg. AA- 6.125 1/1/06 @ 100 S.F. 102,465
Bonds Series 1994 (St. Thomas Univ. Issue) 1/1/2019 1/1/04 @ 102 Ref.

6 300,000 Hsg. Fincg. Auth. of Dade Cnty. (Fla.) AAA 6.700 4/1/07 @ 100 S.F. 310,986
S.F.M.R. Bond Series 1995 4/1/2028 4/1/05 @ 102 Ref.

7 260,000 Palm Beach Cnty. Hlth. Facs. Auth. Hosp. Rev. A+ 6.300 10/1/05 @ 100 S.F. 267,894
Bonds (Good Sam. Hlth. Sys., Inc. Proj.) 10/1/2022 10/1/03 @ 102 Ref.
Series 1993 (AMT) (MBIA)

8 200,000 St. Johns Cnty. Ind. Dev. Auth. Hosp. Rev. A2* 6.000 8/1/04 @ 100 S.F. 200,554
Bonds (Flagler Hosp. Proj.) Series 1992 8/1/2022 8/1/02 @ 102 Ref.

9 200,000 Cmmnwlth. of P.R. Pub. Imprvmnt. Ref. Bonds A 6.500 7/1/06 @ 100 S.F. 214,408
of 1994 (Gen. Obg. Bonds) 7/1/2023 7/1/04 @ 101.5 Ref.

10 100,000 City of Sunrise Fla. Pub. Facs. Ref. Rev. AAA 0.000 No Sinking Fund 27,658
Bonds Series 1992 B (MBIA) 10/1/2019 None
----------
--------------

$1,885,000 Total Investments (Cost $1,805,837) $ 1,866,472
========== ==============

</TABLE>

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

Municipal Securities Trust, Multi-State Series 46,
Virginia Trust
Portfolio
December 31, 1996
- --------------------------------------------------------------------------------

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

<S> <C> <C> <C> <C> <C> <C>
1 $ 300,000 Va. Hsg. Dev. Auth. Cmmnwlth. Mtg. Bonds AA+ 6.450% 1/1/04 @ 100 S.F. $ 304,038
1992 Series B-AMT, Subseries B-4 7/1/2021 1/1/02 @ 102 Ref.

2 100,000 Chesapeake Bay Va. Bridge & Tunnel Commsn. AAA 5.750 7/1/23 @ 100 S.F. 100,314
Dist. Rev. Rfndg. Bonds 1991 (MBIA) 7/1/2025 7/1/01 @ 100 Ref.

3 250,000 Indus. Dev. Auth. of Danville, VA Solid A- 6.500 No Sinking Fund 262,100
Waste disposal Rev. Bonds 1995 Series A 3/1/2019 3/1/05 @ 102 Ref.
(Int'l. Paper Co. Prjts.)

4 300,000 Indus. Dev. Auth. of the City of Hampton, VA A 6.500 11/1/06 @ 100 S.F. 313,254
Hosp. Rev. and Ref. Bonds (Sentara Hampton 11/1/2012 11/1/04 @ 102 Ref.
Gen. Hosp.) Series 1994A

5 300,000 Indus. Dev. Auth. of the Cnty of Isle of A1* 6.550 No Sinking Fund 317,661
Wright VA Solid Waste Disp. Facs. Rev. Bonds 4/1/2024 4/1/04 @ 102 Ref.
(Union Camp Corp. Prjt.) Series 1994

6 200,000 Riverside Regl. Jail Auth. Jail Fac. Rev. AAA 6.000 7/1/07 @ 100 S.F. 207,412
Bonds Series 1995 7/1/2025 7/1/05 @ 102 Ref.

7 125,000 Cmmnwlth. of P.R. Pub. Imprvmnt. Ref. Bonds ofA 6.500 7/1/06 @ 100 S.F. 134,005
1994 (Gen Obg. Bonds) 7/1/2023 7/1/04 @ 101.5 Ref.

8 60,000 P.R. Elec. Pwr. Auth. Pwr. Rev. BBB+ 0.000 No Sinking Fund 18,399
Bonds Series O 1989 7/1/2017 None
----------
--------------

$1,635,000 Total Investments (Cost $1,607,270) $ 1,657,183
========== =============

</TABLE>

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

Municipal Securities Trust, Multi-State Series 46
Footnotes to Portfolio
- --------------------------------------------------------------------------------

3. At December 31, 1996, the net unrealized appreciation of all the bonds
was comprised of the following:

California Florida Virginia
Trust Trust Trust

<S> <C> <C> <C>
Gross unrealized appreciation $ 102,502 $ 60,635 $ 49,913
Gross unrealized depreciation --- --- ---
-------------- ------------- ------------

Net unrealized appreciation $ 102,502 $ 60,635 $ 49,913
============= ============= =============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Multi-State Series 46

Statement of Net Assets
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

California Florida Virginia
Trust Trust Trust

Investments in Securities
<S> <C> <C> <C>
at Market Value (Cost,
$1,883,374, $1,805,837 and
$1,607,270, Respectively) $ 1,985,876 $ 1,866,472 $ 1,657,183
------------ ------------ ------------

Other Assets
Accrued Interest 38,502 34,309 36,193
------------ ------------ ------------
Total Other Assets 38,502 34,309 36,193
------------ ------------ ------------
Liabilities
Accrued Expenses 458 458 458
Advance from Trustee 34,307 23,678 35,667
------------ ------------ ------------
Total Liabilities 34,765 24,136 36,125
------------ ------------ ------------
Excess of Other Assets over
Total Liabilities 3,737 10,173 68
------------ ------------ ------------

Net Assets (1,993, 2,000 and 1,635 Units of
Fractional Undivided Interest Outstanding,
$998.30, $938.32 and $1,013.61
per Unit, Respectively) $ 1,989,613 $ 1,876,645 $ 1,657,251
============ ============= =============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Multi-State Series 46,

California Trust
Statement of Operations
- --------------------------------------------------------------------------------

For the Year Ended For the Period from
December 31, April 6, 1995 (Date
1996 of Deposit) to
December 31,1995

Investment Income
<S> <C> <C>
Interest $ 116,363 $ 85,656
----------- ------------

Expenses
Trustee's Fees 3,566 1,884
Evaluator's Fees 719 507
Sponser's Advisory Fee 458 368
----------- ------------

Total Expenses 4,743 2,759
----------- ------------
Net Investment Income 111,620 82,897
----------- ------------
Realized and Unrealized Gain (Loss)

Change in Unrealized Appreciation
(Depreciation) on Investments (18,279) 120,781
----------- ------------
Net Gain (Loss) on Investments (18,279) 120,781
----------- ------------
Net Increase in Net Assets
Resulting From Operations $ 93,341 $ 203,678
=========== ===========

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

</TABLE>

<PAGE>

Municipal Securities Trust, Multi-State Series 46,

Florida Trust
Statement of Operations
- --------------------------------------------------------------------------------

For the Year Ended For the Period from
December 31, April 6, 1995 (Date
1996 of Deposit) to
December 31,1995

Investment Income
<S> <C> <C>
Interest $ 115,539 $ 89,259
----------- ------------

Expenses
Trustee's Fees 3,414 2,190
Evaluator's Fees 719 507
Sponser's Advisory Fee 458 368
----------- ------------
Total Expenses 4,591 3,065
----------- ------------
Net Investment Income 110,948 86,194
----------- ------------
Realized and Unrealized Gain (Loss)
Realized (Loss) on
Investments (2,819) ----

Change in Unrealized Appreciation
(Depreciation) on Investments (23,319) 83,954
----------- ------------
Net Gain (Loss) on Investments (26,138) 83,954
----------- ------------
Net Increase in Net Assets
Resulting From Operations $ 84,810 $ 170,148
=========== =============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Multi-State Series 46,

Virginia Trust
Statement of Operations
- --------------------------------------------------------------------------------

For the Year Ended For the Period from
December 31, April 6, 1995 (Date
1996 of Deposit) to
December 31,1995

Investment Income
<S> <C> <C>
Interest $ 101,341 $ 85,613
----------- ------------

Expenses
Trustee's Fees 3,259 1,913
Evaluator's Fees 784 507
Sponser's Advisory Fee 458 368
----------- ------------
Total Expenses 4,501 2,788
----------- ------------
Net Investment Income 96,840 82,825
----------- ------------
Realized and Unrealized Gain (Loss)
Realized Gain on
Investments ---- 14,205

Change in Unrealized Appreciation
(Depreciation) on Investments (16,288) 66,201
----------- ------------
Net Gain (Loss) on Investments (16,288) 80,406
----------- ------------
Net Increase in Net Assets
Resulting From Operations $ 80,552 $ 163,231
=========== =============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Multi-State Series 46,

California Trust
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------

For the Year Ended For the Period from
December 31, April 6, 1995 (Date
1996 of Deposit) to
December 31,1995

Operations
<S> <C> <C>
Net Investment Income $ 111,620 $ 82,897
Change in Unrealized Appreciation
(Depreciation) on Investments (18,279) 120,781
------------ --------------

Net Increase in Net Assets
Resulting From Operations 93,341 203,678
------------ --------------

Distributions to Certificateholders
Investment Income 111,235 70,311
To Sponsor of Accrued Interest
to Date of Settlement ---- 2,262

Redemptions
Interest 29 ----
Principal 6,943 ----
------------ --------------

Total Distributions
and Redemptions 118,207 72,573
------------ --------------

Total Increase (Decrease) (24,866) 131,105

Net Assets
Beginning of Year 2,014,479 1,883,374
------------ --------------

End of Year (Including
Undistributed Net Investment
Income of $10,680 and
$10,324, Respectively) $ 1,989,613 $ 2,014,479
============= ==============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Multi-State Series 46,

Florida Trust
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------

For the Year Ended For the Period from
December 31, April 6, 1995 (Date
1996 of Deposit) to
December 31,1995

Operations
<S> <C> <C>
Net Investment Income $ 110,948 $ 86,194
Realized (Loss)
on Investments (2,819) ----
Change in Unrealized Appreciation
(Depreciation) on Investments (23,319) 83,954
------------ --------------

Net Increase in Net Assets
Resulting From Operations 84,810 170,148
------------ --------------

Distributions to Certificateholders
Investment Income 109,982 72,563
Principal 115,000 ----
To Sponsor of Accrued Interest
to Date of Settlement ---- 2,330
------------ --------------

Total Distributions
and Redemptions 224,982 74,893
------------ --------------

Total Increase (Decrease) (140,172) 95,255

Net Assets
Beginning of Year 2,016,817 1,921,562
------------ --------------

End of Year (Including
Undistributed Net Investment
Income of $12,267 and
$11,301, Respectively) $ 1,876,645 $ 2,016,817
============= ==============

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

</TABLE>

<PAGE>

Municipal Securities Trust, Multi-State Series 46,

Virginia Trust
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------

For the Year Ended For the Period from
December 31, April 6, 1995 (Date
1996 of Deposit) to
December 31,1995

Operations
<S> <C> <C>
Net Investment Income $ 96,840 $ 82,825
Realized Gain
on Investments ---- 14,205
Change in Unrealized Appreciation
(Depreciation) on Investments (16,288) 66,201
------------- --------------
Net Increase in Net Assets
Resulting From Operations 80,552 163,231
------------- --------------
Distributions to Certificateholders
Investment Income 96,322 68,279
To Sponsor of Accrued Interest
to Date of Settlement ---- 2,371

Redemptions
Interest ---- 2,211
Principal ---- 363,033
------------- --------------
Total Distributions
and Redemptions 96,322 435,894
------------- --------------
Total (Decrease) (15,770) (272,663)

Net Assets
Beginning of Year 1,673,021 1,945,684
------------- --------------
End of Year (Including
Undistributed Net Investment
Income of $10,124 and
$9,606, Respectively) $ 1,657,251 $ 1,673,021
============ ============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Multi-State Series 46

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

1. Organization

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

2. Summary of Significant Accounting Policies

<PAGE>

Municipal Securities Trust, Multi-State Series 46

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

3. Income Taxes

4. Trust Administration

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

The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. For the year ended December 31, 1996, 7 units were
redeemed in the California Trust. For the period ended December 1995,
365 units were redeemed in the Virginia Trust. No units were redeemed,
except for the redemptions stated above, for the year ended December
31, 1996 and the period ended December 31, 1995.

The Trust pays an annual fee for trustee services rendered by the
Trustee that ranges from $1.00 to $1.45 per $1,000 of outstanding
investment principal. In addition, a minimum fee of $2.83 is paid to a
service bureau for each portfolio valuation. A maximum fee of $.25 per
$1,000 of outstanding investment principal is paid to the Sponsor. For
the year ended December 31, 1996, the "Trustee's Fees" are comprised of
Trustee fees of $2,648, $2,746 and $2,239 and other expenses of $918,
$668 and $1,020 for the California, Florida and Virginia Trusts,
respectively. The other expenses include professional, printing and
miscellaneous fees.

<PAGE>

Municipal Securities Trust, Multi-State Series 46

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

5. Net Assets

At December 31, 1996, the net assets of the Trust represented the
interest of Certificateholders as follows:

California Florida Virginia
Trust Trust Trust

<S> <C> <C> <C>
Original cost to Certificateholders $ 1,980,414 $ 2,020,570 $ 2,045,934
Less Initial Gross Underwriting
Commission 97,040 99,008 100,250
------------ ------------ ------------
1,883,374 1,921,562 1,945,684
Accumulated Cost of Securities Sold,
Matured or Called ---- (117,819) (339,843)
Net Unrealized Appreciation 102,502 60,635 49,913
Undistributed Net Investment Income 10,680 12,267 10,124
Undistributed Proceeds From
Investments (6,943) ---- (8,627)
------------ ------------ ------------
Total $ 1,989,613 $ 1,876,645 $ 1,657,251
============ ============ ============

</TABLE>

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

Undistributed net investment income includes accumulated accretion of
original issue discount of $2,094 and $1,429 for the Florida Trust and
Virginia Trust, respectively.

6. Concentration of Credit Risk

<PAGE>

Municipal Securities Trust, Multi-State Series 46

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

7. Financial Highlights (per unit)*

Selected data for a unit of the Trust outstanding for the year ended
December 31, 1996:

California Florida Virginia
Trust Trust Trust

<S> <C> <C> <C>
Net Asset Value, Beginning of Year** $ 1,007.24 $ 1,008.41 $ 1,023.25
----------- ----------- -----------

Interest Income 58.27 57.77 61.98
Expenses (2.38) (2.30) (2.75)
----------- ----------- -----------
Net Investment Income 55.89 55.47 59.23
----------- ----------- -----------
Net Gain or Loss on Investments(1) (9.12) (13.07) (9.96)
----------- ----------- -----------
Total from Investment Operations 46.77 42.40 49.27
----------- ----------- -----------
Less Distributions
to Certificateholders
Income 55.70 54.99 58.91
Principal ---- 57.50 ----
for Redemptions
Interest .01 ---- ----
----------- ----------- -----------
Total Distributions 55.71 112.49 58.91
----------- ----------- -----------
Net Asset Value, End of Year** $ 998.30 $ 938.32 $ 1,013.61
============ ============ ===========

</TABLE>

See "Financial and Statistical Information" in Part A of this
Prospectus for amounts of per unit distributions during the years ended
December 31, 1996 and 1995 based on actual units.

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

* Unless otherwise stated, based upon average units outstanding during
the year of 1,997 ([1,993+2,000]/2), for the California Trust.

Unless otherwise stated, based upon average units outstanding during
the year of 2,000 ([2,000+2,000]/2), for the Florida Trust.

Unless otherwise stated, based upon average units outstanding during
the year of 1,635 ([1,635 + 1,635]/2), for the Virginia Trust.

** Based upon actual units outstanding.

<PAGE>

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

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

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES
(Multiplier Portfolio)

Prospectus Part B

Dated: April 30, 1997

THE TRUST

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

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

Each "Unit" outstanding on the Evaluation Date represented an
undivided interest or pro rata share in the principal and interest of each State
Trust in the ratio of one Unit to the principal amount of Bonds in such State
Trust on such date as specified in Part A of this Prospectus. To the extent that
any Units of a State Trust are redeemed by the Trustee, the
- --------
* References in this Prospectus to the Trust Agreement are qualified in
their entirety by the respective Trust Indentures and Agreements which
are incorporated herein by reference.

82600.6

<PAGE>

fractional undivided interest or pro rata share in such State Trust represented
by each unredeemed Unit of such State Trust will increase, although the actual
interest in such State Trust represented by such fraction will remain unchanged.
Units will remain outstanding until redeemed upon tender to the Trustee by
Certificateholders, which may include the Sponsor, or until the termination of
the Trust Agreement.

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

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

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

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

When selecting Bonds for the State Trusts, the following
factors, among others, were considered by the Sponsor on the Date of Deposit:
(a) the quality of the Bonds and whether such Bonds were rated "A" or better by
Standard & Poor's or Moody's, (b) the yield and price of the Bonds relative to
other tax-exempt securities of comparable quality and maturity, (c) income to
the Certificateholders of the State Trusts, (d) the diversification of each
State Trust's portfolio, as to purpose of issue and location of issuer, taking
into account the availability in the market of issues which meet such State
Trust's quality, rating, yield and price criteria and (e) the existence of
"market" discount and original issue discount. Subsequent to the Evaluation
Date, a Bond may cease to be rated or its rating may be reduced below that
specified above. Neither event requires an elimination of such Bond from a State
Trust but may be considered in the Sponsor's determination to direct the

-2-
82600.6

<PAGE>

Trustee to dispose of the Bond. See "Portfolio Supervision." For an
interpretation of the bond ratings, see "Description of Bond Ratings."

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

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

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

Nuclear Power Facility Bonds: Certain Bonds may have been
issued in connection with the financing of nuclear generating facilities. In
view of developments in connection with such facilities, legislative and
administrative actions have been taken and proposed relating to the development
and operation of nuclear generating facilities. The Sponsor is unable to predict
whether any such actions or whether any such proposals or litigation, if enacted
or instituted, will have an adverse impact on the revenues available to pay the
debt service on the Bonds in the portfolio issued to finance such nuclear
projects. See "Description of Portfolio" in Part A for the amount of bonds
issued to finance nuclear generating facilities contained therein.

-3-
82600.6

<PAGE>

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

Mortgage Revenue Bonds: Certain Bonds may be "mortgage revenue
bonds." Under the Internal Revenue Code of 1986, as amended (the "Code") (and
under similar provisions of the prior tax law) "mortgage revenue bonds" are
obligations the proceeds of which are used to finance owner-occupied residences
under programs which meet numerous statutory requirements relating to residency,
ownership, purchase price and target area requirements, ceiling amounts for
state and local issuers, arbitrage restrictions, and certain information
reporting certification, and public hearing requirements. There can be no
assurance that additional federal legislation will not be introduced or that
existing legislation will not be further amended, revised, or enacted after
delivery of these Bonds or that certain required future actions will be taken by
the issuing governmental authorities, which action or failure to act could cause
interest on the Bonds to be subject to federal income tax. If any portion of the
Bonds proceeds are not committed for the purpose of the issue, Bonds in such
amount could be subject to earlier mandatory redemption at par, including issues
of Zero Coupon Bonds (see "Discount and Zero Coupon Bonds"). See "Description of
Portfolio" in Part A for the amount of mortgage revenue bonds contained therein.

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

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

-4-
82600.6

<PAGE>

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

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

Legal Proceedings Involving the Trusts: The Sponsor has not
been notified or made aware of any litigation pending with respect to any Bonds
which might reasonably be expected to have a material effect on the State Trusts
other than that which is discussed under "The State Trusts" herein. Such
litigation as, for example, suits challenging the issuance of pollution control
revenue bonds under recently enacted environmental protection statutes may
affect the validity of such Bonds or the tax-free nature of the interest
thereon. At any time after the date of this Prospectus, litigation may be
instituted on a variety of grounds with respect to the Bonds in the State
Trusts. The Sponsor is unable to predict whether any such litigation may be
instituted or, if instituted, whether it will have a material adverse effect on
a State Trust.

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

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

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

-5-
82600.6

<PAGE>

court assistance in reorganizing their debts in the future and, therefore, what
effect, if any, the applicable federal bankruptcy law provisions will have on
the state Trusts.

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

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

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

Puerto Rico Bonds: Certain of the Bonds in the Trust may be
general obligations and/or revenue bonds of issuers located in Puerto Rico which
will be affected by general economic conditions in Puerto Rico. The economy of
Puerto Rico is closely integrated with that of the mainland United States.
During fiscal year 1995, approximately 89% of Puerto Rico's exports were to the
United States mainland, which was also the source of 65% of Puerto Rico's
imports. In fiscal 1995, Puerto Rico experienced a $4.6 billion positive
adjusted trade balance. The economy of Puerto Rico is dominated by the
manufacturing and service sectors. The manufacturing sector has experienced a
basic change over the years as a result of increased emphasis on higher wage,
high technology industries such as pharmaceuticals, electronics, computers,
microprocessors, professional and scientific instruments, and certain high
technology machinery and equipment. The service sector, including finance,
insurance and real estate, wholesale and retail trade, and hotel and related
services, also plays a major role in the economy. It ranks second only to
manufacturing in contribution to the gross domestic product and leads all
sectors in providing employment. In recent years, the service sector has
experienced significant growth in response to and paralleling the expansion of
the manufacturing sector. Since fiscal 1985, personal income, both aggregate and
per capita, has increased consistently in each fiscal year. In fiscal 1995,
aggregate personal income was $27.0 billion ($22.5 billion in 1987 prices) and
personal income per capita was $7,296 ($6,074 in 1987 prices). Personal income
includes transfer payments to individuals in Puerto Rico under various social
programs. Total federal payments to Puerto Rico,

-6-
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<PAGE>

which include many types in addition to federal transfer payments, are lower on
a per capita basis in Puerto Rico than in any state. Transfer payments to
individuals in fiscal 1995 were $5.9 billion, of which $4.0 billion, or 67.6%,
represent entitlement to individuals who had previously performed services or
made contributions under programs such as Social Security, Veterans Benefits and
Medicare. The number of persons employed in Puerto Rico during fiscal 1996
averaged 1,092,300, an increase of 3.9% over fiscal 1995. The unemployment rate
in Puerto Rico for fiscal 1996 remained the same. The Puerto Rico Planning
Board's most recent gross product forecast for fiscal 1997, made in February
1996, showed an increase of 2.7%. The Planning Board's Economic Activity Index,
a composite index for thirteen economic indicators, increased 1.6% for fiscal
1996 compared to fiscal 1995, and 2.0% for fiscal 1995, compared to fiscal 1994.
During the first three months of fiscal 1997 the Index decreased 0.9% compared
to the same period in fiscal 1996, which period showed an increase of 1.7% over
the same period of fiscal 1995. Growth in the Puerto Rico economy in fiscal 1997
depends on several factors, including the state of the United States economy and
the relative stability in the price of oil imports, the exchange value of the
U.S. dollar, the level of federal transfers and the cost of borrowing.

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

The State Trust portfolios may also contain Bonds that were
purchased at deep "market" discount from par value at maturity. This is because
the coupon interest rates on the discount Bonds at the time they were purchased
and deposited in the State Trusts were lower than the current market interest
rates for newly issued bonds of comparable rating and type. At the time of
issuance the discount Bonds were for the most part issued at then current coupon
interest rates. The current returns (coupon interest income as a percentage of
market price) of discount bonds will be lower than the current returns of
comparably rated bonds of similar type newly issued at current interest rates
because discount bonds tend to increase in market value as they approach
maturity and the full principal amount becomes payable. A discount bond held to
maturity will have a larger portion of its total return in the form of capital
gain and less in the form of tax-exempt interest income than a comparable bond
newly issued at current market rates. Gain on the disposition of a Bond
purchased at a market discount generally will be treated as ordinary income,
rather than capital gain, to the extent of accrued market discount. Discount
bonds with a longer term to maturity tend to have a higher current yield and a
lower current market value than otherwise comparable bonds with a shorter term
to maturity. If interest rates rise, the value of the bonds will

-7-
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<PAGE>

decrease; and if interest rates decline, the value of the bonds will increase.
The discount does not necessarily indicate a lack of market confidence in the
issuer.

THE STATE TRUSTS

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

California Trust

California Economy

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

After suffering through a severe recession, California's
economy has been on a steady recovery since the start of 1994. More than 300,000
nonfarm jobs were added in the State in 1996, while personal income grew by more
than $55 billion. California's economic expansion is being fueled by strong
growth in high-technology industries, including computer software, electronics
manufacturing and motion picture production, all of which have offset the
recession-related losses which were heaviest in aerospace and defense-related
industries (which accounted for two-thirds of the job losses), finance and
insurance.

California's economy is approaching a major milestone in 1997
as gross state domestic product is expected to pass the $1 trillion mark. As a
stand-alone economy, California's economy would rank seventh in the world, ahead
of China's and behind the United Kingdom's.

California's July 1, 1996 population of 32.7 million
represented over 12% of the United States' population and is concentrated in
metropolitan areas. As of the April 1, 1990 census, 96 percent resided in the 23
Metropolitan Statistical Areas in the State. As of July 1, 1994, the 5-county
Los Angeles area accounted for 48 percent of the State's population with 15.6
million residents, and the 10-county San Francisco Bay Area represented 21
percent, with a population of 6.6 million.

California has a large and diverse labor force. The following
table presents civilian labor force data for the resident population, age 16 and
over, for the years 1991 to 1996.

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<PAGE>

LABOR FORCE
1991-96
<TABLE>
<CAPTION>
Labor Force Trends (thousands) Unemployment Rate
------------------------------------------------------- -----------------------------------

Labor United
Year Force Employment Unemployment California States
<S> <C> <C> <C> <C> <C>
1991................ 15,118 13,978 1,141 7.5 6.7

1992................ 15,335 13,939 1,396 9.1 7.4

1993................ 15,205 13,995 1,410 9.2 6.8

1994................ 15,462 14,133 1,329 8.6 6.1

1995................ 15,416 14,206 1,201 7.8 5.6

1996................ 15,508 14,383 1,125 7.3 5.4

</TABLE>

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

SOURCE: State of California, Employment Development Department.

The following table shows California's nonagricultural
employment distribution and growth for 1980 to 1990 and 1996.

Payroll Employment By Major Sector
1980, 1990 and 1995
<TABLE>
<CAPTION>
Employment % Distribution
(thousands) of Employment
----------------------------------------------- -------------------------------------------------

Industry Sector 1980 1990 1996 1980 1990 1996
--------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Mining.................... 44 39 29 0.4 0.3 0.2

Construction.............. 428 605 516 4.3 4.8 4.1

Manufacturing
Nondurable goods...... 639 721 713 6.5 5.7 5.6
High Technology....... 615 686 482 6.2 5.4 3.8
Other Durable Goods... 764 690 605 7.8 5.5 4.7

Transportation and
Utilities............. 546 624 639 5.5 4.9 5.0

Wholesale and Retail
Trade................. 2,267 3,002 3,000 23.0 23.7 23.5

Finance, Insurance
and Real Estate....... 623 825 735 6.3 6.5 5.8

Services.................. 2,159 3,395 3,896 21.9 26.8 30.6

Government
Federal............... 334 362 304 3.4 2.9 2.4
State and Local....... 1,430 1,713 1,808 14.5 13.5 14.2
----- ----- ----- ---- ---- ----

TOTAL............ 9,849 12,662 12,746 100 100 100
===== ====== ====== === === ===

</TABLE>
- ----------------------------

SOURCE: State of California, Employment Development Department and State of
California, Department of Finance.

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<PAGE>

The State.

Fiscal Years Prior to 1995-96.

The State's budget problems in recent years have been caused by a
combination of external economic conditions and a structural imbalance in that
the largest General Fund Programs--K-14 education, health, welfare and
corrections -- were increasing faster than the revenue base, driven by the
State's rapid population growth. These pressures are expected to continue as
population trends maintain strong demand for health and welfare services, as the
school age population continues to grow, and as the State's corrections program
responds to a "Three Strikes" law enacted in 1994, which requires mandatory life
prison terms for certain third-time felony offenders.

As a result of these factors and others, and especially because a
severe recession between 1990-94 reduced revenues and increased expenditures for
social welfare programs, from the late 1980's until 1992-93, the State had a
period of budget imbalance. During this period, expenditures exceeded revenues
in four out of six years, and the State accumulated and sustained a budget
deficit in its budget reserve, the Special Fund for Economic Uncertainties
("SFEU") approaching $2.8 billion at its peak at June 30, 1993. Starting in the
1990-91 Fiscal Year and for each fiscal year thereafter, each budget required
multibillion dollar actions to bring projected revenues and expenditures into
balance. The Legislature and Governor agreed on the following principal steps to
produce Budget Acts in the years 1991-92 to 1994-95, although not all these
actions were taken in each year:

o significant cuts in health and welfare program expenditures;

o transfers of program responsibilities and funding from the State to local
governments (referred to as "realignment"), coupled with some reduction in
mandates on local government;

o transfer of about $3.6 billion in local property tax revenues from cities,
counties, redevelopment agencies and some other districts to local school
districts, thereby reducing State funding for schools under Proposition 98;

o reduction in growth of support for higher education programs, coupled with
increases in student fees, through the 1994-95 Fiscal Year;

o maintenance of the minimum Proposition 98 funding guarantee for K-14
schools, and the disbursement of additional funds to keep a constant level of
about $4,200 per K-12 pupil through the 1993-94 Fiscal Year;

o revenue increases (particularly in the 1991-92 Fiscal Year budget),
most of which were for a short duration;

o increased reliance on aid from the federal government to offset the costs
of incarcerating, educating and providing health and welfare services to illegal
immigrants, although during this time frame, most of the additional aid
requested by the Administration was not received; and

o various one-time adjustments and accounting changes.

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

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second two-year plan was implemented in 1994-95, again using cross-fiscal year
revenue anticipation warrants to partly finance the deficit into the 1995-96
fiscal year.

Another consequence of the accumulated budget deficits, together with
other factors such as disbursement of funds to local school districts "borrowed"
from future fiscal years and hence not shown in the annual budget, was to
significantly reduce the State's cash resources available to pay its ongoing
obligations. When the Legislature and the Governor failed to adopt a budget for
the 1992-93 Fiscal Year by July 1, 1992, which would have allowed the State to
carry out its normal annual cash flow borrowing to replenish its cash reserves,
the State Controller issued registered warrants to pay a variety of obligations
representing prior years' or continuing appropriations, and mandates from court
orders. Available funds were used to make constitutionally-mandated payments,
such as debt service on bonds and warrants. Between July 1 and September 4,
1992, when the budget was adopted, the State Controller issued a total of
approximately $3.8 billion of registered warrants.

During the past several fiscal years, the State was forced to rely
increasingly on external debt markets to meet its cash needs, as a succession of
notes and revenue anticipation warrants were issued in the period from June 1992
to July 1994, often needed to pay previously maturing notes or warrants. These
borrowings were used also in part to spread out the repayment of the accumulated
budget deficit over the end of a fiscal year, as noted earlier. The last and
largest of these borrowings was $4.0 billion of revenue anticipation warrants
which were issued in July, 1994 and matured on April 25, 1996.

1995-96 Fiscal Year

The 1995-96 Budget Act was signed by the Governor on August 3, 1995, 34
days after the start of the fiscal year. The Budget Act projected General Fund
revenues and transfers of $44.1 billion, a 3.5 percent increase from the prior
year. Expenditures were budgeted at $43.4 billion, a 4 percent increase. The
Budget Act also projected Special Fund revenues of $12.7 billion and
appropriated Special Fund expenditures of $13.0 billion.

Final data for the 1995-96 Fiscal Year showed revenues and transfers of
$46.1 billion, some $2 billion over the original fiscal year estimate, which was
attributed to the strong economic recovery. Expenditures also increased to an
estimated $45.4 billion, as a result of the requirement to expend revenues for
schools under Proposition 98, and, among other things, failure of the federal
government to enact welfare reform during the fiscal year and to budget new aid
for illegal immigrant costs, both of which had been counted on to allow
reductions in State costs. The Special Fund for Economic Uncertainties had a
small negative balance of about $87 million at June 30, 1996, all but
eliminating the accumulated budget deficit from the early 1990's. Available
internal borrowable resources (available cash, after payment of all obligations
due) on June 30, 1996 was about $3.8 billion, representing a significant
improvement in the State's cash position, and ending the need for deficit
borrowing over the end of the fiscal year. The State's improved cash position
allowed it to repay the $4.0 billion Revenue Anticipation Warrant issue on April
25, 1996, and to issue only $2.0 billion of revenue anticipation notes during
the fiscal year, which matured on June 28, 1996.

The 1995-96 Budget Act included substantial additional funding under
Proposition 98 for schools and community colleges (about $1.0 billion General
Fund and $1.2 billion total above 1994-95 levels). Because of higher than
projected revenues in 1994-95, an additional $561 million ($92 per K-12 ADA)

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was appropriated to the 1994-95 Proposition 98 entitlement. A large part of this
was a block grant of about $50 per pupil for any one-time purpose. For the first
time in several years, a full 2.7 percent cost of living allowance was funded.
The budget was based on the settlement of the CTA v. Gould litigation. Cuts in
health and welfare costs totaled about $220 million, almost $700 million less
than had been anticipated, because of the failure by the federal government to
approve certain of these actions in a timely manner. The federal government also
failed to appropriate all but $31 million of an anticipated $500 million in new
federal aid for incarceration and health care costs of illegal immigrants.
Funding from the General Fund for the University of California was increased by
$106 million and for the California State University system by $97 million, with
no increases in student fees.

1996-97 Fiscal Year

1996-97 BUDGET ACT. The 1996-97 Budget Act was signed by the Governor
on July 15, 1996, along with various implementing bills. The Governor vetoed
about $82 million of appropriations (both General Fund and Special Fund). With
the signing of the Budget Act, the State implemented its regular cash flow
borrowing program with the issuance of $3.0 billion of Revenue Anticipation
Notes to mature on June 30, 1997. The Budget Act appropriated a modest budget
reserve in the SFEU of $305 million, as of June 30, 1997. The Department of
Finance projected that, on June 30, 1997, the State's available internal
borrowable (cash) resources will be $2.9 billion, after payment of all
obligations due by that date, so that no cross-fiscal year borrowing will be
needed.

Revenues -- The legislature rejected the Governor's proposed 15% cut in
personal income taxes (to be phased over three years), but did approve a 5% cut
in bank and corporation taxes, to be effective for income years starting on
January 1, 1997. As a result, revenues for the Fiscal Year were estimated to
total $47.643 billion, a 3.3 percent increase over the final estimated 1995-96
revenues. Special Fund revenues were estimated to be $13.3 billion.

Expenditures -- The Budget Act contained General Fund appropriations
totaling $47.251 billion, a 4.0 percent increase over the final estimated
1995-96 expenditures. Special Fund expenditures were budgeted at $12.6 billion.

The following are principal features of the 1996-97 Budget Act:

1. Proposition 98 funding for schools and community college districts
increased by almost $1.6 billion (General Fund) and $1.65 billion total above
revised 1995-96 levels. Almost half of this money was budgeted to fund class-
size reductions in kindergarten and grades 1-3. Also, for the second year in a
row, the full cost of living allowance (3.2 percent) was funded. The Proposition
98 increases have brought K-12 expenditures to almost $4,800 per pupil (also
called per ADA, or Average Daily Attendance), an almost 15% increase over the
level prevailing during the recession years. Community colleges will receive an
increase in funding of $157 million for 1996-97 out of this $1.6 billion total.

Because of the higher than projected revenues in 1995-96, an additional
$1.1 billion ($190 per K-12 ADA and $145 million for community colleges) was
appropriated and retroactively applied towards the 1995-96 Proposition 98
guarantee, bringing K-12 expenditures in that year to over $4,600 per ADA. These
new funds were appropriated for a variety of purposes, including block grants,
allocations for each school site, facilities for class size reduction, and a
reading initiative. Similar retroactive increases totaling $230 million, based
on final figures on revenues and State population growth, were

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made to the 1991-92 and the 1994-95 Proposition 98 guarantees, most of which was
allocated to each school site.

2. The Budget Act assumed savings of approximately $660 million in
health and welfare costs which required changes in federal law, including
federal welfare reform. The Budget Act further assumed federal law changes in
August 1996 which would allow welfare cash grant levels to be reduced by October
1, 1996. These cuts totaled approximately $163 million of the anticipated $660
million savings. See "Federal Welfare Reform" below.

3. A 4.9 percent increase in funding for the University of California
($130 million General Fund) and the California State University system ($101
million General Fund), with no increases in student fees, maintaining the second
year of the Governor's four-year "Compact" with the State's higher education
units.

4. The Budget Act assumed the federal government will provide
approximately $700 million in new aid for incarceration and health care costs of
illegal immigrants. These funds reduce appropriations in these categories that
would otherwise have to be paid from the General Fund. (For purposes of cash
flow projections, the Department of Finance expects $540 million of this amount
to be received during the 1996-97 fiscal year.)

5. General Fund support for the Department of Corrections was increased
by about 7 percent over the prior year, reflecting estimates of increased prison
population.

6. With respect to aid to local governments, the principal new programs
included in the Budget Act are $100 million in grants to cities and counties for
law enforcement purposes, and budgeted $50 million for competitive grants to
local governments for programs to combat juvenile crime.

The Budget Act did not contain any tax increases. As noted, there was a
reduction in corporate taxes. In addition, the Legislature approved another
one-year suspension of the Renters Tax Credit, saving $520 million in
expenditures.

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

The Law requires states to implement the new TANF program not later
than July 1, 1997 and provides California approximately $3.7 billion in block
grant funds for FY 1996-97 for the provisions of the Law. States are allowed to
implement TANF as soon as possible and will receive a prorated block grant
effective the date of application. The California State Plan was approved
November 27, 1996 to allow grant reductions to be implemented effective January
1, 1997 and to allow the State to capture approximately $267 million in
additional federal block grant funds over the currently budgeted level. None of
the other federal changes needed to achieve the balance of the $660 million cost
savings were enacted. Thus, in lieu of the $660 million savings

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initially assumed, it is now projected that savings will total approximately
$320 million.

A preliminary analysis of the Law by the Legislative Analyst's Office
indicates that an overall assessment of how these changes will affect the
State's General Fund will not be known for some time, and will depend on how the
State implements the Law. There are many choices including how quickly the State
implements the Law; the degree to which the State elects to make up for cuts in
federal aid, provide more aid to counties, or cut some of its own existing
programs for noncitizens; and the State's ability to avoid certain penalties
written into the Law.

Other Subsequent Developments - With the continued strong economic
recovery in the State, the Department of Finance has estimated, in connection
with the release of the Governor's 1997-98 Budget Proposal, that revenues for
the 1996-97 Fiscal Year will exceed initial projections by about $760 million.
This increase will be offset by higher expenditures for K-14 school aid
(pursuant to Proposition 98) and for health and welfare costs, because federal
law changes and other federal actions did not provide as much assistance to the
State as was initially planned in the Budget Act. The Department's updated
projections show a balance in the Special Fund for Economic Uncertainties of
$197 million, slightly lower than projected in July, 1996. The Department also
projects the State's cash position will be stronger than originally estimated,
with unused internal borrowable resources at June 30, 1997 of about $4.3
billion.

1997-98 Fiscal Year Proposed Budget

On January 9, 1997, the Governor released his proposed budget for the
1997-98 Fiscal Year (the "Governor's Budget"). The Governor's Budget projects
General Fund revenues and transfers in 1997-98 of $50.7 billion, a 4.6% increase
from revised 1996-97 figures. The Governor proposes expenditures of $50.3
billion, a 3.9% increase from 1996-97. The Governor's Budget projects a balance
in the SFEU of $553 million on June 30, 1998. The Governor's Budget also
anticipates about $3 billion of external borrowing for cash flow purposes during
the year, with no requirement for cross-fiscal year borrowing.

Among the major initiatives and features of the Governor's Budget are
the following:

1. A proposed 10% cut in the Bank and Corporation Tax rate, to be
phased in over two years.

2. Proposition 98 funding for K-14 schools will be increased again, as
a result of stronger revenues. Per-pupil funding for K-12 schools will reach
$5,010, compared to $4,220 as recently as the 1993-94 Fiscal Year. Part of the
new funding is proposed to be dedicated to the completion of the current program
to reduce class size to 20 pupils in lower elementary grades, and to expand the
program by one grade, so that it will cover K-3rd grade.

3. Funding for higher education will be increased consistent with a
four-year "compact" established in 1995-96. There is not projected to be any
increase in student fees at any of the three levels of the State higher
education system.

4. The 1997-98 proposed Governor's Budget assumes approximately $500
million in savings contingent upon federal action. The Budget assumes that
federal law will be enacted to remove the maintenance-of-effort requirement for
Supplemental Security Income (SSI) payments, thereby enabling the state to
reduce grant levels pursuant to previously enacted state law ($279 million). The
Budget also assumes the federal government will fund $216 million in costs of
health care for illegal immigrants.

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Local Governments. The primary units of local government in California
are the counties, ranging in population from 1,300 (Alpine) to over 9,000,000
(Los Angeles). Counties are responsible for the provision of many basic
services, including indigent health care, welfare, courts, jails and public
safety in unincorporated areas. There are also about 480 incorporated cities,
and thousands of other special districts formed for education, utility and other
services. The fiscal condition of local governments has been constrained since
the enactment of "Proposition 13" in 1978, which reduced and limited the future
growth of property taxes, and limited the ability of local governments to impose
other taxes, and limited the ability of local governments to impose "special
taxes" (those devoted to a specific purpose) without two-thirds voter approval.

Counties, in particular, have had fewer options to raise revenues than
many other local government entities, and have been required to maintain many
services. The entire statewide welfare system will be changed in response to the
change in federal welfare law enacted in 1996. It is not yet known how the final
system will affect county finances. Under current law, counties are required to
provide "general assistance" aid to certain persons who cannot obtain welfare
from other programs, but this mandate may be eliminated as part of the overhaul.

In the aftermath of Proposition 13, the State provided aid from the
General Fund to make up some of the loss of property tax moneys, including
taking over the principal responsibility for funding local K-12 schools and
community colleges. Under the pressure of the recent recession, the Legislation
has eliminated the remnants of this post-Proposition 13 aid to entities other
than K-14 education districts, although it has also provided additional funding
sources (such as sales taxes) and reduced mandates for local services. Many
counties continue to be under severe fiscal stress. While such stress has in
recent years most often been experienced by smaller, rural counties, larger
urban counties, such as Los Angeles, have also been affected. Orange County
implemented significant reductions in services and personnel, and continues to
face fiscal constraints in the aftermath of its bankruptcy, which had been
caused by large investment losses in its pooled investment funds.

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

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

Constitutional and Statutory Limitations; Recent Initiatives; Pending
Litigation. Article XIIIA of the California Constitution (which resulted from
the voter-approved Proposition 13 in 1978) limits the taxing powers of
California public agencies. Article XIIIA provides that the maximum ad valorem
tax on real property cannot exceed 1% of the "full cash value" of the

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property, and effectively prohibits the levying of any other ad valorem property
tax for general purposes. However, on May 3, 1986, Proposition 46, an amendment
to Article XIIIA, was approved by the voters of the State of California,
creating a new exemption under Article XIIIA permitting an increase in ad
valorem taxes on real property in excess of 1% for bonded indebtedness approved
by two-thirds of the voters voting on the proposed indebtedness. "Full cash
value" is defined as "the County Assessor's valuation of real property as shown
on the 1975-76 tax bill under "full cash value" or, thereafter, the appraised
value of real property when purchased, newly constructed, or a change in
ownership has occurred after the 1975 assessment." The "full cash value" is
subject to annual adjustment to reflect increases (not to exceed 2%) or
decreases in the consumer price index or comparable local data, or to reflect
reductions in property value caused by damage, destruction or other factors.

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

Proposition 98. In 1988, California voters approved an initiative known
as Proposition 98. This initiative amends Article XIIIB to require that (i) the
California legislature establish a prudent state reserve fund in an amount as it
shall deem reasonable and necessary and (ii) revenues in excess of amounts
permitted to be spent and which would otherwise be returned pursuant to Article
XIIIB by revision of tax rates or fee schedules, be transferred and allocated
(up to a maximum of 40%) to the State School Fund and be expended solely for
purposes of instructional improvement and accountability. Proposition 98 also
amends Article XVI to require that the State of California provide a minimum
level of funding for public schools and community colleges. Commencing with the
1988-89 fiscal year, money to be applied by the State for the support of school
districts and community college districts shall not be less than the greater of:
(i) the amount which, as a percentage of the State general fund revenues which
may be appropriated pursuant to Article XIIIB, equals the percentage of such
State general fund revenues appropriated for school districts and community
college districts, respectively, in fiscal year 1986-87 or (ii) the amount
required to ensure that the total allocations to school districts and community
college districts from the State general fund proceeds of taxes appropriated
pursuant to Article XIIIB and allocated local proceeds of taxes shall not be
less than the total amount from these sources in the prior year, adjusted for
increases in enrollment and adjusted for changes in the costs of living pursuant
to the provisions of Article XIIIB. The initiative permits the enactment of
legislation, by a two-thirds vote, to suspend the minimum funding requirement
for one year. As a result of Proposition 98, funds that the State might
otherwise make available to its political subdivisions may be allocated instead
to satisfy such minimum funding level.

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

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Proposition 98 sources stayed almost constant at approximately $4,220 from
Fiscal Year 1991-92 to Fiscal Year 1993-94.

In 1992, a lawsuit was filed, called California Teachers' Association
v. Gould, which challenged the validity of these off-budget loans. As part of
the negotiations leading to the 1995-96 Budget Act, an oral agreement was
reached to settle this case. The settlement required adoption of legislation
satisfactory to the parties to implement its terms, which has occurred. The
court gave final approval of the settlement in late July, 1996.

The settlement provides, among other things, that both the State and
K-14 schools share in the repayment of prior years' emergency loans to schools.
Of the total $1.76 billion in loans, the State will repay $935 million by
forgiveness of the amount owed, while schools will repay $825 million. The State
share of the repayment will be reflected as an appropriation above the current
Proposition 98 base calculation. The schools' share of the repayment will count
as appropriations that count toward satisfying the Proposition 98 guarantee, or
from "below" the current base. Repayments are spread over the eight-year period
of 1994-95 through 2001-02 to mitigate any adverse fiscal impact. The Director
of Finance certified that a settlement has occurred, allowing approximately $377
million in appropriations from the 1995-96 Fiscal Year to schools to be
disbursed.

Proposition 187. On November 8, 1994, the voters in California approved
Proposition 187, an initiative statute ("Proposition 187"). Proposition 187
specifically prohibits funding by the State of social service, health care
services and public school education for the benefit of any person not verified
as either a United States citizen or a person legally admitted to the Untied
States. Among the provisions in Proposition 187 pertaining to public school
education, the measure requires that every school district in the State verify
the legal status of every child enrolling in the district for the first time and
must also verify the legal status of children already enrolled in the district
and of all parents or guardians of all students. The State Legislative Analyst
estimated that verification costs could be in the tens of millions of dollars on
a statewide level (including verification costs incurred by other local
governments) with first-year costs potentially in excess of $100 million.

The reporting requirements may violate the Family Educational Rights
and Privacy Act ("FERPA"), which generally prohibits schools that receive
federal funds from disclosing information in student records without parental
consent. Compliance with FERPA is a condition of receiving federal education
funds, which total $2.3 billion annually to California school districts. The
Secretary of the United States Department of Education has indicated that the
reporting requirement in Proposition 187 could jeopardize the ability of school
districts to receive these funds.

Opponents of Proposition 187 filed challenges to the constitutionality
and validity of the measure and a United States District Court judge struck down
the central provision of Proposition 187 by ruling that parts of Proposition 187
conflict with federal power over immigration. An appeal has been filed. It
cannot be predicted what the nature or outcome of such appeal will be or the
ultimate fiscal impact of Proposition 187.

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

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Pending Litigation. The State is involved in a lawsuit, Thomas Hayes v.
Commission on State Mandates, related to state-mandated costs. The action
involves an appeal by the Director of Finance from a 1984 decision by the State
Board of Control, (now succeeded by the Commission on State Mandates
(Commission)). The Board of Control decided in favor of local school districts'
claims for reimbursement for special education programs for handicapped
students. The case was then brought to the trial court by the State and later
remanded to the Commission for redetermination. The Commission has since
expanded the claim to include supplemental claims filed by seven other
educational institutions; the issuance of a final consolidated decision is
anticipated sometime after September 1996. To date, the Legislature has not
appropriated funds. The liability to the State, if all potentially eligible
school districts pursue timely claims, has been estimated by the Department of
Finance at over $1 billion.

In the Yuba River flood litigation in which the State is a defendant in
a coordinated action, the trial court has found liability in inverse
condemnation and awarded damages of $500,000 to 12 sample plaintiffs. Potential
liability to the remaining 3,000 plaintiffs, from claims filed, ranges from $800
million to $1.5 billion. The appellate court affirmed the trial court finding
and the State is pursuing its remaining appellate remedies. Damages have yet to
be determined for all but the 12 sample plaintiffs.

The State is involved in a lawsuit related to contamination at the
Stringfellow toxic waste site. In United States, People of the State of
California v. J.B. Stringfellow, Jr., et al., the State is seeking recovery for
past costs of cleanup of the site, a declaration that the defendants are jointly
and severally liable for future costs, and an injunction ordering completion of
the cleanup. However, the defendants have filed a counterclaim against the State
for alleged negligent acts. Because the State is the present owner of the site,
the State may be found liable. Present estimates of the cleanup range from $200
million to $800 million.

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

The State is a defendant in a coordinate action involving 3,000
plaintiffs seeking recovery for damages caused by the Yuba River flood of
February 1986. The trial court has found liability in inverse condemnation and
awarded damages of $500,000 to 12 sample plaintiffs. The State's potential
liability to the remaining 3,000 plaintiffs from claims filed ranges from $800
million to $1.5 billion. An appeal has been filed.

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

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

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

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

In the case of Board of Administration, California Public Employees'
Retirement System, et al. v. Pete Wilson, Governor, et al., plaintiffs
challenged the constitutionality of legislation which deferred payment of the
State's employer contribution to the Public Employees' Retirement System
beginning in Fiscal Year 1992-93. On January 11, 1995, the Sacramento County
Superior Court entered a judgment finding that the legislation
unconstitutionally impaired the vested contract rights of PERS members. The
judgment provides for issuance of a writ of mandate directing State defendants
to disregard the provisions of the legislation, to implement the statute
governing employer contributions that existed before the changes in the
legislation found to be unconstitutional, and to transfer to PERS the
contributions that are unpaid to date. On February 19, 1997, the State Court of
Appeal affirmed the decision of the Superior Court. The 1993-94 and 1994-95
transfers to PERS were made pursuant to the legislation deferring payment. The
transfers to PERS which have not yet been made, but which would be required
under the judgment total approximately $900 million, representing the transfers
for 1995-96 and for a portion of the 1996-97 fiscal year. This amount does not
include any interest that may be awarded. The State defendants intend to seek
review of the decision by the State Supreme Court.

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

Florida Trust

Risk Factors

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

The State Economy. In 1980 Florida ranked seventh among the fifty
states with a population of 9.7 million people. The State has grown dramatically
since then and, as of April 1, 1995, ranked fourth with an estimated population
of 14.1 million. Since the beginning of the eighties, Florida has surpassed
Ohio, Illinois and Pennsylvania in total population. Florida's attraction, as
both a growth and retirement state, has kept net migration at an average of
227,000 new residents each year in the ten years ending 1995. 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%. Non-farm employment has grown by over 36% since
1986. Total non-farm employment in Florida is expected to increase 2.9% in
1996-97 and rise 2.9% in 1997-98. By the end of 1996-97, non-farm employment in
the State is expected to reach an average of 6.3 million jobs. The service
sector is Florida's largest employment sector, presently accounting for 87% of
total non-farm employment. Employment in the service sector should experience an
increase of 4.3% in 1996-97, while again growing 4.3% in 1997-98. Manufacturing
jobs in Florida are concentrated in the area of high-tech and value-added
sectors, such as electrical and electronic equipment, as well as printing and
publishing. Florida's manufacturing sector has kept pace with the U.S., at about
2.6% of total U.S. manufacturing employment since the beginning of the nineties.
Foreign Trade has contributed significantly to Florida's employment growth.
Trade is expected to expand 3.1% this year and 2.9% next year. Florida's
dependence on highly cyclical construction and construction related
manufacturing has declined. Total contract construction employment as a share of
total non-farm employment has fallen from 10% in 1973 to 7.5% in 1980, and down
to nearly 5% in 1995. Although the job creation rate for the State of Florida
since 1986 is almost twice the rate for the nation as a whole, since 1986 the
unemployment rate for the State has tracked at or above the national average.
The average rate of unemployment for Florida since 1986 is 6.2%, while the
national average is also 6.2%. Florida's unemployment rate is expected to
average 5.3% this year and 5.4% next year. Because Florida has a proportionately
greater retirement age population, property income (dividends, interest and
rent) and transfer payments (Social Security and pension benefits) are a
relatively more important source of income. In 1995, Florida employment income
represented 60.6% of total personal income, while nationally, employment income
represented 70.8% of total personal income. In the ten years ending in 1995,
Florida total nominal personal income grew by 103% and per capita income
expanded approximately 62.5%. For the nation, total and per capita personal
income increased by roughly 77.8% and 61.0%, respectively. Real personal income
in Florida is estimated to increase 4.2% in 1996-97 and increase 4.9% in 1997-98
while real personal income per capita in the State is projected to grow at 2.3%
in 1996-97 and 2.6% in 1997-98.

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

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

The financial operations of the State covering all receipts and
expenditures are maintained through the use of four types of funds: the General
Revenue Fund, Trust Funds, the Working Capital Fund and the Budget Stabilization
Fund. The majority of the State's tax revenues are deposited in the General
Revenue Fund and monies for all funds are expended pursuant to appropriations
acts. In fiscal year 1995-1996, expenditures for education, health and welfare
and public safety represented approximately 51%, 31% and 11%, respectively, of
expenditures from the General Revenue Fund. The Trust Funds consist of monies
received by the State which under law or trust agreement are segregated for a
purpose authorized by law. Revenues in the General Revenue Fund which are in
excess of the amount needed to meet appropriations may be transferred to the
Working Capital Fund.

State Revenues. For fiscal year 1995-1996 the estimated General Revenue
plus Working Capital and Budget Stabilization Funds total $15,419.3 million, a
4.0% increase over 1994-95. The $14,651.7 million in Estimated Revenues
represent an increase of 7.4% over the analogous figure in 1994-95. With
combined General Revenue, Working Capital Fund and Budget Stabilization Fund
appropriations at $14,710.4 million, unencumbered reserves at the end of 1995-96
are estimated at $697.8 million. For fiscal year 1996-97, the estimated General
Revenue plus Working Capital and Budget Stabilization Funds available total
$16,601.7 million, a 7.7% increase over 1995-96. The $15,566.9 million in
Estimated Revenues represent a 6.2% increase over the analogous figure in
1995-96.

In fiscal year 1995-1996, the State derived approximately 66% of its
total direct revenues for deposit in the General Revenue Fund, Trust Funds,
Working Capital Fund and Budget Stabilization Fund from State taxes and fees.
Federal funds and other special revenues accounted for the remaining revenues.
The greatest single source of tax receipts in the State is the 6% sales and use
tax. For the fiscal year ended June 30, 1996, receipts from the sales and use
tax totalled $11,461 million, an increase of 7.4% from fiscal year 1994-95. The
second largest source of State tax receipts is the tax on motor fuels including
the tax receipts distributed to local governments. Receipts from the taxes on
motor fuels are almost entirely dedicated to trust funds for specific purposes
or transferred to local governments and are not included in

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<PAGE>

the General Revenue Fund. Preliminary data for the fiscal year ended June 30,
1996, show collections of this tax totalled $1,923.0 million.

The State currently does not impose a personal income tax. However, the
State does impose a corporate income tax on the net income of corporations,
organizations, associations and other artificial entities for the privilege of
conducting business, deriving income or existing within the State. For the
fiscal year ended June 30, 1996, receipts from the corporate income tax totalled
$1,162.7 million, an increase of 9.3% from fiscal year 1994-95. The Documentary
Stamp Tax collections totalled $775.2 million during fiscal year 1995-96,
posting an 11.5% increase from the previous fiscal year. The Alcoholic Beverage
Tax, an excise tax on beer, wine and liquor totalled $441.5 million in fiscal
year 1995-96. The Florida lottery produced sales of $2.07 billion in fiscal year
1995-96 of which $788.1 million was used for education purposes.

While the State does not levy ad valorem taxes on real property or
tangible personal property, counties, municipalities and school districts are
authorized by law, and special districts may be authorized by law, to levy ad
valorem taxes. Under the State Constitution, ad valorem taxes may not be levied
by counties, municipalities, school districts and water management districts in
excess of the following respective millages upon the assessed value of real
estate and tangible personal property: for all county, municipal or school
purposes, ten mills; and for water management districts, no more than 0.05 mill
or 1.0 mill, depending upon geographic location. These millage limitations do
not apply to taxes levied for payment of bonds and taxes levied for periods not
longer than two years when authorized by a vote of the electors. (Note: one mill
equals one-tenth of one cent).

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

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

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

At the November 1994 general election, voters approved an amendment to
the State Constitution that limits the amount of taxes, fees, licenses and
charges imposed by the Legislature and collected during any fiscal year to the

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<PAGE>

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

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

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

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

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

Bond Ratings. General obligation bonds of the State are currently
rated Aa by Moody's and AA by Standard & Poor's.

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

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<PAGE>

A. In a suit filed against the Florida Department of Health and
Rehabilitative Services (DHRS) arising out of the implementation of a DHRS
computer system, plaintiffs seek declaratory relief and money damages. Issues
included allegations concerning contract performance, warranty provisions,
payment for equipment and software, computer usage charges, computer programming
work, liquidated damages, breach of contract, claims for extra work allegedly
required by DHRS, and warranty breach of contract. This case has been settled
and DHRS agreed to pay E.D.S. Federal Corporation $42,800,000.

B. In a suit filed against the Florida Agency for Health Care
Administration, plaintiffs seek a declaration that certain Florida statutes
imposing an assessment on the net operating income of hospitals are invalid,
unconstitutional and unenforceable. Plaintiffs have requested temporary and
permanent injunctive relief and that all moneys paid to the defendants by
plaintiffs and the class members within the four years preceding the filing of
the action be reimbursed with interest. In a trial hearing, the court ordered
that a final judgment be entered in favor of the State. The trial court's ruling
for the State was appealed by the plaintiff at the First District Court of
Appeals. On April 2, 1996, the First District Court of Appeals ruled in favor of
the State. This case is closed.

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

D. In a challenge by plaintiffs to the constitutionality of the $295
impact fee imposed by Florida law on the issuance of certificates of title for
vehicles previously titled outside the State, the Court granted summary judgment
to the plaintiff finding the fee violated the commerce clause of the U.S.
Constitution. In an appeal to the State Supreme Court by the State, the Court
ordered a full refund to all those who paid the impact fee since the statute
came into existence in mid-1991. Refunds of approximately $188 million were
paid. Litigation pertaining to post judgment interest is still active.

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

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

G. In an action challenging the constitutionality of the Public
Medical Assistance Trust Fund annual assessment on net operating revenue of
free-standing out-patient facilities offering sophisticated radiology services,
a

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<PAGE>

trial has not been scheduled. If the State does not prevail, the potential
refund liability could be approximately $70 million.

H. In an action against the Florida Department of Corrections,
plaintiffs seek a declaratory judgment that they are not exempt employees under
the Fair Labor Standards Act and that, therefore, they are entitled to certain
overtime compensation. The US. District Court for the Northern District of
Florida entered an order dismissing the case for lack of jurisdiction on June
24, 1996. Plaintiffs filed a lawsuit against the Department in July, 1996 at the
State level making the same allegations at that level which plaintiffs
previously made before the U.S. District Court for the Northern District of
Florida. On December 20, 1996, the State Court determined that it had
jurisdiction over the FLSA claim.

Summary. Many factors including national, economic, social and
environmental policies and conditions, most of which are not within the control
of the State or its local units of government, could affect or could have an
adverse impact on the financial condition of the State. Additionally, the
limitations placed by the State Constitution on the State and its local units of
government with respect to income taxation, ad valorem taxation, bond
indebtedness and other matters, discussed above, as well as other applicable
statutory limitations, may constrain the revenue-generating capacity of the
State and its local units of government and, therefore, the ability of the
issuers of the Debt Obligations to satisfy their obligations thereunder.

The Sponsors believe that the information summarized above describes
some of the more significant matters relating to the Florida Trust. For a
discussion of the particular risks with each of the Debt Obligations, and other
factors to be considered in connection therewith, reference should be made to
the Official Statement and other offering materials relating to each of the Debt
Obligations included in the portfolio of the Florida Trust. The foregoing
information regarding the State, its political subdivisions and its agencies and
authorities constitutes only a brief summary, does not purport to be a complete
description of the matters covered and is based solely upon information drawn
from official statements relating to offerings of certain bonds of the State.
The Sponsors and their counsel have not independently verified this information,
and the Sponsors have no reason to believe that such information is incorrect in
any material respect. None of the information presented in this summary is
relevant to Puerto Rico or Guam Debt Obligations which may be included in the
Florida Trust.

For a general description of the risks associated with the various
types of Debt Obligations comprising the Florida Trust, see the discussion under
"Risk Factors", above.

Virginia Trust

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

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

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<PAGE>

Virginia and its political subdivisions to pay their debts. Therefore, the
general risk factors as to the credit of the State or its political subdivision
discussed herein may not be relevant to the Virginia Trust.

To the extent bonds of the Commonwealth of Virginia are included in the
Virginia Issues, information on the financial condition of the Commonwealth is
noted. The Constitution of Virginia limits the ability of the Commonwealth to
create debt. The Constitution requires a balanced budget. The Commonwealth has
maintained a high level of fiscal stability for many years due in large part to
conservative financial operations and diverse sources of revenue. The economy of
the Commonwealth of Virginia is based primarily on manufacturing, the government
sector (including defense), agriculture, mining and tourism. The Federal Base
Closing Commission has ordered that a number of military facilities in Virginia
be closed or reduced, as a result of recessionary conditions. In 1995 Motorola
and IBM each announced the location of major manufacturing facilities in
Virginia. The Commonwealth ended the fiscal year on June 30, 1996 with general
fund revenues exceeding budget projections by $78.1 million. The preliminary
unaudited results at the end of such fiscal year show a general fund balance of
$476.3 million. The balance grew by $125.6 million as a result of greater than
expected revenues and transfers and reduced expenditure growth.

In Davis v. Michigan (decided March 28, 1989), the United States
Supreme Court ruled unconstitutional Michigan's statute exempting from state
income tax the retirement benefits paid by the state and local governments and
not exempting retirement benefits paid by the federal government. In Harper v.
Virginia Department of Taxation (decided June 18, 1993), the United States
Supreme Court held, in a suit involving claims for refunds by Federal retirees
living in Virginia that Virginia State income tax Statutes violated the
principles of Davis v. Michigan, but remanded for further relief so long as the
relief was consistent with Federal due process. The Governor and the General
Assembly authorized settlement with moneys payable into a special trust fund in
years 94 through 98. On September 15, 1995, the Supreme Court of Virginia
rendered its decision in Harper and entered final judgment in favor of the
taxpayers who had not previously settled. The total cost of the settlement
(approximately $316.2 million) and the judgment ($78.5 million) is approximately
$394.6 million. Of that amount, $203.2 million ($124.5 million in respect of the
settlement and the entire $78.7 million in respect of the judgment) has been
paid, leaving $191.7 million payable in respect of the settlement --
approximately $63.2 million in the fiscal year ending June 30, 1997, $62.5
million on March 31, 1998 and, subject to appropriation, $66 million on March
31, 1999.

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

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

General obligations of cities, towns and counties in Virginia are
payable from the general revenues of the entity, including ad valorem tax
revenues on property within the jurisdiction. The obligation to levy taxes could
be enforced by mandamus, but such a remedy may be impracticable and

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<PAGE>

difficult to enforce. Under section 15.1-227.61 of the Code of Virginia of 1950,
as amended, a holder of any general obligation bond in default may file an
affidavit setting forth such default with the Governor. If, after investigating,
the Governor determines that such default exists, he is directed to order the
State Comptroller to withhold State funds appropriated and payable to the entity
and apply the amount so withheld to unpaid principal and interest. The
Commonwealth, however, has no obligation to provide any additional funds
necessary to pay such principal and interest.

Revenue bonds issued by Virginia political subdivisions include (1)
revenue bonds payable exclusively from revenue producing governmental
enterprises and (2) industrial revenue bonds, college and hospital revenue bonds
and other "private activity bonds" which are essentially non-governmental debt
issues and which are payable exclusively by private entities such as non-profit
organizations and business concerns of all sizes. State and local governments
have no obligation to provide for payment of such private activity bonds and in
many cases would be legally prohibited from doing so. The value of such private
activity bonds may be affected by a wide variety of factors relevant to
particular localities or industries, including economic developments outside of
Virginia.

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

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

Virginia municipal issuers have generally not been required to provide
ongoing information about their finances and operations to holders of their debt
obligations, although a number of cities, counties and other issuers prepare
annual reports. Virginia political subdivisions that sell bonds after July 3,
1995, will be subject to Rule 15c2-12 of the Securities and Exchange Commission
that requires continuing disclosure, including annual audited financial
statements, with respect to those obligations, unless exempted by the Rule.

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

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

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<PAGE>

PUBLIC OFFERING

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

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

As Percent of Public
Time to Maturity Offering Price

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

A proportionate share of accrued interest on the Bonds to the expected
date of settlement for the Units is added to the Public Offering Price. Accrued
interest is the accumulated and unpaid interest on Bonds from the last day on
which interest was paid and is initially accounted for daily by each Trust at
the daily rate set forth under "Summary of Essential Information" for each Trust
in Part A of this Prospectus. This daily rate is net of estimated fees and
expenses. The secondary market Public Offering Price can vary on a daily basis
from the amount stated on the cover of Part A of this Prospectus in accordance
with fluctuations in the prices of the Bonds. The price to be paid by each
investor will be computed on the basis of an evaluation made as of the day the
Units are purchased. The aggregate bid price evaluation of the Bonds is
determined in the manner set forth under "Trustee Redemption."

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

ACCRUED INTEREST. An amount of accrued interest which represents
accumulated unpaid or uncollected interest on a bond from the last day on which
interest was paid thereon will be added to the Public Offering Price and paid by
the Certificateholder at the time Units are purchased. Since each Trust normally
receives the interest on the Bonds twice a year and the interest on the Bonds is
accrued on a daily basis (this daily rate is net of estimated fees and
expenses), each Trust will always have an amount of interest earned but
uncollected by, or unpaid to, the Trustee. A Certificateholder will not recover
his proportionate share of accrued interest until the Units of a Trust are sold
or redeemed, or such Trust is terminated. At that time, the Certificateholder
will receive his proportionate share of the accrued interest computed to the
settlement date in the case of sale or termination and to the date of tender in
the case of redemption.

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EMPLOYEE DISCOUNTS. Employees (and their families) of Reich & Tang
Distributors L.P. (and its affiliates) and of any underwriter of any Trust,
pursuant to employee benefit arrangements, may purchase Units of a State Trust
at a price equal to the bid side evaluation of the underlying securities in such
State Trust divided by the number of Units outstanding plus a reduced sales
charge. Such arrangements result in less selling effort and selling expenses
than sales to employee groups of other companies. Resales or transfers of Units
purchased under the employee benefit arrangements may only be made through the
Sponsor's secondary market, so long as it is being maintained.

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

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

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

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

COMPARISON OF PUBLIC OFFERING PRICE, SPONSOR'S REPURCHASE PRICE AND
REDEMPTION PRICE. The secondary market Public Offering Price of Units of each
State Trust will be determined on the basis of the current bid prices of the
Bonds in such State Trust plus the applicable sales charge. Value at which Units
may be resold in the secondary market or redeemed will be determined on the
basis of the current bid prices of such Bonds without any sales charge. On the
Evaluation Date, the Public Offering Price per Unit of each State Trust (based
on the bid price of the Bonds in such State Trust plus the sales charge) each
exceeded the Repurchase and Redemption Price per Unit (based upon the bid price
of the Bonds in each State Trust without the sales charge) by the amounts shown
under "Summary of Essential Information" for each State Trust in Part A of this
Prospectus. For this reason, among others (including fluctuations in the market
prices of such Bonds and the fact that the Public Offering Price includes the
5-1/2% sales charge), the amount realized by a Certificateholder upon any
redemption of Units may be less than the price paid for such Units.

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ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN

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

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

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

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

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

RIGHTS OF CERTIFICATEHOLDERS

CERTIFICATES. Ownership of Units of each State Trust is evidenced by
registered Certificates executed by the Trustee and the Sponsor. Certificates
may be issued in denominations of one or more Units and will bear appropriate
notations on their faces indicating which plan of distribution has been selected
by the Certificateholder. Certificates are transferable by presentation and
surrender to the Trustee properly endorsed and/or accompanied by a written
instrument or instrument of transfer. Although no such charge is presently made
or contemplated, the Trustee may require a Certificateholder to pay $2.00 for
each Certificate reissued or transferred and any governmental charge that may be
imposed in connection with each such transfer or interchange. Mutilated,
destroyed, stolen or lost Certificates will be

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replaced upon delivery of satisfactory indemnity and payment of expenses
incurred.

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

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

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

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

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

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

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

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

TAX STATUS

All Bonds acquired by the State Trusts were accompanied by copies of
opinions of bond counsel to the issuing governmental authorities given at the
time of original delivery of the Bonds to the effect that the interest thereon

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

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

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

The State Trusts are not associations taxable as corporations for
federal income tax purposes under the Internal Revenue Code of 1986 (the
"Code"), and income received by each State Trust that consists of interest
excludable from federal gross income under the Code will be excludable from
the federal gross income of the Certificateholders of such State Trust.

Each Certificateholder of a State Trust will be considered the owner of
a pro rata portion of that State Trust under Section 676(a) of the Code.
Thus, each Certificateholder of a State Trust will be considered to have
received his pro rata share of Bond interest when it is received by the
State Trust, and the entire amount of net income distributable to
Certificateholders of a State Trust that is exempt from federal income tax
when received by that State Trust will constitute tax-exempt income when
received by the Certificateholders.

Gain (other than any earned original issue discount) realized on sale
or redemption of the Bonds or on sale of a Unit is, however, includible in
gross income for federal income tax purposes, generally as capital gain,
although gain on the disposition of a Bond or a Unit purchased at a market
discount generally will be treated as ordinary income, rather than capital
gain, to the extent of accrued market discount. (It should be noted in this
connection that such gain does not include any amounts received in respect
of accrued interest.) Such gain may be long or short-term gain depending on
the facts and circumstances. Capital losses are deductible to the extent of
capital gains; in addition, up to $3,000 of capital losses of non-corporate
Certificateholders may be deducted against ordinary income. Capital assets
acquired on or after January 1, 1988 must be held for more than one year to
qualify for long-term capital gain treatment. Individuals who realize
long-term capital gains will be subject to a maximum tax rate of 28% on such
gain.

Each Certificateholder of a State Trust will realize taxable gain or
loss when that State Trust disposes of a Bond (whether by sale, exchange,
redemption or payment at maturity), as if the Certificateholder had directly
disposed of his pro rata share of such Bond. The gain or loss is measured by
the difference between (i) the tax cost of such pro rata share and (ii) the
amount received therefor. The Certificateholder's tax cost for each Bond is
determined by allocating the total tax cost of each Unit among all the Bonds
held in the State Trust (in accordance with the portion of the State Trust
comprised by each Bond). In order to determine the amount of taxable gain or
loss, the Certificateholder's amount received is similarly allocated at that
time. The Certificateholder may exclude from

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<PAGE>

the amount received any amounts that represent accrued interest or the
earned portion of any original issue discount but may not exclude amounts
attributable to market discount. Thus, when a Bond is disposed of by State
Trust at a gain, taxable gain will equal the difference between (i) the
amount received and (ii) the amount paid plus any original issue discount
(limited, in the case of Bonds issued after June 8, 1980, to the portion
earned from the date of acquisition to the date of disposition). Gain on the
disposition of a Bond purchased at a market discount generally will be
treated as ordinary income, rather than capital gain, to the extent of
accrued market discount. No deduction is allowed for the amortization of
bond premium on tax-exempt bonds, such as the Bonds, in computing regular
federal income tax.

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

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

A portion of Social Security benefits is includible in gross income for
taxpayers whose "modified adjusted gross income" combined with a portion of
their benefits exceeds a base amount. The base amount is $25,000 for an
individual, $32,000 for a married couple filing a joint return and zero for
married persons filing separate returns. Interest on tax-exempt bonds is to
be added to adjusted gross income for purposes of computing the amount of
Social Security benefits that are includible in gross income and determining
whether an individual's income exceeds the base amount above which a portion
of the benefits would be subject to tax.

Corporate Certificateholders are required to include in federal
corporate alternative minimum taxable income 75 percent of the amount by
which the adjusted current earnings (which will include tax-exempt interest)
of the corporation exceeds alternative minimum taxable income (determined
without regard to this item). In addition, in certain cases, Subchapter S
corporations with accumulated earnings and profits from Subchapter C years
will be subject to a minimum tax on excess "passive investment income" which
includes tax-exempt interest.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Interest on indebtedness incurred or continued to purchase or carry the
Units is not deductible for regular federal income tax purposes. In addition,
under rules used by the Internal Revenue Service for determining when borrowed
funds are considered used for the purpose of purchasing or carrying particular
assets, the purchase of Units may be considered to have been made with borrowed
funds even though the borrowed funds are not directly traceable to the purchase
of Units. Also, in the case of certain financial institutions

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that acquire Units, in general no deduction is allowed for interest expense
allocable to the Units.

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

In South Carolina v. Baker, the U.S. Supreme Court held that the
federal government may constitutionally require states to register bonds they
issue and subject the interest on such bonds to federal income tax if not
registered, and that there is no constitutional prohibition against the federal
government's taxing the interest earned on state or other municipal bonds. The
Supreme Court decision affirms the authority of the federal government to
regulate and control bonds such as the Bonds in the Trust and to tax interest on
such bonds in the future. The decision does not, however, affect the current
exemption from taxation of the interest earned on the Bonds in the Trust in
accordance with Section 103 of the Code.

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

LIQUIDITY

Sponsor Repurchase. The Sponsor, although not obligated to do so,
intends to maintain a secondary market for the Units of each State Trust and
continuously to offer to repurchase the Units of the Trusts. The Sponsor's
secondary market repurchase price will be based on the aggregate bid price of
the Bonds in each State Trust portfolio, determined by the Evaluator on a daily
basis, and will be the same as the redemption price. (See "Trustee Redemption.")
Certificateholders who wish to dispose of their Units should inquire of the
Sponsor as to current market prices prior to making a tender for redemption. The
Sponsor may discontinue repurchases of Units of a State Trust if the supply of
Units exceeds demand, or for other business reasons. The date of repurchase is
deemed to be the date on which Certificates representing Units of a State Trust
are physically received in proper form by the Sponsor, Reich & Tang Distributors
L.P., 600 Fifth Avenue, New York, N.Y. 10020. Units received after 4:00 p.m.,
New York Time, will be deemed to have been repurchased on the next business day.
In the event a market is not maintained for the Units of a State Trust, a
Certificateholder may be able to dispose of Units only by tendering them to the
Trustee for redemption.

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

Units purchased by the Sponsor in the secondary market may be
re-offered for sale by the Sponsor at a price based on the aggregate bid price
of the Bonds in a State Trust [(Note: plus the applicable sales charge (see
"Public Offering Price") plus a 5-1/2% sales charge (5.820% of the net amount
invested)] plus net accrued interest. Any Units that are purchased by the

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Sponsor in the secondary market also may be redeemed by the Sponsor if it
determines such redemption to be in its best interest.

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

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

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

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

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

The Redemption Price per Unit of a State Trust is the pro rata share of
each Unit in such State Trust determined by the Trustee on the basis of (i) the
cash on hand in such Trust or monies in the process of being collected, (ii) the
value of the Bonds in such State Trust based on the bid prices of such Bonds and
(iii) interest accrued thereon, less (a) amounts representing taxes or other
governmental charges payable out of such State Trust, (b) the accrued expenses
of such State Trust and (c) cash allocated for distribution to
Certificateholders of record of such State Trust as of the business day prior to
the evaluation being made. The Evaluator may determine the value of the Bonds in
such State Trust for purposes of redemption (1) on the basis of current bid
prices of the Bonds obtained from dealers or brokers

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

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

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

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

TOTAL REINVESTMENT PLAN

Under the Total Reinvestment Plan (the "Plan"), semi-annual and annual
Certificateholders may elect to have all interest and principal distributions,
if any, with respect to their Units reinvested either in units of various series
of "Municipal Securities Trust"* which will have been created shortly before
each semi-annual or annual Payment Date (a "Primary Series") or, if units of a
Primary Series are not available, in units of a previously formed series of the
Trust which have been repurchased by the Sponsor in the secondary market,
including the Units being offered hereby (a "Secondary Series") (Primary Series
and Secondary Series are hereafter collectively referred to as "Available
Series"). June 15 and December 15 of each year in the case of semi-annual
Certificateholders and December 15 of each year in the case of annual
Certificateholders are "Plan Reinvestment Dates."

Under the Plan (subject to compliance with applicable blue sky laws),
fractional units ("Plan Units") will be purchased from the Sponsor at a price
equal to the aggregate offering price per Unit of the bonds in the Available
Series portfolio during the initial offering of the Available Series or at the
- --------
* Certificateholders of a particular State Trust of the Multi-State Trust who
participate in the Plan will have reinvestments made in Units from the same
State Trust of a similar Multi-State Trust if such Units are available. If
no such Units are available for reinvestment, distributions to Certificate-
holders will be reinvested in Units of regular series of Municipal
Securities Trust, the income earned on which may not be exempt from state
and local income taxes.

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

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

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

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

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

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

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

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

Although not obligated to do so, the Sponsor intends to maintain a
market for the Plan Units and continuously to offer to purchase Plan Units at
prices based upon the aggregate offering price of the Bonds in the Available
Series portfolio during the initial offering of the Available Series, or at

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

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

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

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

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

TRUST ADMINISTRATION

PORTFOLIO SUPERVISION. The Sponsor may direct the Trustee to dispose of
Bonds in a State Trust upon (i) default in payment of principal or interest on
such Bonds, (ii) institution of certain legal proceedings with respect to the
issuers of such Bonds, (iii) default under other documents adversely affecting
debt service on such Bonds, (iv) default in payment of principal or interest on
other obligations of the same issuer or guarantor, (v) with respect to revenue
Bonds, decline in revenues and income of any facility or project below the
estimated levels calculated by proper officials charged with the construction or
operation of such facility or project, or (vi) decline in price or the
occurrence of other market or credit factors that in the opinion

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of the Sponsor would make the retention of such Bonds in such State Trust
detrimental to the interests of the Certificateholders. If a default in the
payment of principal or interest on any of the Bonds occurs and if the Sponsor
fails to instruct the Trustee to sell or hold such Bonds, the Trust Agreement
provides that the Trustee may sell such Bonds.

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

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

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

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

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The Sponsor. The Sponsor, Reich & Tang Distributors L.P. ("Reich & Tang") is
engaged in the brokerage business and is a member of the National Association of
Securities Dealers, Inc. Reich & Tang is also a registered investment adviser.
Reich & Tang maintains its principal business offices at 600 Fifth Avenue, New
York, New York 10020. Reich & Tang Asset Management L.P. ("RTAM LP"), a
registered investment adviser, having its principal place of business at 399
Boylston Street, Boston, MA 02116, is the 99% limited partner of the Sponsor.
RTAM LP is 99.5% owned by New England Investment Companies, LP ("NEIC LP") and
Reich & Tang Asset Management, Inc., a wholly owned subsidiary of NEIC LP, owns
the remaining .5% interest of RTAM LP and is its general partner. NEIC LP's
general partner is New England Investment Companies, Inc. ("NEIC"), a holding
company offering a broad array of investment styles across a wide range of asset
categories through eleven subsidiaries, divisions and affiliates offering a wide
array of investment styles and products to institutional clients. These
affiliates in the aggregate are investment advisers or managers to over 54
registered investment companies. Reich & Tang is the successor sponsor for
numerous series of unit investment trusts, including, New York Municipal Trust,
Series 1 (and Subsequent Series), Municipal Securities Trust, Series 1 (and
Subsequent Series), 1st Discount Series (and Subsequent Series), Multi-State
Series 1 (and Subsequent Series), Mortgage Securities Trust, Series 1 (and
Subsequent Series), Insured Municipal Securities Trust, Series 1 (and Subsequent
Series), 5th Discount Series (and Subsequent Series), and Equity Securities
Trust, Series 1, Signature Series, Gabelli Communications Income Trust (and
Subsequent Series).

On August 30, 1996, New England Mutual Life Insurance Company ("The New
England") and Metropolitan Life Insurance Company ("MetLife") merged, with
MetLife being the continuing company. RTAM L.P. remains a wholly-owned
subsidiary of NEIC LP, but RTAM Inc. its sole general partner, is now an
indirect subsidiary of MetLife. Also, Metlife New England Holdings, Inc., a
wholly-owned subsidiary of MetLife, owns 55% of the outstanding limited
partnership interest of NEIC L.P., also indirectly owns a majority of the
outstanding limited partnership interest of NEIC LP.

MetLife is a mutual life insurance company with assets of $142.2
billion at March 31, 1996. It is the second largest life insurance company in
the United States in terms of total assets. MetLife provides a wide range of
insurance and investment products and services to individuals and groups and is
the leader among United States life insurance companies in terms of total life
insurance in force, which exceeded $1.2 trillion at March 31, 1996 for MetLife
and its insurance affiliates. MetLife and its affiliates provide insurance or
other financial services to approximately 36 million people worldwide.

For certain other Trusts as set forth in the "Summary of Essential
Information" in Part A, the Sponsors are Reich & Tang and Gruntal & Co., L.L.C.,
both of whom have entered into an Agreement Among Co-Sponsors pursuant to which
both parties have agreed to act as Co-Sponsors for the Trust. Reich & Tang has
been appointed by Gruntal & Co., L.L.C. as agent for purposes of taking any
action required or permitted to be taken by the Sponsor under the Trust
Agreement. If the Sponsors are unable to agree with respect to action to be
taken jointly by them under the Trust Agreement and they cannot agree as to
which Sponsor shall act as sole Sponsor, then Reich & Tang shall act as sole
Sponsor. If one of the Sponsors fails to perform its duties under the Trust
Agreement or becomes incapable of acting or becomes bankrupt or its affairs are
taken over by public authorities, that Sponsor may be discharged under the Trust
Agreement and a new Sponsor may be appointed or the remaining Sponsor may
continue to act as Sponsor.

Gruntal & Co., L.L.C., a Delaware limited liability company, operates
a regional securities broker/dealer from its main office in New York City and
branch offices in nine states. The firm is very active in the marketing of

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investment companies and has signed dealer agreements with many mutual fund
groups. Further, through its Syndicate Department, Gruntal & Co., L.L.C. has
underwritten a large number of Closed-End Funds and has been Co-Manager on the
following offerings: Cigna High Income Shares; Dreyfus New York Municipal
Income, Inc.; Franklin Principal Maturity Trust and Van Kampen Merritt Limited
Term High Income Trust. The Sponsor is liable for the performance of its
obligations arising from its responsibilities under the Trust Agreement, but
will be under no liability to Certificateholders for taking any action, or
refraining from taking any action, in good faith pursuant to the Trust
Agreement, or for errors in judgment except in cases of its own willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties.

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

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

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

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

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

The Trustee shall not be liable or responsible in any way for taking
any action, or for refraining from taking any action, in good faith pursuant to
the Trust Agreement, or for errors in judgment; or for any disposition of any
moneys, Bonds or Certificates in accordance with the Trust Agreement, except in
cases of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties; provided, however, that the

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Trustee shall not in any event be liable or responsible for any evaluation made
by the Evaluator. In addition, the Trustee shall not be liable for any taxes or
other governmental charges imposed upon or in respect of the Bonds or the Trusts
which it may be required to pay under current or future law of the United States
or any other taxing authority having jurisdiction. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the Trustee of
any of the Bonds pursuant to the Trust Agreement.

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

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

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

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

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

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

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TRUST EXPENSES AND CHARGES

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

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

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

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

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

The following additional charges are or may be incurred by any or all
of the State Trusts: all expenses (including counsel and auditing fees) of the
Trustee incurred in connection with its activities under the Trust Agreement,
including the expenses and costs of any action undertaken by the Trustee to
protect a State Trust and the rights and interests of the Certificateholders;
fees of the Trustee for any extraordinary services performed under the Trust
Agreement; indemnification of the Trustee for any loss or liability accruing to
it without gross negligence, bad faith or willful misconduct on its part,
arising out of or in connection with its acceptance or administration of a State
Trust; indemnification of the Sponsor for any loss, liabilities and expenses
incurred in acting as Sponsor of a State Trust without gross negligence, bad
faith or willful misconduct on its part; and all taxes and other governmental
charges imposed upon the Bonds or any part of a State Trust (no such taxes or
charges are being levied, made or, to the knowledge of the Sponsor,
contemplated). The above expenses, including the Trustee's fees, when paid by or
owing to the Trustee are secured by a first lien on the State Trust to which
such expenses are allocable. In addition, the Trustee is empowered to sell Bonds
of a State Trust in order to make funds available to pay all expenses of such
State Trust.

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

-47-
82600.6

<PAGE>

EXCHANGE PRIVILEGE AND CONVERSION OFFER

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

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

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

The Sponsor reserves the right to suspend, modify or terminate the
Exchange Privilege. The Sponsor will provide Certificateholders of the Trust
with 60 days' prior written notice of any termination or material amendment to
the Exchange Privilege, provided that, no notice need be given if (i) the only
material effect of an amendment is to reduce or eliminate the sales charge
payable at the time of the exchange, to add one or more series of the Trust
eligible for the Exchange Privilege or to delete a series which has been
terminated from eligibility for the Exchange Privilege, (ii) there is a
suspension of the redemption of units of an Exchange Trust under Section 22(e)
of the Investment Company Act of 1940, or (iii) an Exchange Trust temporarily
delays or ceases the sale of its units because it is unable to invest amounts
effectively in accordance with its investment objectives, policies and

-48-
82600.6

<PAGE>

restrictions. During the 60-day notice period prior to the termination or
material amendment of the Exchange Privilege described above, the Sponsor will
continue to maintain a secondary market in the units of all Exchange Trusts that
could be acquired by the affected Certificateholders. Certificateholders may,
during this 60-day period, exercise the Exchange Privilege in accordance with
its terms then in effect.

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

THE CONVERSION OFFER. Unit owners of any registered unit investment
trust for which there is no active secondary market in the units of such trust
(a "Redemption Trust") will be able to elect to redeem such units and apply the
proceeds of the redemption to the purchase of available Units of one or more
series of Municipal Securities Trust, Insured Municipal Securities Trust,
Mortgage Securities Trust, New York Municipal Trust or Equity Securities Trust
(the "Conversion Trusts") at the Public Offering Price for units of the
Conversion Trust based on a reduced sales charge as set forth below. Under the
Conversion Offer, units of the Redemption Trust must be tendered to the trustee
of such trust for redemption at the redemption price determined as set forth in
the relevant Redemption Trust's prospectus. The purchase price of the units will
be based on the aggregate offer price of the in the Conversion Trust's portfolio
securities during its initial offering period; or, at a price based on the
aggregate bid price of the underlying bonds if the initial public offering of
the Conversion Trust has been completed, plus accrued interest and a sales
charge as set forth below. If the participant elects to purchase units of the
Equity Securities Trust under the Conversion Offer, the purchase price of the
units will be based, at all times, on the market value of the underlying
securities in the Trust portfolio plus a sales charge.

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

The exercise of the Conversion Offer is subject to the following
limitations: (i) the Conversion Offer is limited only to unit owners of any
Redemption Trust, (ii) at the time of the unit owner's election to participate
in the Conversion Offer, there also must be available units of a Conversion
Trust, either under a primary distribution or in the Sponsor's secondary market,
(iii) exchanges under the Conversion Offer will be effected in whole units only,
(iv) units of the Mortgage Securities Trust may only be acquired in blocks of
1,000 units, (v) units of the Equity Securities Trust may only be acquired in
blocks of 100 Units. Unit owners will not be permitted to advance any new funds
in order to complete an exchange under the Conversion Offer.

-49-
82600.6

<PAGE>

Any excess proceeds from units being redeemed will be returned to the unit
owner.

The Sponsor reserves the right to modify, suspend or terminate the
Conversion Offer. The Sponsor will provide Certificateholders with 60 days prior
written notice of any termination or material amendment to the Conversion Offer,
provided that, no notice need be given if (i) the only material effect of an
amendment is to reduce or eliminate the sales charge payable at the time of the
exchange, to add one or more series of the Trusts eligible for the Conversion
Offer, to add any new unit investment trust sponsored by Reich & Tang or a
sponsor controlled by or under common control with Reich & Tang, or to delete a
series which has been terminated from eligibility for the Conversion Offer, (ii)
there is a suspension of the redemption of units of a Conversion Trust under
Section 22(e) of the Act, or (iii) a Conversion Trust temporarily delays or
ceases the sale of its units because it is unable to invest amounts effectively
in accordance with its investment objectives, policies and restrictions.

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

DESCRIPTION OF THE EXCHANGE TRUSTS AND THE CONVERSION TRUSTS. Municipal
Securities Trust and New York Municipal Trust may be appropriate investment
vehicles for an investor who is more interested in tax-exempt income. The
interest income from New York Municipal Trust is, in general, also exempt from
New York State and local New York income taxes, while the interest income from
Municipal Securities Trust is subject to applicable New York State and local New
York taxes, except for that portion of the income which is attributable to New
York and Puerto Rico obligations in the Trust portfolio, if any. The interest
income from each State Trust of the Municipal Securities Trust, Multi-State
Series is, in general, exempt from state and local taxes when held by residents
of the state where the issuers of bonds in such State Trusts are located. The
Insured Municipal Securities Trust combines the advantages of providing interest
income free from regular federal income tax under existing law with the added
safety of irrevocable insurance. Insured Navigator Series further combines the
advantages of providing interest income free from regular federal income tax and
state and local taxes when held by residents of the state where issuers of bonds
in such state trusts are located with the added safety of irrevocable insurance.
Mortgage Securities Trust offers an investment vehicle for investors who are
interested in obtaining safety of capital and a high level of current
distributions of interest income through investment in a fixed portfolio of
collateralized mortgage obligations. Equity Securities Trust offers investors an
opportunity to achieve capital appreciation together with a high level of
income.

-50-
82600.6

<PAGE>

TAX CONSEQUENCES OF THE EXCHANGE PRIVILEGE AND THE CONVERSION OFFER. A
surrender of units pursuant to the Exchange Privilege or the Conversion Offer
will constitute a "taxable event" to the Certificateholder under the Code. The
Certificateholder will recognize a tax gain or loss that will be of a long or
short-term capital or ordinary income nature depending on the length of time the
units have been held and other factors. A Certificateholder's tax basis in the
Units acquired pursuant to the Exchange Privilege or Conversion Offer will be
equal to the purchase price of such Units. Investors should consult their own
tax advisors as to the tax consequences to them of exchanging or redeeming units
and participating in the Exchange Privilege or Conversion Offer.

OTHER MATTERS

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

INDEPENDENT ACCOUNTANTS. The financial statements of the Trusts for the
year ended December 31, 1996 included in Part A of this Prospectus have been
examined by Price Waterhouse LLP, independent accountants. The financial
statements have been so included in reliance on their report given upon the
authority of said firm as experts in accounting and auditing. KPMG Peat Marwick
LLP has consented to the incorporation by reference of their report on the
statements of operations and changes in net assets for the Trusts included in
Part A of this Prospectus for the periods ended December 31, 1994 and December
31, 1995, respectively.

DESCRIPTION OF BOND RATINGS*

STANDARD & POOR'S RATINGS SERVICES. A brief description of the
applicable Standard & Poor's Corporation rating symbols and their meanings is as
follows:

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

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

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

-51-
82600.6

<PAGE>

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:

(a) 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.

(b) Nature of and provisions of the obligation.

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

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

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

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

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

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

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

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

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

-52-
82600.6

<PAGE>

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

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

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

Those bonds in the A and Baa group which Moody's believes
possess the strongest investment attributes are designated by the symbol A 1 and
Baa 1. Other A bonds comprise the balance of the group. These rankings (1)
designate the bonds which offer the maximum in security within their quality
group, (2) designate bonds which can be bought for possible upgrading in quality
and (3) additionally afford the investor an opportunity to gauge more precisely
the relative attractiveness of offerings in the market place.

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

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

* * *

-53-
82600.6

<PAGE>

FOR USE WITH MUNICIPAL SECURITIES TRUST

MULTISTATE SERIES 1-11

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

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

TRP PLAN - TOTAL REINVESTMENT PLAN

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

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

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

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

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

My Brokerage Firm's Name

Street Address

City, State and Zipcode

Salesman's Name ___________________ Salesman's No.

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

UNIT HOLDERS NEED ONLY DATE AND SIGN THIS FORM.

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

82600.6

<PAGE>

FOR USE WITH MUNICIPAL SECURITIES TRUST

MULTISTATE SERIES 12-46

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

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

TRP PLAN - TOTAL REINVESTMENT PLAN

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

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

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

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

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

My Brokerage Firm's Name
------------------------------------------------------
Street Address
----------------------------------------------------------------
City, State and Zip Code
------------------------------------------------------
Salesman's Name ___________________ Salesman's No._____________________________

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

UNIT HOLDERS NEED ONLY DATE AND SIGN THIS FORM.

MAIL TO YOUR BROKER
OR
THE CHASE MANHATTAN BANK
ATTN: THE UIT REINVESTMENT UNIT A
4 NEW YORK PLAZA
NEW YORK, NEW YORK 10004

82600.6

<PAGE>

INDEX
<S> <C> <C>
Title Page * * *
MUNICIPAL SECURITIES TRUST
Summary of Essential Information.................................... A-5 MULTI-STATE SERIES
Financial and Statistical Information............................... A-6
Information Regarding the Trust..................................... A-7 (A Unit Investment Trust)
Audit and Financial Information..................................... F-1
Prospectus
The Trust........................................................... 1
The State Trusts.................................................... 8 Dated: April 30 , 1997
Public Offering..................................................... 28
Estimated Long Term Return and Estimated Sponsor:
Current Return.................................................... 30
Rights of Certificateholders........................................ 30 Reich & Tang Distributors L.P.
Tax Status.......................................................... 32 600 Fifth Avenue
Liquidity........................................................... 37 New York, N.Y. 10020
Total Reinvestment Plan............................................. 39 212-830-5200
Trust Administration................................................ 42
Trust Expenses and Charges.......................................... 47 (and for certain Trusts:)
Exchange Privilege and Conversion Offer............................. 48 Gruntal & Co., L.L.C.
Other Matters....................................................... 51 14 Wall Street
Description of Bond Ratings......................................... 51 New York, New York 10005
(212) 267-8800
Parts A and B of this Prospectus do not contain all of the
information set forth in the registration statement and exhibits relating thereto, Trustee:
filed with the Securities and Exchange Commission, Washington, D.C., under
the Securities Act of 1933, and to which reference is made. The Chase Manhattan Bank
4 New York Plaza
New York, N.Y. 10004
800-882-9898
or
The Bank of New York
101 Barclay Street
New York, N.Y. 10286
800-431-8002

Evaluator:

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

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

* * *

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

82600.6

PART II

ADDITIONAL INFORMATION NOT REQUIRED
IN PROSPECTUS

CONTENTS OF REGISTRATION STATEMENT

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

The facing sheet on Form S-6.
The Cross-Reference Sheet (incorporated by reference to the Post-Effective
Amendment to Form S-6 Registration Statement No. 33-55996, filed on April 29,
1996.
The Prospectus consisting of pages.
Signatures.
Consent of Independent Accountants.
Consent of Counsel (included in Exhibits 99.3.1 and 99.3.1.1). Consent of the
Evaluator (included in Exhibit 99.5.1).

The following exhibits:

99.1.1 -- Form of Reference Trust Agreement, as amended (filed as
Exhibit 99.1.1 to Post-Effective Amendment No. 8 to Form S-6
Registration Statement No. 33-26426 on April 25, 1997; and as
Exhibit 1.1 to Amendment No. 1 to Form S-6 Registration
Statements Nos. 33-52397 and 33-58167 of Municipal Securities
Trust, Series 55 (Intermediate) & Multi-State Series 45 and
Multi-State Series 46 on April 14, 1994 and April 6, 1995,
respectively, and incorporated herein by reference).

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

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

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

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

99.3.1 -- Form of Opinion of Berger Steingut & Stern as to the legality
of the securities being registered, including their consent
to the filing thereof and to the use of their name under the
headings "Tax Status" and "Legal Opinions" in the Prospectus,
and to the filing of their opinion regarding tax status of
the

II-1
175584.1

<PAGE>

Trust (filed as Exhibit 99.3.1 to Post-Effective Amendment
No. 10 to Form S-6 Registration Statement No. 33-10963 on
April 28, 1997 and incorporated herein by reference).

-- Opinion of Battle Fowler LLP as to the legality of the
securities being registered, including their consent to the
delivery thereof and to the use of their name under the
headings "Tax Status" and "Legal Opinions" in the Prospectus,
and to the filing of their opinion regarding the tax status
(filed as Exhibit 3.1 to Amendment No. 1 to Form S-6
Registration Statements Nos. 33-52397 and 33-58167 of
Municipal Securities Trust, Series 55 (Intermediate) &
Multi-State Series 45 and Multi-State Series 46 on April 14,
1994 and April 6, 1995, respectively, and incorporated herein
by reference).

99.3.1.1 -- Opinion of Battle Fowler LLP as to tax status of Securities
being registered including their consent to the delivery
thereof and to the use of their name under the heading "Tax
Status" in the Prospectus (filed as Exhibit 3.1.1 to Post-
Effective Amendment No. 1 of Municipal Securities Trust,
Series 54 (Intermediate) & Multi-State Series 43 (Long) on
April 29, 1994 and incorporated herein by reference).

99.3.3 -- Opinion of Brown & Wood as Special California Counsel
including their consent to the filing thereof and to the use
of their name in the Prospectus (filed as Exhibit 99.3.3 to
Amendment No. 1 to Registration Statement No. 33-58167 of
Municipal Securities Trust, Multi-State Series 46, on April
6, 1995, and incorporated herein by reference).

99.3.4 -- Opinion of Greenberg Traurig Special Florida Counsel
including their consent to the filing thereof and to the use
of their name in the Prospectus (filed as Exhibit 99.3.4 to
Amendment No. 1 to Registration Statement No. 33-58167 of
Municipal Securities Trust, Multi-State Series 46, on April
6, 1995, and incorporated herein by reference).

**99.3.5 -- Form of Opinion of Hunton & Williams as Special Virginia
Counsel including their consent to the filing thereof and to
the use of their name in the Prospectus (filed as Exhibit 3.5
to Post-Effective Amendment No. 4 to Registration Statement
No. 33-55996 on April 28, 1997; and as Exhibits 3.3 and 3.5,
respectively, to Amendment No. 1 to Registration Statements
Nos. 33-52397 and 33-58167 of Municipal Securities Trust,
Multi-State Series 45 and Multi-State Series 46 on April 14,
1994 and April 6, 1995, respectively, and incorporated herein
by reference).

*99.5.1 -- Consent of the Evaluator.

99.6.0 -- Power of Attorney of Reich & Tang Distributors L.P., the
Depositor, by its officers and a majority of its Directors
(filed as Exhibit 99.6.0 to Amendment No. 1 to Form S-6
Registration Statement No. 33-62627 of Equity Securities
Trust, Series 6, Signature Series, Gabelli Entertainment and
Media Trust on November 16, 1995 and incorporated herein by
reference).

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

** Filed herewith for the EDGAR filing only.

II-2
175584.1

<PAGE>

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

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

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

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

II-3
175584.1

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrants, Municipal Securities Trust, Series 54 (Intermediate) & Multi-State
Series 43 (Long), Series 55 (Intermediate) & Multi-State Series 45 and
Multi-State Series 46 certify that they have met all of the requirements for
effectiveness of this Post-Effective Amendment to the Registration Statements
pursuant to Rule 485(b) under the Securities Act of 1933. The registrants have
duly caused this Post-Effective Amendment to the Registration Statements to be
signed on their behalf by the undersigned, thereunto duly authorized, in the
City of New York and State of New York on the 17th day of April, 1997.

MUNICIPAL SECURITIES TRUST, SERIES 54 (INTERMEDIATE) &
MULTI-STATE SERIES 43 (LONG), SERIES 55 (INTERMEDIATE) &
MULTI-STATE SERIES 45 and MULTI-STATE SERIES 46
(Registrants)

REICH & TANG DISTRIBUTORS L.P.
(Depositor)

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

By: /s/PETER J. DeMARCO
---------------------------
Peter J. DeMarco
(Authorized Signatory)

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

Name Title Date

PETER S. VOSS President, Chief Executive Officer )
and Director )
G. NEAL RYLAND Executive Vice President, Treasurer ) April 17, 1997
and Chief Financial Officer )
EDWARD N. WADSWORTH Clerk )
RICHARD E. SMITH III Director )By: /s/PETER J. DeMARCO
) -------------------
STEVEN W. DUFF Director ) Peter J. DeMarco
BERNADETTE N. FINN Vice President ) Attorney-in-Fact*
LORRAINE C. HYSLER Secretary )
RICHARD DE SANCTIS Vice President and Treasurer )
</TABLE>

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

* Executed copies of Powers of Attorney were filed as Exhibit 6.0 to
Amendment No. 1 to Registration Statement No. 33-62627 on November 16,
1995.

II-4
175584.1

<PAGE>

SIGNATURES

MUNICIPAL SECURITIES TRUST, SERIES 54
(INTERMEDIATE) & MULTI-STATE SERIES
(LONG), SERIES 55 (INTERMEDIATE) &
MULTI-STATE SERIES 45 and
MULTI-STATE SERIES 46
(Registrants)

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

By: /s/LEE FENSTERSTOCK
--------------------------
Lee Fensterstock
(Authorized Signatory)

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons, who constitute the principal officers and a majority of
the directors of the Executive Committee of Gruntal & Co., L.L.C., the
Depositor, in the capacities and on the dates indicated.

Name Title Date

ROBERT P. RITTEREISER Chief Executive Officer and )
Chairman of the Board of ) April 24, 1997
Directors )
LEE FENSTERSTOCK President and Director )
JOANNE T. MARREN Executive Vice President, ) By: /s/LEE FENSTERSTOCK
) -------------------
General Counsel, Secretary ) Lee Fensterstock
and Director ) Attorney-in-Fact*
BARRY RICHTER Vice Chairman and Director )
STEPHEN DITURSI Executive Vice President and )
Director )
HENRY D. GOTTMANN Executive Vice President and )
Director )
LEOPOLD KORINS Director )
JOSEPH V. BATTIPAGLIA Executive Vice President and )
Director )
JOHN FEENEY Director and President of GMS)
JOHN CIRRITO Director and Executive )
Vice President )
RALPH H. BRADLEY, JR. Executive Vice President and )
Director )

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

* An executed copy of the power of attorney was filed as Exhibit 99.6.1 to
the Post-Effective Amendment to Registration Statement No. 33-31426 on
April 25, 1997.

II-5
175584.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment to the registration statement on Form S-6 of our report
dated March 28, 1997, relating to the financial statements and financial
highlights for the year ended December 31, 1996 of the Municipal Securities
Trust, Series 54 (Intermediate); Municipal Securities Trust, Multi-State Series
43, Virginia Trust; Municipal Securities Trust, Series 55 (Intermediate);
Municipal Securities Trust, Multi-State Series 45, Virginia Trust; and Municipal
Securities Trust, Multi-State Series 46, California Trust, Florida Trust,
Virginia Trust, which appear in such Prospectus. We also consent to the
reference to us under the heading "Independent Accountants" in the Prospectus.

PRICE WATERHOUSE LLP

Boston, MA 02110
April 25, 1997

<PAGE>

Independent Auditors' Consent

Re: Municipal Securities Trust, Series 54 Intermediate
Municipal Securities Trust, Multi-State Series 43
Municipal Securities Trust, Series 55
Municipal Securities Trust, Multi-State Series 45
Municipal Securities Trust, Multi-State Series 46

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

KPMG Peat Marwick LLP

New York, New York
April 24, 1997

<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
extracted from the financial statements and
supporting schedules as of the end of the most
current period and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000895431
<NAME> MST, Series 54
<SERIES>
<NUMBER> 1
<NAME> MST, Series 54

<S> <C>
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 2,945,863
<INVESTMENTS-AT-VALUE> 3,004,998
<RECEIVABLES> 41,269
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,046,267
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,317
<TOTAL-LIABILITIES> 3,317
<SENIOR-EQUITY> 3,042,950
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 41,446
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,009
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 59,135
<NET-ASSETS> 3,042,950
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 165,098
<OTHER-INCOME> 0
<EXPENSES-NET> 8,015
<NET-INVESTMENT-INCOME> 157,083
<REALIZED-GAINS-CURRENT> (1,392)
<APPREC-INCREASE-CURRENT> (2,774)
<NET-CHANGE-FROM-OPS> 152,917
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 166,395
<DISTRIBUTIONS-OF-GAINS> 851,009
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 673
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (864,487)
<ACCUMULATED-NII-PRIOR> 50,758
<ACCUMULATED-GAINS-PRIOR> 25,431
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1,013.87
<PER-SHARE-NII> 44.65
<PER-SHARE-GAIN-APPREC> (2.90)
<PER-SHARE-DIVIDEND> 47.29
<PER-SHARE-DISTRIBUTIONS> 51.73
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 956.60
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
extracted from the financial statements and
supporting schedules as of the end of the most
current period and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000895431
<NAME> MSTMS, Series 43 VA
<SERIES>
<NUMBER> 2
<NAME> MSTMS, Series 43 VA

<S> <C>
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 2,934,490
<INVESTMENTS-AT-VALUE> 2,943,322
<RECEIVABLES> 66,286
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,009,608
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 37,057
<TOTAL-LIABILITIES> 37,057
<SENIOR-EQUITY> 2,972,551
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 41,405
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,899)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,832
<NET-ASSETS> 2,972,551
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 173,396
<OTHER-INCOME> 0
<EXPENSES-NET> 7,201
<NET-INVESTMENT-INCOME> 166,195
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (41,676)
<NET-CHANGE-FROM-OPS> 124,519
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 164,778
<DISTRIBUTIONS-OF-GAINS> 4,899
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 5
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (45,158)
<ACCUMULATED-NII-PRIOR> 39,988
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1,005.90
<PER-SHARE-NII> 55.44
<PER-SHARE-GAIN-APPREC> (13.88)
<PER-SHARE-DIVIDEND> 54.96
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 992.50
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
extracted from the financial statements and
supporting schedules as of the end of the most
current period and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000919280
<NAME> MST, Series 55 (INTERMEDIATE)
<SERIES>
<NUMBER> 1
<NAME> MST, Series 55 (INTERMEDIATE)

<S> <C>
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 2,179,333
<INVESTMENTS-AT-VALUE> 2,294,408
<RECEIVABLES> 36,341
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,330,749
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25,940
<TOTAL-LIABILITIES> 25,940
<SENIOR-EQUITY> 2,304,809
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 10,395
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 115,075
<NET-ASSETS> 2,304,809
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 125,292
<OTHER-INCOME> 0
<EXPENSES-NET> 6,887
<NET-INVESTMENT-INCOME> 118,405
<REALIZED-GAINS-CURRENT> 10,162
<APPREC-INCREASE-CURRENT> (16,319)
<NET-CHANGE-FROM-OPS> 112,248
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 120,183
<DISTRIBUTIONS-OF-GAINS> 235,621
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 219
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (243,556)
<ACCUMULATED-NII-PRIOR> 12,173
<ACCUMULATED-GAINS-PRIOR> 5,993
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1,032.56
<PER-SHARE-NII> 50.19
<PER-SHARE-GAIN-APPREC> (1.68)
<PER-SHARE-DIVIDEND> 50.95
<PER-SHARE-DISTRIBUTIONS> 5.30
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1,024.82
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
extracted from the financial statements and
supporting schedules as of the end of the most
current period and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000919280
<NAME> MSTMS, Series 45 VA
<SERIES>
<NUMBER> 2
<NAME> MSTMS, Series 45 VA

<S> <C>
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 2,770,544
<INVESTMENTS-AT-VALUE> 2,949,606
<RECEIVABLES> 64,117
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,013,723
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 33,808
<TOTAL-LIABILITIES> 33,808
<SENIOR-EQUITY> 2,979,915
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 15,030
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 15,279
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 179,062
<NET-ASSETS> 2,979,915
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 172,970
<OTHER-INCOME> 0
<EXPENSES-NET> 6,768
<NET-INVESTMENT-INCOME> 166,202
<REALIZED-GAINS-CURRENT> 2,125
<APPREC-INCREASE-CURRENT> (21,878)
<NET-CHANGE-FROM-OPS> 146,449
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 166,351
<DISTRIBUTIONS-OF-GAINS> 12,930
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 13
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (32,832)
<ACCUMULATED-NII-PRIOR> 15,179
<ACCUMULATED-GAINS-PRIOR> (14,424)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1,009.30
<PER-SHARE-NII> 55.79
<PER-SHARE-GAIN-APPREC> (6.59)
<PER-SHARE-DIVIDEND> 55.84
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1,002.66
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
extracted from the financial statements and
supporting schedules as of the end of the most
current period and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000942164
<NAME> MSTMS-Series 46 CA
<SERIES>
<NUMBER> 1
<NAME> MSTMS-Series 46 CA

<S> <C>
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 1,883,374
<INVESTMENTS-AT-VALUE> 1,985,876
<RECEIVABLES> 38,502
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,024,378
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34,765
<TOTAL-LIABILITIES> 34,765
<SENIOR-EQUITY> 1,989,613
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 10,680
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (6,943)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 102,502
<NET-ASSETS> 1,989,613
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 116,363
<OTHER-INCOME> 0
<EXPENSES-NET> 4,743
<NET-INVESTMENT-INCOME> 111,620
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (18,279)
<NET-CHANGE-FROM-OPS> 93,341
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 111,264
<DISTRIBUTIONS-OF-GAINS> 6,943
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 7
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (24,866)
<ACCUMULATED-NII-PRIOR> 10,324
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1,007.24
<PER-SHARE-NII> 55.89
<PER-SHARE-GAIN-APPREC> (9.12)
<PER-SHARE-DIVIDEND> 55.71
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 998.30
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
extracted from the financial statements and
supporting schedules as of the end of the most
current period and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000942164
<NAME> MSTMS-Series 46 FLA
<SERIES>
<NUMBER> 2
<NAME> MSTMS-Series 46 FLA

<S> <C>
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 1,805,837
<INVESTMENTS-AT-VALUE> 1,866,472
<RECEIVABLES> 34,309
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,900,781
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24,136
<TOTAL-LIABILITIES> 24,136
<SENIOR-EQUITY> 1,876,645
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 12,267
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 60,635
<NET-ASSETS> 1,876,645
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 115,539
<OTHER-INCOME> 0
<EXPENSES-NET> 4,591
<NET-INVESTMENT-INCOME> 110,948
<REALIZED-GAINS-CURRENT> (2,819)
<APPREC-INCREASE-CURRENT> (23,319)
<NET-CHANGE-FROM-OPS> 84,810
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 109,982
<DISTRIBUTIONS-OF-GAINS> 115,000
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (140,172)
<ACCUMULATED-NII-PRIOR> 11,301
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1,008.41
<PER-SHARE-NII> 55.47
<PER-SHARE-GAIN-APPREC> (13.07)
<PER-SHARE-DIVIDEND> 54.99
<PER-SHARE-DISTRIBUTIONS> 57.50
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 938.32
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
extracted from the financial statements and
supporting schedules as of the end of the most
current period and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000942164
<NAME> MSTMS-Series 46 VA
<SERIES>
<NUMBER> 3
<NAME> MSTMS-Series 46 VA

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</TABLE>

[Letterhead of Hunton & Williams]

[Insert Date]

[Name of Sponsor(s) and Trustee]

Municipal Securities Trust, Series __ and
Multi-State Series __,
Virginia Trust

Gentlemen:

We are acting as special Virginia counsel to [Name of Sponsor(s) and
Trustee] (together, the "Sponsor(s)"), on Virginia tax matters relating to the
Virginia Trust (the "Virginia Trust") included as part of the Municipal
Securities Trust, Series __ and Multi-State Series __ (the "Fund"). ____ units
of beneficial interest in the Virginia Trust (the Units") are to be sold
pursuant to an effective registration statement on Form S-6 (Registration No.
33-_____) under the Securities Act of 1933 (the "Registration Statement"), filed
by the Sponsors on behalf of the Fund, covering the Units and units of the other
trusts described in the Registration Statement.

The Virginia Trust is to be established and the Units are to be created
pursuant to a trust indenture and agreement, dated the date hereof (the "Trust
Agreement"), among the Sponsor(s), [Name of Trustee and Evaluator]. The
portfolio of the Virginia Trust will consist entirely of bonds issued by (i) the
Commonwealth of Virginia or municipalities, authorities or political
subdivisions thereof or (ii) the Government of Puerto Rico or by its authority
(collectively the "Bonds").

We have examined originals or certified copies, or copies otherwise
identified to our satisfaction, of the Trust Agreement, the Registration
Statement and such other documents as we have deemed necessary for the purpose
of this opinion. We have assumed for purposes of rendering the following
opinions that the Virginia Trust is a grantor trust under the grantor trust
rules

480302.1

<PAGE>

Page 2

of Sections 671-679 of the Internal Revenue Code of 1986, as amended. We have
also examined and relied upon the opinion to the Sponsor(s) of [ ], counsel to
the Sponsor(s), with respect to the matters of Federal income tax law set forth
in the Prospectus included in the Registration Statement.

Based on the foregoing, we are of the opinion that, insofar as the law
of the Commonwealth of Virginia is concerned, upon the establishing of the
Virginia Trust and the issuance of the Units thereunder:

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

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

3. A Unit holder will realize a taxable event when the Virginia Trust
disposes of a Bond (whether by sale, exchange, redemption or payment at
maturity) or when the Unit holder redeems or sells his Units, and taxable gain
for Federal income tax purposes may result in taxable gain for Virginia income
tax purposes. However, when a Bond has been issued under an Act of the Virginia
General Assembly which provides that all income from such Bond, including any
profit made from the sale thereof, shall be free from all taxation by the
Commonwealth of Virginia, any such profit received by the Virginia Trust will
retain its tax-exempt status in the hands of the Unit holders.

In rendering the foregoing opinion, we have not passed on or
considered, among other things, the due authorization and delivery of the Bonds
or the Virginia income tax status of interest on the Bonds.

We consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the references to this firm in the Registration
Statement under the headings "Tax Status" and "Other Matters - Legal Opinions."

This letter is solely for the benefit of the Sponsor(s) and
is not to be quoted in whole or in part or otherwise referred to

480302.1

<PAGE>

Page 3

in any document, other than as set forth in the preceding paragraph, without our
prior written consent.

Very truly yours,

35/295/370

480302.1

<PAGE>

J.J. Kenny Frank A. Ciccotto, Jr.
65 Broadway Vice President
New York, NY 10006-2551 Tax-Exempt Evaluations
Tel 212 770 4422
Fax 212 797 8681

Standard & Poor's
A Division of The McGraw-Hill Companies

April 30, 1997

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

Re: Municipal Securities Trust,
Series 54 (Intermediate) and
Multi-State Series 43 (Long) (VA)

Gentlemen:

We have examined the post-effective Amendment to the Registration
Statement File No. 33-55996 for the above-captioned trust. We hereby acknowledge
that Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc. is
currently acting as the evaluator for the trust. We hereby consent to the use in
the Amendment of the reference to Kenny S&P Evaluation Services, a division of
J.J. Kenny Co., Inc. as evaluator.

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

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

Sincerely,

Frank A. Ciccotto

FAC/trh

<PAGE>
J.J. Kenny Frank A. Ciccotto, Jr.
65 Broadway Vice President
New York, NY 10006-2551 Tax-Exempt Evaluations
Tel 212 770 4422
Fax 212 797 8681

Standard & Poor's
A Division of The McGraw-Hill Companies

April 30, 1997

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

Re: Municipal Securities Trust,
Series 55 (Intermediate) and
Multi-State Series 45 (VA)

Gentlemen:

We have examined the post-effective Amendment to the Registration
Statement File No. 33-52829 for the above-captioned trust. We hereby acknowledge
that Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc. is
currently acting as the evaluator for the trust. We hereby consent to the use in
the Amendment of the reference to Kenny S&P Evaluation Services, a division of
J.J. Kenny Co., Inc. as evaluator.

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

Sincerely,

Frank A. Ciccotto

FAC/trh

<PAGE>
J.J. Kenny Frank A. Ciccotto, Jr.
65 Broadway Vice President
New York, NY 10006-2551 Tax-Exempt Evaluations
Tel 212 770 4422
Fax 212 797 8681

Standard & Poor's
A Division of The McGraw-Hill Companies

April 30, 1997

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

Re: Municipal Securities Trust,
Multi-State Series 46 (CA, FL, VA)

Gentlemen:

We have examined the post-effective Amendment to the Registration
Statement File No. 33-58167 for the above-captioned trust. We hereby acknowledge
that Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc. is
currently acting as the evaluator for the trust. We hereby consent to the use in
the Amendment of the reference to Kenny S&P Evaluation Services, a division of
J.J. Kenny Co., Inc. as evaluator.

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

Sincerely,

Frank A. Ciccotto

FAC/trh