MUNICIPAL SECURITIES TRUST SERIES 54 & MULTI STATE SERIES 43, 485BPOS, 1999-04-29

MUNICIPAL SECURITIES TRUST SERIES 54 & MULTI STATE SERIES 43
485BPOS, 1999-04-29

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As filed with the Securities and Exchange Commission on April 29, 1999

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,
MULTI-STATE SERIES 43 (LONG),
SERIES 55 (INTERMEDIATE) &
MULTI-STATE SERIES 45, AND
MULTI-STATE SERIES 46

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

C. Complete address of depositors' principal executive offices:

REICH & TANG DISTRIBUTORS, INC. GRUNTAL & CO., L.L.C.
600 Fifth Avenue One Liberty Plaza
New York, NY 10020 New York, NY 10006

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, Inc. One Liberty Plaza New York, NY 10022
600 Fifth Avenue New York, NY 10006 (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, 1999 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, 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. 6 for
Multi-State Series 43 (Long), Post-Effective Amendment No. 5 for Series 55
(Intermediate) & Multi-State Series 45, and Post-Effective Amendment No. 4
for Multi-State Series 46.

Each of the Registrants filed a Rule 24f-2 Notice for its fiscal year
ended December 31, 1998 on or about March 31, 1999.

** Gruntal & Co., L.L.C. acted as Co-Sponsor for Multi-State Series 43.

175584.1

<PAGE>

Prospectus Part A Dated April 30, 1999

MUNICIPAL SECURITIES TRUST

MULTI-STATE SERIES 43
(MULTIPLIER PORTFOLIO)

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

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

This Prospectus consists of two parts. Part A contains the Summary of
Essential Information including descriptive material relating to the Trust as of
December 31, 1998 (the "Evaluation Date"), a summary of certain specific
information regarding the Trust and audited financial statements of the Trust,
including the related portfolio, as of the Evaluation Date. Part B of this
Prospectus contains a general summary of the State Trusts. Part A of this
Prospectus may not be distributed unless accompanied by Part B. Investors should
read and retain both parts of this Prospectus for future reference. The
Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.

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

Principal Secondary Market
Number of Amount of Offering Price
Units Bonds per Unit (12/31/98)
--------- --------- -------------------

Virginia Trust 2,695 $2,675,000 $1,057.19

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.

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

181353.1

<PAGE>

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

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

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

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

A-2
181353.1

<PAGE>

In addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units of the Trust had been purchased on the
Evaluation Date, the Public Offering Price per Unit would have been $1,057.19
plus accrued interest of $6.60 under the monthly distribution plan, $11.10 under
the semi-annual distribution plan and $11.12 under the annual distribution plan,
for a total of $1,063.79, $1,068.29 and $1,068.31, respectively. The Public
Offering Price per Unit can vary on a daily basis in accordance with
fluctuations in the aggregate bid price of the Bonds. (See "Summary of Essential
Information" and "Public Offering--Offering Price" in Part B of this
Prospectus.)

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of 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".)

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.

A-3
181353.1

<PAGE>

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

MARKET FOR UNITS. The Sponsor, although not obligated to do so,
intends to maintain a secondary market for the Units at prices based on the
aggregate bid price of the Bonds in the Trust portfolio. The secondary market
repurchase price is based on the aggregate bid price of the Bonds in the Trust
portfolio, and the reoffer price is based on the aggregate bid price of the
Bonds plus a sales charge of 3.8% of the Public Offering Price (3.950% of the
net amount invested) plus net accrued interest. If a market is not maintained, a
Certificateholder will be able to redeem his or her Units with the Trustee at a
price also based on the aggregate bid price of the Bonds. (See "Sponsor
Repurchase" and "Public Offering--Offering Price" in Part B of this Prospectus.)

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

A-4
181353.1

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 43

VIRGINIA TRUST (LONG)

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1998
--------------------------------------------------------

Date of Deposit*: April 22, 1993 Minimum Principal Distribution:
Principal Amount of Bonds . $2,675,000 $1.00 per Unit.
Number of Units ........... 2,695 Weighted Average Life
Fractional Undivided Inter- to Maturity: 10.3 Years.
est in Trust per Unit ... 1/2695 Minimum Value of Trust: Trust
Principal Amount of may be terminated if value of
Bonds per Unit .......... $992.58 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 ..... $2,743,694+++ 2042 or the disposition of
Divided by 2,695 Units .. $1,018.57 the last Bond in the Trust.
Plus Sales Charge of 3.8% Trustee***:
of Public Offering The Chase Manhattan Bank.
Price.................. $39.12 Trustee's Annual Fee: Monthly
Public Offering Price plan $1.10 per $1,000; semi-
per Unit .............. $1,057.19+ annual plan $.63 per $1,000;
Redemption and Sponsor's and annual plan is $.36 per
Repurchase Price $1,000.
per Unit ................ $1,018.57+ 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 .......... $39.12++++ (treating separate maturities
Difference between Public as separate issues).
Offering Price per Unit Sponsor: Reich & Tang
and Principal Amount per Distributors, Inc. and
Unit Premium/(Discount) . $64.61 Gruntal & 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
------------------------------------------------------------------

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

Gross annual interest income# ......... $56.01 $56.01 $56.01
Less estimated annual fees and
expenses ............................ 2.52 2.06 1.80
Estimated net annual interest
------ ------ ------
income (cash)# ...................... $53.49 $53.95 $54.21
Estimated interest distribution# ...... 4.46 26.98 54.21
Estimated daily interest accrual# ..... .1486 .1499 .1506
Estimated current return#++ ........... 5.06% 5.10% 5.13%
Estimated long term return++ .......... 3.66% 3.71% 3.73%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15
</TABLE>

A-5
181353.1

<PAGE>

Footnotes to Summary of Essential Information
---------------------------------------------

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

** Certain amounts distributable as of December 31, 1998, may be
reported in the Summary of Essential Information as if they had been
distributed at year-end.

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

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $6.60 monthly, $11.10
semi-annually and $11.12 annually for the Virginia Trust.

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

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

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

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

FINANCIAL AND STATISTICAL INFORMATION

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

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

December 31, 1996 2,995 $ 992.50 $54.60 $55.18 $55.28 -0-
December 31, 1997 2,955 1,020.54 54.59 55.14 55.28 $2.73
December 31, 1998 2,695 1,028.69 53.95 54.52 54.70 9.91

</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, 1998

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

Each Unit in the Trust consists of a 1/2695th undivided interest in
the principal and net income of the Trust in the ratio of one Unit for each
$992.58 of principal amount of the Bonds currently held in the Trust. The
Sponsor has not participated as a sole underwriter or manager, co-manager or
member of an underwriting syndicate from which any of the initial aggregate
principal amount of the Bonds were acquired. The portfolio of the Virginia Trust
consists of 11 issues of 9 issuers located in Virginia and 1 in Puerto Rico.
None of the Bonds are obligations of state and local housing authorities;
approximately 9.2% are hospital revenue bonds; and none were issued in
connection with the financing of nuclear generating facilities. None of the
issues comprising the aggregate principal amount of the Trust are mortgage
revenue bonds. All of the Bonds are subject to redemption prior to their stated
maturity dates pursuant to sinking fund or optional call provisions. The Bonds
may also be subject to other calls, which may be permitted or required by events
which cannot be predicted (such as destruction, condemnation, termination of a
contract, or receipt of excess or unanticipated revenues). One issue
representing $250,000 of the principal amount of the Bonds is a general
obligation bond. All ten of the remaining issues representing $2,425,000 of the
principal amount of the Bonds are payable from the income of a specific project
or authority and are not supported by the issuer's power to levy taxes. The
portfolio is divided for purpose of issue as follows: Bridge and Tunnel 1,
College 1, Electric 2, Expressway Improvement 1, Hospital 1, Office Building 1,
Waste Improvement 1, Water and Sewer 1, and Water Improvement 1. For an
explanation of the significance of these factors see "The State
Trusts--Portfolios" in Part B of this Prospectus.

As of December 31, 1998, $1,005,000 (approximately 37.6% of the
aggregate principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, $140,000 (approximately 5.2% 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 62.4% 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.

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

* Changes in the Trust Portfolio: From January 1, 1999 to March 19, 1999,
$175,000 of the principal amount of the Bond in portfolio no. 2 was sold
and is no longer contained in the Trust. 170 Units were redeemed from the
Trust.

A-7
181353.1

<PAGE>

Report of Independent Accountants

To the Sponsor, Trustee and Certificateholders of
Municipal Securities Trust, Multi-State Series 43, 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 43, Virginia Trust (the "Trust") at December 31, 1998, the
results of its operations, the changes in its net assets and the financial
highlights for the three years then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998 by correspondence with the
Trustee, provide a reasonable basis for the opinion expressed above.

/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, MA
March 19, 1999

<PAGE>

Municipal Securities Trust, Multi-State Series 43,
Virginia Trust
Portfolio
December 31, 1998
- ------------------------------------------------------------------------------

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

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

2 245,000 Hampton Roads Va. Med. CIIg. Gen. A- 6.875
Rev. Bonds Series 1991B 11/15/2016

3 230,000 Prince William Cnty. Va. Serv. Auth. AAA 6.000
Wtr. & Swr. Sys. Rev. Bonds Series 7/01/2029
1991 (Financial Guaranty)

4 340,000 Richmond Va Metro. Auth. Expwy. AAA 5.750
Rev. Rfndg. Bonds Series A 7/15/2022
(Financial Guaranty)

5 165,000 Roanoke Cnty. Va. Ind. Dev. Auth. A 5.625
Lease Rev. Bonds (Roanoke Cnty. 4/15/2013
Admnstion. Cntr.) Series 1993

6 275,000 Roanoke Cnty. Va. Wtr. Sys. Rev. AAA 6.000
Bonds Series 1991 (Financial 7/01/2031
Guaranty)

7 300,000 S.E. Va. Pub. Serv. Auth. of Va. Sr. A- 6.000
Rev. Bonds Rgnl. Solid Waste Sys. 7/01/2017
Series 1993 (AMT)

8 250,000 City of Suffolk Va. Genl. Oblig. Pub. A 6.000
Imprvmnt. & Rfndg. Bonds Series 1993 8/01/2013

9 400,000 Williamsburg Va. Ind. Dev. Auth. Hosp. A 5.750
Fac. Rev. Bonds (Williamsburg 10/01/2022
Commnty Hosp.)

10 100,000 P.R. Elec. Pwr. Auth. Pwr. Rev. Rfndg. BBB+ 0.000
Bonds Series N 7/01/2017

11 40,000 P.R. Elec. Pwr. Auth. Pwr. Rev. Bonds BBB+ 0.000
Series O 7/01/2017

------------
$ 2,675,000 Total Investments (Cost $2,601,754)
============

</TABLE>

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

1 7/01/23 @ 100 S.F. $ 346,899

7/01/01 @ 100 Ref.

2 11/15/03 @ 100 S.F. 270,832
11/15/01 @ 102 Ref.

3 7/01/22 @ 100 S.F. 243,142
7/01/01 @ 100 Ref.

4 7/15/17 @ 100 S.F. 362,916
7/15/02 @ 100 Ref.

5 4/15/07 @ 100 S.F. 172,940
4/15/03 @ 102 Ref.

6 7/01/22 @ 100 S.F. 290,714
7/01/01 @ 100 Ref.

7 7/01/05 @ 100 S.F. 313,431
7/01/03 @ 102 Ref.

8 No Sinking Fund 272,498
8/01/03 @ 102 Ref.

9 10/01/13 @ 100 S.F. 413,964
10/01/03 @ 102 Ref.

10 7/01/15 @ 87.06 S.F. 40,252
None

11 No Sinking Fund 16,101
None
----------
$2,743,689
==========

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. 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, 1998, the net unrealized appreciation of all the bonds
was comprised of the following:

Gross unrealized appreciation $ 141,935
Gross unrealized depreciation -
---------------

Net unrealized appreciation $ 141,935
===============

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, Multi-State Series 43,
Virginia Trust
Statement of Net Assets
December 31, 1998
- ------------------------------------------------------------------------------

Investments in Securities,
at Market Value (Cost $2,601,754) $ 2,743,689
--------------

Other Assets
Accrued Interest 58,765
--------------
Total Other Assets 58,765
--------------

Liabilities
Advance from Trustee 29,399
--------------
Total Liabilities 29,399
--------------

Excess of Other Assets over Total Liabilities 29,366
--------------

Net Assets (2,695 Units of Fractional Undivided
Interest Outstanding, $1,028.96 per Unit) $ 2,773,055
==============

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,
1998 1997 1996

Investment Income
Interest $ 159,272 $ 171,487 $ 173,396
----------- ----------- -----------

Expenses
Trustee's Fees 4,372 4,463 4,407
Evaluator's Fee 2,283 2,046 2,063
Sponsor's Advisory Fee 738 769 731
----------- ----------- -----------

Total Expenses 7,393 7,278 7,201
----------- ----------- -----------

Net Investment Income 151,879 164,209 166,195
----------- ----------- -----------

Realized and Unrealized Gain (Loss)
Realized Gain on
Investments 4,645 997 ----

Unrealized Appreciation
(Depreciation) on Investments 44,865 88,238 (41,676)
----------- ----------- -----------

Net Gain (Loss) on Investments 49,510 89,235 (41,676)
----------- ----------- -----------

Net Increase
in Net Assets
Resulting From Operations $ 201,389 $ 253,444 $ 124,519
=========== =========== ===========

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,
1998 1997 1996

Operations
<S> <C> <C> <C>
Net Investment Income $ 151,879 $ 164,209 $ 166,195
Realized Gain
on Investments 4,645 997 ----
Unrealized Appreciation
(Depreciation) on Investments 44,865 88,238 (41,676)
------------ ------------ ------------

Net Increase in
Net Assets Resulting
From Operations 201,389 253,444 124,519
------------ ------------ ------------

Distributions to Certificateholders
Investment Income 149,393 163,102 164,724
Principal 27,263 8,067 ----

Redemptions
Interest 3,750 302 54
Principal 263,631 38,821 4,899
------------ ------------ ------------

Total Distributions
and Redemptions 444,037 210,292 169,677
------------ ------------ ------------

Total Increase (Decrease) (242,648) 43,152 (45,158)

Net Assets
Beginning of Year 3,015,703 2,972,551 3,017,709
------------ ------------ ------------

End of Year (Including
Undistributed Net Investment
Income of $40,946, $42,210
and $41,405, Respectively) $ 2,773,055 $ 3,015,703 $ 2,972,551
============ ============ ============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Multi-State Series 43,
Virginia Trust
Financial Highlights
- ------------------------------------------------------------------------------

Selected data for a unit of the Trust outstanding: *
For the years ended December 31,
1998 1997 1996

<S> <C> <C> <C>
Net Asset Value, Beginning of Year** $ 1,020.54 $ 992.50 $ 1,005.90
---------- ---------- ----------

Interest Income 56.38 57.64 57.84
Expenses (2.62) (2.45) (2.40)
---------- ---------- ----------
Net Investment Income 53.76 55.19 55.44
---------- ---------- ----------
Net Gain or Loss on Investments(1) 18.52 30.48 (13.88)
---------- ---------- ----------

Total from Investment Operations 72.28 85.67 41.56
---------- ---------- ----------

Less Distributions
to Certificateholders
Income 52.88 54.82 54.94
Principal 9.65 2.71 ----
for Redemptions
Interest 1.33 .10 .02
---------- ---------- ----------

Total Distributions 63.86 57.63 54.96
---------- ---------- ----------

Net Asset Value, End of Year** $ 1,028.96 $ 1,020.54 $ 992.50
========== ========== ==========

</TABLE>

(1) Net gain or loss on investments is a result of changes in outstanding
units since January 1, 1998, 1997 and 1996, respectively, and the dates of
net gain and loss on investments.

- --------
* Unless otherwise stated, based upon average units outstanding during
the year of 2,825 ([2,695 + 2,955]/2) for 1998, 2,975 ([2,955 +
2,995]/2) for 1997 and of 2,998 ([2,995 + 3,000]/2) for 1996.

** Based upon actual units outstanding

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

<PAGE>

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

1. Organization

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

Effective September 28, 1995, Reich & Tang Distributors, Inc. ("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.

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, Multi-State Series 43,
Virginia Trust
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 Chase Manhattan Bank (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of
the Trust and is responsible for establishing and maintaining a
system of internal control related thereto. The Trustee is also
responsible for all estimates of expenses and accruals reflected in
the Trust's financial statements.

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

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, 1998, 1997 and 1996,
260, 40 and 5 units were redeemed, respectively.

The Trust pays an annual fee for trustee services rendered by the
Trustee that ranges from $.36 to $1.10 per $1,000 of outstanding
investment principal. In addition, a minimum fee of $8.00 is paid to
a service bureau for each portfolio valuation. A maximum fee of $.25
per $1,000 of outstanding investment principal is paid to the
Sponsor. For the years ended December 31, 1998, 1997 and 1996, the
"Trustee's Fees" are comprised of Trustee fees of $2,575, $2,518 and
$2,545 and other expenses of $1,797, $1,945 and $1,862, respectively.
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, 1998, 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 (337,046)
Net Unrealized Appreciation 141,935
Undistributed Net Investment Income 40,946
Undistributed Proceeds From Investments 7
---------------

Total $ 2,773,055
===============

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 $11,587.

6. Concentration of Credit Risk

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

<PAGE>

Prospectus Part A Dated April 30, 1999

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 under existing law but may be subject to state and local
taxes. There can be no assurance that the Trust's objectives will be achieved.
Although the Supreme Court has determined that Congress has the authority to
subject interest on bonds such as the Bonds in the Trust to federal income
taxation, existing law excludes such interest from regular federal income tax.
Such interest income may, however, be subject to the federal individual and
corporate alternative minimum tax and to state and local taxes. (See
"Description of Portfolio" in this Part A for a description of those Bonds, if
any, which pay interest income subject to the federal individual alternative
minimum tax.) In addition, capital gains are subject to tax. (See "Tax Status"
and "The Trust--Portfolio" in Part B of this Prospectus.) The Sponsors are Reich
& Tang Distributors, Inc. and Gruntal & Co., L.L.C. 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, 1998 (the "Evaluation Date"), a summary
of certain specific information regarding the Trust and audited financial
statements of the Trust, including the related portfolio, as of the Evaluation
Date. Part B of this Prospectus contains a general summary of the Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should retain both parts of this Prospectus for future reference. The
Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.

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

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

THE TRUST. The Trust seeks to achieve its investment objectives through
investment in a fixed, diversified portfolio of long-term bonds (the "Bonds")
issued by or on behalf of states, municipalities and public authorities. All of
the Bonds in the Trust were rated "A" or better by

263870.1

<PAGE>

Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, or
Moody's Investors Service, Inc. at the time originally deposited in the Trust.
For a discussion of the significance of such ratings see "Description of Bond
Ratings" in Part B of this Prospectus and for a list of ratings on the
Evaluation Date see the "Portfolio". Some of the Bonds in the portfolio may be
"Zero Coupon Bonds", which are original issue discount bonds that provide for
payment at maturity at par value, but do not provide for the payment of any
current interest.

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

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 1/2087th 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 3.3% of the Public
Offering Price, which is the same as 3.413% 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 $1,077.58
plus accrued interest of $.69 under the monthly distribution plan and $4.84
under the semi-annual distribution plan, for a total of $1,078.27 and $1,082.42,
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.)

263870.1
A-2

<PAGE>

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

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

263870.1
A-3

<PAGE>

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 3.3% of the Public Offering Price (3.413% 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.)

263870.1
A-4

<PAGE>

<TABLE>
<CAPTION>
MUNICIPAL SECURITIES TRUST
SERIES 55

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1998

Date of Deposit*: April 14, 1994 Minimum Principal Distribution:
Principal Amount of Bonds ... $2,060,000 $1.00 per Unit.
Number of Units ............. 2,087 Weighted Average Life to
Fractional Undivided Inter- Maturity: 5.2 Years.
est in Trust per Unit ..... 1/2,087 Minimum Value of Trust: Trust
Principal Amount of may be terminated if value of
Bonds per Unit ............ $987.06 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 ....... $2,176,765+++ or the disposition of the last
Divided by 2,087 Units .... $1,043.01 Bond in the Trust.
Plus Sales Charge of 3.3% Trustee***: The Chase Manhattan
of Public Offering Price $34.57 Bank.
Public Offering Price Trustee's Annual Fee: Monthly
per Unit ................ $1,077.58+ plan $1.36 per $1,000; semi-
Redemption and Sponsor's annual plan $.91 per $1,000.
Repurchase Price Evaluator: Kenny S&P Evaluation
per Unit .................. $1,043.01+ 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 ............ $34.52++++ Sponsor: Reich & Tang
Difference between Public Distributors, Inc.
Offering Price per Unit Sponsor's Annual Fee: Maximum of
and Principal Amount per $.25 per $1,000 principal
Unit Premium/(Discount) ... $90.52 amount of Bonds (see "Trust
Evaluation Time: 4:00 p.m. Expenses and Charges" in Part B
New York Time. of this Prospectus).
</TABLE>

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

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

Gross annual interest income# ......... $52.49 $52.49
Less estimated annual fees and
expenses ............................ 2.41 2.68
Estimated net annual interest ----- -----
income (cash)# ...................... $50.08 $49.81
Estimated interest distribution# ...... 4.17 24.91
Estimated daily interest accrual# ..... .1391 .1384
Estimated current return#++ ........... 4.65% 4.62%
Estimated long term return++ .......... 3.15% 3.12%
Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15
</TABLE>

263870.1
A-5

<PAGE>

Footnotes to Summary of Essential Information

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

** Certain amounts distributable as of December 31, 1998, may be
reported in the Summary of Essential Information as if they had been
distributed at year-end.

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $.69 monthly and $4.84
semi-annually.

+++ 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.

<TABLE>
<CAPTION>
FINANCIAL AND STATISTICAL INFORMATION

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

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

December 31, 1996 2,249 $1,024.82 $ 51.46 $51.22 $5.53
December 31, 1997 2,155 1,045.83 51.09 50.90 5.93
December 31, 1998 2,087 1,046.25 50.47 50.29 9.26

- --------
* 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>

263870.1
A-6

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1998

DESCRIPTION OF PORTFOLIO*

The portfolio of the Trust consists of 10 issues representing
obligations of issuers located in 7 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; none
are hospital revenue bonds; and approximately 30.3%** 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 six of the remaining issues representing $1,160,000 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, Jails 1, Lease
Revenue 1 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, 1998, $1,520,000 (approximately 73.8% 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 26.2% were purchased at a
premium and none were purchased at par. For an explanation of the significance
of these factors see "Discount and Zero Coupon Bonds" in Part B of this
Prospectus.

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

- --------
* Changes in the Trust Portfolio: From January 1, 1999 to March 19, 1999,
2 Units were redeemed from the Trust.

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

263870.1
A-7

<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, 1998, the results of its
operations, the changes in its net assets and the financial highlights for the
three years then ended, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Trust's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998 by correspondence with the
Trustee, provide a reasonable basis for the opinion expressed above.

/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, MA
March 19, 1999

<PAGE>

Municipal Securities Trust, Series 55 (Intermediate)
Portfolio
December 31, 1998
- --------------------------------------------------------------------------------

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

<S> <C> <C> <C> <C>
1 $ 25,000 Ca. Pub. Works. Bd. Lease Rntl. (Dept of A 5.900%
Vets. Affrs.) 1994 Series A (So. Ca. 10/01/2002
Vets. Home-Barstow Fac.)

2 300,000 D.C. (Wash, D.C.) Genl. Oblig. Ref. AAA 4.650
Bonds Series 1994 A-2 (AMBAC) 6/01/2002

3 20,000 Ga Muni. Elec. Pwr. Rev. Gen. Ser. D. AAA 4.750
(Financial Guaranty) 1/01/2004

4 300,000 St. of Ill Genl. Oblig. Ref. Bonds Series AA 4.600
of January, 1994 12/01/2005

5 205,000 The City of N.Y. Gen. Oblig. Bonds, BBB+ 5.700
Fiscal 1994 Series H 8/01/2003

6 95,000 The City of N.Y. Gen Oblig. Bonds, BBB+ 5.800
Fiscal 1994 Series H 8/01/2004

7 325,000 N.C. Eastern Muni Pwr. Agcy. Pwr. Sys. Baa1* 6.000
Rev. Bond Series 1993 B 1/01/2005

8 300,000 Charleston Cnty., S.C. Charleston Pub. AAA 5.700
Facs. Corp. Rfndg. Certs. of Part Series 6/01/2005
1994

9 300,000 Wa. Pub. Pwr. Spply. Systm. Nuc. Proj. Aa1* 4.600
No. 2 Rev. Rfndg. Series 1994A 7/01/2002

10 190,000 P.R. Elec. Pwr. Auth. Pwr. Rev. Bonds BBB+ 6.200
Series Q 7/01/2004

------------
$ 2,060,000 Total Investments (Cost $1,989,683)
============

</TABLE>

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

1 No Sinking Fund $ 26,932
None

2 No Sinking Fund 306,951
None

3 No Sinking Fund 20,729
None

4 No Sinking Fund 309,510
12/01/03 @ 102 Opt.

5 No Sinking Fund 220,147
None

6 No Sinking Fund 103,467
None

7 No Sinking Fund 347,857
1/01/03 @ 102

8 No Sinking Fund 327,996
6/01/04 @ 102 Opt.

9 No Sinking Fund 306,906
None

10 No Sinking Fund 206,268
7/01/02 @ 101.5

----------
$2,176,763
==========

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

Municipal Securities Trust, Series 55 (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.,
except for those identified by an asterisk (*) which are by Moody's
Investors Service, Inc. A brief description of the ratings symbols and
their meaning is set forth under "Description of Bond Ratings" in Part B
of the Prospectus.

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

3. At December 31, 1998, the net unrealized appreciation of all the bonds
was comprised of the following:

Gross unrealized appreciation $ 187,080
Gross unrealized depreciation -
---------------
Net unrealized appreciation $ 187,080
===============

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

<PAGE>

Municipal Securities Trust, Series 55 (Intermediate)

Statement of Net Assets
December 31, 1998
- --------------------------------------------------------------------------------

Investments in Securities,
at Market Value (Cost $1,989,683) $ 2,176,763
--------------

Other Assets
Accrued Interest 34,286
--------------
Total Other Assets 34,286
--------------
Liabilities
Advance from Trustee 27,524
--------------
Total Liabilities 27,524
--------------

Excess of Other Assets over Total Liabilities 6,762
--------------

Net Assets (2,087 Units of Fractional Undivided
Interest Outstanding, $1,046.25 per Unit) $ 2,183,525
==============

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

<PAGE>

Municipal Securities Trust, Series 55 (Intermediate)

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

For the Years Ended December 31,
1998 1997 1996

Investment Income
Interest $ 111,563 $ 117,616 $125,292
----------- ----------- --------
Expenses
Trustee's Fees 5,293 5,579 5,443
Evaluator's Fee 956 818 825
Sponsor's Advisory Fee 536 562 619
----------- ----------- -------
Total Expenses 6,785 6,959 6,887
----------- ----------- -------
Net Investment Income 104,778 110,657 118,405
----------- ----------- -------
Realized and Unrealized Gain (Loss)
Realized Gain on
Investments 4,236 4,464 10,162

Unrealized Appreciation
(Depreciation) on Investments 17,894 54,111 (16,319)
----------- ----------- --------
Net Gain (Loss) on Investments 22,130 58,575 (6,157)
----------- ----------- --------
Net Increase in Net Assets
Resulting From Operations $ 126,908 $ 169,232 $112,248
=========== =========== ========

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,
1998 1997 1996

<S> <C> <C> <C>
Operations
Net Investment Income $ 104,778 $ 110,657 $ 118,405
Realized Gain
on Investments 4,236 4,464 10,162
Unrealized Appreciation
(Depreciation) on Investments 17,894 54,111 (16,319)
----------- ------------ -------------
Net Increase in Net Assets
Resulting From Operations 126,908 169,232 112,248
----------- ------------ -------------
Distributions to Certificateholders
Investment Income 106,242 112,044 118,212
Principal 19,326 12,779 12,499

Redemptions
Interest 350 432 1,971
Principal 71,228 95,023 223,122
----------- ------------ ------------
Total Distributions
and Redemptions 197,146 220,278 355,804
----------- ------------ ------------
Total (Decrease) (70,238) (51,046) (243,556)

Net Assets
Beginning of Year 2,253,763 2,304,809 2,548,365
----------- ------------ ------------
End of Year (Including
Undistributed Net Investment
Income of $6,762, $8,576
and $10,395, Respectively) $ 2,183,525 $ 2,253,763 $ 2,304,809
============ ============ ============
</TABLE>

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

<PAGE>

Municipal Securities Trust, Series 55 (Intermediate)

Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Selected data for a unit of the Trust outstanding: *
For the years ended December 31,
1998 1997 1996

<S> <C> <C> <C>
Net Asset Value, Beginning of Year** $ 1,045.83 $ 1,024.82 $ 1,032.56
---------- ---------- ----------
Interest Income 52.60 53.41 53.11
Expenses (3.20) (3.16) (2.92)
---------- ---------- ----------
Net Investment Income 49.40 50.25 50.19
---------- ---------- ----------
Net Gain or Loss on Investments(1) 10.39 27.64 (1.68)
---------- ---------- ----------
Total from Investment Operations 59.79 77.89 48.51

Less Distributions
to Certificateholders
Income 50.09 50.88 50.11
Principal 9.11 5.80 5.30
for Redemptions
Interest .17 .20 .84
---------- ---------- ----------
Total Distributions 59.37 56.88 56.25
---------- ---------- ----------
Net Asset Value, End of Year** $ 1,046.25 $ 1,045.83 $ 1,024.82
========== ========== ==========

</TABLE>

(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1998, 1997 and 1996, respectively, and the dates of net
gain and loss on investments.

- --------
* Unless otherwise stated, based upon average units outstanding during
the year of 2,121 ([2,087 + 2,155]/2) for 1998, 2,202 ([2,155 +
2,249]/2) for 1997 and of 2,359 ([2,249 + 2,468]/2) for 1996.

** Based upon actual units outstanding

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

<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.

<PAGE>

Municipal Securities Trust, Series 55 (Intermediate)

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

3. Income Taxes

4. Trust Administration

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

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

The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. For the years ended December 31, 1998, 1997 and 1996,
68, 94 and 219 units were redeemed, respectively.

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 years ended December 31, 1998, 1997 and 1996, the
"Trustee's Fees" are comprised of Trustee fees of $2,714, $2,672 and
$2,877 and other expenses of $2,579, $2,907 and $2,566, respectively.
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, 1998, 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 (932,653)
Net Unrealized Appreciation 187,080
Undistributed Net Investment Income 6,762
Undistributed Proceeds From Investments ----
---------------
Total $ 2,183,525
===============

6. Concentration of Credit Risk

<PAGE>

Prospectus Part A Dated April 30, 1999

MUNICIPAL SECURITIES TRUST

MULTI-STATE SERIES 45
(MULTIPLIER PORTFOLIO)

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

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

This Prospectus consists of two parts. Part A contains the Summary of
Essential Information including descriptive material relating to each State
Trust as of December 31, 1998 (the "Evaluation Date"), a summary of certain
specific information regarding each State trust and audited financial statements
of each State Trust, including the related portfolio, as of the Evaluation Date.
Part B of this Prospectus contains a general summary of the State Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should read and retain both parts of this Prospectus for future
reference. The Securities and Exchange Commission ("SEC") maintains a website
that contains reports, proxy and information statements and other information
regarding the Trust which is filed electronically with the SEC. The SEC's
Internet address is http:www.sec.gov. Offering materials for the sale of these
units available through the Internet are not being offered directly or
indirectly to residents of a particular state nor is an offer of these units
through the Internet specifically directed to any person in a state by, or on
behalf of, the issuer.

- --------------------------------------------------------------------------------
Principal Secondary Market
Number of Amount of Offering Price
Units Bonds per Unit (12/31/98)
--------- --------- -------------------

Virginia Trust 2,702 $2,690,000 $1,086.33

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.

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

263868.1

<PAGE>

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

The 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

A-2
263868.1

<PAGE>

hereby are issued and outstanding Units which have been purchased by the Sponsor
in the secondary market.

PUBLIC OFFERING PRICE. The secondary market Public Offering Price
of each Unit is equal to the aggregate bid price of the Bonds in the Trust
divided by the number of Units outstanding, plus a sales charge of 5.1% of the
Public Offering Price, or 5.374% of the net amount invested in Bonds per Unit.
In addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units of the Virginia Trust had been purchased on the
Evaluation Date, the Public Offering Price per Unit would have been $1,086.33
plus accrued interest of $.75 under the monthly distribution plan and $5.34
under the semi-annual distribution plan, for a total of $1,087.80 and $1,091.67.
The Public Offering Price per Unit can vary on a daily basis in accordance with
fluctuations in the aggregate bid price of the Bonds. (See "Summary of Essential
Information" and "Public Offering--Offering Price" in Part B of this
Prospectus.)

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

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

A-3
263868.1

<PAGE>

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 5.1% of the Public Offering Price (5.374% of the net amount
invested) plus net accrued interest. If a market is not maintained, a
Certificateholder will be able to redeem his or her Units with the Trustee at a
price also based on the aggregate bid price of the Bonds. (See "Sponsor
Repurchase" and "Public Offering--Offering Price" in Part B of this Prospectus.)

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

A-4
263868.1

<PAGE>

<TABLE>
<CAPTION>
MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 45

VIRGINIA TRUST

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1998

Date of Deposit: April 14, 1994 Minimum Principal Distribution:
Principal Amount of Bonds ... $2,690,000 $1.00 per Unit.
Number of Units ............. 2,702 Weighted Average Life
Fractional Undivided Inter- to Maturity: 18.1 Years.
est in Trust per Unit ..... 1/2702 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $995.56 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 ....... $2,793,448+++ The earlier of December 31,
Divided by 2,702 units .... $1,033.84 2044 or the disposition of the
Plus Sales Charge of 5.1% last Bond in the Trust.
of Public Offering Price $52.49 Trustee***: The Chase Manhattan
Public Offering Price Bank.
per Unit ................ $1,086.33+ Trustee's Annual Fee: Monthly
Redemption and Sponsor's plan $1.37 per $1,000; and
Repurchase Price semi-annual plan $.92 per
per Unit.................. $1,033.84+ $1,000.
+++ Evaluator: Kenny S&P Evaluation
++++ Services.
Excess of Secondary Market Evaluator's Fee for Each
Public Offering Price Evaluation: Minimum of $3 plus
over Redemption and $.25 per each issue of Bonds in
Sponsor's Repurchase excess of 50 issues (treating
Price per Unit ............ $52.49++++ separate maturities as separate
Difference between Public issues).
Offering Price per Unit Sponsor: Reich & Tang
and Principal Amount per Distributors, Inc.
Unit Premium/(Discount) ... $90.77 Sponsor's Annual Fee: Maximum of
Evaluation Time: 4:00 p.m. $.25 per $1,000 principal
New York Time. amount of Bonds (see "Trust
Expenses and Charges" in Part B
of this Prospectus).
</TABLE>

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

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

Gross annual interest income# ......... $56.86 $56.86
Less estimated annual fees and
expenses ............................ 2.35 1.86
Estimated net annual interest ------ ------
income (cash)# ...................... $54.51 $55.00
Estimated interest distribution# ...... 4.54 27.50
Estimated daily interest accrual# ..... .1514 .1528
Estimated current return#++ ........... 5.02% 5.06%
Estimated long term return++ .......... 4.14% 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
</TABLE>

A-5
263868.1

<PAGE>

Footnotes to Summary of Essential Information

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

** Certain amounts distributable as of December 31, 1998 may be reported
in the Summary of Essential Information as if they had been
distributed at year-end.

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $.75 monthly and $5.34
semi-annually for the Virginia Trust.

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

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

<TABLE>
<CAPTION>
FINANCIAL AND STATISTICAL INFORMATION

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

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

December 31, 1996 2,972 $1,002.66 $55.56 $56.11 -0-
December 31, 1997 2,789 1,036.72 55.02 55.58 $8.50
December 31, 1998 2,702 1,038.35 54.45 54.99 6.12

</TABLE>

A-6
263868.1

<PAGE>

INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1998

DESCRIPTION OF PORTFOLIO*

Each Unit in the Virginia Trust consists of a 1/2702nd undivided
interest in the principal and net income of the Trust in the ratio of one Unit
for each $995.56 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 13.0% of the Bonds are obligations of state and local housing
authorities; approximately 26.0**% 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 $90,000 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, 1998, $2,200,000 (approximately 81.8% 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 18.2% were purchased
at a premium and none were purchased at par. For an explanation of the
significance of these factors see "The Portfolios--Discount and Zero Coupon
Bonds" in Part B of this Prospectus.

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

- --------

* Changes in the Trust Portfolio: From January 1, 1999 to March 19, 1999, the
entire principal amount of the Bond in portfolio no. 6, and $200,000 of the
principal amount of the Bond in portfolio no. 4 were sold and are no longer
contained in the Trust. 288 Units were redeemed from the Trust.

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

A-7
263868.1

<PAGE>

Report of Independent 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, 1998, the
results of its operations, the changes in its net assets and the financial
highlights for the three years then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998 by correspondence with the
Trustee, provide a reasonable basis for the opinion expressed above.

/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, MA
March 19, 1999

<PAGE>

Municipal Securities Trust, Multi-State Series 45,
Virginia Trust
Portfolio
December 31, 1998
- ------------------------------------------------------------------------------

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

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

2 400,000 Indus Dev. Auth. of the City of A 5.375
Alexandria, Va. Poll Cntl. Rev. Rfndg. 2/15/2024
Bonds

3 300,000 Fairfax Cnty. Va. Dev. Auth. Hosp. Rev. AA 5.000
Rfndg. Bonds (Inova Hlth. Sys. Hosps. 8/15/2023
Prjt.) Series 1993A

4 400,000 Fairfax Cnty. Wtr. Auth. Wtr. Rfndg. Aa2* 5.750
Rev. Bonds Series 1992 4/01/2029

5 350,000 Harrisonburg Va. Redev. & Hsg. Auth. AA 6.150
Multifam. Hsg. Rev. Rfndg. Bonds 3/01/2029
(Hanover Crossing Aprtmts. Prjt.)
Series 1993

6 90,000 Richmond Va. Genl. Oblig. Pub. Aaa* 6.250
Imprvmt. Rev. Bonds Series 1991A 1/15/2021

7 400,000 Richmond Metro. Auth. Expy. Rev. AAA 6.250
& Rfndg. Bonds, Series 1992B 7/15/2022

8 150,000 P.R. Hwy. Auth. Hwy. Rev. Rfndg. A 6.000
Bonds (Series Q) 7/01/2020

9 200,000 P.R. Pub. Bldgs. Auth. Pub. Ed. & Hlth. A 5.500
Facs. Rev. Rfndg. Bonds Gtd. By the 7/01/2021
Cmmnwlth. of P.R. Series M

------------
$ 2,690,000 Total Investments (Cost $2,497,112)
============

</TABLE>

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

1 10/01/03 @ 100 S.F. $408,548
10/01/03 @ 102 Opt.

2 No Sinking Fund 408,632
2/15/04 @ 102 Opt.

3 8/15/20 @ 100 S.F. 302,274
None

4 4/01/23 @ 100 S.F. 420,268
4/01/02 @ 100 Opt.

5 3/01/04 @ 100 S.F. 369,208
3/01/03 @ 102 Opt.

6 1/15/12 @ 100 S.F. 96,498
1/15/01 @ 102 Opt.

7 7/15/04 @ 100 S.F. 436,356
7/15/02 @ 102 Opt.

8 7/01/18 @ 100 S.F. 155,835
7/01/00 @ 100 Opt.

9 7/01/17 @ 100 S.F. 207,062
7/01/03 @ 101.5 Opt.
----------
$2,804,681
==========

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, 1998, the net unrealized appreciation of all the bonds
was comprised of the following:

Gross unrealized appreciation $ 307,569
Gross unrealized depreciation -
---------------

Net unrealized appreciation $ 307,569
===============

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, 1998
- ------------------------------------------------------------------------------

Investments in Securities,
at Market Value (Cost $2,497,112) $ 2,804,681
--------------

Other Assets
Accrued Interest 56,335
--------------
Total Other Assets 56,335
--------------

Liabilities
Advance from Trustee 55,396
--------------
Total Liabilities 55,396
--------------

Excess of Other Assets over Total Liabilities 939
--------------

Net Assets (2,702 Units of Fractional Undivided
Interest Outstanding, $1,038.35 per Unit) $ 2,805,620
==============

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,
1998 1997 1996

Investment Income
Interest $ 155,870 $ 165,714 $ 172,970
----------- ----------- -----------

Expenses
Trustee's Fees 5,314 5,450 5,298
Evaluator's Fee 952 818 825
Sponsor's Advisory Fee 698 845 645
----------- ----------- -----------

Total Expenses 6,964 7,113 6,768
----------- ----------- -----------

Net Investment Income 148,906 158,601 166,202
----------- ----------- -----------

Realized and Unrealized Gain (Loss)
Realized Gain on
Investments 4,494 10,646 2,125
Unrealized Appreciation
(Depreciation) on Investments 17,604 110,903 (21,878)
----------- ----------- -----------

Net Gain (Loss) on Investments 22,098 121,549 (19,753)
----------- ----------- -----------

Net Increase
in Net Assets
Resulting From Operations $ 171,004 $ 280,150 $ 146,449
=========== =========== ===========

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

<PAGE>

Municipal Securities Trust, Multi-State Series 45,
Virginia Trust
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------

For the Years Ended December 31,
1998 1997 1996

Operations

<S> <C> <C> <C>
Net Investment Income $ 148,906 $ 158,601 $ 166,202
Realized Gain
on Investments 4,494 10,646 2,125
Unrealized Appreciation
(Depreciation) on Investments 17,604 110,903 (21,878)
------------ ------------ ------------

Net Increase in
Net Assets Resulting
From Operations 171,004 280,150 146,449
------------ ------------ ------------

Distributions to Certificateholders
Investment Income 149,839 160,001 166,316
Principal 16,885 24,681 ----

Redemptions
Interest 267 258 35
Principal 89,811 183,707 12,930
------------ ------------ ------------

Total Distributions
and Redemptions 256,802 368,647 179,281
------------ ------------ ------------

Total (Decrease) (85,798) (88,497) (32,832)

Net Assets
Beginning of Year 2,891,418 2,979,915 3,012,747
------------ ------------ ------------

End of Year (Including
Undistributed Net Investment
Income of $12,172, $13,372
and $15,030, Respectively) $ 2,805,620 $ 2,891,418 $ 2,979,915
============ ============ ============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Multi-State Series 45,
Virginia Trust
Financial Highlights
- ------------------------------------------------------------------------------

Selected data for a unit of the Trust outstanding: *
<TABLE>
<CAPTION>

For the years ended December 31,
1998 1997 1996

<S> <C> <C> <C>
Net Asset Value, Beginning of Year** $ 1,036.72 $ 1,002.66 $ 1,009.30
---------- ---------- ----------

Interest Income 56.76 57.52 58.60
Expenses (2.54) (2.47) (2.27)
---------- ---------- ----------
Net Investment Income 54.22 55.05 55.79
---------- ---------- ----------
Net Gain or Loss on Investments(1) 8.23 43.21 (6.59)
---------- ---------- ----------

Total from Investment Operations 62.45 98.26 49.20
---------- ---------- ----------

Less Distributions
to Certificateholders
Income 54.57 55.54 55.83
Principal 6.15 8.57 ----
for Redemptions
Interest .10 .09 .01
---------- ---------- ----------

Total Distributions 60.82 64.20 55.84
---------- ---------- ----------

Net Asset Value, End of Year** $ 1,038.35 $ 1,036.72 $ 1,002.66
========== ========== ==========

</TABLE>

(1) Net gain or loss on investments is a result of changes in outstanding
units since January 1, 1998, 1997 and 1996, respectively, and the dates of
net gain and loss on investments.

- --------
* Unless otherwise stated, based upon average units outstanding during
the year of 2,746 ([2,702 + 2,789]/2) for 1998, 2,881 ([2,789 +
2,972]/2) for 1997 and of 2,979 ([2,972 + 2,985]/2) for 1996.

** Based upon actual units outstanding

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

<PAGE>

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

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, 1998, 1997 and 1996,
87, 183 and 13 units were redeemed, respectively.

The Trust pays an annual fee for trustee services rendered by the
Trustee that ranges from $.92 to $1.37 per $1,000 of outstanding
investment principal. In addition, a minimum fee of $3.00 is paid to
a service bureau for each portfolio valuation. A maximum fee of $.25
per $1,000 of outstanding investment principal is paid to the
Sponsor. For the years ended December 31, 1998, 1997 and 1996, the
"Trustee's Fees" are comprised of Trustee fees of $3,641, $3,652 and
$2,545 and other expenses of $1,673, $1,798 and $2,753, respectively.
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, 1998, 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 (313,940)
Net Unrealized Appreciation 307,569
Undistributed Net Investment Income 12,172
Distributions in Excess of Proceeds From Investments (11,233)
---------------

Total $ 2,805,620
===============

6. Concentration of Credit Risk

<PAGE>

Prospectus Part A Dated April 30, 1999

MUNICIPAL SECURITIES TRUST

MULTI-STATE SERIES 46
(MULTIPLIER PORTFOLIO)
- --------------------------------------------------------------------------------

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

This Prospectus consists of two parts. Part A contains the Summary of
Essential Information including descriptive material relating to each State
Trust as of December 31, 1998 (the "Evaluation Date"), a summary of certain
specific information regarding each State trust and audited financial statements
of each State Trust, including the related portfolio, as of the Evaluation Date.
Part B of this Prospectus contains a general summary of the State Trusts. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should read and retain both parts of this Prospectus for future
reference. The Securities and Exchange Commission ("SEC") maintains a website
that contains reports, proxy and information statements and other information
regarding the Trust which is filed electronically with the SEC. The SEC's
Internet address is http:www.sec.gov. Offering materials for the sale of these
units available through the Internet are not being offered directly or
indirectly to residents of a particular state nor is an offer of these units
through the Internet specifically directed to any person in a state by, or on
behalf of, the issuer.

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

Principal Secondary Market
Number of Amount of Offering Price
Units Bonds per Unit (12/31/98)
--------- --------- -------------------

<S> .<C> <C> .<C>.

California Trust 983 $940,000 $1,037.28
Florida Trust 1,582 $1,450,000 $994.17
Virginia Trust 1,440 $1,395,000 $1,075.49
</TABLE>

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.

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

352541.1

<PAGE>

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

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

PUBLIC OFFERING PRICE. The secondary market Public Offering Price of
each Unit is equal to the aggregate bid price of the Bonds in the Trust divided
by the number of Units outstanding, plus a sales charge of 5.5% for the
California Trust, 5.5% for the Florida Trust and 5.4% for the Virginia Trust of
the Public Offering Price, or 5.820% for the California Trust, 5.820% for the
Florida Trust and 5.708% 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 $1,037.28 plus accrued interest of $.51 under the monthly distribution plan
and $4.57 under the semi-annual

352541.1
A-2

<PAGE>

distribution plan, for a total of $1,037.79 and $1,041.85, respectively. If
Units of the Florida Trust had been purchased on the Evaluation Date, the Public
Offering Price per Unit would have been $994.17 plus accrued interest of $.70
under the monthly distribution plan and $4.99 under the semi-annual distribution
plan, for a total of $994.87 and $999.16, respectively. If Units of the Virginia
Trust had been purchased on the Evaluation Date, the Public Offering Price per
Unit would have been $1,075.49 plus accrued interest of $.78 under the monthly
distribution plan and $5.51 under the semi-annual distribution plan, for a total
of $1,076.27 and $1,081.00, 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 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.

352541.1
A-3

<PAGE>

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 5.5% for the California Trust, 5.5% for the Florida Trust and
5.4% for the Virginia Trust of the Public Offering Price (5.820% for the
California Trust, 5.820% for the Florida Trust and 5.708% for the Virginia Trust
of the net amount invested) plus net accrued interest. If a market is not
maintained, a Certificateholder will be able to redeem his or her Units with the
Trustee at a price also based on the aggregate bid price of the Bonds. (See
"Sponsor Repurchase" and "Public Offering--Offering Price" in Part B of this
Prospectus.)

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

352541.1
A-4

<PAGE>

<TABLE>
<CAPTION>
MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46

CALIFORNIA TRUST

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1998

Date of Deposit: April 6, 1995 Minimum Principal Distribution:
Principal Amount of Bonds ... $940,000 $1.00 per Unit.
Number of Units ............. 983 Weighted Average Life to
Fractional Undivided Inter- Maturity: 19.3 Years.
est in Trust per Unit ..... 1/983 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $956.26 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 ....... $966,854+++ The earlier of December 31,
Divided by 983 units .... $983.58 2044 or the disposition of
Plus Sales Charge of 5.5% the last Bond in the Trust.
of Public Offering Price $53.70 Trustee***: The Chase
Public Offering Price Manhattan Bank.
per Unit ................ $1,037.28+ 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 .................. $983.58+ $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 ............ $53.70++++ (treating separate maturities
Difference between Public as separate issues).
Offering Price per Unit Sponsor: Reich & Tang
and Principal Amount per Distributors, Inc.
Unit Premium/(Discount) ... $81.20 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>

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

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

Gross annual interest income# ......... $51.88 $51.88
Less estimated annual fees and
expenses ............................ 3.16 3.21
------ ------
Estimated net annual interest
income (cash)# ...................... $48.72 $48.67
Estimated interest distribution# ...... 4.06 24.34
Estimated daily interest accrual# ..... .1353 .1352
Estimated current return#++ ........... 4.70% 4.69%
Estimated long term return++ .......... 4.15% 4.14%
Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15
</TABLE>

352541.1
A-5

<PAGE>

<TABLE>
<CAPTION>
MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46

FLORIDA TRUST

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1998

Date of Deposit: April 6, 1995 Minimum Principal Distribution:
Principal Amount of Bonds ... $1,450,000 $1.00 per Unit.
Number of Units ............. 1,582 Weighted Average Life to
Fractional Undivided Inter- Maturity: 22.6 Years.
est in Trust per Unit ..... 1/1582 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $916.56 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........ $1,490,849+++ The earlier of December 31,
Divided by 1,582 units .... $942.38 2044 or the disposition of
Plus Sales Charge of 5.5% the last Bond in the Trust.
of Public Offering Price $51.79 Trustee***: The Chase
Public Offering Price Manhattan Bank.
per Unit ................ $994.17+ Trustee's Annual Fee: Monthly
Redemption and Sponsor's plan $1.47 per $1,000; and
Repurchase Price semi-annual plan $1.01 per
per Unit .................. $942.38+ $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 ............ $51.79++++ (treating separate maturities
Difference between Public as separate issues).
Offering Price per Unit Sponsor: Reich & Tang
and Principal Amount per Distributors, Inc.
Unit Premium/(Discount) ... $77.61 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>

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

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

Gross annual interest income# ......... $53.64 $53.64
Less estimated annual fees and
expenses ............................ 2.62 2.30
------ ------
Estimated net annual interest
income (cash)# ...................... $51.02 $51.34
Estimated interest distribution# ...... 4.25 25.67
Estimated daily interest accrual# ..... .1417 .1426
Estimated current return#++ ........... 5.13% 5.16%
Estimated long term return++ .......... 3.78% 3.82%
Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15
</TABLE>

352541.1
A-6

<PAGE>

<TABLE>
<CAPTION>
MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46

VIRGINIA TRUST

SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1998

Date of Deposit: April 6, 1995 Minimum Principal Distribution:
Principal Amount of Bonds ... $1,395,000 $1.00 per Unit.
Number of Units ............. 1,440 Weighted Average Life
Fractional Undivided Inter- to Maturity: 20.4 Years.
est in Trust per Unit ..... 1/1440 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $968.75 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 ....... $1,468,930+++ The earlier of December 31,
Divided by 1,440 units .... $1,020.09 2044 or the disposition of
Plus Sales Charge of 5.4% the last Bond in the Trust.
of Public Offering Price $55.40 Trustee***: The Chase
Public Offering Price Manhattan Bank.
per Unit ................ $1,075.49+ 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 .................. $1,020.09+ $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 ............ $55.40++++ (treating separate maturities
Difference between Public as separate issues).
Offering Price per Unit Sponsor: Reich & Tang
and Principal Amount per Distributors, Inc.
Unit Premium/(Discount) ... $106.74 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>

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

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

Gross annual interest income# ......... $59.04 $59.04
Less estimated annual fees and
expenses ............................ 2.74 2.28
------ ------
Estimated net annual interest
income (cash)# ...................... $56.30 $56.76
Estimated interest distribution# ...... 4.69 28.38
Estimated daily interest accrual# ..... .1564 .1577
Estimated current return#++ ........... 5.23% 5.28%
Estimated long term return++ .......... 3.47% 3.51%
Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15
</TABLE>

352541.1
A-7

<PAGE>

Footnotes to Summary of Essential Information

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

** Certain amounts distributable as of December 31, 1998, may be
reported in the Summary of Essential Information as if they had been
distributed at year-end.

+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $.51 monthly and $4.57
semi-annually for the California Trust, $.70 monthly and $4.99
semi-annually for the Florida Trust, and $.78 monthly and $5.51
semi-annually for the Virginia Trust.

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

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

<TABLE>
<CAPTION>
FINANCIAL AND STATISTICAL INFORMATION

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

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

December 31, 1996 1,993 $998.30 $55.46 $55.98 -0-
December 31, 1997 1,566 1,025.65 55.69 56.14 $15.25
December 31, 1998 983 988.33 52.03 52.49 26.68

Florida Trust

December 31, 1996 2,000 $938.32 $54.94 $55.40 $57.50
December 31, 1997 1,733 959.89 53.24 53.81 16.24
December 31, 1998 1,582 947.28 51.27 51.80 63.40

Virginia Trust

December 31, 1996 1,635 $1,013.61 $58.73 $59.30 -0-
December 31, 1997 1,518 1,035.06 58.35 58.82 $20.47
December 31, 1998 1,440 1,025.07 56.45 56.94 14.57

- --------

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

352541.1
A-8

<PAGE>

INFORMATION REGARDING THE TRUSTS
AS OF DECEMBER 31, 1998

DESCRIPTION OF PORTFOLIOS

California Trust

Each Unit in the California Trust consists of a 1/983rd undivided
interest in the principal and net income of the Trust in the ratio of one Unit
for each $956.26 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 4 issues of 4 issuers located
in California. None of the Bonds are obligations of state and local housing
authorities; none are hospital revenue bonds; and none were issued in connection
with the financing of nuclear generating facilities. None of the issues are
mortgage subsidy bonds. All of the Bonds are subject to redemption prior to
their stated maturity dates pursuant to sinking fund or optional call
provisions. The Bonds may also be subject to other calls, which may be permitted
or required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or unanticipated
revenues). None of the issues are general obligation bonds. All four of the
issues representing $940,000 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 1, Lease Revenue 1, Solid Waste 1 and Transit 1. For an
explanation of the significance of these factors see "The State
Trusts--Portfolios" in Part B of this Prospectus.

As of December 31, 1998, $870,000 (approximately 92.6% 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 7.4% 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 1/1582nd undivided
interest in the principal and net income of the Trust in the ratio of one Unit
for each $916.56 of principal amount of the Bonds currently held in the Trust.
The Sponsor has not participated as a sole underwriter or manager, co-manager or
member of an underwriting syndicate from which any of the Bonds were acquired.
The portfolio of the Florida Trust consists of 9 issues of 9 issuers located in
Florida. None of the Bonds are obligations of state and local housing
authorities; approximately 23.1% are hospital revenue bonds; and

- --------

* Changes in the Trust Portfolio: From January 1, 1999 to March 19,
1999, $115,000 of the principal amount of the Bond in portfolio no. 7
of the Florida Trust was sold and is no longer contained in the Trust.
121 Units were redeemed from the Trust.

352541.1
A-9

<PAGE>

none were issued in connection with the financing of nuclear generating
facilities. Two issues comprising approximately 33.4%* of the aggregate
principal amount of the Bonds are mortgage subsidy bonds. All of the Bonds are
subject to redemption prior to their stated maturity dates pursuant to sinking
fund or optional call provisions. The Bonds may also be subject to other calls,
which may be permitted or required by events which cannot be predicted (such as
destruction, condemnation, termination of a contract, or receipt of excess or
unanticipated revenues). None of the issues are general obligation bonds. All
nine of the issues representing $1,450,000 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, 1998, $680,000 (approximately 46.9% of the aggregate
principal amount of the Bonds) were original issue discount bonds. Of these
original issue discount bonds, $100,000 (approximately 6.9% of the aggregate
principal amount of the Bonds) were Zero Coupon Bonds. Zero Coupon Bonds do not
provide for the payment of any current interest and provide for payment at
maturity at par value unless sooner sold or redeemed. The market value of Zero
Coupon Bonds is subject to greater fluctuations than coupon bonds in response to
changes in interest rates. None of the aggregate principal amount of the Bonds
in the Trust were purchased at a "market" discount from par value at maturity,
approximately 33.4% were purchased at a premium and approximately 19.7% 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 1/1440th undivided
interest in the principal and net income of the Trust in the ratio of one Unit
for each $968.75 of principal amount of the Bonds currently held in the Trust.
The Sponsor has not participated as a sole underwriter or manager, co-manager or
member of an underwriting syndicate from which any of the Bonds were acquired.
The portfolio of the Virginia Trust consists of 7 issues of 6 issuers located in
Virginia and 1 in Puerto Rico. None of the Bonds are obligations of state and
local housing authorities; approximately 13.3% are hospital revenue bonds; and
none were issued in connection with the financing of nuclear generating
facilities. One of the issues comprising approximately 21.5% of the aggregate
principal amount of the Bonds in the trust is a mortgage subsidy bond. All of
the Bonds are subject to redemption prior to their stated maturity dates
pursuant to sinking fund or optional call provisions. The Bonds may also be
subject to other calls, which may be permitted or required by events which
cannot be predicted (such as destruction, condemnation, termination of a
contract, or receipt of excess or unanticipated revenues). None of the issues
are general obligation bonds. All seven of the issues representing $1,395,000 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

- --------

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

352541.1
A-10

<PAGE>

for 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, 1998, $160,000 (approximately 11.5% of the aggregate
principal amount of the Bonds) were original issue discount bonds. Of these
original issue discount bonds, $60,000 (approximately 4.3% 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 88.5% 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. 1 in the Virginia Trust is subject to the federal
individual alternative minimum tax under the Tax Reform Act of 1986. See "Tax
Status" in Part B of this Prospectus.

352541.1
A-11

<PAGE>

Report of Independent 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, 1998, the
results of their operations, the changes in their net assets and the financial
highlights for the three years then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998 by correspondence with the
Trustee, provide a reasonable basis for the opinion expressed above.

/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, MA
March 19, 1999

<PAGE>

Municipal Securities Trust, Multi-State Series 46,
California Trust
Portfolio
December 31, 1998
- -------------------------------------------------------------------------------

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

<S> <C> <C> <C> <C>
1 $ 270,000 Costa Mesa Pub. Fincg. Auth. Orange Cnty, Ca. A+ 5.250%
Rfndg. Rev. Bonds, 1993 Series A (Pub. Facs. Prjt.) 10/1/2018

2 300,000 Redding JT. Pwrs. Fincg. Auth. Solid Waste and A* 5.500
Corp. Yard Rev. Bonds, 1993 Series A 1/1/2013

3 300,000 San Diego Ca. Muni. Trans. Dstrct. Bd. Auth. 1993 Aa* 5.375
Lease Rev. Bonds (Old Town Light Rail Trans. 6/1/2023
Ext.)

4 70,000 So. Ca. Pub. Pwr. Auth. Multiple Prjt. Rev. Bonds, A 6.000
1989 Series 7/1/2018

------------
$ 940,000 Total Investments (Cost $839,173)
============

</TABLE>

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

1 10/1/05 @ 100 S.F. $ 273,497
10/1/03 @ 102 Ref.

2 1/1/06 @ 100 S.F. 313,812
1/1/04 @ 102 Ref.

3 6/1/05 @ 100 S.F. 308,085
6/1/03 @ 101 Ref.

4 7/1/14 @ 100 S.F. 71,456
7/1/00 @ 100 Ref. ----------

$ 966,850
==========

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

Municipal Securities Trust, Multi-State Series 46,
Florida Trust
Portfolio
December 31, 1998
- -------------------------------------------------------------------------------

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

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

2 185,000 Brevard Cnty. Fla. Hsg. Fin. Auth. S.F.M.R. Aaa* 6.800
(AMT) 3/1/2028

3 130,000 Brevard Cnty. Fla. Solid Waste Sys. Rev. Bonds, A 5.700
Series 1993 4/1/2009

4 150,000 Dade Cnty. Fla. Aviation Rev. Bonds Series 1995 AAA 6.000
B (AMT) (MBIA) 10/1/2024

5 100,000 Dade Cnty. Fla. Ed. Facs. Auth. Rev. Rfndg. Bonds, AA- 6.125
Series 1994 (St. Thomas Univ. Issue) 1/1/2019

6 300,000 Hsg. Fincg. Auth. of Dade Cnty. (Fla.) S.F.M.R. AAA 6.700
Bond Series 1995 4/1/2028

7 135,000 Palm Beach Cnty. Hlth. Facs. Auth. Hosp. Rev. A+ 6.300
Bonds (Good Sam. Hlth. Sys., Inc. Proj.) 10/1/2022
Series 1993 (AMT) (MBIA)

8 200,000 St. Johns Cnty. Ind. Dev. Auth. Hosp. Rev. Bonds A2* 6.000
(Flagler Hosp. Proj.) Series 1992 8/1/2022

9 100,000 City of Sunrise Fla. Pub. Facs. Ref. Rev. Bonds AAA 0.000
Series 1992 B (MBIA) 10/1/2019

------------
$ 1,450,000 Total Investments (Cost $1,372,436)
============

</TABLE>

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

1 6/1/06 @ 100 S.F. $ 165,603
6/1/05 @ 101 Ref.

2 3/1/07 @ 100 S.F. 199,861
3/1/05 @ 102 Ref.

3 No Sinking Fund 138,323
4/1/03 @ 102 Ref.

4 10/1/07 @ 100 S.F. 162,440
10/1/05 @ 102 Ref.

5 1/1/06 @ 100 S.F. 108,196
1/1/04 @ 102 Ref.

6 4/1/07 @ 100 S.F. 321,531
4/1/05 @ 102 Ref.

7 10/1/05 @ 100 S.F. 150,539
10/1/03 @ 102 Ref.

8 8/1/04 @ 100 S.F. 209,036
8/1/02 @ 102 Ref.

9 No Sinking Fund 35,312
None
----------
$1,490,841
==========

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

Municipal Securities Trust, Multi-State Series 46
Virginia Trust
Portfolio
December 31, 1998
- -------------------------------------------------------------------------------

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

<S> <C> <C> <C> <C>
1 $ 300,000 Va. Hsg. Dev. Auth. Cmmnwlth. Mtg. Bonds AA+ 6.450%
1992 Series B-AMT, Subseries B-4 7/1/2021

2 100,000 Chesapeake Bay Va. Bridge & Tunnel Commsn. AAA 5.750
Dist. Rev. Rfndg. Bonds 1991 (MBIA) 7/1/2025

3 250,000 Indus. Dev. Auth. of Danville, VA Solid Waste A- 6.500
Disposal Rev. Bonds 1995 Series A 3/1/2019
(Int'l. Paper Co. Prjts.)

4 185,000 Indus. Dev. Auth. of the City of Hampton, VA Aa2* 6.500
Hosp. Rev. and Ref. Bonds (Sentara Hampton 11/1/2012
Gen. Hosp.) Series 1994A

5 300,000 Indus. Dev. Auth. of the Cnty of Isle of Wright, A1* 6.550
VA Solid Waste Disp. Facs. Rev. Bonds (Union Camp 4/1/2024
Corp. Prjt.) Series 1994

6 200,000 Riverside Regl. Jail Auth. Jail Fac. Rev. Bonds AAA 6.000
Series 1995 7/1/2025

7 60,000 Series O 1989 P.R. Elec. Pwr. Auth. Pwr. BBB+ 0.000
Rev. Bonds 7/1/2017

------------
$ 1,395,000 Total Investments (Cost $1,362,598)
============
</TABLE>

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

1 1/1/04 @ 100 S.F. $ 314,157
1/1/02 @ 102 Ref.

2 7/1/23 @ 100 S.F. 105,121
7/1/01 @ 100 Ref.

3 No Sinking Fund 271,548
3/1/05 @ 102 Ref.

4 11/1/06 @ 100 S.F. 207,348
11/1/04 @ 102 Ref.

5 No Sinking Fund 326,493
4/1/04 @ 102 Ref.

6 7/1/07 @ 100 S.F. 220,278
7/1/05 @ 102 Ref.

7 No Sinking Fund 24,151
None
----------
$1,469,096
==========

See accompanying footnotes to portfolio and notes to financial statements.

<PAGE>

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

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

3. At December 31, 1998, the net unrealized appreciation of all the bonds
was comprised of the following:

California Florida Virginia
Trust Trust Trust

Gross unrealized appreciation $ 127,677 $ 118,405 $ 106,498
Gross unrealized depreciation - - -
------------- ------------- --------------

Net unrealized appreciation $ 127,677 $ 118,405 $ 106,498
============ ============ =============

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, 1998
- ------------------------------------------------------------------------------

California Florida Virginia
Trust Trust Trust

Investments in Securities
at Market Value (Cost,
$839,173, $1,372,436 and
$1,362,598, Respectively) $ 966,850 $ 1,490,841 $ 1,469,096
---------- ------------ ------------

Other Assets
Accrued Interest 15,237 24,271 30,883
---------- ------------ ------------
Total Other Assets 15,237 24,271 30,883
---------- ------------ ------------

Liabilities
Advance from Trustee 10,562 16,522 23,874
---------- ------------ ------------
Total Liabilities 10,562 16,522 23,874
---------- ------------ ------------

Excess of Other Assets over
Total Liabilities 4,675 7,749 7,009
---------- ------------ ------------

Net Assets (983, 1,582 and 1,440
Units of Fractional Undivided
Interest Outstanding, $988.33,
$947.28 and $1,025.07
per Unit, Respectively) $ 971,525 $ 1,498,590 $ 1,476,105
========== ============ ============

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

<PAGE>

Municipal Securities Trust, Multi-State Series 46,
California Trust
Statement of Operations
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>

For the Years Ended December 31,
1998 1997 1996

<S> <C> <C> <C>
Investment Income
Interest $ 65,042 $ 106,599 $ 116,363
------------ ----------- -----------

Expenses
Trustee's Fees 2,626 3,476 3,566
Evaluator's Fee 1,117 772 719
Sponsor's Advisory Fee 389 542 458
------------ ----------- -----------

Total Expenses 4,132 4,790 4,743
------------ ----------- -----------

Net Investment Income 60,910 101,809 111,620
------------ ----------- -----------

Realized and Unrealized Gain (Loss)
Realized Gain on
Investments 58,403 18,279 ----

Unrealized Appreciation
(Depreciation) on Investments (27,410) 52,585 (18,279)
------------ ----------- -----------

Net Gain (Loss) on Investments 30,993 70,864 (18,279)
------------ ----------- -----------

Net Increase in Net Assets
Resulting From Operations $ 91,903 $ 172,673 $ 93,341
============ =========== ============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Multi-State Series 46,
Florida Trust
Statement of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

For the Years Ended December 31,
1998 1997 1996

Investment Income
<S> <C> <C> <C>
Interest $ 93,247 $ 104,985 $ 115,539
------------ ----------- -----------

Expenses
Trustee's Fees 3,355 3,542 3,414
Evaluator's Fee 902 772 719
Sponsor's Advisory Fee 405 513 458
------------ ----------- -----------

Total Expenses 4,662 4,827 4,591
------------ ----------- -----------

Net Investment Income 88,585 100,158 110,948
------------ ----------- -----------

Realized and Unrealized Gain (Loss)
Realized Gain (Loss) on
Investments 18,678 13,477 (2,819)

Unrealized Appreciation
(Depreciation) on Investments 6,054 51,716 (23,319)
------------ ----------- -----------

Net Gain (Loss) on Investments 24,732 65,193 (26,138)
------------ ----------- -----------

Net Increase in Net Assets
Resulting From Operations $ 113,317 $ 165,351 $ 84,810
=========== =========== ============

</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 Years Ended December 31,
1998 1997 1996

Investment Income
Interest $ 87,698 $ 97,675 $ 101,341
---------- ----------- ---------

Expenses
Trustee's Fees 2,877 3,109 3,259
Evaluator's Fee 902 772 784
Sponsor's Advisory Fee 371 360 458
---------- ----------- ---------

Total Expenses 4,150 4,241 4,501
---------- ----------- ---------

Net Investment Income 83,548 93,434 96,840
---------- ----------- ---------

Realized and Unrealized Gain (Loss)
Realized Gain on
Investments 9,154 6,292 ----

Unrealized Appreciation
(Depreciation) on Investments (2,975) 59,560 (16,288)
---------- ----------- ---------

Net Gain (Loss) on Investments 6,179 65,852 (16,288)
---------- ----------- ---------

Net Increase in Net Assets
Resulting From Operations $ 89,727 $ 159,286 $ 80,552
========== =========== ==========

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 Years Ended December 31,
1998 1997 1996

Operations
<S> <C> <C> <C>
Net Investment Income $ 60,910 $ 101,809 $ 111,620
Realized Gain
on Investments 58,403 18,279 ----
Unrealized Appreciation
(Depreciation) on Investments (27,410) 52,585 (18,279)
------------ ------------ ------------

Net Increase in Net Assets
Resulting From Operations 91,903 172,673 93,341
------------ ------------ ------------

Distributions to Certificateholders
Investment Income 62,396 98,573 111,235
Principal 73,564 26,107 ---

Redemptions
Interest 2,159 5,602 29
Principal 588,427 425,836 6,943
------------ ------------ ------------

Total Distributions
and Redemptions 726,546 556,118 118,207
------------ ------------ ------------

Total (Decrease) (634,643) (383,445) (24,866)

Net Assets
Beginning of Year 1,606,168 1,989,613 2,014,479
------------ ------------ ------------

End of Year (Including
Undistributed Net Investment
Income of $4,669, $8,314
and $10,680, Respectively) $ 971,525 $ 1,606,168 $ 1,989,613
============= ============ ============

</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 Years Ended December 31,
1998 1997 1996

Operations
<S> <C> <C> <C>
Net Investment Income $ 88,585 $ 100,158 $ 110,948
Realized Gain (Loss)
on Investments 18,678 13,477 (2,819)
Unrealized Appreciation
(Depreciation) on Investments 6,054 51,716 (23,319)
------------ ----------- ------------

Net Increase in Net Assets
Resulting From Operations 113,317 165,351 84,810
------------ ----------- ------------

Distributions to Certificateholders
Investment Income 88,197 100,265 109,982
Principal 43,810 28,876 115,000

Redemptions
Interest 262 175 ----
Principal 145,947 249,191 ----
------------ ----------- ------------

Total Distributions
and Redemptions 278,216 378,507 224,982
------------ ----------- ------------

Total (Decrease) (164,899) (213,156) (140,172)

Net Assets
Beginning of Year 1,663,489 1,876,645 2,016,817
------------ ----------- ------------

End of Year (Including
Undistributed Net Investment
Income of $12,111, $11,985
and $12,267, Respectively) $ 1,498,590 $ 1,663,489 $ 1,876,645
============ ============ ============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Multi-State Series 46,
Virginia Trust
Statement of Changes in Net Assets
- -----------------------------------------------------------------------------

For the Years Ended December 31,
1998 1997 1996

<S> <C> <C> <C>
Operations
Net Investment Income $ 83,548 $ 93,434 $ 96,840
Realized Gain
on Investments 9,154 6,292 ----
Unrealized Appreciation
(Depreciation) on Investments (2,975) 59,560 (16,288)
------------ ------------- -------------

Net Increase in Net Assets
Resulting From Operations 89,727 159,286 80,552
------------ ------------- -------------

Distributions to Certificateholders
Investment Income 83,177 92,657 96,322
Principal 21,462 32,017 ----

Redemptions
Interest 191 871 ----
Principal 80,019 119,765 ----
------------ ------------- -------------

Total Distributions
and Redemptions 184,849 245,310 96,322
------------ ------------- -------------

Total (Decrease) (95,122) (86,024) (15,770)

Net Assets
Beginning of Year 1,571,227 1,657,251 1,673,021
------------ ------------- -------------

End of Year (Including
Undistributed Net Investment
Income of $10,210, $10,030
and $10,124, Respectively) $ 1,476,105 $ 1,571,227 $ 1,657,251
============ ============ ============

</TABLE>

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

<PAGE>

Municipal Securities Trust, Multi-State Series 46

Financial Highlights
- ------------------------------------------------------------------------------

Selected data for a unit of the Trust outstanding: *

For the years ended December 31,
1998 1997 1996

California Trust

Net Asset Value, Beginning of Year** $ 1,025.65 $ 998.30 $ 1,077.24
---------- ---------- ----------

Interest Income 51.01 59.89 58.27
Expenses (3.24) (2.69) (2.38)
---------- ---------- ----------
Net Investment Income 47.77 57.20 55.89
---------- ---------- ----------
Net Gain or Loss on Investments(1) 23.24 43.35 (9.12)
---------- ---------- ----------

Total from Investment Operations 71.01 100.55 46.77
---------- ---------- ----------

Less Distributions
to Certificateholders
Income 48.94 55.38 55.70
Principal 57.70 14.67 ----
for Redemptions
Interest 1.69 3.15 .01
---------- ---------- ----------

Total Distributions 108.33 73.20 55.71
---------- ---------- ----------

Net Asset Value, End of Year** $ 988.33 $ 1,025.65 $ 998.30
========== ========== ==========

(1) Net gain or loss on investments is a result of changes in outstanding
units since January 1, 1998, 1997 and 1996, respectively, and the dates of
net gain and loss on investments.

- -----
* Unless otherwise stated, based upon average units outstanding during
the year of 1,275 ([983 + 1,566]/2) for 1998, 1,780 ([1,566 +
1,993]/2) for 1997 and of 1,997 ([1,993 + 2,000]/2) for 1996.

** Based upon actual units outstanding

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

<PAGE>

Municipal Securities Trust, Multi-State Series 46

Financial Highlights
- -------------------------------------------------------------------------------

Selected data for a unit of the Trust outstanding:*

For the years ended December 31,
1998 1997 1996

Florida Trust

Net Asset Value, Beginning of Year** $ 959.89 $ 938.32 $ 1,008.41
---------- ---------- ----------

Interest Income 56.24 56.23 57.77
Expenses (2.81) (2.59) (2.30)
---------- ---------- ----------
Net Investment Income 53.43 53.64 55.47
---------- ---------- ----------
Net Gain or Loss on Investments(1) 13.73 37.19 (13.07)
---------- ---------- ----------

Total from Investment Operations 67.16 90.83 42.40
---------- ---------- ----------

Less Distributions
to Certificateholders
Income 53.19 53.70 54.99
Principal 26.42 15.47 57.50
for Redemptions
Interest .16 .09 ----
---------- ---------- ----------

Total Distributions 79.77 69.26 112.49
---------- ---------- ----------

Net Asset Value, End of Year** $ 947.28 $ 959.89 $ 938.32
========== ========== ==========

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

- -----
* Unless otherwise stated, based upon average units outstanding during
the year of 1,658 ([1,582 + 1,733]/2) for 1998, 1,867 ([1,733 +
2,000]/2) for 1997 and of 2,000 ([2,000 + 2,000]/2) for 1996.

** Based upon actual units outstanding

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

<PAGE>

Municipal Securities Trust, Multi-State Series 46

Financial Highlights
- ------------------------------------------------------------------------------

Selected data for a unit of the Trust outstanding: *

For the years ended December 31,
1998 1997 1996

Virginia Trust

Net Asset Value, Beginning of Year** $ 1,035.06 $ 1,013.61 $ 1,023.25
---------- ---------- ----------
Interest Income 59.30 61.94 61.98
Expenses (2.81) (2.69) (2.75)
Net Investment Income 56.49 59.25 59.23
Net Gain or Loss on Investments(1) 4.40 41.81 (9.96)

Total from Investment Operations 60.89 101.06 49.27
---------- ---------- ----------

Less Distributions
to Certificateholders
Income 56.24 58.76 58.91
Principal 14.51 20.30 ----
for Redemptions
Interest .13 .55 ----

Total Distributions 70.88 79.61 58.91
---------- ---------- ----------

Net Asset Value, End of Year** $ 1,025.07 $ 1,035.06 $ 1013.61
========== ========== ==========

(1) Net gain or loss on investments is a result of changes in outstanding
units since January 1, 1998, 1997 and 1996, respectively, and the dates of
net gain and loss on investments.

- -----

* Unless otherwise stated, based upon average units outstanding during
the year of 1,479 ([1,440 + 1,518]/2) for 1998, 1,577 ([1,518 +
1,635]/2) for 1997 and of 1,635 ([1,635 + 1,635]/2) for 1996.

** Based upon actual units outstanding

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 years ended December 31, 1998, 1997 and 1996,
583, 427 and 7 units were redeemed in the California Trust,
respectively. For the years ended December 31, 1998 and 1997, 151 and
267 units were redeemed in the Florida Trust, respectively. For the
years ended December 31, 1998 and 1997, 78 and 117 units were redeemed
in the Virginia Trust, respectively. No units were redeemed in the
Florida Trust or in the Virginia Trust for the year ended December
31, 1996.

<PAGE>

Municipal Securities Trust, Multi-State Series 46

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

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

<TABLE>
<CAPTION>
California Florida Virginia
Trust Trust Trust

<S> <C> <C> <C>
Original cost to Certificateholders $ 1,980,414 $ 2,020,570 $ 2,045,934
Less Initial Gross Underwriting
Commission 97,040 99,008 100,250
------------ ------------ ------------
1,883,374 1,921,562 1,945,684
Accumulated Cost of Securities Sold,
Matured or Called (1,044,201) (553,496) (586,122)
Net Unrealized Appreciation 127,677 118,405 106,498
Undistributed Net Investment Income 4,669 12,111 10,210
Undistributed Proceeds From
Investments 6 8 (165)
------------ ------------ ------------

Total $ 971,525 $ 1,498,590 $ 1,476,105
============= ============ ============

</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 $4,370 and $3,036 for the Florida Trust
and Virginia Trust, respectively.

6. Concentration of Credit Risk

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

<PAGE>

This module replaces an
earlier one

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

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

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES
(Multiplier Portfolio)

Prospectus Part B

Dated: April 30, 1999

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

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

- --------
* 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.

82600.10

<PAGE>

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

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

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

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

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

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

82600.10
-2-

<PAGE>

to other tax-exempt securities of comparable quality and maturity, (iii) income
to the Certificateholders of the State Trusts, (iv) the diversification of each
State Trust's portfolio, as to purpose of issue and location of issuer, taking
into account the availability in the market of issues which meet such State
Trust's quality, rating, yield and price criteria and (v) the existence of
"market" discount and original issue discount. Subsequent to the Evaluation
Date, a Bond may cease to be rated or its rating may be reduced below that
specified above. Neither event requires an elimination of such Bond from a State
Trust but may be considered in the Sponsor's determination to direct the Trustee
to dispose of the Bond. See "Portfolio Supervision." For an interpretation of
the bond ratings, see "Description of Bond Ratings."

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

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

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

82600.10
-3-

<PAGE>

areas may affect the ability of such issuers to make payment of principal and
interest on such bonds. See "Description of Portfolio" in Part A for the amount
of hospital revenue bonds contained therein.

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

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

82600.10
-4-

<PAGE>

Mortgage Revenue Bonds. Certain Bonds may be "mortgage revenue bonds."
Under the Internal Revenue Code of 1986 (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: (i)
Bonds for a publicly owned facility which a private entity may have a right to
use or manage to some degree, such as an airport, seaport facility or water
system and (ii) facilities deemed owned or beneficially owned by a private
entity but which were financed with tax-exempt bonds of a public issuer, such as
a manufacturing facility or a pollution control facility. In the case of the
first type, bonds are generally payable from a designated source of revenues
derived from the facility and may further receive the benefit of the legal or
moral obligation of one or more political subdivisions or taxing jurisdictions.
In most cases of project financing of the first type, receipts or revenues of
the issuer are derived from the project or the operator or from the unexpended
proceeds of the bonds. Such revenues include user fees, service charges, rental
and lease payments, and mortgage and other loan payments.

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

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

Litigation. Litigation challenging the validity under state
constitutions of present systems of financing public education has been

82600.10
-5-

<PAGE>

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 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

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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. such bonds
will be affected by general economic conditions in Puerto Rico. The economy of
Puerto Rico is fully integrated with that of the mainland United States. During
fiscal year 1998, approximately 90% of Puerto Rico's exports were to the United
States mainland, which was also the source of 61% of Puerto Rico's imports. In
fiscal 1998, Puerto Rico experienced a $8.5 billion positive adjusted
merchandise trade balance. The dominant section of the Puerto Rico economy are
manufacturing and services. Gross product in fiscal 1993 was $25.1 billion
($24.5 billion in 1992 prices) and gross product in fiscal 1997 was $32.1
billion ($27.7 billion in 1992 prices). This represents an increase in gross
product of 27.7% from fiscal 1993 to 1997 (13.0% in 1992 prices). According to
the Labor Department's Household Employment survey, during fiscal 1998, total
employment increased 0.8% over fiscal 1997. The preliminary figures of gross
product for fiscal 1998, released in November 1998, was $34.7 billion ($28.5
billion in 1992 prices). This represents an increase of 8.1% (3.1% in 1992
prices) over fiscal 1997. This preliminary growth rate is 0.1% above the
original base line forecast for fiscal 1998. The Planning Board's gross product
forecast for fiscal 1999, made in February 1998, projected an increase of 2.7%
over fiscal 1998. according to the Labor Department's Household Employment
Survey, during the first five months of fiscal 1999, compared to 1,138,400 over
the same period in fiscal 1998. The seasonally adjusted unemployment rate for
November 1998 was 13.3%.

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

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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. Under the provisions of the Internal Revenue Code in
effect on the date of this Prospectus, any income attributable to market
discount will be taxable but will not be realized until maturity, redemption or
sale of the Bonds or Units. However, the Administration's 1999 Budget proposals
would require accrual basis taxpayers to accrue market discount income with
respect to obligations acquired after the date that the proposal is enacted.
Gain on the disposition of a Bond purchased at a market discount generally will
be treated as ordinary income, rather than capital gain, to the extent of
accrued market discount. Discount bonds with a longer term to maturity tend to
have a higher current yield and a lower current market value than otherwise
comparable bonds with a shorter term to maturity. If interest rates rise, the
value of the bonds will decrease; and if interest rates decline, the value of
the bonds will increase. The discount does not necessarily indicate a lack of
market confidence in the issuer.

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

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other service providers. However, there can be no assurance that the Year 2000
Problem will be properly or timely resolved as to avoid any adverse impact to
the Trust. At this time, it is generally believed that municipal issuers may be
more vulnerable to Year 2000 issues or problems than will other issuers.

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

Despite these budget actions, the effects of the recession led to
large, unanticipated budget deficits. By the 1993-94 Fiscal Year, the
accumulated deficit was so large that it was impractical to budget to retire it
in one year, so a two-year program was implemented, using the issuance of
revenue anticipation warrants to carry a portion of the deficit over the end of
the fiscal year. When the economy failed to recover sufficiently in 1993- 94, a
second two-year plan was implemented in 1994-95, again using cross- fiscal year
revenue anticipation warrants to partly finance the deficit into the 1995-96
fiscal year.

Another consequence of the accumulated budget deficits, together with
other factors such as disbursement of funds to local school districts "borrowed"
from future fiscal years and hence not shown in the annual budget, was to
significantly reduce the State's cash resources available to pay its ongoing
obligations. When the 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

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constitutionally-mandated payments, such as debt service on bonds and warrants.
Between July 1 and September 4, 1992, when the budget was adopted, the State
Controller issued a total of approximately $3.8 billion of registered warrants.

For several fiscal years during the recession, the State was forced to
rely on external debt markets to meet its cash needs, as a succession of notes
and revenue anticipation warrants, often needed to pay previously maturing notes
or warrants, were issued in the period from June 1992 to July 1994. 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 through 1997-98 Fiscal Years

The State's financial condition improved markedly during the 1995- 96,
1996-97 and 1997-98 fiscal years, with a combination of better than expected
revenues, slowdown in growth of social welfare programs, and continued spending
restraint based on the actions taken in earlier years. The State's cash position
also improved, and no external deficit borrowing has occurred over the end of
these three fiscal years.

The economy grew strongly during these fiscal years, and as a result,
the General Fund took in substantially greater tax revenues (around $2.2 billion
in 1995-96, $1.6 billion in 1996-97 and $2.4 billion in 1997-98) than were
initially planned when the budgets were enacted. These additional funds were
largely directed to school spending as mandated by Proposition 98, and to make
up shortfalls from reduced federal health and welfare aid in 1995- 96 and
1996-97. The accumulated budget deficit from the recession years was finally
eliminated.

1998-99 Fiscal Year Budget

When the Governor released his proposed 1998-99 Fiscal Year Budget on
January 9, 1998, he projected General Fund revenues for the 1998-99 Fiscal Year
of $55.4 billion, and proposed expenditures in the same amount. By the time the
Governor released the May Revision to the 1998-99 Budget ("May Revision") on May
14, 1998, the Administration projected that revenues for the 1997-98 and 1998-99
Fiscal Years combined would be more than $4.2 billion higher than was projected
in January. The Governor proposed that most of this increased revenue be
dedicated to fund a 75 percent cut in the Vehicle License Fee ("VLF").

The Legislature passed the 1998-99 Budget Bill on August 11, 1998, and
the Governor signed it on August 21, 1998. Some 33 companion bills necessary to
implement the budget were also signed. In signing the Budget Bill, the Governor
used his line-item veto power to reduce expenditures by $1.360 billion from the
General Fund, and $160 million from special funds. Of this total, the Governor
indicated that about $250 million of vetoed funds were "set aside" to fund
programs for education. Vetoed items included education funds, salary increases
and many individual resources and capital projects.

The 1998-99 Budget Act was based on projected General Fund revenues and
transfers of $57.0 billion (after giving effect to various tax

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reductions enacted in 1997 and 1998), a 4.2 percent increase from the then
revised 1997-98 figures. Special Fund revenues were estimated at $14.3 billion.
The revenue projections were based on the May Revision. Economic problems
overseas since that time may affect the May Revision projections. See "Economic
Assumptions" below.

After giving effect to the Governor's vetoes, the Budget Act provided
authority for expenditures of $57.3 billion from the General Fund (a 7.3 percent
increase from 1997-98), $14.7 billion from Special Funds, and $3.4 billion from
bond funds. The Budget Act projected a balance in the SFEU at June 30, 1999 (but
without including the "set aside" veto amount) of $1.255 billion, a little more
than 2 percent of General Fund revenues. The Budget Act assumed the State will
carry out its normal intra-year cash flow borrowing in the amount of $1.7
billion of revenue anticipation notes, which were issued on October 1, 1998.

Revenues and expenditures for 1998-99 as updated in the 1999-00
Governor's Budget are $56.3 billion and $58.3 billion, respectively. As a
result, the projected balance in the SFEU at June 30, 1999 has been reduced to
$617 million.

The most significant feature of the 1998-99 budget was agreement on a
total of $1.4 billion tax cuts. The central element is a bill which provides for
a phased-in reduction of the VLF. Since the VLF is currently transferred to
cities and counties, the bill provides for the General Fund to replace the lost
revenues. Started on January 1, 1999, the VLF has been reduced by 25 percent, at
a cost to the General Fund of approximately $500 million in the 1998-99 Fiscal
Year and about $1 billion annual thereafter.

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

Other significant elements of the revised 1998-99 Budget are as
follows:

1. Proposition 98 funding for K-12 schools is increased by $2.2 billion
in General Fund moneys over the latest revised 1997-98 levels, over $1 billion
higher than the minimum Proposition 98 guarantee. Of the 1998-99 funds, major
new programs include money for instructional and library materials, deferred
maintenance, support for increasing the school year to 180 days and reduction of
class sizes in Grade 9. Overall, per-pupil spending for K-12 schools under
Proposition 98 is increased to $5,752, which is $478 over the 1997-98 level. The
Budget also includes $250 million as repayment of prior years' loans to schools,
as part of the settlement of the CTA v. Gould lawsuit.

2. Funding for higher education increased substantially above the
actual 1997-98 level. General Fund support was increased by $339 million (15.6
percent) for the University of California and $271 million (14.5 percent) for
the California State University system. In addition, Community Colleges
increased by $183 million (9.0 percent).

3. The Budget includes increased funding for health, welfare and social
services programs. A 4.9 percent grant increase was included in

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the basic welfare grants, the first increase in those grants in 9 years. Future
increases will depend on sufficient General Fund revenue to trigger the phased
cuts in VLF described above.

4. Funding for the judiciary and criminal justice programs increased by
about 15 percent over 1997-98, primarily to reflect increased state support for
local trial courts and rising prison population.

5. Various other highlights of the revised Budget included new funding
for resources projects, dedication of $240 million of General Fund moneys for
capital outlay projects, funding of a state employee salary increase, funding of
2,000 new Department of Transportation positions to accelerate transportation
construction projects, and funding of the Infrastructure and Economic
Development Bank ($50 million).

6. The State of California received approximately $167 million of
federal reimbursements to offset costs related to the incarceration of
undocumented alien felons for federal fiscal year 1997. The state anticipates
receiving approximately $173 million in federal reimbursements for federal
fiscal year 1998.

The revised 1998-99 budget as reported in the 1999-00 Governor's
Budget, also reflects the latest estimated costs or savings as provided in
various pieces of legislation passed and signed after the 1998 Budget Act. Major
budget items include costs for the All-American Canal, state's share of purchase
of Headwaters Forest, and additional funds for state prisons and juvenile
facilities. The revised budget reflects a $433 million reduction in the State's
obligation to contribute to STRS in 1998-99.

Proposed 1999-00 Budget

On January 8, 1999, Governor Davis released his proposed budget for
Fiscal Year 1999-2000 (the "Governor's Budget"). The Governor's Budget generally
reported that General Fund revenues for FY 1998-99 and FY 1999-00 would be lower
than earlier projections (primarily due to the overseas economic downturn),
while some caseloads would be higher than earlier projections. The Governor's
Budget was designed to meet ongoing caseloads and basic inflation adjustments,
and included certain new programs.

The Governor's Budget projects General Fund revenues and transfers in
1999-00 of $60.3 billion. This includes anticipated initial payments from the
tobacco litigation settlement of about $560 million, and receipt of one-time
revenue from sale of assets. The Governor also assumes receipt of about $400
million of federal aid for certain health and welfare programs and reimbursement
for costs for incarceration of undocumented felons, above the amount presently
received by California from the federal government. The Governor's Budget notes
that more accurate revenue estimates will be available in May and June before
adoption of the budget. Among other things, the amount of realized capital gains
for 1998 is still unknown, given the large fluctuations in the stock market last
year. The Governor has not proposed any tax cuts or increases.

The Governor's Budget proposes General Fund expenditures of $60.5
billion. The Governor's Budget gives highest priority to education, with
Proposition 98 funding increasing by almost 5 percent. The Governor proposed
certain new education initiatives focused on improving reading skills, teacher
quality and school accountability. The Governor proposed modest increase in

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funding for higher education, and an 8 percent increase in SSP payments (a
State-funded welfare program), while assuming decreases in Medi-Cal and CalWORKs
grant costs due to lowering caseloads. The Governor also proposes to reduce
expenditures by deferring certain previously budgeted expenditures totaling
about $170 million.

Based on the proposed revenues and expenditures, the Governor's Budget
projects the June 30, 2000 balance in the SFEU would drop to about $415 million.

On February 16, 1999, the Legislative Analyst released a report on the
1999-00 Governor's Budget (the "LAO Report"). The LAO Report was based in part
on actual revenues received in December, 1998 and January 1999, which had not
been available when the Governor's Budget was prepared. These revenues were
higher than had been predicted in the Governor's Budget, apparently reflecting
stronger than expected economic activity in the nation and the State. The LAO
report projected that General Fund revenues in 1998-99 could be as much as $750
million higher than predicted in the Governor's Budget, and 1999-00 revenues
could be $550 million above the Governor's Budget.

The Governor's Budget includes a proposal to implement changes in law
to make "midcourse corrections" in the State's budget if ongoing revenues fall
short of projections during a fiscal year or expenditures increase
significantly. The proposals include two components: restoring authority for the
Director of Finance to reduce expenditures in certain circumstances, and an
automatic "trigger" mechanism which would produce spending cuts if certain
conditions were met. These proposals will require legislative action.

Future Budgets

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

THE FOREGOING DISCUSSION IS BASED ON OFFICIAL STATEMENTS AND OTHER
INFORMATION PROVIDED BY THE STATE OF CALIFORNIA. THE STATE HAS INDICATED THAT
ITS DISCUSSION OF BUDGETARY INFORMATION IS BASED ON ESTIMATES AND PROJECTIONS OF
REVENUES AND EXPENDITURES FOR THE CURRENT FISCAL YEAR AND MUST NOT BE CONSTRUED
AS STATEMENTS OF FACT; THE ESTIMATES AND PROJECTIONS ARE BASED UPON VARIOUS
ASSUMPTIONS WHICH MAY BE AFFECTED BY NUMEROUS FACTORS, INCLUDING FUTURE ECONOMIC
CONDITIONS IN THE STATE AND THE NATION, AND THERE CAN BE NO ASSURANCE THAT THE
ESTIMATES WILL BE ACHIEVED.

Voter Initiative

"Proposition 218" or the "Right to Vote on Taxes Act" (the
"Proposition") was approved by the California electorate at the November, 1996
general election. Officially titled "Voter Approval For Local Government Taxes,
Limitation on Fees, Assessments and Charges Initiative Constitutional
Amendment," the Act was approved by a majority of the voters voting at the
election and adds Articles XIIIC and XIIID to the California Constitution.

The Proposition, among other things, requires local governments to
follow certain procedures in imposing or increasing any fee or charge as
defined. "Fee" or "charge" is defined to mean "any levy other than an ad valorem
tax, a special tax or an assessment imposed by an agency upon a parcel

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or upon a person as an incident of property ownership, including user fees or
charges for a property related service."

The procedure required by the Proposition to impose or increase any fee
or charge include a public hearing upon the proposed fee or charge and the
opportunity to present written protests by the owners of the parcels subject to
the proposed fee or charge. If written protests against the proposed fee or
charge are presented by a majority of owners of the identified parcels, the
local government shall not impose the fee or charge.

The Proposition further provides as follows:

"Except for fees or charges for sewer, water, and refuse collection
services, no property related fee or charge shall be imposed or increased unless
and until such fee or charge is submitted and approved by a majority vote of the
property owners of the property subject to the fee or charge or, at the option
of the agency, by a two-thirds vote of the electorate residing in the affected
area."

Additionally, the Proposition provides, with respect to standby
charges, as follows:

"No fee or charge may be imposed for a service unless that service is
actually used by, or immediately available to, the owner of the property in
question. Fees or charges based on potential or future use of a service are not
permitted. Standby charges, whether characterized as charges or assessments,
shall be classified as assessments and shall not be imposed without compliance
with Section 4 of this Article."

The Proposition provides that beginning July 1, 1997, all fees or
charges shall comply with the Proposition's requirements.

The Proposition is silent with respect to future increases of pre-
existing fees or charges which are pledged to payment of indebtedness or
obligations previously incurred by the local government. Presumably, the
Proposition cannot preempt outstanding contractual obligations protected by the
contract impairment clause of the federal constitution. However, with respect to
any given situation or case, litigation may be the method which will settle any
question concerning the authority of a local government to increase fees or
charges outside of the strictures of the Proposition in order to meet
contractual obligations.

Proposition 218 also contains a new provision subjecting "matters of
reducing or repealing any local tax, assessments and charges" to the initiative
power. This means that no city or local agency revenue source is safe from
reduction or repeal pursuant to the initiative process.

Litigation concerning various elements of the Proposition may
ultimately ensue and clarifying legislation may be enacted.

Future Initiatives

Articles XIIIA, XIIIB, XIIIC and XIIID were each adopted as measures
that qualified for the ballot pursuant to the State's initiative process. From
time to time, other initiative measures could be adopted which could affect
revenues of the State or public agencies within the State.

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State Appropriations Limit

The State is subject to an annual appropriations limit imposed by
Article XIIIB of the State Constitution (the "Appropriations Limit"), and is
prohibited from spending "appropriations subject to limitation" in excess of the
Appropriations Limit. Article XIIIB, originally adopted in 1979, was modified
substantially by Propositions 98 and 111 in 1988 and 1990, respectively.
"Appropriations subject to limitation" are authorizations to spend "proceeds of
taxes," which consist of tax revenues and certain other funds, including
proceeds from regulatory licenses, user charges or the other fees to the extent
that such proceeds exceed the reasonable cost of providing the regulation,
product or service. The Appropriations Limit is based on the limit for the prior
year, adjusted annually for certain changes, and is tested over consecutive
two-year periods. Any excess of the aggregate proceeds of taxes received over
such two-year period above the combined Appropriation Limits for those two years
is divided equally between transfers to K-12 districts and refunds to taxpayers.

Exempted from the Appropriations Limit are debt Service costs of
certain bonds, court or federally mandated costs, and, pursuant to Proposition
111, qualified capital outlay projects and appropriations or revenues derived
from any increase in gasoline taxes and motor vehicle weight fees above January
1, 1990 levels. Some recent initiatives were structured to create new tax
revenues dedicated to specific uses and expressly exempted from the Article
XIIIB limits. The Appropriations Limit may also be exceeded in cases of
emergency arising from civil disturbance or natural disaster declared by the
Governor and approved by two-thirds of the Legislature. If not so declared and
approved, the Appropriations Limit for the next three years must be reduced by
the amount of the excess.

Article XIIIB, as amended by Proposition 98 on November 8, 1988, also
establishes a minimum level of state funding for school and community college
districts and requires that excess revenues up to a certain limit be transferred
to schools and community college districts instead of returned to the taxpayers.
Determination of the minimum level of funding is based on several tests set
forth in Proposition 98. During fiscal year 1991-1992 revenues were smaller than
expected, thus reducing the payment owed to schools in 1991-1992 under alternate
"test" provisions. In response to the changing revenue situation, and to fully
fund the Proposition 98 guarantee in the 1991- 1992 and 1992-1993 fiscal years
without exceeding it, the Legislature enacted legislation to reduce 1991-92
appropriations. The amount budgeted to schools, but which exceeded the reduced
appropriation, was treated as a non-Proposition 98 short-term loan in 1991-92.
As part of the 1992-93 Budget, $1.083 billion of the amount budgeted to K-12
schools was designated to "repay" the prior year loan, thereby reducing cash
outlays in 1992-93 by that amount. To maintain per-average daily attendance
("ADA") funding, the 1992-93 Budget included loans to schools and to community
colleges, to be repaid from future Proposition 98 entitlements. The 1993-94
Budget also provided new loans to K- 12 schools and community colleges to
maintain ADA funding. These loans have been combined with the 1992-93 fiscal
year loans into one loan of $1.760 billion, to be repaid from future years'
Proposition 98 entitlements, and conditioned upon maintaining current funding
levels per pupil at K-12 schools.

A Sacramento County Superior Court in California Teachers' Association,
et al. v Gould, et al., ruled that the 1992-93 loans to K-12 schools and
community colleges violate Proposition 98. As part of the negotiations leading
to the 1995-96 Budget Act, an oral agreement was reached

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to settle this case. The parties reached a conditional final settlement of the
case in April, 1996. The settlement required adoption of legislation
satisfactory to the parties to implement its terms.

The settlement provided, among other things, that both the State and
K-12 schools share in the repayment of prior years' emergency loans to schools.
Of the total $1.76 billion in loans, the State was obligated to repay $935
million by forgiveness of the amount owed, while schools were required to repay
$825 million. The State's share of the repayment is reflected as expenditures
above the current Proposition 98 base circulation. The schools' share of the
repayment counts as appropriations toward satisfying the Proposition 98
guarantee, or from "below" the current base. Repayments are spread over the
eight-year period beginning 1994-95 through 2002-03.

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

State Indebtedness

As of August 1, 1998, the State had over $15.9 billion aggregate amount
of its general obligation bonds outstanding. General obligation bond
authorizations in an aggregate amount of approximately $4.8 billion remained
unissued as of August 1, 1998. As of April 1, 1998 the State Finance Committee
had authorized the issuance of approximately $2.6 billion of general obligation
commercial paper notes, but as of that date only $1.3 billion aggregate
principal amount of which was issued and outstanding. The State also builds and
acquires capital facilities through the use of lease purchase borrowing. As of
April 1, 1998, the State had approximately $6.5 billion of outstanding General
Fund-supported Lease-Purchase Debt.

In addition to the general obligation bonds, State agencies and
authorities had approximately $22.49 billion aggregate principal amount of
revenue bonds and notes outstanding as of April 1, 1998. Revenue bonds represent
both obligations payable from State revenue-producing enterprises and projects,
which are not payable from the General Fund, and conduit obligations payable
only from revenues paid by private users of facilities financed by such revenue
bonds. Such enterprises and projects include transportation projects, various
public works and exposition projects, educational facilities (including the
California State University and University of California systems), housing,
health facilities and pollution control facilities.

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Litigation

The State is a party to numerous legal proceedings. In addition, the
State is involved in certain other legal proceedings that, if decided against
the State, might require the State to make significant future expenditures or
impair future revenue sources. Examples of such cases include challenges to
certain vehicle license fees and challenges to the State's use of Public
Employee Retirement System funds to offset future State and local pension
contributions. Other cases which could significantly impact revenue or
expenditures involve challenges of payments of wages under the Fair Labor
Standards Act, the method of determining gross insurance premiums involving
health insurance, property tax challenges, and challenges of transfer of moneys
from State Treasury special fund accounts to the State's General Fund pursuant
to its Budget Acts for certain fiscal years. Because of the prospective nature
of these proceedings, it is not presently possible to predict the outcome of
such litigation or estimate the potential impact on the ability of the State to
pay debt service on its obligation.

Ratings

During 1996, the ratings of California's general obligation bonds were
upgraded by the following rating agencies. Standard & Poor's Ratings Group
upgraded its rating of such debt to A+; the same rating has been assigned to
such debt by Fitch Investors Service. Moody's Investors Service has assigned
such debt an A1 rating. Any explanation of the significance of such ratings may
be obtained only from the rating agency furnishing such ratings. There is no
assurance that such ratings will continue for any given period of time or that
they will not be revised downward or withdrawn entirely if, in the judgment of
the particular rating agency, circumstances so warrant.

Local Governments

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

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

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welfare reform, trial court restructuring, the COPs program supporting local
public safety departments, and various other measures. In his 1999-00 Budget
Proposal, the Governor has proposed a review and "accounting" of state -- local
fiscal relationships, with the goal of ultimately restoring local government
finances to an equivalent fiscal condition to the period prior to the 1991-93
recession -- induced tax shifts. Litigation has been brought challenging the
legality of the property tax shifts from counties to schools.

Historically, funding for the State's trial court system was divided
between the State and the counties. However, Chapter 850, Statutes of 1997,
implemented a restructuring of the State's trial court funding system. Funding
for the courts, with the exception of costs for facilities, local judicial
benefits, and revenue collection, was consolidated at the State level. The
county contribution for both their general fund and fine and penalty amounts is
capped at the 1994-95 level and becomes part of the Trial Court Trust Fund,
which supports all trial court operations. The State assumed responsibility
future growth in trial court funding. The consolidation of funding is intended
to streamline the operation of the courts, provide a dedicated revenue source,
and relieve fiscal pressure on the counties. Beginning in 1998-99, the county
general fund contribution for court operations is reduced by $300 million, and
cities will retain $62 million in fine and penalty revenue previously remitted
to the State; the General Fund reimbursed the $362 million revenue loss to the
Trial Court Trust Fund. The 1999-00 Governor's Budget would further reduce the
county general fund contribution by an additional $48 million to reduce by 50
percent the contributions of the next 18 smallest counties and reduce by 5
percent the general fund contribution of the remaining 21 counties.

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

The Sponsor believes the information summarized above describes some of
the more significant aspects relating to the California Trust. The sources of
such information are Preliminary Official Statements and Official Statements
relating to the State's general obligation bonds and the State's revenue
anticipation notes, or obligations of other issuers located in the State of
California, or other publicly available documents. Although the Sponsor has not
independently verified this information, it has no reason to believe that such
information is not correct in all material respects.

Florida Trust

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

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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, 1997, ranked fourth with an estimated population
of 14.7 million. Since the beginning of the eighties, Florida has surpassed
Ohio, Illinois and Pennsylvania in total population. Because of the national
recession, Florida's net migration declined to 138,000 in 1992, but migration
has since recovered and reached 255,000 in 1996. In recent years the prime
working age population (18-64) has grown at an average annual rate of more than
2.0%. The share of Florida's total working age population (18-64) to total State
population is about 60%. Non-farm employment has grown by over 21.2% since 1991.
Total non-farm employment in Florida is expected to increase 3.4% in 1998-99 and
rise 2.9% in 1999-2000. By the end of 1999-2000, non-farm employment in the
State is expected to reach almost 7.0 million jobs. The State is gradually
becoming less dependent on employment related to construction, agriculture and
manufacturing, and more dependent on employment related to trade and services.
Presently services constitute 34.9% and trade 25.6% of the State's total
non-farm jobs. 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. While both the State and national proportion
of manufacturing jobs has declined over time, Florida's proportion of
manufacturing jobs has been about half the nation's for many years. Foreign
Trade has contributed significantly to Florida's employment growth. Trade jobs
are expected to grow 2.8% in 1998-99 and 2.8% in 1999-2000. Florida's dependence
on highly cyclical construction and construction-related manufacturing has
declined. Total contract construction employment as a share of total non-farm
employment reached a peak of 10% in 1973. Before the recession of the early
1980's the share was 7.7%. In the late 80's construction's share was 7.5% and in
1997 it was 5.7%. The job creation rate for the State of Florida is almost twice
the rate for the nation as a whole. Throughout most of the 1980's the
unemployment rate for the State tracked below that of the nation's. In the
nineties, the trend was reversed, until 1995, when the state's unemployment rate
again tracked below or about the same as the U.S.. In 1997 Florida's
unemployment rate was 4.8% while the nation's was 4.9%. Florida's unemployment
rate is forecasted at 4.5% in 1998-99 and 4.6% in 1999-2000. Because Florida has
a proportionately greater retirement age population, property income (dividends,
interest and rent) and transfer payments (Social Security and pension benefits)
are a relatively more important source of income. From 1992 to 1997, Florida's
total nominal personal income grew by 36.6% and per capita income expanded
approximately 25.9%. For the nation, total and per capita personal income
increased by 30.2% and 24.1%, respectively. From 1992 through 1997, Florida's
total nominal personal income grew by 36.6% and per capita income expanded
approximately 25.9%. For the nation, total and per capita personal income
increased by 30.2% and 24.1%, respectively. Real personal income in Florida is
forecasted to increase 4.9% in 1998-99 and increase 3.5% in 1999-2000. During
this time real personal income per capita is expected to grow at 3.1% in 1998-99
and 1.8% in 1999-2000.

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

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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.

Some of the computer hardware and software and embedded technology used
by the State, its agencies, bond registrars or paying agents may not have been
designed to recognize calendar years after 1999, the so-called "Year 2000
problem." Since the operations necessary to assure the uninterrupted flow of
funds to bondholders depend upon computer technologies, the failure of any such
system to become Year 2000 complaint on a timely basis could have an adverse
effect on the collection and payment of revenues to bondholders.

The State has established a Year 2000 Task Force, allocated funds and
expects to complete the remediation of all state agency computer systems by
June, 1999. The State Legislature has enacted legislation applying the State's
sovereign immunity provision to State and local government entities in the event
of Year 2000 computer system failures, and granting the Governor the power to
transfer State resources if necessary to address Year 2000 problems in State
agencies.

There can be no assurance that Year 2000 compliance will be achieved in
a timely manner by State agencies, and there can be no assurance that any other
entity or governmental agency with which they interact electronically will be
Year 2000 compliant. At this time, the potential impact of such noncompliance is
not known.

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 1996-97, expenditures for education, health and welfare and
public safety amounted to approximately 53%, 26% and 14%, respectively, of total
General Revenue Funds available. The Trust Funds consist of monies received by
the State which under law or trust agreement are segregated for a purpose
authorized by law. Revenues in the General Revenue Fund which are in excess of
the amount needed to meet appropriations may be transferred to the Working
Capital Fund.

State Revenues.

For fiscal year 1998-99 the estimated General Revenue plus Working
Capital and Budget Stabilization Funds available total $19,463.7 million, a 5.1%
increase over 1997-98. The $17,692.4 million in Estimated Revenues represent an
increase of 4.4% over the analogous figure in 1997-98. With combined General
Revenue, Working Capital and Budget Stabilization Funds appropriations at
$18,185.0 million, unencumbered reserves at the end of 1998-

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99 are estimated at $1,379.6 million. For fiscal year 1999-2000, the estimated
General Revenue plus Working Capital and Budget Stabilization Funds available
total $19,923.7 million, a 2.4% increase over 1998-99. The $18,386.1 million in
Estimated Revenues represent a 3.9% increase over the analogous figure in
1998-99.

In fiscal year 1996-97, the State derived approximately 67% of its
total direct revenues for deposit in the General Revenue Fund, Trust Funds,
Working Capital Fund and Budget Stabilization Fund from State taxes and fees.
Federal funds and other special revenues accounted for the remaining revenues.
The largest single source of tax receipts in the State is the 6% sales and use
tax. For the fiscal year ended June 30, 1997, receipts from the sales and use
tax totaled $12,089 million, an increase of 5.5% from the prior fiscal year. The
second largest source of State tax receipts is the tax on motor fuels including
the tax receipts distributed to local governments. Receipts from the taxes on
motor fuels are almost entirely dedicated to trust funds for specific purposes
or transferred to local governments and are not included in the General Revenue
Fund. Preliminary data for the fiscal year ended June 30, 1997, show collections
of this tax totaled $2,012.0 million.

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

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

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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
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 1995-96
based on actual revenues from fiscal year 1994-95. 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

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capital projects authorized by law, provided that electorate approval is
obtained, or (ii) to refund outstanding debt obligations and interest and
redemption premium thereon at a lower net average interest cost rate.

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

Bond Ratings.

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

Litigation.

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

A. In 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. Final judgment was made in favor of the
State. Although plaintiff filed for a review by the Florida Supreme Court, the
Supreme Court denied review and the petition for certiorari.

B. The Florida Department of Transportation has filed an action against
owners of property adjoining property that is subject to a claim by the U.S.
Environmental Protection Agency, seeking a declaratory judgment that the
Department is not the owner of such property. Although the case was dismissed
the EPA could file a claim against the FDOT for clean-upcosts. These clean-up
costs could exceed $25 million.

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

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

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

F. In an action challenging whether the State of Florida and the
Department of Environmental Protection (DEP) breached contracts with the
plaintiff by "freezing" the process of reimbursement applications and then
terminating the petroleum contamination clean-up reimbursement process, the
plaintiff alleges the State's and DEP's actions constitute torts or impairment
of contractual obligations. Plaintiff also alleges that the termination of the
petroleum contamination clean-up reimbursement program constitutes a breach of
contract. In addition to damages, plaintiff seeks recovery of attorneys fees and
costs. If attorneys fees and costs are awarded, the potential liability could be
as high as $60 million.

G. In an action against the Florida Department of Transportation,
plaintiff claims the Department has been responsible for construction of roads
and attendant drainage facilities in Hillsborough County, and as a result of its
construction, has caused plaintiff's property to become subject to flooding,
thereby amounting to an uncompensated taking. The Court granted the State's
Motion for More Definite Statement as to certain portions of the plaintiff's
complaint. If the State is unsuccessful in its action, potential losses could
exceed $40 million.

H. In a case challenging the date of the imposition of interest on
additional amounts of corporate income tax due as a result of Federal audit
adjustments, the Florida Department of Revenue's historical position is that
interest is due from the due date of the return until payment of the additional
amount of tax is made. The taxpayer contends that interest should accrue from
the date the Federal audit adjustments were due to be reported to Florida. A
Final Order was issued adopting the Department's position; however, the taxpayer
filed an appeal of the Final Order. Based on the best available information, the
potential exposure for refunds or lost revenue is in the range of $12 to $20
million per year.

New York Trust

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

Economic Trends

Over the long term, the State of New York (the "State") and the City of
New York (the "City") face serious economic problems. The City accounts for
approximately 41% of the State's population and personal income, and the City's
financial health affects the State in numerous ways. The State historically has
been one of the wealthiest states in the nation. For

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decades, however, the State has grown more slowly than the nation as a whole,
gradually eroding its relative economic affluence. Statewide, urban centers have
experienced significant changes involving migration of the more affluent to the
suburbs and an influx of generally less affluent residents. Regionally, the
older Northeast cities have suffered because of the relative success that the
South and the West have had in attracting people and business. The City has also
had to face greater competition as other major cities have developed financial
and business capabilities which make them less dependent on the specialized
services traditionally available almost exclusively in the City.

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

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

New York City

The City, with a population of approximately 7.4 million, is an
international center of business and culture. Its non-manufacturing economy is
broadly based, with the banking and securities, life insurance, communications,
publishing, fashion design, retailing and construction industries accounting for
a significant portion of the City's total employment earnings. Additionally, the
City is the nation's leading tourist destination. The City's manufacturing
activity is conducted primarily in apparel and printing.

For each of the 1981 through 1998 fiscal years, the City had an
operating surplus, before discretionary transfers, and achieved balanced
operating results as reported in accordance with then applicable generally
accepted accounting principles ("GAAP"), after discretionary transfers. The City
has been required to close substantial gaps between forecast revenues and
forecast expenditures in order to maintain balanced operating results. There can
be no assurance that the City will continue to maintain balanced operating
results as required by State law without tax or other revenue increases or
reductions in City services or entitlement programs, which could adversely
affect the City's economic base.

As required by law, the City prepares a four-year annual financial
plan, which is reviewed and revised on a quarterly basis and which includes the
City's capital, revenue and expense projections and outlines proposed gap-
closing programs for years with projected budget gaps. The City's current
financial plan projects a surplus in the 1999 fiscal year, before discretionary
transfers, and budget gaps for each of the 2000, 2001 and 2002 fiscal years.
This pattern of current year surplus operating results and projected subsequent
year budget gaps has been consistent through the entire period since 1982,
during which the City has achieved surplus operating results, before
discretionary transfers, for each fiscal year.

The City depends on aid from the State both to enable the City to
balance its budget and to meet its cash requirements. There can be no

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assurance that there will not be reductions in State aid to the City from
amounts currently projected; that State budgets will be adopted by the April 1
statutory deadline, or interim appropriations enacted; or that any such
reductions or delays will not have adverse effects on the City's cash flow or
expenditures. In addition, the Federal budget negotiation process could result
in a reduction in or a delay in the receipt of Federal grants which could have
additional adverse effects on the City's cash flow or revenues.

The Mayor is responsible for preparing the City's financial plan,
including the City's current financial plan for the 1999 through 2002 fiscal
years (the "1999-2002 Financial Plan" or "Financial Plan"). The City's
projections set forth in the Financial Plan are based on various assumptions and
contingencies which are uncertain and which may not materialize. Such
assumptions and contingencies include the condition of the regional and local
economies, the provision of State and Federal aid and the impact on City
revenues and expenditures of any future Federal or State policies affecting the
City.

Implementation of the Financial Plan is dependent upon the City's
ability to market its securities successfully. The City's financing program for
fiscal years 1999 through 2002 contemplates the issuance of $5.2 billion of
general obligation bonds and $5.4 billion of bonds to be issued by the New York
City Transitional Finance Authority (the "Finance Authority") to finance City
capital projects. The Finance Authority was created as part of the City's effort
to assist in keeping the City's indebtedness within the forecast level of the
constitutional restrictions on the amount of debt the City is authorized to
incur. In addition, the City issues revenue and tax anticipation notes to
finance its seasonal working capital requirements. The success of projected
public sales of City bonds and notes, New York City Municipal Water Finance
Authority ("Water Authority") bonds and Finance Authority bonds will be subject
to prevailing market conditions. The City's planned capital and operating
expenditures are dependent upon the sale of its general obligation bonds and
notes, and the Water Authority and Finance Authority bonds. Future developments
concerning the City and public discussion of such developments, as well as
prevailing market conditions, may affect the market for outstanding City general
obligation bonds and notes.

For the 1998 fiscal year, the City had an operating surplus, before
discretionary and other transfers, and achieved balanced operating results,
after discretionary and other transfers, in accordance with GAAP. The 1998
fiscal year is the eighteenth year that the City has achieved an operating
surplus, before discretionary and other transfers, and balanced operating
results, after discretionary and other transfers.

On November 18, 1998, the City released the Financial Plan for the 1999
through 2002 fiscal years, which relates to the City and certain entities which
receive funds from the City. The Financial Plan is a modification to the
financial plan submitted to the Control Board on June 26, 1998 (the "June
Financial Plan"). The Financial Plan projects revenues and expenditures for the
1999 fiscal year balanced in accordance with GAAP, and projects gaps of $2.2
billion, $2.9 billion and $2.4 billion for the 2000 through 2002 fiscal years,
respectively, after implementation of a gap closing program to reduce agency
expenditures by $200 million in the 1999 fiscal year and approximately $80
million in each of fiscal years 2000 through 2002.

Changes since the June Financial Plan include: (i) an increase in
projected tax revenues of $288 million and $8 million in fiscal years 1999 and
2000, respectively, and a decrease in projected tax revenues of $23 million and
$66 million in fiscal years 2001 and 2002, respectively; (ii) an increase in
planned expenditures for health insurance of approximately $60 million in

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each of fiscal years 1999 through 2002; (iii) a decrease in projected pension
expenditures due to higher than planned increases in the value of the assets of
the retirement systems of $67 million, $171 million, $264 million and $372
million in the fiscal years 1999 through 2002, respectively; (iv) other agency
spending increases of $76 million, $101 million, $78 million, and $70 million in
fiscal years 1999 through 2002, respectively; and (v) an increase in agency
expenditures of $227 million, $295 million, $295 million and $294 million in
fiscal years 1999 through 2002, respectively, due to a reduction in the agency
gap closing program.

The 1999-2002 Financial Plan includes a proposed discretionary transfer
in the 1999 fiscal year of $465 million to pay debt service due in fiscal year
2000. In addition, the Financial Plan reflects enacted and proposed tax
reduction programs totaling $429 million, $604 million and $606 million in
fiscal years 2000 through 2002, respectively, including the elimination of the
City sales tax on all clothing as of December 1, 1999, the extension of current
tax reductions for owners of cooperative and condominium apartments starting in
fiscal year 2000 and a personal income tax credit for child care and for
resident holders of Subchapter S corporations starting in fiscal year 2000,
which are subject to State legislative approval, and reduction of the commercial
rent tax commencing in fiscal year 2000.

The Financial Plan assumes (i) approval by the Governor and the State
Legislature of the extension of the 14% personal income tax surcharge, which is
scheduled to expire on December 31, 1999, and which is projected to provide
revenue of $183 million, $524 million and $544 million in the 2000, 2001 and
2002 fiscal years, respectively; and (ii) collection of the projected rent
payments for the City's airports, totaling $6 million, $365 million, $155
million and $185 million in the 1999 through 2002 fiscal years, respectively, a
substantial portion of which may depend on the successful completion of
negotiations with The Port Authority of New York and New Jersey (the "Port
Authority") or the enforcement of the City's rights under the existing leases
through pending legal actions. The Financial Plan provides no additional wage
increases for City employees after their contracts expire in fiscal years 2000
and 2001. In addition, the economic and financial condition of the City may be
affected by various financial, social, economic and political factors which
could have a material effect on the City.

In January, the Mayor is expected to publish a Modification (the
"January Modification") to the Financial Plan for the City's 1999 through 2003
fiscal years and a preliminary budget for the City's fiscal year 2000. The
January Modification will include changes since the Financial Plan and the
City's program to address the currently forecast $2.2 billion gap in fiscal year
2000. As in prior years, the City's gap-closing program could include a program
to substantially reduce projected agency spending and City proposals for
increased Federal and State aid and other non-tax revenues.

The 1998 modification of the City's financial plan and the 1999- 2002
Financial Plan include a proposed discretionary transfer in the 1998 fiscal year
of approximately $2.0 billion to pay debt service due in the 1999 fiscal year,
and a proposed discretionary transfer in the 1999 fiscal year of $416 million to
pay debt service due in fiscal year 2000, included in the Budget Stabilization
Accounts for the 1998 and 1999 fiscal years, respectively. In addition, the
Financial Plan reflects proposed tax reduction programs totaling $237 million,
$537 million, $657 million and $666 million in fiscal years 1999 through 2002,
respectively, including the elimination of the City sales tax on all clothing as
of December 1, 1999, a City-funded acceleration of the State funded personal
income tax reduction for the 1999 through 2001 fiscal years, the extension of
current tax reductions for owners of cooperative and condominium apartments
starting in fiscal year 2000 and a

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personal income tax credit for child care and for resident holders of Subchapter
S corporations, which are subject to State legislative approval, and reduction
of the commercial rent tax commencing in fiscal year 2000.

On June 5, 1998, the City Council adopted a budget which re- allocated
expenditures from those provided in the Executive Budget in the amount of $409
million. The re-allocated expenditures, which include $116 million from the
Budget Stabilization Account, $82 million from debt service, $45 million from
pension contributions, $54 million from social services spending and $112
million from other spending, were re-allocated to uses set forth in the City
Council's adopted budget. Such uses include a revised tax reduction program at a
revenue cost in the 1999 fiscal year of $45 million, additional expenditures for
various programs of $199 million and provision of $165 million to retire high
interest debt. The revised tax reduction program in the City Council's adopted
budget assumes the expiration of the 12.5% personal income tax surcharge, rather
than the implementation of the personal income tax reduction program proposed in
the Executive budget. The changes reflected in the City Council's adopted budget
would increase the gaps forecast between revenues and expenditures in the future
years of the Financial Plan.

On June 5, 1998, in accordance with the City Charter, the Mayor
certified to the City Council revised estimates of the City's revenues (other
than property tax) for fiscal year 1999. Consistent with this certification, the
property tax levy was estimated by the Mayor to require an increase to realize
sufficient revenue from this source to produce a balanced budget within
generally accepted accounting principles. On June 8, 1998, the City Council
adopted a property tax levy that was $237.7 million lower than the levy
estimated to be required by the Mayor. The City Council, however, maintained
that the revenue to be derived from the levy it adopted would be sufficient to
achieve a balanced budget because the property tax reserve for uncollectibles
could be reduced. Property tax bills for fiscal year 1999 are expected to be
mailed in the near future by the City's Department of Finance at the rates
adopted by the City Council for fiscal year 1998, subject to later adjustment.

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

New York State and its Authorities. The State Financial Plan for the
1998-1999 fiscal year projects balance on a cash basis for the 1998-1999 fiscal
year, as modified on July 30, 1998, with a closing balance in the General Fund
of $1.67 billion. The State Financial Plan contains projections of a potential
imbalance in the 1999-2000 fiscal year of $1.3 billion, assuming implementation
of unspecified efficiency actions, the receipt of funds from the tobacco
settlement and the application of certain reserves established in the 1998-1999
State Financial Plan. The Executive Budget submitted in February 1998 contained
projections at that time of a potential imbalance in the 2000-2001 fiscal year
of $3.72 billion, assuming implementation of unspecified efficiency initiatives
and other actions in the 2000-2001 fiscal year.

The 1999-2002 Financial Plan is based on numerous assumptions,
including the condition of the City's and the region's economy and a modest
employment recovery and the concomitant receipt of economically sensitive tax
revenues in the amounts projected. The 1999-2002 Financial Plan is subject to
various other uncertainties and contingencies relating to, among other

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factors, the extent, if any, to which wage increases for City employees exceed
the annual wage costs assumed for the 1999 through 2002 fiscal years;
continuation of projected interest earnings assumptions for pension fund assets
and current assumptions with respect to wages for City employees affecting the
City's required pension fund contributions; the willingness and ability of the
State to provide the aid contemplated by the Financial Plan and to take various
other actions to assist the City; the ability of State agencies to maintain
balanced budgets; the willingness of the Federal government to provide the
amount of Federal aid contemplated in the Financial Plan; the impact on City
revenues and expenditures of Federal and State welfare reform and any future
legislation affecting Medicare or other entitlement programs; adoption of the
City's budgets by the City Council in substantially the forms submitted by the
Mayor; the ability of the City to implement cost reduction initiatives, and the
success with which the City controls expenditures; the impact of conditions in
the real estate market on real estate tax revenues; the City's ability to market
its securities successfully in the public credit markets; and unanticipated
expenditures that may be incurred as a result of the need to maintain the City's
infrastructure. Certain of these assumptions have been questioned by the City
Comptroller and other public officials.

The Legislature passed a State budget for the 1998-1999 fiscal year on
April 18, 1998, and on April 26, 1998 the Governor vetoed certain of the
increased spending in the State budget passed by the Legislature. The
Legislature did not override any of the Governor's vetoes. The State Financial
Plan for the 1998-1999 fiscal year, as modified on July 30, 1998, projects
balance on a cash basis for the 1998-1999 fiscal year, with a closing balance in
the General Fund of $1.67 billion. The State Financial Plan contains projections
of a potential imbalance in the 1999-2000 fiscal year of $1.3 billion, assuming
implementation of $600 million of unspecified efficiency actions, the receipt of
$250 million in funds from the tobacco settlement and the application of certain
reserves established in the 1998- 1999 State Financial Plan. The Executive
Budget submitted in February 1998 contained projections at that time of a
potential imbalance in the 2000-2001 fiscal year of $3.72 billion, assuming
implementation of $800 million of unspecified efficiency initiatives in the
2000-2001 fiscal year and $250 million in funds from the tobacco settlement. The
State Financial Plan for the 1998-1999 fiscal year includes multi-year tax
reductions and significant increases in spending which will affect the 2000-2001
fiscal year. The various elements of the State and local tax and assessment
reductions enacted during the last several fiscal years will reduce projected
revenues by more than $4 billion in the 2002-2003 fiscal year as measured from
the current 1998-1999 base.

On July 23, 1998, the New York State Comptroller issued a report which
noted that a significant cause for concern is the budget gaps in the 1999-2000
and 2000-2001 fiscal years, which the State Comptroller projected at $1.8
billion and $5.5 billion, respectively, after excluding the uncertain receipt by
the State of $250 million of funds from the tobacco settlement assumed for each
of such fiscal years, as well as the unspecified actions assumed in the State's
projections. The State Comptroller also stated that if the securities industry
or economy slows, the size of the gaps would increase.

Standard & Poor's rates the State's general obligation bonds A, and
Moody's rates the State's general obligation bonds A2. On August 28, 1997,
Standard & Poor's revised its rating on the State's general obligation bonds
from A- to A.

Litigation. A number of court actions have been brought involving State
finances. The court actions in which the State is a defendant generally

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involve State programs and miscellaneous tort, real property, and contract
claims. While the ultimate outcome and fiscal impact, if any, on the State of
those proceedings and claims are not currently predictable, adverse
determinations in certain of them might have a material adverse effect upon the
State's ability to carry out the 1999-2002 Financial Plan. The City has
estimated that its potential future liability on account of outstanding claims
against it as of June 30, 1998 amounted to approximately $3.5 billion.

Virginia Trust

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

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

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

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

General obligations of cities, towns and counties in Virginia are
payable from the general revenues of the entity, including ad valorem tax
revenues on property within the jurisdiction. The obligation to levy taxes could
be enforced by mandamus, but such a remedy may be impracticable and difficult to
enforce. Under section 15.2-2659 of the Code of Virginia of 1950, as amended, a
holder of any general obligation bond in default may file an affidavit setting
forth such default with the Governor. If, after

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investigating, the Governor determines that such default exists, he is directed
to order the State Comptroller to withhold State funds appropriated and payable
to the entity and apply the amount so withheld to unpaid principal and interest.
The Commonwealth, however, has no obligation to provide any additional funds
necessary to pay such principal and interest.

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

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

PUBLIC OFFERING

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

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

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

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

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

Distribution of Units. Certain banks and thrifts will make Units of the
Trust available to their customers on an agency basis. A portion of the sales
charge paid by their customers is retained by or remitted to the 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

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Dealers, Inc. Units may be sold to dealers at prices which represent a
concession of up to $33.00 per Unit, subject to the Sponsor's right to change
the dealers' concession from time to time. In addition, for transactions of
1,000,000 Units or more, the Sponsor intends to negotiate the applicable sales
charge and such charge will be disclosed to any such purchaser. Such Units may
then be distributed to the public by the dealers at the Public Offering Price
then in effect. The Sponsor reserves the right to reject, in whole or in part,
any order for the purchase of Units. The Sponsor reserves the right to change
the discounts from time to time.

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

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

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN

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

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

Estimated Current Return is computed by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price per Unit. In

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

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

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

RIGHTS OF CERTIFICATEHOLDERS

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

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

Distributions to each Certificateholder of each State Trust from the
Interest Account of such State Trust are computed as of the close of 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

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the Total Reinvestment Plan, except as provided thereunder. Persons who purchase
Units between a Record Date and a Payment Date will receive their first
distribution on the second Payment Date after such purchase.

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

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

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

Distribution Elections. Interest is distributed monthly, semi- annually
or annually, depending upon the distribution applicable to the Unit Purchased.
Record Dates for interest distributions will be the first day of each month for
monthly distributions, the first day of each June and December for semi-annual
distributions and the first day of each December for annual 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

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

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

TAX STATUS

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

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

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

The State Trusts will be classified as a grantor trust for federal
income tax purposes and are not associations taxable as corporations for

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federal income tax purposes under the Internal Revenue Code of 1986 (the
"Code"). Income received by each State Trust that consists of interest
excludable from federal gross income under the Code will be excludable from
the federal gross income of the Certificateholders of such State Trust.

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

Such gain does not include any amount received in respect to accrued
interest, earned original issue discount and accrued market discount.

Gain realized on sale or redemption of the Bonds or on sale of a Unit
is, however, includible in gross income for federal income tax purposes,
generally as capital gain. Such gain does not include any amount received
in respect to accrued interest, earned original issue discount and accrued
market discount. Gain on the disposition of a Bond or a Unit purchased at a
market discount generally will be treated as ordinary income, rather than
capital gain, to the extent of accrued market discount. Such gain may be
long- or short-term gain depending on the holding period of the Units,
assuming that the Units are held as a capital asset. Capital losses are
deductible to the extent of capital gains; in addition, up to $3,000 of
capital losses of non-corporate Certificateholders ($1,500 for married
persons filing separately) may be deducted against ordinary income. Capital
assets held by individuals will qualify for long-term capital gain
treatment if held for more than one year and will be subject to a reduced
tax rate of 20% rather than the regular maximum tax rate of 39.6%.

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

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

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

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

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

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

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New York State or New York City resident should determine its basis and holding
period for its Units in the same manner for New York State and New York City tax
purposes as for federal tax purposes. For corporations doing business in New
York State, interest earned on state and municipal obligations that are exempt
from federal income tax, including obligations of New York State, its political
subdivisions and instrumentalities, must be included in calculating New York
State and New York City entire net income for purposes of computing New York
State and New York City franchise (income) tax.

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

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

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

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

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

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

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

3. The Units will be subject to Florida estate taxes 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

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credit for state death taxes provided for in Section 2011 of the Internal
Revenue Code of 1986, as amended.

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

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

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

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

A Certificateholder of the Virginia Trust will realize a taxable event
when the Virginia Trust disposes of a Bond (whether by sale, exchange,
redemption or payment at maturity) or when the 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

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owner or principal user (or related person) of the facilities exceeds
$40,000,000. In the case of IRBs issued under the $10,000,000 small issue
exemption, interest on such IRBs will become taxable if the face amount of such
IRBs plus certain capital expenditures exceeds $10,000,000.

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

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

From time to time, proposals have been introduced before Congress to
restrict or eliminate the federal income tax exemption for interest on debt
obligations similar to the Bonds in the State Trusts, and it can be expected
that similar proposals may be introduced in the future. In particular, Congress
may consider the adoption of some form of flat tax which could have an adverse
impact on the value of tax-exempt bonds.

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

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

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

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

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

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

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

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

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

The Redemption Price per Unit of a State Trust is the pro rata share of
each Unit in such State Trust determined by the Trustee on the basis of (i) the
cash on hand in such Trust or monies in the process of being collected, (ii) the
value of the Bonds in such State Trust based on the bid prices of such Bonds and
(iii) interest accrued thereon, less (a) amounts representing taxes or other
governmental charges payable out of such State Trust, (b) the accrued expenses
of such State Trust and (c) cash allocated for distribution to
Certificateholders of record of such State Trust as of the business day prior to
the evaluation being made. The Evaluator may determine the value of the Bonds in
such State Trust for purposes of redemption (i) on the basis of current bid
prices of the Bonds obtained from dealers or brokers who customarily deal in
bonds comparable to those held by such State Trust, (ii) on the basis of bid
prices for bonds comparable to any Bonds for which bid prices are not available,
(iii) by determining the value of the Bonds by appraisal, or (iv) by any
combination of the above.

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

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

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

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TRUST ADMINISTRATION

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

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

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

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

The Trust Agreement provides that each State Trust shall terminate upon
the maturity, redemption or other disposition, as the case may be, of the last
of the Bonds held in such State Trust, but in no event is it to continue beyond
the end of the calendar year preceding the fiftieth anniversary of the

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execution of the Trust Agreement. If the value of a State Trust shall be less
than the minimum amount set forth under "Summary of Essential Information in
Part A" for such State Trust, the Trustee may, in its discretion, and shall when
so directed by the Sponsor, terminate such State Trust. Each State Trust may
also be terminated at any time with the consent of the holders of Certificates
representing 100% of the Units of such State Trust then outstanding. In the
event of termination of a State Trust, written notice thereof will be sent by
the Trustee to all Certificateholders of such State Trust. Within a reasonable
period after termination, the Trustee must sell any Bonds remaining in the
terminated State Trust, and, after paying all expenses and charges incurred by
such State Trust, distribute to each Certificateholder thereof, upon surrender
for cancellation of his Certificate for Units, his pro rata share of the
Interest and Principal Accounts of such State Trust.

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

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
investment companies and has signed dealer agreements with many mutual fund
groups. Further, through its Syndicate Department, Gruntal & Co.,

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L.L.C. has underwritten a large number of Closed-End Funds and has been
Co-Manager on the following offerings: Cigna High Income Shares; Dreyfus New
York Municipal Income, Inc.; Franklin Principal Maturity Trust and Van Kampen
Merritt Limited Term High Income Trust. The Sponsor is liable for the
performance of its obligations arising from its responsibilities under the Trust
Agreement, but will be under no liability to Certificateholders for taking any
action, or refraining from taking any action, in good faith pursuant to the
Trust Agreement, or for errors in judgment except in cases of its own willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties.

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

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

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

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

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

The Trustee shall not be liable or responsible in any way for taking
any action, or for refraining from taking any action, in good faith pursuant to
the Trust Agreement, or for errors in judgment; or for any disposition of any
moneys, Bonds or Certificates in accordance with the Trust Agreement, except in
cases of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties; provided, however, that the Trustee
shall not in any event be liable or responsible for any evaluation made by the
Evaluator. In addition, the Trustee shall not be liable for any taxes or other
governmental charges imposed upon or in respect of the Bonds or the Trusts which
it may be required to pay under current or future law of the United States or
any other taxing authority having jurisdiction. The Trustee shall not be liable
for depreciation or loss

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<PAGE>

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

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<PAGE>

covered by the audit during the year may receive a copy of the audited
financials upon request.

EXCHANGE PRIVILEGE AND CONVERSION OFFER

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

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

In order to exercise the Exchange Privilege the Sponsor must be
maintaining a secondary market in the units of the available Exchange Trust. The
Conversion Offer is limited only to unit owners of any Redemption Trust.
Exercise of the Exchange Privilege and the Conversion Offer by
Certificateholders is subject to the following additional conditions: (i) at the
time of the Certificateholder's election to participate in the Exchange
Privilege or Conversion Offer, there must be units of the Exchange or

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<PAGE>

Conversion Trust available for sale, either under the initial primary
distribution or in the Sponsor's secondary market, (ii) exchanges will be
effected in whole units only, (iii) Units of the Mortgage Securities Trust may
only be acquired in blocks of 1,000 Units and (iv) Units of the Equity
Securities Trust may only be acquired in blocks of 100 Units. Certificate
holders will not be permitted to advance any funds in excess of their redemption
in order to complete the exchange. Any excess proceeds received from a
Certificateholder for exchange or from units being redeemed per conversion will
be remitted to such Certificateholder.

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

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

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

OTHER MATTERS

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

Independent Accountants. The financial statements of the Trusts for the
years ended December 31, 1996, 1997 and 1998 included in Part A of this
Prospectus have been examined by PricewaterhouseCoopers 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.

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

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DESCRIPTION OF BOND RATINGS*

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

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

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

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

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

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

(ii) Nature of and provisions of the obligation.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Con-Bonds for which the security depends upon the completion of some
act or the fulfillment of some condition are rated conditionally. These

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are debt obligations secured by (i) earnings of projects under construction,
(ii) earnings of projects unseasoned in operating experience, (iii) rentals
which begin when facilities are completed, or (iv) payments to which some other
limiting condition attaches. Rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.

NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of obligation as a matter of policy.

* * *

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INDEX * * *

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES
Title Page

<S> <C> <C>
Summary of Essential Information.............................A-5
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............................................. 9
Public Offering.............................................. 31 Dated: April 30, 1999
Estimated Long Term Return and Estimated
Current Return............................................. 33 Sponsor:
Rights of Certificateholders................................. 34
Tax Status................................................... 36 Reich & Tang Distributors, Inc.
Liquidity.................................................... 41
Trust Administration......................................... 44 600 Fifth Avenue
Trust Expenses and Charges................................... 48 New York, N.Y. 10020
Exchange Privilege and Conversion Offer...................... 49 212-830-5200
Other Matters................................................ 51
Description of Bond Ratings.................................. 52 (and for certain Trusts:)
Gruntal & Co., L.L.C.
Parts A and B of this Prospectus do not contain all of the information One Liberty Plaza
set forth in the registration statement and exhibits relating thereto, filed New York, New York 10006
with the Securities and Exchange Commission, Washington, D.C., under the (212) 267-8800
Securities Act of 1933, and to which reference is made.
Trustee:

The Chase Manhattan Bank
4 New York Plaza
New York, N.Y. 10004
800-882-9898
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.

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

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

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

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).

II-1
175584.1

<PAGE>

99.3.1 -- Form of Opinion of Berger Steingut & Stern as to the legality
of the securities being registered, including their consent
to the filing thereof and to the use of their name under the
headings "Tax Status" and "Legal Opinions" in the Prospectus,
and to the filing of their opinion regarding tax status of
the Trust (filed as Exhibit 99.3.1 to Post-Effective
Amendment No. 10 to Form S-6 Registration Statement
No. 33-10963 on April 28, 1997 and incorporated herein by
reference).

-- 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,
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).

II-2
175584.1

<PAGE>

*99.5. -- Consent of the Evaluator.

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

99.6.1 -- Power of Attorney of Gruntal & Co., L.L.C., by its officers
and a majority of its Directors of the Executive Committee
(filed as Exhibit 99.6.1 to the Post-Effective Amendment to
Form S-6 Registration Statement No. 33-29989 of Municipal
Securities Trust, Multi-State Series 38 on October 28, 1998
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).

- --------
* 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, 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 19th day of April, 1999.

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 43
(LONG), SERIES 55 (INTERMEDIATE) &
MULTI-STATE SERIES 45 and
MULTI-STATE SERIES 46
(Registrants)

REICH & TANG DISTRIBUTORS, INC.
(Depositor)

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

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

Name Title Date

RICHARD E. SMITH, III President and Director )
PETER S. VOSS Director ) April 19, 1999
G. NEAL RYLAND Director )
STEVEN W. DUFF Director )
PETER J. DeMARCO Executive Vice President )
RICHARD I. WEINER Vice President ) By: /s/ PETER J. DeMARCO
--------------------
BERNADETTE N. FINN Vice President ) Peter J. DeMarco
LORRAINE C. HYSLER Secretary ) as Executive Vice
RICHARD DE SANCTIS Treasurer ) President and
EDWARD N. WADSWORTH Executive Officer ) Attorney-in-Fact*

</TABLE>

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

II-4
175584.1

<PAGE>

SIGNATURES

MUNICIPAL SECURITIES TRUST,
MULTI-STATE SERIES 43 (LONG),
SERIES 55 (INTERMEDIATE) &
MULTI-STATE SERIES 45 and
MULTI-STATE SERIES 46
(Registrants)

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

By: /s/JOANNE T. MARREN
----------------------------------
Joanne T. Marren
(Authorized Signatory)

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons, who constitute the principal officers and a majority of
the directors of the Executive Committee of Gruntal & Co., L.L.C., the
Depositor, in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

Name Title Date

ROBERT P. RITTEREISER Chief Executive Officer and Chairman )
of the Board of Directors ) April 19, 1999
)
LEE FENSTERSTOCK President and Director ) By: /S/ JOANNE T. MARREN
--------------------
) Joanne T. Marren
) Attorney-in-Fact*
JOANNE T. MARREN Executive Vice President, General
Counsel, Secretary and Director
HENRY D. GOTTMANN Executive Vice President and )
Director )
JOSEPH V. BATTIPAGLIA Executive Vice President and )
Director )
JOHN FEENEY Director and President of GMS )
JOHN CIRRITO Executive Vice President and )
Director )
RALPH H. BRADLEY, JR. Executive Vice President and )
Director )
STEPHEN BYERS Executive Vice President, Chief )
Financial Officer and Director )
STEPHEN A. GREYSER Director )
MICHAEL D. MADDEN Director )
</TABLE>

* Executed copies of the Power of Attorney were filed as Exhibit 99.6.1 to
the Post-Effective Amendment to Form S-6 Registration Statement
No. 33-29989 on October 28, 1998.

II-5
175584.1

<PAGE>

Consent of Independent Accountants

We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment to the registration statement on Form S-6 of our report
dated March 19, 1999, relating to the financial statements and financial
highlights for the three years ended December 31, 1998 of the 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.

PricewaterhouseCoopers LLP
Boston, MA
April 26, 1999

II-6
175584.1

<PAGE>

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

April 30, 1999

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

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

Re: Municipal Securities Trust,
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 Registration Statement for the respective
bonds comprising the trust portfolio are the ratings indicated in our KENNYBASE
database.

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

Sincerely,

/s/ Frank A. Ciccotto
----------------------------
Frank A. Ciccotto

FAC/trh

<PAGE>

April 30, 1999

Reich & Tang Distributors, Inc.
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 Commission.

Sincerely,

/s/ Frank A. Ciccotto
---------------------------
Frank A. Ciccotto

FAC/trh

<PAGE>

April 30, 1999

Reich & Tang Distributors, Inc.
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 Commission.

Sincerely,

/s/ Frank A. Ciccotto
--------------------------------
Frank A. Ciccotto

FAC/trh