MUNICIPAL INVT TR FD MULTISTATE SER 62 DEFINED ASSET FUNDS, 487, 1994-05-26

MUNICIPAL INVT TR FD MULTISTATE SER 62 DEFINED ASSET FUNDS
487, 1994-05-26

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 26, 1994

REGISTRATION NO. 33-53285

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

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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

AMENDMENT NO. 1
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 INVESTMENT TRUST FUND
MULTISTATE SERIES - 62
DEFINED ASSET FUNDS

B. NAMES OF DEPOSITORS:

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY SHEARSON INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.

C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:

MERRILL LYNCH, PIERCE, FENNER & SMITH SMITH BARNEY SHEARSON INC.
INCORPORATED TWO WORLD TRADE CENTER--101ST FLOOR
P.O. BOX 9051 NEW YORK, N.Y. 10048
PRINCETON, N.J. 08543-9051

PAINEWEBBER INCORPORATED PRUDENTIAL SECURITIES DEAN WITTER REYNOLDS INC.
1285 AVENUE OF THE INCORPORATED TWO WORLD TRADE
AMERICAS ONE SEAPORT PLAZA CENTER--59TH FLOOR
NEW YORK, N.Y. 10019 199 WATER STREET NEW YORK, N.Y. 10048
NEW YORK, N.Y. 10292

D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:

TERESA KONCICK, ESQ. THOMAS D. HARMAN, ESQ. LEE B. SPENCER, JR.
P.O. BOX 9051 388 GREENWICH STREET ONE SEAPORT PLAZA
PRINCETON, N.J. 8543-9051 NEW YORK, NY 10013 199 WATER STREET
NEW YORK, N.Y. 10292
COPIES TO:
PHILIP BECKER ROBERT E. HOLLEY PIERRE DE SAINT PHALLE,
130 LIBERTY STREET--29TH 1200 HARBOR BLVD. ESQ.
FLOOR WEEHAWKEN, N.J. 07087 450 LEXINGTON AVENUE
NEW YORK, N.Y. 10019 NEW YORK, N.Y. 10017

E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:

An indefinite number of Units of Beneficial Interest pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended.

F. PROPOSED MAXIMUM OFFERING PRICE TO THE PUBLIC OF THE SECURITIES BEING
REGISTERED: Indefinite

G. AMOUNT OF FILING FEE: $500 (as required by Rule 24f-2)

H. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:

As soon as practicable after the effective date of the registration statement.

/ x / Check box if it is proposed that this filing will become effective at 9:30
a.m. on May 26, 1994 pursuant to Rule 487.

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- --------------------------------------------------------------------------------
<PAGE>
Def ined

Asset FundsSM

MUNICIPAL INVESTMENT This Defined Fund consists of separate underlying
TRUST FUND Trusts designated as the Florida, New York and
- ------------------------------Pennsylvania Trusts, each of which is a portfolio
MULTISTATE SERIES - 62 of preselected securities issued by or on behalf
(UNIT INVESTMENT TRUSTS) of the State for which the Trust is named and
FLORIDA TRUST (INSURED) political subdivisions and public authorities
5.62% thereof or certain United States territories or
ESTIMATED CURRENT RETURN possessions. The Fund is formed for the purpose of
5.69% providing interest income which in the opinion of
ESTIMATED LONG TERM RETURN counsel is, with certain exceptions, exempt from
NEW YORK TRUST (INSURED) regular Federal income taxes and from certain
5.59% state and local personal income taxes in the State
ESTIMATED CURRENT RETURN for which each Trust is named but may be subject
5.67% to other state and local taxes. In addition, the
ESTIMATED LONG TERM RETURN Debt Obligations included in each Trust are
PENNSYLVANIA TRUST (INSURED) insured. This insurance guarantees the timely
5.73% payment of principal and interest on but does not
ESTIMATED CURRENT RETURN guarantee the market value of the Debt Obligations
5.81% or the value of the Units. As a result of this
ESTIMATED LONG TERM RETURN insurance, Units of each Trust are rated AAA by
AS OF MAY 25, 1994 Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc. ('Standard & Poor's'). The value
of the Units of each Trust will fluctuate with the
value of the Portfolio of underlying Debt
Obligations in the Trust.
The Estimated Current Return and Estimated Long
Term Return figures shown give different
information about the return to investors.
Estimated Current Return on a Unit shows a net
annual current cash return based on the initial
Public Offering Price and the maximum applicable
sales charge and is computed by multiplying the
estimated net annual interest rate per Unit by
$1,000 and dividing the result by the Public
Offering Price per Unit (including the sales
charge but not including accrued interest).
Estimated Long Term Return shows a net annual
long-term return to investors holding to maturity
based on the yield on the individual bonds in the
Portfolio, weighted to reflect the time to
maturity (or in certain cases to an earlier call
date) and market value of each bond in the
Portfolio, adjusted to reflect the Public Offering
Price (including the sales charge) and estimated
expenses. Unlike Estimated Current Return,
Estimated Long Term Return takes into account
maturities of the underlying Securities and
discounts and premiums. Distributions of income on
Units are generally subject to certain delays; if
the Estimated Long Term Return figure shown above
took these delays into account, it would be lower.
Both Estimated Current Return and Estimated Long
Term Return are subject to fluctuations with
changes in Portfolio composition (including the
redemption, sale or other disposition of
Securities in the Portfolio), changes in the
market value of the underlying Securities and
changes in fees and expenses. Estimated cash flows
for each Trust are available upon request from the
Sponsors at no charge.
Minimum purchase: 1 Unit.

----------------------------------------
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
SPONSORS: REPRESENTATION
Merrill Lynch, TO THE CONTRARY IS A CRIMINAL OFFENSE.
Pierce, Fenner & Smith Inc. INQUIRIES SHOULD BE DIRECTED TO THE
Smith Barney Shearson Inc. TRUSTEE AT 1-800-338-6019.
PaineWebber Incorporated PROSPECTUS DATED MAY 26, 1994.
Prudential Securities Incorporated READ AND RETAIN THIS PROSPECTUS FOR
Dean Witter Reynolds Inc. FUTURE REFERENCE.

<PAGE>
- ------------------------------------------------------------------------------

DEFINED ASSET FUNDSSM is America's oldest and largest family of unit investment
trusts with over $90 billion sponsored since 1970. Each Defined Fund is a
portfolio of preselected securities. The portfolio is divided into 'units'
representing equal shares of the underlying assets. Each unit receives an equal
share of income and principal distributions.

With Defined Asset Funds you know in advance what you are investing in and that
changes in the portfolio are limited. Most defined bond funds pay interest
monthly and repay principal as bonds are called, redeemed, sold or as they
mature. Defined equity funds offer preselected stock portfolios with defined
termination dates.

Your financial advisor can help you select a Defined Fund to meet your personal
investment objectives. Our size and market presence enable us to offer a wide
variety of investments. Defined Funds are available in the following types of
securities: municipal bonds, corporate bonds, government bonds, utility stocks,
growth stocks, even international securities denominated in foreign currencies.

Termination dates are as short as one year or as long as 30 years. Special funds
are available for investors seeking extra features: insured funds, double and
triple tax-free funds, and funds with 'laddered maturities' to help protect
against rising interest rates. Defined Funds are offered by prospectus only.
- --------------------------------------------------------------------------------

CONTENTS

Investment Summary.......................................... A-3
Tax-Free vs. Taxable Income................................. A-5
Underwriting Account........................................ A-7
Fee Table................................................... A-8
Report of Independent Accountants........................... A-9
Statements of Condition..................................... A-10
Portfolios.................................................. A-11
Fund Structure.............................................. 1
Risk Factors................................................ 2
Description of the Fund..................................... 16
Taxes....................................................... 18
Public Sale of Units........................................ 21
Market for Units............................................ 24
Redemption.................................................. 24
Expenses and Charges........................................ 26
Administration of the Fund.................................. 26
Resignation, Removal and Limitations on Liability........... 30
Miscellaneous............................................... 31
Description of Ratings...................................... 33
Exchange Option............................................. 34
Appendix:
The Florida Trust........................................... A-1
The New York Trust.......................................... A-6
The Pennsylvania Trust...................................... A-12

A-2

<PAGE>

INVESTMENT SUMMARY AS OF MAY 25, 1994 (THE BUSINESS DAY PRIOR TO THE INITIAL
DATE OF DEPOSIT)(a)

FLORIDA NEW YORK PENNSYLVANIA
TRUST TRUST TRUST
-------------- -------------- --------------
ESTIMATED CURRENT RETURN(b)
(based on Public Offering
Price)--...................... 5.62% 5.59% 5.73%
ESTIMATED LONG TERM RETURN(b)
(based on Public Offering
Price)--...................... 5.69% 5.67% 5.81%
PUBLIC OFFERING PRICE PER UNIT
(including 4.50% sales
charge).......................$ 983.02(c)$ 996.15(c) $ 971.22(c)
FACE AMOUNT OF DEBT
OBLIGATIONS...................$ 3,500,000 $ 4,000,000 $ 3,250,000
INITIAL NUMBER OF UNITS(d)...... 3,500 4,000 3,250
FRACTIONAL UNDIVIDED INTEREST IN
TRUST REPRESENTED BY EACH
UNIT.......................... 1/3,500th 1/4,000th 1/3,250th
MONTHLY INCOME DISTRIBUTIONS
First distribution to be paid
on the 25th day of August
1994, August 1994 and
September 1994 to Holders of
record on the 10th day of
August 1994, August 1994 and
September 1994 for the
Florida, New York and
Pennsylvania Trusts,
respectively................$ 1.77 $ 1.41 $ 5.58
Calculation of second and
following distributions:
Estimated net annual interest
rate per Unit times
$1,000......................$ 55.20 $ 55.68 $ 55.68
Divided by 12.................$ 4.60 $ 4.64 $ 4.64
SPONSORS' REPURCHASE PRICE AND
REDEMPTION PRICE PER
UNIT(e)
(based on bid side
evaluation)...................$ 934.78(c)$ 947.32(c)$ 923.51(c)
REDEMPTION PRICE PER UNIT LESS
THAN:
Public Offering Price by....$ 48.24 $ 48.83 $ 47.71
Sponsors' Initial Repurchase
Price by....................$ 4.00 $ 4.00 $ 4.00
CALCULATION OF PUBLIC OFFERING
PRICE
Aggregate offer side
evaluation of Debt
Obligations
in Trust..................$ 3,285,735.00 $ 3,805,291.30 $ 3,014,412.50
-------------- -------------- --------------
Divided by Number of
Units.......................$ 938.78 $ 951.32 $ 927.51
Plus sales charge of 4.50%
of Public Offering Price
(4.712% of net amount
invested in Debt
Obligations)(f)........... 44.24 44.83 43.71
-------------- -------------- --------------
Public Offering Price per
Unit........................$ 983.02 $ 996.15 $ 971.22
Plus accrued interest(g).... 1.07 1.08 1.08
-------------- -------------- --------------
Total.....................$ 984.09 $ 997.23 $ 972.30
-------------- -------------- --------------
-------------- -------------- --------------
CALCULATION OF ESTIMATED NET
ANNUAL INTEREST RATE PER UNIT
(based on face amount of
$1,000 per Unit)
Annual interest rate per
Unit........................ 5.719% 5.761% 5.771%
Less estimated annual
expenses per Unit
expressed as a
percentage................ .199% .193% .203%
-------------- -------------- --------------
Estimated net annual
interest rate per
Unit.................... 5.520% 5.568% 5.568%
-------------- -------------- --------------
-------------- -------------- --------------
DAILY RATE AT WHICH ESTIMATED
NET INTEREST ACCRUES PER
UNIT.......................... .0153% .0154% .0154%
SPONSORS' PROFIT (LOSS) ON
DEPOSIT.......................$ 25,537.50 $ 29,078.00 $ 27,470.00
TRUSTEE'S ANNUAL FEE AND
EXPENSES........................$ 1.99(h)$ 1.93(h)$ 2.03(h)
Per Unit commencing June
1994, July 1994 and March
1995 for the Florida, New
York and Pennsylvania
Trusts, respectively (see
Expenses and Charges).

- ------------------
(a) The Indentures were signed and the initial deposits were made on the date
of this Prospectus.
(b) Estimated Current Return represents annual interest income after
estimated annual expenses divided by the maximum public offering price including
a 4.50% maximum sales charge. Estimated Long Term Return is the net annual
percentage return based on the yield on each underlying Debt Obligation weighted
to reflect market value and time to maturity or earlier call date. Estimated
Long Term Return is adjusted for estimated expenses and the maximum offering
price but not for delays in a Trust's distribution of income. Estimated Current
Return shows current annual cash return to investors while Estimated Long Term
Return shows the return on Units held to maturity, reflecting maturities,
discounts and premiums on underlying Debt Obligations. Each figure will vary
with purchase price including sales charge, changes in the net interest income
and the redemptions, sale, or other disposition of Debt Obligations in the
Portfolio.
(c) Plus accrued interest.
(d) The Sponsors may create additional Units during the offering period of
the Fund.
(e) During the initial offering period, the Sponsors intend to offer to
purchase Units at prices based on the offer side value of the underlying
Securities. Thereafter, the Sponsors intend to maintain such a market based on
the bid side value of the underlying Securities which will be equal to the
Redemption Price. (See Market for Units.)
(f) The sales charge during the initial offering period and in the secondary
market will be reduced on a graduated scale in the case of purchases of 250 or
more Units; the secondary market sales charge will also vary depending on the
maturities of the underlying Securities (see Public Sale of Units--Public
Offering Price). Any resulting reduction in the Public Offering Price will
increase the effective current and long term returns on a Unit.
(g) Figure shown represents interest accrued on underlying Securities from
the Initial Date of Deposit to expected date of settlement (normally five
business days after purchase) for Units purchased on Initial Date of Deposit
(see Description of the Fund--Income; Estimated Current Return; Estimated Long
Term Return).

(h) During the first year this amount will be reduced by $0.11, $0.21 and
$1.40 for the Florida, New York and Pennsylvania Trusts, respectively. Estimated
annual interest income per Unit (estimated annual interest rate per Unit times
$1,000) during the first year will be $57.08, $57.40 and $56.31 and estimated
expenses per Unit will be $1.88, $1.72 and $0.63 for the Florida, New York and
Pennsylvania Trusts, respectively. Estimated net annual interest income per Unit
will remain the same (see Description of the Fund--Income; Estimated Current
Return; Estimated Long Term Return).

A-3

<PAGE>

INVESTMENT SUMMARY AS OF MAY 25, 1994 (CONTINUED)

FLORIDA NEW YORK PENNSYLVANIA
TRUST TRUST TRUST
------------- ------------- -------------
NUMBER OF ISSUES IN PORTFOLIO-- 8 7 7
NUMBER OF ISSUES BY
SOURCE OF REVENUE(a):
Industrial Development Revenue-- -- -- 1
Airports/Ports/Highways-- 2 1 --
Solid Waste Disposal-- 1 -- --
State/Local Municipal Electric
Utilities-- 1 -- --
Special Tax-- 1 -- --
General Obligation-- -- 1 2
Hospitals/Healthcare Facilities-- 2 2 3
Lease Revenue-- 1 1 --
Municipal Water/Sewer Utilities-- -- 1 1
Moral Obligation-- -- 1 --
NUMBER OF ISSUES RATED BY
STANDARD &
POOR'S/RATING-- AAA-- 8(b) 7(b) 7(b)
RANGE OF FIXED FINAL MATURITY DATES
OF DEBT
OBLIGATIONS...................... 2014-2024 2014-2023 2021-2027
TYPE OF ISSUE EXPRESSED AS A
PERCENTAGE OF THE AGGREGATE FACE
AMOUNT OF PORTFOLIO
General Obligation Issues........ -- 8% 31%
Issues Payable from Income of
Specific Project or
Authority..................... 100% 92% 69%
Debt Obligations Issued at an
'Original Issue
Discount'(c).................. 100% 68% 100%
Obligations Insured by certain
Insurance Companies:(d)
AMBAC......................... 14% 55% 23%
CGIC.......................... 14% -- --
Financial Guaranty............ 43% 15% 15%
MBIA.......................... 29% 30% 62%
CONCENTRATIONS(a) EXPRESSED AS A
PERCENTAGE OF THE AGGREGATE FACE
AMOUNT OF PORTFOLIO(e)
General Obligation............ -- -- 31%
Hospital/Healthcare
Facilities.................... 29% 32% 38%
PREMIUM AND DISCOUNT ISSUES IN
PORTFOLIO
Face amount of Debt
Obligations
with offer side
evaluation: at
par-- -- -- 15%
over par-- 36% 17% 15%
at a discount from par-- 64% 83% 70%
PERCENTAGE OF PORTFOLIO ACQUIRED
FROM
UNDERWRITING SYNDICATE IN WHICH
CERTAIN SPONSORS PARTICIPATED AS
SOLE UNDERWRITER, MANAGING
UNDERWRITER OR MEMBER............ -- -- --
PERCENTAGE OF PORTFOLIOS NOT
SUBJECT TO OPTIONAL
REDEMPTIONS PRIOR TO 2002 (AT
PRICES INITIALLY AT LEAST 100% OF
PAR)(f).......................... 100% 100% 100%

- ------------------
(a) See Risk Factors for a brief summary of certain investment risks relating
to certain of these issues.
(b) All of the Debt Obligations in this Trust are insured as to scheduled
payments of principal and interest as a result of which the Units of the Trust
are rated AAA by Standard & Poor's (see Description of Ratings).
(c) See Taxes.
(d) See Risk Factors--Obligations Backed by Insurance.
(e) A Trust is considered to be 'concentrated' in these categories when they
constitute 25% or more of the aggregate face amount of the Portfolio.
(f) See Footnote (2) to Portfolios.

A-4

<PAGE>
Def ined
Asset Funds

INVESTOR'S GUIDE
MUNICIPAL INVESTMENT MUNICIPAL INVESTMENT TRUST FUND
TRUST FUND Our defined portfolios of municipal bonds offer
- ------------------------------investors a simple and convenient way to earn
Multistate Series monthly income tax-free. And by purchasing
municipal Defined Funds, investors not only avoid
the problem of selecting municipal bonds by
themselves, but also gain the advantage of
diversification by investing in bonds of several
different issuers. Spreading your investment among
different securities and issuers reduces your
risk, but does not eliminate it.
MONTHLY TAX-FREE INTEREST INCOME
Each Trust pays monthly income, even though the
underlying bonds pay interest semi-annually. This
income is generally 100% exempt under existing
laws from regular federal income tax and from
certain state and local personal income taxes in
the State for which the Trust is named. Any gain
on disposition of the underlying bonds will be
subject to tax.
REINVESTMENT OPTION
You can elect to automatically reinvest your
distributions into a separate portfolio of
federally tax-exempt bonds. Reinvesting helps to
compound your income tax-free. Income from the
reinvestment program may be subject to state and
local taxes.
A-RATED INVESTMENT QUALITY
Each bond in the Fund has been selected by
investment professionals among available bonds
rated A or better by at least one national rating
organization or has, in the opinion of Defined
Funds research analysts, comparable credit
characteristics. Bonds with these 'investment
grade' ratings are judged to have a strong
capacity to pay interest and repay principal. In
addition, units of any insured Fund are rated AAA
by Standard & Poor's.
PROFESSIONAL SELECTION AND SUPERVISION
Each Trust contains a variety of securities
selected by experienced buyers and market
analysts. The Trusts are not actively managed.
However, each portfolio is regularly reviewed and
a security can be sold if, in the opinion of
Defined Funds analysts and buyers, retaining it
could be detrimental to investors' interests.
A LIQUID INVESTMENT
Although not legally required to do so, the
Sponsors have maintained a secondary market for
Defined Asset Funds for over 20 years. You can
cash in your units at any time. Your price is
based on the market value of the bonds in the
Fund's portfolio at that time as determined by an
independent evaluator. Or, you can exchange your
investment for another Defined Fund at a reduced
sales charge. There is never a fee for cashing in
your investment.
PRINCIPAL DISTRIBUTIONS
Principal from sales, redemptions and maturities
of bonds in the Fund is distributed to investors
periodically.
RISK FACTORS
Unit price fluctuates and is affected by interest
rates as well as the financial condition of the
issuers and insurers of the bonds.

This page may not be distributed unless included in a current prospectus.
Investors should refer to the prospectus for further information.
<PAGE>
TAX-FREE VS. TAXABLE INCOME
A COMPARISON OF TAXABLE AND TAX-FREE YIELDS

FOR FLORIDA RESIDENTS

TAXABLE INCOME 1994* EFFECTIVE
TAX RATE
A TAX-FREE YIELD OF
%
SINGLE RETURN JOINT RETURN 3% 3.5% 4% 4.5% 5% 5.5% 6%
IS EQUIVALENT TO A TAXABLE YIELD OF
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
$0-36,900 15.00 3.53 4.12 4.71 5.29 5.88 6.47 7.06
- --------------------------------------------------------------------------------------------------------------------------------
$0-22,100 15.00 3.53 4.12 4.71 5.29 5.88 6.47 7.06
- --------------------------------------------------------------------------------------------------------------------------------
$36,900-89,150 28.00 4.17 4.86 5.56 6.25 6.94 7.64 8.33
- --------------------------------------------------------------------------------------------------------------------------------
$22,100-53,500 28.00 4.17 4.86 5.56 6.25 6.94 7.64 8.33
- --------------------------------------------------------------------------------------------------------------------------------
$89,150-140,000 31.00 4.35 5.07 5.80 6.52 7.25 7.97 8.70
- --------------------------------------------------------------------------------------------------------------------------------
$53,500-115,000 31.00 4.35 5.07 5.80 6.52 7.25 7.97 8.70
- --------------------------------------------------------------------------------------------------------------------------------
$140,000-250,000 36.00 4.69 5.47 6.25 7.03 7.81 8.59 9.38
- --------------------------------------------------------------------------------------------------------------------------------
$115,000-250,000 36.00 4.69 5.47 6.25 7.03 7.81 8.59 9.38
- --------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 39.60 4.97 5.79 6.62 7.45 8.28 9.11 9.93
- --------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 39.60 4.97 5.79 6.62 7.45 8.28 9.11 9.93
- --------------------------------------------------------------------------------------------------------------------------------

</TABLE>

TAXABLE INCOME 1994*

SINGLE RETURN 6.5% 7%

- ----------------
7.65 8.24
- ----------------
$0-22,100 7.65 8.24
- ----------------
9.03 9.72
- ----------------
$22,100-53,500 9.03 9.72
- ----------------
9.42 10.14
- ----------------
$53,500-115,000 9.42 10.14
- ----------------
10.16 10.94
- ----------------
$115,000-250,000 10.16 10.94
- ----------------
10.76 11.59
- ----------------
OVER $250,000 10.76 11.59
- ----------------

FOR NEW YORK CITY RESIDENTS

<TABLE><CAPTION>
COMBINED
TAXABLE INCOME 1994* EFFECTIVE
TAX RATE
TAX-FREE YIELD OF
%
SINGLE RETURN JOINT RETURN 3% 3.5% 4% 4.5% 5% 5.5% 6%
IS EQUIVALENT TO A TAXABLE YIELD OF
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
$0-36,900 25.33 4.02 4.69 5.36 6.03 6.70 7.37 8.04
- ------------------------------------------------------------------------------------------------------------------------------
$0-22,100 25.33 4.02 4.69 5.36 6.03 6.70 7.37 8.04
- ------------------------------------------------------------------------------------------------------------------------------
$36,900-89,150 36.84 4.75 5.54 6.33 7.12 7.92 8.71 9.50
- ------------------------------------------------------------------------------------------------------------------------------
$22,100-53,500 36.84 4.75 5.54 6.33 7.12 7.92 8.71 9.50
- ------------------------------------------------------------------------------------------------------------------------------
$89,150-140,000 39.51 4.96 5.79 6.61 7.44 8.27 9.09 9.92
- ------------------------------------------------------------------------------------------------------------------------------
$53,500-115,000 39.51 4.96 5.79 6.61 7.44 8.27 9.09 9.92
- ------------------------------------------------------------------------------------------------------------------------------
$140,000-250,000 43.89 5.35 6.24 7.13 8.02 8.91 9.80 10.69
- ------------------------------------------------------------------------------------------------------------------------------
$115,000-250,000 43.89 5.35 6.24 7.13 8.02 8.91 9.80 10.69
- ------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 47.05 5.67 6.61 7.55 8.50 9.44 10.39 11.33
- ------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 47.05 5.67 6.61 7.55 8.50 9.44 10.39 11.33
- ------------------------------------------------------------------------------------------------------------------------------

</TABLE>

TAXABLE INCOME 1994*

SINGLE RETURN 6.5% 7%

- ----------------
8.71 9.37
- ----------------
$0-22,100 8.71 9.37
- ----------------
10.29 11.08
- ----------------
$22,100-53,500 10.29 11.08
- ----------------
10.75 11.57
- ----------------
$53,500-115,000 10.75 11.57
- ----------------
11.59 12.48
- ----------------
$115,000-250,000 11.59 12.48
- ----------------
12.28 13.22
- ----------------
OVER $250,000 12.28 13.22
- ----------------

FOR NEW YORK STATE RESIDENTS

<TABLE><CAPTION>
COMBINED
TAXABLE INCOME 1994* EFFECTIVE
TAX RATE
TAX-FREE YIELD OF
%
SINGLE RETURN JOINT RETURN 3% 3.5% 4% 4.5% 5% 5.5% 6%
IS EQUIVALENT TO A TAXABLE YIELD OF
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
$0-36,900 21.69 3.83 4.47 5.11 5.75 6.39 7.02 7.66
- ------------------------------------------------------------------------------------------------------------------------------
$0-22,100 21.69 3.83 4.47 5.11 5.75 6.39 7.02 7.66
- ------------------------------------------------------------------------------------------------------------------------------
$36,900-89,150 33.67 4.52 5.28 6.03 6.78 7.54 8.29 9.05
- ------------------------------------------------------------------------------------------------------------------------------
$22,100-53,500 33.67 4.52 5.28 6.03 6.78 7.54 8.29 9.05
- ------------------------------------------------------------------------------------------------------------------------------
$89,150-140,000 36.43 4.72 5.51 6.29 7.08 7.87 8.65 9.44
- ------------------------------------------------------------------------------------------------------------------------------
$53,500-115,000 36.43 4.72 5.51 6.29 7.08 7.87 8.65 9.44
- ------------------------------------------------------------------------------------------------------------------------------
$140,000-250,000 41.04 5.09 5.94 6.78 7.63 8.48 9.33 10.18
- ------------------------------------------------------------------------------------------------------------------------------
$115,000-250,000 41.04 5.09 5.94 6.78 7.63 8.48 9.33 10.18
- ------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 44.36 5.39 6.29 7.19 8.09 8.99 9.88 10.78
- ------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 44.36 5.39 6.29 7.19 8.09 8.99 9.88 10.78
- ------------------------------------------------------------------------------------------------------------------------------

</TABLE>

TAXABLE INCOME 1994*

SINGLE RETURN 6.5% 7%

- ----------------
8.30 8.94
- ----------------
$0-22,100 8.30 8.94
- ----------------
9.80 10.55
- ----------------
$22,100-53,500 9.80 10.55
- ----------------
10.23 11.01
- ----------------
$53,500-115,000 10.23 11.01
- ----------------
11.02 11.87
- ----------------
$115,000-250,000 11.02 11.87
- ----------------
11.68 12.58
- ----------------
OVER $250,000 11.68 12.58
- ----------------

FOR PENNSYLVANIA RESIDENTS

COMBINED
TAXABLE INCOME 1994* EFFECTIVE
TAX RATE
TAX-FREE YIELD OF
%
SINGLE RETURN JOINT RETURN 3% 3.5% 4% 4.5% 5% 5.5% 6%
IS EQUIVALENT TO A TAXABLE YIELD OF
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
$0-36,900 17.38 3.63 4.24 4.84 5.45 6.05 6.66 7.26
- ------------------------------------------------------------------------------------------------------------------------------
$0-22,100 17.38 3.63 4.24 4.84 5.45 6.05 6.66 7.26
- ------------------------------------------------------------------------------------------------------------------------------
$36,900-89,150 30.02 4.29 5.00 5.72 6.43 7.14 7.86 8.57
- ------------------------------------------------------------------------------------------------------------------------------
$22,100-53,500 30.02 4.29 5.00 5.72 6.43 7.14 7.86 8.57
- ------------------------------------------------------------------------------------------------------------------------------
$89,150-140,000 32.93 4.47 5.22 5.96 6.71 7.46 8.20 8.95
- ------------------------------------------------------------------------------------------------------------------------------
$53,500-115,000 32.93 4.47 5.22 5.96 6.71 7.46 8.20 8.95
- ------------------------------------------------------------------------------------------------------------------------------
$140,000-250,000 37.79 4.82 5.63 6.43 7.23 8.04 8.84 9.65
- ------------------------------------------------------------------------------------------------------------------------------
$115,000-250,000 37.79 4.82 5.63 6.43 7.23 8.04 8.84 9.65
- ------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 41.29 5.11 5.96 6.81 7.66 8.52 9.37 10.22
- ------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 41.29 5.11 5.96 6.81 7.66 8.52 9.37 10.22
- ------------------------------------------------------------------------------------------------------------------------------

</TABLE>

TAXABLE INCOME 1994*

SINGLE RETURN 6.5% 7%

- ----------------
7.87 8.47
- ----------------
$0-22,100 7.87 8.47
- ----------------
9.29 10.00
- ----------------
$22,100-53,500 9.29 10.00
- ----------------
9.69 10.44
- ----------------
$53,500-115,000 9.69 10.44
- ----------------
10.45 11.25
- ----------------
$115,000-250,000 10.45 11.25
- ----------------
11.07 11.92
- ----------------
OVER $250,000 11.07 11.92
- ----------------

To compare the yield of a taxable security with the yield of a tax-free security
find your taxable income and read across. These tables incorporate current
Federal and applicable State (and City) income tax rates and assume that all
income would otherwise be taxable at the investor's highest tax rates. Yield
figures are for example only.

Legislation has recently been enacted that would increase rates for certain
individuals, thereby increasing the tax-free equivalent yield.

*Based upon net amount subject to Federal income tax after deductions and
exemptions. These tables do not reflect other possible tax factors such as the
alternative minimum tax, personal exemptions, the phase out of exemptions,
itemized deductions and the possible partial disallowance of deductions.
Consequently, holders are urged to consult their own tax advisers in this
regard.

A-5
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES
DEFINED ASSET FUNDS
I want to learn more about automatic reinvestment in the Investment Accumulation
Program. Please send me information about participation in the Municipal Fund
Accumulation Program, Inc. and a current Prospectus.
My name (please
print) _________________________________________________________________________
My address (please print):
Street and Apt.
No. ____________________________________________________________________________
City, State, Zip
Code ___________________________________________________________________________
This page is a self-mailer. Please complete the information above, cut along the
dotted line, fold along the lines on the reverse side, tape, and mail with the
Trustee's address displayed on the outside.
12345678

<PAGE>

BUSINESS REPLY MAIL NO POSTAGE
FIRST CLASS PERMIT NO. 7036 BOSTON, MA NECESSARY
IF MAILED
POSTAGE WILL BE PAID BY ADDRESSEE IN THE
INVESTORS BANK & TRUST COMPANY UNITED STATES
P.O. BOX 1537
BOSTON, MA 02205-1537

- --------------------------------------------------------------------------------
(Fold along this line.)

<PAGE>

INVESTMENT SUMMARY FOR EACH TRUST AS OF MAY 25, 1994 (CONTINUED)

RECORD DAY
The 10th day of each month
DISTRIBUTION DAY
The 25th day of each month
MINIMUM CAPITAL DISTRIBUTION
No distribution need be made from Capital Account of any Trust if balance
is less than $5.00 per Unit outstanding.
EVALUATION TIME
3:30 P.M. New York Time
ANNUAL PORTFOLIO SUPERVISION FEE(a)
Maximum of $0.25 per $1,000 face amount of underlying Debt Obligations (see
Expenses and Charges)
EVALUATOR'S FEE FOR EACH SERIES
Minimum of $13.00 (see Expenses and Charges)
MANDATORY TERMINATION DATE
Each Trust must be terminated no later than one year after the maturity
date of the last maturing Debt Obligation listed under its Portfolio (see
Portfolios).
MINIMUM VALUE OF TRUSTS
Any Trust may be terminated if its value is less than 40% of the Face
Amount of Securities in the Portfolio on the date of their deposit.

OBJECTIVE--To provide tax-exempt interest income through investment in
fixed-income long-term debt obligations issued by or on behalf of the States for
which the Trusts are named and political subdivisions and public authorities
thereof or certain United States territories or possessions. There is no
assurance that this objective will be met because it is subject to the
continuing ability of issuers of the Debt Obligations held by the Trusts to meet
their principal and interest requirements. Furthermore, the market value of the
underlying Debt Obligations, and therefore the value of the Units, will
fluctuate with changes in interest rates and other factors.

The Sponsors may deposit additional Securities in a Trust (where additional
Units are to be offered to the public) subsequent to the Initial Date of Deposit
(see Fund Structure).

RISK FACTORS--Investment in a Trust should be made with an understanding
that the value of the underlying Portfolio may decline with increases in
interest rates. In recent years there have been wide fluctuations in interest
rates and thus in the value of fixed-rate, long-term debt obligations generally.
The Sponsors cannot predict whether these fluctuations will continue in the
future. The Securities are generally not listed on a national securities
exchange. Whether or not the Securities are listed, the principal trading market
for the Securities will generally be in the over-the-counter market. As a
result, the existence of a liquid trading market for the Securities may depend
on whether dealers will make a market in the Securities. There can be no
assurance that a market will be made for any of the Securities, that any market
for the Securities will be maintained or of the liquidity of the Securities in
any markets made. In addition, the Fund may be restricted under the Investment
Company Act of 1940 from selling Securities to any Sponsor. The price at which
the Securities may be sold to meet redemptions and the value of Trust Units will
be adversely affected if trading markets for the Securities are limited or
absent.

PUBLIC OFFERING PRICE--During the initial offering period and any offering
of additional units the Public Offering Price of the Units of a Trust is based
on the aggregate offer side evaluation of the underlying Securities in the Trust
(the price at which they could be directly purchased by the public assuming they
were available) divided by the number of Units of the Trust outstanding plus a
sales charge of 4.712% of the offer side evaluation per Unit (the net amount
invested); this results in a sales charge of 4.50% of the Public Offering
Price.(b) For secondary market sales charges see Public Sale of Units--Public
Offering Price. Units are offered at the Public Offering Price computed as of
the Evaluation Time for all sales made subsequent to the previous evaluation,
plus cash per unit in the Capital Account not allocated to the purchase of
specific Securities and net interest accrued. The Public Offering Price on the
Initial Date of Deposit and subsequent dates will vary from the Public Offering
Price set forth on page A-3. (See Public Sale of Units--Public Offering Price
and Redemption.)

ESTIMATED CURRENT RETURN; ESTIMATED LONG TERM RETURN--Estimated Current
Return on a Unit of the Trust shows the return based on the Initial Public
Offering Price and the maximum applicable sales charge of 4.50%(b) and is
computed by multiplying the estimated net annual interest rate per Unit (which
shows the return per Unit based on $1,000 face amount per Unit) by $1,000 and
dividing the result by the Public Offering Price per Unit (not including accrued
interest). Estimated Long Term Return on a Unit of the Trust shows a net annual
long-term return to investors holding to maturity based on the individual Debt
Obligations in the Portfolio weighted to reflect the time to maturity (or in
certain cases to an earlier call date) and market value of each Debt Obligation
in the Portfolio, adjusted to reflect the Public Offering Price (including the
maximum applicable sales charge of 4.50%) and estimated expenses. The net annual
interest rate per Unit and the net annual long-term

- ---------------
(a) In addition to this amount, the Sponsors may be reimbursed for bookkeeping
or other administrative expenses not exceeding their actual costs, currently at
a maximum annual rate of $0.10 per Unit.

(b) The sales charge during the initial offering period and in the secondary
market will be reduced on a graduated scale in the case of purchases of 250 or
more Units (see Public Sale of Units--Public Offering Price).

A-6

<PAGE>

INVESTMENT SUMMARY FOR EACH TRUST AS OF MAY 25, 1994 (CONTINUED)

return to investors will vary with changes in the fees and expenses of the
Trustee and Sponsors and the fees of the Evaluator which are paid by the Fund,
and with the exchange, redemption, sale, prepayment or maturity of the
underlying Securities; the Public Offering Price will vary with any reduction in
sales charges paid in the case of purchases of 250 or more Units, as well as
with fluctuations in the offer side evaluation of the underlying Securities.
Therefore, it can be expected that the Estimated Current Return and Estimated
Long Term Return will fluctuate in the future (see Description of the
Fund--Income; Estimated Current Return; Estimated Long Term Return).

MONTHLY DISTRIBUTIONS--Monthly distributions of interest and any principal
or premium received by a Trust will be made in cash on or shortly after the 25th
day of each month to Holders of record of Units of the Trust on the 10th day of
such month commencing with the first distribution on the date indicated above
(see Administration of the Fund--Accounts and Distributions). Alternatively,
Holders may elect to have their monthly distributions reinvested in the
Municipal Fund Accumulation Program, Inc. Further information about the program,
including a current prospectus, may be obtained by returning the enclosed form
(see Administration of the Fund-- Investment Accumulation Program).

TAXATION--In the opinion of special counsel to the Sponsors, each Holder of
Units of a Trust will be considered to have received the interest on his pro
rata portion of each Debt Obligation in the Trust when interest on the Debt
Obligation is received by the Trust. In the opinion of bond counsel rendered on
the date of issuance of the Debt Obligation, this interest is exempt under
existing law from regular Federal income tax and exempt from certain state and
local personal income taxes of the State for which the Trust is named (except in
certain circumstances depending on the Holder), but may be subject to other
state and local taxes. Any gain on the disposition of a Holder's pro rata
portion of a Debt Obligation will be subject to tax. (See Taxes.)

MARKET FOR UNITS--The Sponsors, though not obligated to do so, intend to
maintain a secondary market for Units based on the aggregate bid side evaluation
of the underlying Securities (see Market for Units). If this market is not
maintained a Holder will be able to dispose of his Units through redemption at
prices also based on the aggregate bid side evaluation of the underlying
Securities (see Redemption). There is no fee for selling Units. Market
conditions may cause the prices available in the market maintained by the
Sponsors or available upon exercise of redemption rights to be more or less than
the total of the amount paid for Units plus accrued interest.

REPLACEMENT SECURITIES--The Indenture permits the deposit of Replacement
Securities under certain circumstances described under Administration of the
Fund--Portfolio Supervision. The Securities on the current list from which
Replacement Securities are to be selected are:

Orange Cnty., FL, Tourist Dev. Tax Rev. Bonds, Ser. 1994 B (MBIA
Ins.), 6.00%, due 10/1/24.

Pinellas Cnty., FL, Swr. Rev. Bonds, Ser. 1994 (Financial Guaranty
Ins.), 5.875%, due 10/1/20.

Metropolitan Trans. Auth., NY, Commuter Fac. Rev. Bonds, Ser. 1992 B
(MBIA Ins.), 6.25%, due 7/1/22.

Triborough Bridge and Tunnel Auth., NY, Spec. Oblig. Bonds, Ser. 1992
(AMBAC Ins.), 5.50%, due 1/1/17.

Beaver Cnty., PA, Ind. Dev. Auth., Poll. Ctl. Rev. Rfdg. Bonds, 1993
Ser. A (Ohio Edison Co. Mansfield Proj.) (AMBAC Ins.), 5.45%, due
9/15/33.

North Penn Wtr. Auth. (Montgomery Cnty., PA), Wtr. Rev. Bonds, Ser. of
1992 (Financial Guaranty Ins.), 6.20%, due 11/1/22.

UNDERWRITING ACCOUNT

The names and addresses of the Underwriters and their several interests in
the Underwriting Account are:

<TABLE>
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated P.O. Box 9051, Princeton, N.J. 08543-9051 73.95%
Smith Barney Shearson Inc. Two World Trade Center--101st Floor, New York, N.Y.
10048 8.37
PaineWebber Incorporated 1285 Avenue of the Americas, New York, N.Y. 10019 6.98
Prudential Securities Incorporated One Seaport Plaza--199 Water Street, New York, N.Y.
10292 6.98
Dean Witter Reynolds Inc. Two World Trade Center--59th Floor, New York, N.Y.
10048 3.72
----------
100.00%
----------
----------
</TABLE>

A-7

<PAGE>

INVESTMENT SUMMARY AS OF MAY 25, 1994 (CONTINUED)

FEE TABLE

THIS FEE TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE COSTS
AND EXPENSES THAT AN INVESTOR IN A TRUST WILL BEAR DIRECTLY OR INDIRECTLY. SEE
PUBLIC SALE OF UNITS AND EXPENSES AND CHARGES. ALTHOUGH THE FUND IS A UNIT
INVESTMENT TRUST RATHER THAN A MUTUAL FUND, THIS INFORMATION IS PRESENTED TO
PERMIT A COMPARISON OF FEES.

<TABLE>
<S> <C>
UNITHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases during the Initial Offering Period (as a percentage
of Public Offering Price)....................................................................................... 4.50%
Maximum Sales Charge Imposed on Purchases during the Secondary Offering Period (as a percentage of Public Offering
Price).......................................................................................................... 5.50%
---------

<CAPTION>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS1)
FLORIDA NEW YORK
TRUST TRUST
----------- -------------
<S> <C> <C>
Trustee's Fee......................................................................... .075% .074%
Portfolio Supervision, Bookkeeping and Administrative Fees............................ .037% .037%
Other Operating Expenses.............................................................. .100% .092%
----------- -------------
Total.............................................................................. .212% .203%
----------- -------------
----------- -------------

ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS1)
PENNSYLVANIA
TRUST
---------------
Trustee's Fee......................................................................... .075%
Portfolio Supervision, Bookkeeping and Administrative Fees............................ .038%
Other Operating Expenses.............................................................. .106%
---------------
Total.............................................................................. .219%
---------------
---------------
</TABLE>

- ------------------
1Based on the mean of the bid and offer side evaluations; these figures may
differ from those set forth as estimated annual expenses per unit expressed as a
percentage on page A-3.

<TABLE><CAPTION>
EXAMPLE
- ------------------------------------------------------------------------------------------------------------------------------

An investor would pay the following expenses on a $1,000 investment,
assuming the Trust's estimated operating expense ratio as described in
parentheses below and a 5% annual CUMULATIVE EXPENSES PAID FOR PERIOD OF:
return on the investment throughout the periods:
------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- ----------- ----------- -----------

Florida Trust (.212%).................................................. $ 47.07 $ 51.52 $ 56.41 $ 70.82
New York Trust (.203%)................................................. 46.98 51.25 55.92 69.73
Pennsylvania Trust (.219%)............................................. 47.14 51.74 56.78 71.66

</TABLE>
The Example assumes reinvestment of all distributions into additional Units of a
Trust (a reinvestment option different from that offered by this Fund--see
Administration of the Fund--Investment Accumulation Program) and utilizes a 5%
annual rate of return as mandated by Securities and Exchange Commission
regulations applicable to mutual funds. In addition to the charges described
above, a Holder selling or redeeming his Units in the secondary market (before a
Trust terminates) will receive a price based on the then-current bid side
evaluation of the underlying securities. The difference between this bid side
evaluation and the offer side evaluation (the basis for the Public Offering
Price), as of the day before the Initial Date of Deposit, is $4.00 per Unit for
each of the Trusts. Of course, this difference may change over time. The Example
should not be considered a representation of past or future expenses or annual
rate of return; the actual expenses and annual rate of return may be more or
less than those assumed for purposes of the Example.

A-8

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

The Sponsors, Co-Trustees and Holders of Municipal Investment Trust Fund,
Multistate Series - 62, Defined Asset Funds (Florida, New York and Pennsylvania
Trusts):

We have audited the accompanying statements of condition, including the
portfolios, of Municipal Investment Trust Fund, Multistate Series - 62, Defined
Asset Funds (Florida, New York, and Pennsylvania Trusts) as of May 26, 1994.
These financial statements are the responsibility of the Co-Trustees. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. The deposit on May 26,
1994 of an irrevocable letter or letters of credit for the purchase of
securities, as described in the statements of condition, was confirmed to us by
Investors Bank & Trust Company, a Co-Trustee. An audit also includes assessing
the accounting principles used and significant estimates made by the Trustees,
as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Municipal Investment Trust
Fund, Multistate Series - 62, Defined Asset Funds (Florida, New York and
Pennsylvania Trusts) at May 26, 1994 in conformity with generally accepted
accounting principles.

DELOITTE & TOUCHE
New York, N.Y.
May 26, 1994

A-9
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES - 62
DEFINED ASSET FUNDS
STATEMENTS OF CONDITION AS OF INITIAL DATE OF DEPOSIT, MAY 26, 1994

FLORIDA NEW YORK PENNSYLVANIA
TRUST TRUST TRUST
-------------- -------------- --------------
FUND PROPERTY
Investment in Debt
Obligations(1)
Contracts to purchase
Debt Obligations.........$ 3,285,735.00 $ 3,805,291.30 $ 3,014,412.50
Accrued interest to Initial Date
of Deposit on underlying Debt
Obligations................... 31,638.03 50,553.99 44,072.92
-------------- -------------- --------------
Total...............$ 3,317,373.03 $ 3,855,845.29 $ 3,058,485.42
-------------- -------------- --------------
-------------- -------------- --------------
LIABILITY AND INTEREST OF
HOLDERS
Liability--Accrued interest to
Initial Date of Deposit on
underlying Debt
Obligations(2)................$ 31,638.03 $ 50,553.99 $ 44,072.92
-------------- -------------- --------------
Interest of Holders--
Units of fractional undivided
interest outstanding
(Florida Trust--3,500;
New York Trust--4,000;
Pennsylvania Trust--3,250)
Cost to investors(3).......$ 3,440,575.00 $ 3,984,611.30 $ 3,156,470.00
Gross underwriting
commissions(4).............$ (154,840.00) $ (179,320.00) $ (142,057.50)
-------------- -------------- --------------
Net amount applicable to
investors.................. 3,285,735.00 3,805,291.30 3,014,412.50
-------------- -------------- --------------
Total...............$ 3,317,373.03 $ 3,855,845.29 $ 3,058,485.42
-------------- -------------- --------------
-------------- -------------- --------------

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

(1) Aggregate cost to each Trust of the Debt Obligations is based on the offer
side evaluation determined by the Evaluator at the Evaluation Time on the
business day prior to the Initial Date of Deposit as set forth under Public
Sale of Units--Public Offering Price. See also the column headed Cost of
Debt Obligations to Trust under Portfolios. An irrevocable letter or letters
of credit in the aggregate amount of $10,159,164.79 has been deposited with
the Trustee. The amount of such letter or letters of credit includes
$10,023,353.30 (equal to the aggregate purchase price to the Sponsors) for
the purchase of $10,750,000 face amount of Debt Obligations in connection
with contracts to purchase Debt Obligations, plus $135,811.49 covering
accrued interest thereon to the earlier of the date of settlement for the
purchase of Units or the date of delivery of the Debt Obligations. The
letter or letters of credit has been issued by The Sakura Bank, Limited, New
York Branch.

(2) Representing, as set forth under Description of the Fund--Income; Estimated
Current Return; Estimated Long Term Return, a special distribution by the
Trustee of an amount equal to accrued interest on the Debt Obligations as of
the Initial Date of Deposit.

(3) Aggregate public offering price (exclusive of interest) computed on the
basis of the offer side evaluation of the underlying Debt Obligations as of
the Evaluation Time on the Business Day prior to the Initial Date of
Deposit.

(4) Assumes sales charge of 4.50% on all Units computed on the basis set forth
under Public Sale of Units--Public Offering Price.

A-10
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND, MULTISTATE SERIES - 62
ON THE INITIAL DATE OF DEPOSIT,
DEFINED ASSET FUNDS
MAY 26, 1994
PORTFOLIO OF THE FLORIDA TRUST (INSURED)

<TABLE><CAPTION>
OPTIONAL
PORTFOLIO NO. AND TITLE OF RATINGS OF FACE REFUNDING
DEBT OBLIGATIONS CONTRACTED FOR ISSUES (1) AMOUNT COUPON MATURITIES REDEMPTIONS (2)
---------------------------------------------- ----------- ------------- ----------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
1. State of Florida, Dept. of Trans., Tpke. Rev. AAA $ 500,000 5.25% 7/1/22 7/1/03 @ 101
Rfdg. Bonds, Ser. 1993 A (Financial Guaranty
Ins.)
2. Hillsborough Cnty., FL, Aviation Auth., Tampa AAA 250,000 5.60 10/1/19 10/1/03 @ 102
Int. Arpt. Rev. Rfdg. Bonds, Ser. 1993 B
(Financial Guaranty Ins.)
3. Hillsborough Cnty., FL, Ind. Dev. Auth., Ind. AAA 500,000 5.80 8/15/24 8/15/04 @ 102
Dev. Rev. Bonds (Univ. Comm. Hosp.), Ser.
1994 (MBIA Ins.)
4. Orange Cnty., FL, Solid Waste Fac. Rev. Bonds, AAA 250,000 6.375 10/1/17 10/1/02 @ 102
Ser. 1992 (Financial Guaranty Ins.)
5. City of Miami Beach, FL, Hlth. Fac. Auth., AAA 500,000 6.25 11/15/19 11/15/02 @ 102
Hosp. Rev. Rfdg. Bonds, Ser. 1992 (Mount
Sinai Med. Ctr. Proj.) (CGIC Ins.)
6. City of Pembroke Pines, FL, Cap. Imp. Rev. AAA 500,000 5.375 12/1/23 12/1/03 @ 102
Bonds, Ser. 1993 (AMBAC Ins.)
7. Florida Muni. Pwr. Agency,. St. Lucie Proj. AAA 500,000 5.25 10/1/21 10/1/02 @ 102
Rfdg. Rev. Bonds, Ser. 1992 (Financial
Guaranty Ins.)
8. The Sch. Bd. of Seminole Cnty., FL, Certs. of AAA 500,000 6.125 7/1/14 7/1/04 @ 102
Part., Ser. 1994 A (MBIA Ins.)
-------------
$ 3,500,000
-------------
-------------
</TABLE>

SINKING COST OF YIELD TO MATURITY
FUND DEBT OBLIGATIONS ON INITIAL DATE OF
REDEMPTIONS (2) TO TRUST (3) DEPOSIT (3)
--------------- ----------------- -------------------
1. 7/1/20 $ 437,130.00 6.200%

2. 10/1/14 232,432.50 6.150

3. 8/15/20 472,780.00 6.200

4. 10/1/13 255,192.50 6.100+

5. 11/15/15 501,890.00 6.200+

6. 12/1/14 447,525.00 6.150

7. 10/1/17 437,765.00 6.200

8. 7/1/10 501,020.00 6.100+

-----------------
$ 3,285,735.00
-----------------
-----------------

A-11
<PAGE>
- ------------
NOTES

(1) All ratings are by Standard & Poor's. Any rating followed by '*' is subject
to submission and review of final documentation. Any rating followed by a
'p' is provisional and assumes the successful completion of the project
being financed. (See Description of Ratings.)

(2) Debt Obligations are first subject to optional redemption (which may be
exercised in whole or in part) on the dates and at the prices indicated
under the Optional Refunding Redemptions column in the table. In subsequent
years Debt Obligations are redeemable at declining prices, but typically
not below par value. Some issues may be subject to sinking fund redemption
or extraordinary redemption without premium prior to the dates shown.

Certain Debt Obligations may provide for redemption at par prior or in
addition to any optional or mandatory redemption dates or maturity, for
example, if proceeds are not able to be used as contemplated, if the project
is sold by the owner, if the project is condemned or sold, if the project
is destroyed and insurance proceeds are used to redeem the Debt
Obligations, if interest on the Debt Obligations becomes subject to
taxation, if any related credit support expires prior to maturity and is
not renewed or substitute credit support not obtained, if, in the case of
housing obligations, mortgages are prepaid, or in other special
circumstances.

Sinking fund redemptions are all at par and generally redeem only part of an
issue. Some of the Debt Obligations have mandatory sinking funds which
contain optional provisions permitting the issuer to increase the principal
amount of Debt Obligations called on a mandatory redemption date. The
sinking fund redemptions with optional provisions may, and optional
refunding redemptions generally will, occur at times when the redeemed Debt
Obligations have an offer side evaluation which represents a premium over
par. To the extent that the Debt Obligations were deposited in the Trust at
a price higher than the redemption price, this will represent a loss of
capital when compared with the original Public Offering Price of the Units.
Monthly distributions will generally be reduced by the amount of the income
which would otherwise have been paid with respect to redeemed Debt
Obligations and there will be distributed to Holders any principal amount
and premium received on such redemption after satisfying any redemption
requests received by the Trust. The current return and long term return in
this event may be affected by redemptions. The tax effect on Holders of
redemptions and related distributions is described under Taxes.

(3) Evaluation of Debt Obligations by the Evaluator is made on the basis of
current offer side evaluation. The offering side evaluation is greater than
the current bid side evaluation of the Debt Obligations, which is the basis
on which Redemption Price per Unit is determined (see Redemption). The
aggregate value based on the bid side evaluation at the Evaluation Time on
the business day prior to the Initial Date of Deposit was $3,271,735.00,
which is $14,000.00 (.40% of the aggregate face amount) lower than the
aggregate Cost of Debt Obligations to Trust based on the offer side
evaluation.

Yield to Maturity on the Initial Date of Deposit of Debt Obligations was
computed on the basis of the offer side evaluation at the Evaluation Time on
the business day prior to the Initial Date of Deposit. Percentages in this
column represent Yield to Maturity on Initial Date of Deposit unless
followed by '+' which indicates yield to an earlier redemption date. (See
Description of the Fund--Income; Estimated Current Return; Estimated Long
Term Return for a description of the computation of yield price.)

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

All Debt Obligations are represented entirely by contracts to purchase such
Debt Obligations, which were entered into by the Sponsors on May 25, 1994.
All contracts are expected to be settled by the initial settlement date for
purchase of Units.

All the Debt Obligations have been insured or guaranteed to maturity by the
indicated insurance company (see Risk Factors--Obligations Backed by
Insurance).

+ See Footnote (3).

A-12
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND, MULTISTATE SERIES - 62
ON THE INITIAL DATE OF DEPOSIT,
DEFINED ASSET FUNDS
MAY 26, 1994
PORTFOLIO OF THE NEW YORK TRUST (INSURED)

<TABLE><CAPTION>
PORTFOLIO NO. AND TITLE OF RATINGS OF FACE
DEBT OBLIGATIONS CONTRACTED FOR ISSUES (1) AMOUNT COUPON MATURITIES
----------------------------------------------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1. New York State Med. Care Fac. Fin. Agency, AAA $ 600,000 5.80 % 8/15/22
Mental Hlth. Fac. Imp. Rev. Bonds, 1993 Ser.
A (AMBAC Ins.)
2. New York State Med. Care Fac. Fin. Agency, St. AAA 690,000 6.20 11/1/14
Mary's Hosp. (Rochester) Mtge. Proj. Rev.
Bonds, 1994 Ser. A Refunding (AMBAC Ins.)
3. New York State, Urban Dev. Corp., Youth Fac. AAA 600,000 5.70 4/1/14
Rev. Bonds, Ser. 1994 (MBIA Ins.)
4. New York State Thruway Auth., Gen. Rev. Bonds, AAA 600,000 5.50 1/1/23
Ser. A (Financial Guaranty Ins.)
5. New York City, NY, Muni. Wtr. Fin. Auth., Wtr. AAA 600,000 5.75 6/15/20
and Swr. Sys. Rev. Bonds, 1994 Ser. F (MBIA
Ins.)
6. New York City, NY, Hlth. and Hosp. Corp., Hlth. AAA 600,000 5.75 2/15/22
Sys. Bonds, 1993 Ser. A (AMBAC Ins.)
7. The City of New York, NY, G.O. Bonds, Fiscal AAA 310,000 5.375 10/1/19
1994 Ser. C (AMBAC Ins.)
-------------
$ 4,000,000
-------------
-------------
<CAPTION>

OPTIONAL SINKING COST OF YIELD TO MATURITY
REFUNDING FUND DEBT OBLIGATIONS ON INITIAL DATE
REDEMPTIONS (2) REDEMPTIONS (2) TO TRUST (3) OF DEPOSIT (3)
------------------- --------------- ----------------- -----------------
<S> <C> <C> <C> <C>
1. 2/15/03 @ 102 2/15/15 $ 571,962.00 6.150%

2. 11/1/03 @ 102 11/1/10 692,760.00 6.150+

3. 4/1/04 @ 102 4/1/10 572,538.00 6.100

4. 1/1/02 @ 100 1/1/20 551,526.00 6.100

5. 6/15/04 @ 101.5 -- 568,998.00 6.150

6. 2/15/03 @ 102 2/15/21 568,188.00 6.150

7. 10/1/03 @ 101.5 -- 279,319.30 6.150

-----------------
$ 3,805,291.30
-----------------
-----------------
</TABLE>

A-13
<PAGE>
- ------------

NOTES

Sinking fund redemptions are all at par and generally redeem only part of an
issue. Some of the Debt Obligations have mandatory sinking funds which
contain optional provisions permitting the issuer to increase the principal
amount of Debt Obligations called on a mandatory redemption date. The
sinking fund redemptions with optional provisions may, and optional
refunding redemptions generally will, occur at times when the redeemed Debt
Obligations have an offering side evaluation which represents a premium over
par. To the extent that the Debt Obligations were deposited in the Trust at
a price higher than the redemption price, this will represent a loss of
capital when compared with the original Public Offering Price of the Units.
Monthly distributions will generally be reduced by the amount of the income
which would otherwise have been paid with respect to redeemed Debt
Obligations and there will be distributed to Holders any principal amount
and premium received on such redemption after satisfying any redemption
requests received by the Trust. The current return and long term return in
this event may be affected by redemptions. The tax effect on Holders of
redemptions and related distributions is described under Taxes.

(3) Evaluation of Debt Obligations by the Evaluator is made on the basis of
current offer side evaluation. The offer side evaluation is greater than the
current bid side evaluation of the Debt Obligations, which is the basis on
which Redemption Price per Unit is determined (see Redemption). The
aggregate value based on the bid side evaluation at the Evaluation Time on
the business day prior to the Initial Date of Deposit was $3,789,291.30,
which is $16,000.00 (.40% of the aggregate face amount) lower than the
aggregate Cost of Debt Obligations to Trust based on the offer side
evaluation.

Yield to Maturity on the Initial Date of Deposit of Debt Obligations was
computed on the basis of the offering side evaluation at the Evaluation Time
on the business day prior to the Initial Date of Deposit. Percentages in
this column represent Yield to Maturity on Initial Date of Deposit unless
followed by '+' which indicates yield to an earlier redemption date. (See
Description of the Fund--Income; Estimated Current Return; Estimated Long
Term Return for a description of the computation of yield price.)

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

All Debt Obligations are represented entirely by contracts to purchase such
Debt Obligations, which were entered into by the Sponsors during the period
May 24, 1994 to May 25, 1994. All contracts are expected to be settled by
the initial settlement date for purchase of Units, except for the Debt
Obligations in Portfolio Number 2 (approximately 17% of the aggregate face
amount of the Portfolio) which have been purchased on a when, as and if
issued basis, or have a delayed delivery, and are expected to be settled 7
days after the settlement date for purchase of Units.

All Debt Obligations have been insured or guaranteed to maturity by the
indicated insurance company (see Risk Factors--Obligations Backed by
Insurance).

+ See Footnote (3).

A-14
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND, MULTISTATE SERIES - 62
ON THE INITIAL DATE OF DEPOSIT,
DEFINED ASSET FUNDS
MAY 26, 1994
PORTFOLIO OF THE PENNSYLVANIA TRUST (INSURED)

OPTIONAL
PORTFOLIO NO. AND TITLE OF RATINGS OF FACE REFUNDING
DEBT OBLIGATIONS CONTRACTED FOR ISSUES (1) AMOUNT COUPON MATURITIES REDEMPTIONS (2)
---------------------------------------------- ----------- ------------- ----------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
1. Bucks Cnty., PA, Ind. Dev. Auth., Hosp. Rev. AAA $ 500,000 5.25% 7/1/21 7/1/03 @ 102
Rfdg. Bonds (Grand View Hosp.), Ser. of 1993
(AMBAC Ins.)
2. Lehigh Cnty., PA, Ind. Dev. Auth., Poll. Ctr. AAA 500,000 5.50 2/15/27 2/15/04 @ 102
Rev. Rfdg. Bonds, 1994 Ser. A (Pennsylvania
Pwr. & Light Co. Proj.) (MBIA Ins.)
3. Montgomery Cnty., PA, Higher Educ. and Hlth. AAA 250,000 5.125 6/1/24 6/1/04 @ 102
Auth., Hosp. Rev. Bonds, Ser. A of 1994
(Abington Mem. Hosp.) (AMBAC Ins.)
4. City of Philadelphia, PA, Wtr. and Wastewater AAA 500,000 5.25 6/15/23 6/15/03 @ 102
Rev. Bonds, Ser. 1993 (MBIA Ins.)
5. Bedford Area Sch. Dist., Bedford Cnty., PA, AAA 500,000 6.20 4/15/24 4/15/04 @ 100
G.O. Bonds, Ser. 1994 A (MBIA Ins.)
6. Saint Mary Hosp. Auth., PA, Hosp. Rev. Bonds, AAA 500,000 6.50 7/1/22 7/1/02 @ 102
Ser. 1992 B (Franciscan Hlth. Sys.) (MBIA
Ins.)
7. West Middlesex Area Sch. Dist., Mercer Cnty., AAA 500,000 6.25 6/15/24 6/15/04 @ 100
PA, G.O. Bonds, Ser. 1994 (Financial
Guaranty Ins.)
-------------
$ 3,250,000
-------------
-------------
</TABLE>

SINKING COST OF YIELD TO MATURITY
FUND DEBT OBLIGATIONS ON INITIAL DATE OF
REDEMPTIONS (2) TO TRUST (3) DEPOSIT (3)
--------------- ----------------- -------------------
1. 7/1/13 $ 429,265.00 6.350%

2. -- 441,670.00 6.350

3. 6/1/15 209,152.50 6.350

4. 6/15/20 430,390.00 6.300

5. 4/15/12 496,590.00 6.250

6. 7/1/13 507,345.00 6.300+

7. 6/15/20 500,000.00 6.250

-----------------
$ 3,014,412.50
-----------------
-----------------

A-15
<PAGE>

- ------------
NOTES

(3) Evaluation of Debt Obligations by the Evaluator is made on the basis of
current offer side evaluation. The offer side evaluation is greater than the
current bid side evaluation of the Debt Obligations, which is the basis on
which Redemption Price per Unit is determined (see Redemption). The
aggregate value based on the bid side evaluation at the Evaluation Time on
the business day prior to the Initial Date of Deposit was $3,001,412.50,
which is $13,000.00 (.40% of the aggregate face amount) lower than the
aggregate Cost of Debt Obligations to Trust based on the offer side
evaluation.

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

All Debt Obligations are represented entirely by contracts to purchase such
Debt Obligations, which were entered into by the Sponsors during the period
May 24, 1994 to May 25, 1994. All contracts are expected to be settled by
the initial settlement date for purchase of Units, except for the Debt
Obligations in Portfolio Numbers 3, 5, 6 and 7 (approximately 54% of the
aggregate face amount of the Portfolio) which have been purchased on a when,
as and if issued basis, or have a delayed delivery, and are expected to be
settled 6 to 25 days after the settlement date for purchase of Units.

All Debt Obligations have been insured or guaranteed to maturity by the
indicated insurance company (see Risk Factors--Obligations Backed by
Insurance).

+ See Footnote (3).

A-16
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES
DEFINED ASSET FUNDS

FUND STRUCTURE

This Series (the 'Fund') consists of separate 'unit investment trusts'
created under New York law by Trust Indentures (the 'Indentures') among the
Sponsors, the Trustee and the Evaluator. Unless otherwise indicated, when
Investors Bank & Trust Company and The First National Bank of Chicago act as
Co-Trustees to the Fund, reference to the Trustee in the Prospectus shall be
deemed to refer to Investors Bank & Trust Company and The First National Bank of
Chicago, as Co-Trustees. To the extent that references in this Prospectus are to
articles and sections of the Indenture, which are hereby incorporated by
reference, the statements made herein are qualified in their entirety by this
reference. On the date of this Prospectus (the 'Initial Date of Deposit') the
Sponsors, acting as managers for the underwriters named under Underwriting
Account, deposited the underlying Securities with the Trustee at a price equal
to the evaluation of the Securities on the offer side of the market on that date
as determined by the Evaluator, and the Trustee delivered to the Sponsors units
of interest ('Units') representing the entire ownership of the Trusts. Except as
otherwise indicated under Portfolios (the 'Portfolios'), the Securities so
deposited were represented by purchase contracts assigned to the Trustee
together with an irrevocable letter or letters of credit issued by a commercial
bank or banks in the amount necessary to complete the purchase thereof.

The Portfolio of each Trust contains different issues of debt obligations
with fixed final maturity dates. As used herein, the term 'Debt Obligations' or
'Securities' means the long-term debt obligations initially deposited in the
Trusts, and described under Portfolio for each Trust, and any replacement and
additional obligations acquired and held by the Trusts pursuant to the terms of
the Indentures. (See Description of the Fund--The Portfolios; Administration of
the Fund--Portfolio Supervision).

With the deposit of the Securities in each Trust on the Initial Date of
Deposit, the Sponsors established a proportionate relationship among the face
amounts of each Security in the Portfolio. During the 90-day period following
the Initial Date of Deposit, the Sponsors may deposit additional Securities
('Additional Securities'), contracts to purchase Additional Securities or cash
(or a bank letter of credit in lieu of cash) with instructions to purchase
Additional Securities, in order to create new Units, maintaining to the extent
practicable the original proportionate relationship among the face amounts of
each Security in the Portfolio. It may not be possible to maintain the exact
original proportionate relationship among the Securities deposited on the
Initial Date of Deposit because of, among other reasons, purchase requirements,
changes in prices, or unavailability of Securities. Replacement obligations may
be acquired under specified conditions (see Description of the Fund-- The
Portfolios; Administration of the Fund--Portfolio Supervision). Units may be
continuously offered to the public by means of this Prospectus (see Public Sale
of Units--Public Distribution) resulting in a potential increase in the number
of Units outstanding. Deposits of Additional Securities subsequent to the 90-day
period following the Initial Date of Deposit must replicate exactly the
proportionate relationship among the face amounts of

1
<PAGE>
Securities comprising the Portfolio at the end of the initial 90-day period,
subject to certain events as discussed under Administration of the
Fund--Portfolio Supervision.

Certain of the Securities in the Portfolio of any Trust may have been
valued at a market discount. Securities trade at less than par value because the
interest rates on the Securities are lower than interest on comparable debt
securities being issued at currently prevailing interest rates. The current
returns of securities trading at a market discount are lower than the current
returns of comparably rated debt securities of a similar type issued at
currently prevailing interest rates because discount securities tend to increase
in market value as they approach maturity and the full principal amount becomes
payable. If currently prevailing interest rates for newly issued and otherwise
comparable securities increase, the market discount of previously issued
securities will become deeper and if currently prevailing interest rates for
newly issued comparable securities decline, the market discount of previously
issued securities will be reduced, other things being equal. Market discount
attributable to interest rate changes does not indicate a lack of market
confidence in the issue.

Certain of the Securities in a Trust may have been valued at a market
premium. Securities trade at a premium because the interest rates on the
Securities are higher than interest on comparable debt securities being issued
at currently prevailing interest rates. The current returns of securities
trading at a market premium are higher than the current returns of comparably
rated debt securities of a similar type issued at currently prevailing interest
rates because premium securities tend to decrease in market value as they
approach maturity when the face amount becomes payable. Because part of the
purchase price is thus returned not at maturity but through current income
payments, an early redemption of a premium security at par will result in a
reduction in yield. If currently prevailing interest rates for newly issued and
otherwise comparable securities increase, the market premium of previously
issued securities will decline and if currently prevailing interest rates for
newly issued comparable securities decline, the market premium of previously
issued securities will increase, other things being equal. Market premium
attributable to interest rate changes does not indicate market confidence in the
issue.

The holders ('Holders') of Units of a Trust will have the right to have
their Units redeemed (see Redemption) at a price based on the aggregate bid side
evaluation of the Securities ('Redemption Price per Unit') if the Units cannot
be sold in the over-the-counter market which the Sponsors propose to maintain at
prices determined in the same manner (see Market for Units). On the Initial Date
of Deposit each Unit of a Trust represented the fractional undivided interest in
the Securities and net income of the Trust set forth under Investment Summary in
the ratio of one Unit for each approximately $1,000 face amount of Securities
initially deposited. Thereafter, if any Units are redeemed, the face amount of
Securities in the Trust will be reduced, and the fractional undivided interest
represented by each remaining Unit in the balance will be increased. However, if
additional Units are issued by the Fund (through deposit of Additional
Securities) the aggregate face amount of Securities will be increased and the
fractional undivided interest represented by each Unit will be decreased. Units
will remain outstanding until redeemed upon tender to the Trustee by any Holder
(which may include the Sponsors) or until the termination of the Indenture (see
Redemption; Administration of the Fund--Amendment and Termination).

2
<PAGE>
RISK FACTORS

An investment in Units of a Trust should be made with an understanding of
the risks which an investment in fixed rate long-term debt obligations may
entail, including the risk that the value of the Portfolio of the Trust and
hence of the Units will decline with increases in interest rates. In recent
years there have been wide fluctuations in interest rates and thus in the value
of fixed-rate debt obligations generally. The Sponsors cannot predict future
economic policies or their consequences or, therefore, the course or extent of
any similar fluctuations in the future. To the extent that payment of amounts
due on Debt Obligations depends on revenue from publicly held corporations, an
investor should understand that these Debt Obligations, in many cases, do not
have the benefit of covenants which would prevent the corporations from engaging
in capital restructurings or borrowing transactions in connection with corporate
acquisitions, leveraged buyouts or restructurings which could have the effect of
reducing the ability of the corporation to meet its obligations and may in the
future result in the ratings of the Debt Obligations and the value of the
underlying Portfolio being reduced.

The Securities are generally not listed on a national securities exchange.
Whether or not the Securities are listed, the principal trading market for the
Securities will generally be in the over-the-counter market. As a result, the
existence of a liquid trading market for the Securities may depend on whether
dealers will make a market in the Securities. There can be no assurance that a
market will be made for any of the Securities, that any market for the
Securities will be maintained or of the liquidity of the Securities in any
markets made. In addition, the Fund may be restricted under the Investment
Company Act of 1940 from selling Securities to any Sponsor. The price at which
the Securities may be sold to meet redemptions and the value of the Fund will be
adversely affected if trading markets for the Securities are limited or absent.

As set forth under Investment Summary and Portfolios, any Trust may contain
or be concentrated in one or more of the classifications of Debt Obligations
referred to below. Percentages of any concentrations for each Trust are set
forth under Investment Summary. An investment in Units of a Trust should be made
with an understanding of the risks that these investments may entail, certain of
which are described below. In addition, investment in a single state Trust, as
opposed to a Trust which invests in the obligations of several states, may
involve some additional risk due to the decreased diversification of economic,
political, financial and market risks. Political restrictions on the ability to
tax and budgetary constraints affecting the state government, particularly in
the current recessionary climate, may result in reductions of, or delays in the
payment of, state aid to cities, counties, school districts and other local
units of government which, in turn, may strain the financial operations and have
an adverse impact on the creditworthiness of these entities. State agencies,
colleges and universities and health care organizations, with municipal debt
outstanding, may also be negatively impacted by reductions in state
appropriations.

GENERAL OBLIGATION BONDS

Certain of the Debt Obligations in the Portfolio of any Trust may be
general obligations of a governmental entity that are secured by the taxing
power of the entity. General obligation bonds are backed by the issuer's pledge
of its full faith, credit and taxing power for the payment of principal and
interest. However, the taxing

3
<PAGE>
power of any governmental entity may be limited by provisions of state
constitutions or laws and an entity's credit will depend on many factors,
including an erosion of the tax base due to population declines, natural
disasters, declines in the state's industrial base or inability to attract new
industries, economic limits on the ability to tax without eroding the tax base
and the extent to which the entity relies on Federal or state aid, access to
capital markets or other factors beyond the entity's control.

As a result of the recent recession's adverse impact upon both their
revenues and expenditures, as well as other factors, many state and local
governments are confronting deficits and potential deficits which are the most
severe in recent years. Many issuers are facing highly difficult choices about
significant tax increases and/or spending reductions in order to restore
budgetary balance. Failure to implement these actions on a timely basis could
force the issuers to depend upon market access to finance deficits or cash flow
needs.

In addition, certain of the Debt Obligations in any Trust may be
obligations of issuers who rely in whole or in part on ad valorem real property
taxes as a source of revenue. Certain proposals, in the form of state
legislative proposals or voter initiatives, to limit ad valorem real property
taxes have been introduced in various states and an amendment to the
constitution of the State of California, providing for strict limitations on ad
valorem real property taxes has had a significant impact on the taxing powers of
local governments and on the financial conditions of school districts and local
governments in California. It is not possible at this time to predict the final
impact of such measures, or of similar future legislative or constitutional
measures, on school districts and local governments or on their abilities to
make future payments on their outstanding debt obligations.

MORAL OBLIGATION BONDS

A Trust may also include 'moral obligation' bonds. If an issuer of moral
obligation bonds is unable to meet its obligations, the repayment of the bonds
becomes a moral commitment but not a legal obligation of the state or
municipality in question. Even though the state may be called on to restore any
deficits in capital reserve funds of the agencies or authorities which issued
the bonds, any restoration generally requires appropriation by the state
legislature and accordingly does not constitute a legally enforceable obligation
or debt of the state. The agencies or authorities generally have no taxing
power.

REFUNDED DEBT OBLIGATIONS

Refunded Debt Obligations are typically secured by direct obligations of
the U.S. Government, or in some cases obligations guaranteed by the U.S.
Government, placed in an escrow account maintained by an independent trustee
until maturity or a predetermined redemption date. These obligations are
generally noncallable prior to maturity or the predetermined redemption date. In
a few isolated instances to date, however, bonds which were thought to be
escrowed to maturity have been called for redemption prior to maturity.

INDUSTRIAL DEVELOPMENT REVENUE BONDS ('IDRS')

IDRs, including pollution control revenue bonds, are tax exempt securities
issued by states, municipalities, public authorities or similar entities
('issuers') to finance the cost of acquiring, constructing or improving various

4
<PAGE>
projects, including pollution control facilities and certain industrial
development facilities. These projects are usually operated by corporate
entities. IDRs are not general obligations of governmental entities backed by
their taxing power. Issuers are only obligated to pay amounts due on the IDRs to
the extent that funds are available from the unexpended proceeds of the IDRs or
receipts or revenues of the issuer under arrangements between the issuer and the
corporate operator of a project. These arrangements may be in the form of a
lease, installment sale agreement, conditional sale agreement or loan agreement,
but in each case the payments to the issuer are designed to be sufficient to
meet the payments of amounts due on the IDRs.

IDRs are generally issued under bond resolutions, agreements or trust
indentures pursuant to which the revenues and receipts payable under the
issuer's arrangements with the corporate operator of a particular project have
been assigned and pledged to the holders of the IDRs or a trustee for the
benefit of the holders of the IDRs. In certain cases, a mortgage on the
underlying project has been assigned to the holders of the IDRs or a trustee as
additional security for the IDRs. In addition, IDRs are frequently directly
guaranteed by the corporate operator of the project or by another affiliated
company. Regardless of the structure, payment of IDRs is solely dependent upon
the creditworthiness of the corporate operator of the project or corporate
guarantor. Corporate operators or guarantors that are industrial companies may
be affected by many factors which may have an adverse impact on the credit
quality of the particular company or industry. These include cyclicality of
revenues and earnings, regulatory and environmental restrictions, litigation
resulting from accidents or environmentally-caused illnesses, extensive
competition (including that of low-cost foreign companies), unfunded pension
fund liabilities or off-balance sheet items, and financial deterioration
resulting from leveraged buy-outs or takeovers. However, as discussed below,
certain of the IDRs in the Portfolios may be additionally insured or secured by
letters of credit issued by banks or otherwise guaranteed or secured to cover
amounts due on the IDRs in the event of default in payment by an issuer.

SPECIAL TAX BONDS

Special tax bonds are payable from and secured by the revenues derived by a
municipality from a particular tax such as a tax on the rental of a hotel room,
on the purchase of food and beverages, on the rental of automobiles or on the
consumption of liquor. Special tax bonds are not secured by the general tax
revenues of the municipality, and they do not represent general obligations of
the municipality. Therefore, payment on special tax bonds may be adversely
affected by a reduction in revenues realized from the underlying special tax due
to a general decline in the local economy or population or due to a decline in
the consumption, use or cost of the goods and services that are subject to
taxation. Also, should spending on the particular goods or services that are
subject to the special tax decline, the municipality may be under no obligation
to increase the rate of the special tax to ensure that sufficient revenues are
raised from the shrinking taxable base.

STATE AND LOCAL MUNICIPAL UTILITY OBLIGATIONS

The ability of utilities to meet their obligations with respect to revenue
bonds issued on their behalf is dependent on various factors, including the
rates they may charge their customers, the demand for a utility's services and
the cost of providing those services. Utilities, in particular investor-owned
utilities, are subject to

5
<PAGE>
extensive regulation relating to the rates which they may charge customers.
Utilities can experience regulatory, political and consumer resistance to rate
increases. Utilities engaged in long-term capital projects are especially
sensitive to regulatory lags in granting rate increases. Any difficulty in
obtaining timely and adequate rate increases could adversely affect a utility's
results of operations.

The demand for a utility's services is influenced by, among other factors,
competition, weather conditions and economic conditions. Electric utilities, for
example, have experienced increased competition as a result of the availability
of other energy sources, the effects of conservation on the use of electricity,
self-generation by industrial customers and the generation of electricity by
co-generators and other independent power producers. Also, increased competition
will result if federal regulators determine that utilities must open their
transmission lines to competitors. Utilities which distribute natural gas also
are subject to competition from alternative fuels, including fuel oil, propane
and coal.

The utility industry is an increasing cost business making the cost of
generating electricity more expensive and heightening its sensitivity to
regulation. A utility's costs are influenced by the utility's cost of capital,
the availability and cost of fuel and other factors. In addition, natural gas
pipeline and distribution companies have incurred increased costs as a result of
long-term natural gas purchase contracts containing 'take or pay' provisions
which require that they pay for natural gas even if natural gas is not taken by
them. There can be no assurance that a utility will be able to pass on these
increased costs to customers through increased rates. Utilities incur
substantial capital expenditures for plant and equipment. In the future they
will also incur increasing capital and operating expenses to comply with
environmental legislation such as the Clean Air Act of 1990, and other energy,
licensing and other laws and regulations relating to, among other things, air
emissions, the quality of drinking water, waste water discharge, solid and
hazardous substance handling and disposal, and siting and licensing of
facilities. Environmental legislation and regulations are changing rapidly and
are the subject of current public policy debate and legislative proposals. It is
increasingly likely that some or many utilities will be subject to more
stringent environmental standards in the future that could result in significant
capital expenditures. Future legislation and regulation could include, among
other things, regulation of so-called electromagnetic fields associated with
electric transmission and distribution lines as well as emissions of carbon
dioxide and other so-called greenhouse gases associated with the burning of
fossil fuels. Compliance with these requirements may limit a utility's
operations or require substantial investments in new equipment and, as a result,
may adversely affect a utility's results of operations.

The electric utility industry in general is subject to various external
factors including (a) the effects of inflation upon the costs of operation and
construction, (b) substantially increased capital outlays and longer
construction periods for larger and more complex new generating units, (c)
uncertainties in predicting future load requirements, (d) increased financing
requirements coupled with limited availability of capital, (e) exposure to
cancellation and penalty charges on new generating units under construction, (f)
problems of cost and availability of fuel, (g) compliance with rapidly changing
and complex environmental, safety and licensing requirements, (h) litigation and
proposed legislation designed to delay or prevent construction of generating and
other facilities, (i) the uncertain effects of conservation on the use of
electric energy, (j) uncertainties associated with the development of a national
energy policy, (k) regulatory, political and consumer resistance to rate
increases and (l)

6
<PAGE>
increased competition as a result of the availability of other energy sources.
These factors may delay the construction and increase the cost of new
facilities, limit the use of, or necessitate costly modifications to, existing
facilities, impair the access of electric utilities to credit markets, or
substantially increase the cost of credit for electric generating facilities.
The Sponsors cannot predict at this time the ultimate effect of such factors on
the ability of any issuers to meet their obligations with respect to Debt
Obligations.

The National Energy Policy Act ('NEPA'), which became law in October, 1992,
makes it mandatory for a utility to permit non-utility generators of electricity
access to its transmission system for wholesale customers, thereby increasing
competition for electric utilities. NEPA also mandated demand-side management
policies to be considered by utilities. NEPA prohibits the Federal Energy
Regulatory Commission from mandating electric utilities to engage in retail
wheeling, which is competition among suppliers of electric generation to provide
electricity to retail customers (particularly industrial retail customers) of a
utility. However, under NEPA, a state can mandate retail wheeling under certain
conditions.

There is concern by the public, the scientific community, and the U.S.
Congress regarding environmental damage resulting from the use of fossil fuels.
Congressional support for the increased regulation of air, water, and soil
contaminants is building and there are a number of pending or recently enacted
legislative proposals which may affect the electric utility industry. In
particular, on November 15, 1990, legislation was signed into law that
substantially revises the Clean Air Act (the '1990 Amendments'). The 1990
Amendments seek to improve the ambient air quality throughout the United States
by the year 2000. A main feature of the 1990 Amendments is the reduction of
sulphur dioxide and nitrogen oxide emissions caused by electric utility power
plants, particularly those fueled by coal. Under the 1990 Amendments the U.S.
Environmental Protection Agency ('EPA') must develop limits for nitrogen oxide
emissions by 1993. The sulphur dioxide reduction will be achieved in two phases.
Phase I addresses specific generating units named in the 1990 Amendments. In
Phase II the total U.S. emissions will be capped at 8.9 million tons by the year
2000. The 1990 Amendments contain provisions for allocating allowances to power
plants based on historical or calculated levels. An allowance is defined as the
authorization to emit one ton of sulphur dioxide.

The 1990 Amendments also provide for possible further regulation of toxic
air emissions from electric generating units pending the results of several
federal government studies to be conducted over the next three to four years
with respect to anticipated hazards to public health, available corrective
technologies, and mercury toxicity.

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

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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 ability of state and local joint action power agencies to make payments
on bonds they have issued is dependent in large part on payments made to them
pursuant to power supply or similar agreements. Courts in Washington and Idaho
have held that certain agreements between the Washington Public Power Supply
System ('WPPSS') and the WPPSS participants are unenforceable because the
participants did not have the authority to enter into the agreements. While
these decisions are not specifically applicable to agreements entered into by
public entities in other states, they may cause a reexamination of the legal
structure and economic viability of certain projects financed by joint action
power agencies, which might exacerbate some of the problems referred to above
and possibly lead to legal proceedings questioning the enforceability of
agreements upon which payment of these bonds may depend.

LEASE RENTAL OBLIGATIONS

Lease rental obligations are issued for the most part by governmental
authorities that have no taxing power or other means of directly raising
revenues. Rather, the authorities are financing vehicles created solely for the
construction of buildings (administrative offices, convention centers and
prisons, for example) or the purchase of equipment (police cars and computer
systems, for example) that will be used by a state or local government (the
'lessee'). Thus, the obligations are subject to the ability and willingness of
the lessee government to meet its lease rental payments which include debt
service on the obligations. Willingness to pay may be subject to changes in the
views of citizens or government officials as to the essential nature of the
finance project. Lease rental obligations are subject, in almost all cases, to
the annual appropriation risk, i.e., the lessee government is not legally
obligated to budget and appropriate for the rental payments beyond the current
fiscal year. These obligations are also subject to the risk of abatement in many
states--rental obligations cease in the event that damage, destruction or
condemnation of the project prevents its use by the lessee. (In these cases,
insurance provisions and reserve funds designed to alleviate this risk become
important credit factors). In the event of default by the lessee government,
there may be significant legal and/or practical difficulties involved in the re-
letting or sale of the project. Some of these issues, particularly those for
equipment purchase, contain the so-called 'substitution safeguard', which bars
the lessee government, in the event it defaults on its rental payments, from the
purchase or use of similar equipment for a certain period of time. This
safeguard is designed to insure that the lessee government will appropriate the
necessary funds even though it is not legally obligated to do so, but its
legality remains untested in most, if not all, states.

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SINGLE FAMILY AND MULTI-FAMILY HOUSING OBLIGATIONS

Multi-family housing revenue bonds and single family mortgage revenue bonds
are state and local housing issues that have been issued to provide financing
for various housing projects. Multi-family housing revenue bonds are payable
primarily from the revenues derived from mortgage loans to housing projects for
low to moderate income families. Single-family mortgage revenue bonds are issued
for the purpose of acquiring from originating financial institutions notes
secured by mortgages on residences.

Housing obligations are not general obligations of the issuer although
certain obligations may be supported to some degree by Federal, state or local
housing subsidy programs. Budgetary constraints experienced by these programs as
well as the failure by a state or local housing issuer to satisfy the
qualifications required for coverage under these programs or any legal or
administrative determinations that the coverage of these programs is not
available to a housing issuer, probably will result in a decrease or elimination
of subsidies available for payment of amounts due on the issuer's obligations.
The ability of housing issuers to make debt service payments on their
obligations will also be affected by various economic and non-economic
developments including, among other things, the achievement and maintenance of
sufficient occupancy levels and adequate rental income in multi-family projects,
the rate of default on mortgage loans underlying single family issues and the
ability of mortgage insurers to pay claims, employment and income conditions
prevailing in local markets, increases in construction costs, taxes, utility
costs and other operating expenses, the managerial ability of project managers,
changes in laws and governmental regulations and economic trends generally in
the localities in which the projects are situated. Occupancy of multi-family
housing projects may also be adversely affected by high rent levels and income
limitations imposed under Federal, state or local programs.

All single family mortgage revenue bonds and certain multi-family housing
revenue bonds are prepayable over the life of the underlying mortgage or
mortgage pool, and therefore the average life of housing obligations cannot be
determined. However, the average life of these obligations will ordinarily be
less than their stated maturities. Single-family issues are subject to mandatory
redemption in whole or in part from prepayments on underlying mortgage loans;
mortgage loans are frequently partially or completely prepaid prior to their
final stated maturities as a result of events such as declining interest rates,
sale of the mortgaged premises, default, condemnation or casualty loss.
Multi-family issues are characterized by mandatory redemption at par upon the
occurrence of monetary defaults or breaches of covenants by the project
operator. Additionally, housing obligations are generally subject to mandatory
partial redemption at par to the extent that proceeds from the sale of the
obligations are not allocated within a stated period (which may be within a year
of the date of issue). Housing obligations are also generally subject to special
redemption at par in the case of mortgage prepayments. To the extent that these
obligations were valued at a premium when a Holder purchased Units, any
prepayment at par would result in a loss of capital to the Holder and, in any
event, reduce the amount of income that would otherwise have been paid to
Holders.

The tax exemption for certain housing revenue bonds depends on
qualification under Section 143 of the Internal Revenue Code of 1986, as amended
(the 'Code'), in the case of single family mortgage revenue bonds or Section
142(a)(7) of the Code or other provisions of Federal law in the case of certain
multi-family housing

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revenue bonds (including Section 8 assisted bonds). These sections of the Code
or other provisions of Federal law contain certain ongoing requirements,
including requirements relating to the cost and location of the residences
financed with the proceeds of the single family mortgage revenue bonds and the
income levels of tenants of the rental projects financed with the proceeds of
the multi-family housing revenue bonds. While the issuers of the bonds and other
parties, including the originators and servicers of the single-family mortgages
and the owners of the rental projects financed with the multi-family housing
revenue bonds, generally covenant to meet these ongoing requirements and
generally agree to institute procedures designed to ensure that these
requirements are met, there can be no assurance that the ongoing requirements
will be consistently met. The failure to meet these requirements could cause the
interest on the bonds to become taxable, possibly retroactively from the date of
issuance, thereby reducing the value of the bonds, subjecting the Holders to
unanticipated tax liabilities and possibly requiring the Trustee to sell the
bonds at reduced values. Futhermore, any failure to meet these ongoing
requirements might not constitute an event of default under the applicable
mortgage or permit the holder to accelerate payment of the bond or require the
issuer to redeem the bond. In any event, where the mortgage is insured by the
Federal Housing Administration, its consent may be required before insurance
proceeds would become payable to redeem the mortgage bonds.

HOSPITAL AND HEALTH CARE FACILITY OBLIGATIONS

The ability of hospitals and other health care facilities to meet their
obligations with respect to revenue bonds issued on their behalf is dependent on
various factors, including the level of payments received from private
third-party payors and government programs and the cost of providing health care
services.

A significant portion of the revenues of hospitals and other health care
facilities is derived from private third-party payors and government programs,
including the Medicare and Medicaid programs. Both private third-party payors
and government programs have undertaken cost containment measures designed to
limit payments made to health care facilities. 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.
Certain special revenue obligations (i.e., Medicare or Medicaid revenues) may be
payable subject to appropriations by state legislatures. 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 costs of providing health care services are subject to increase as a
result of, among other factors, changes in medical technology and increased
labor costs. In addition, health care facility construction and operation is
subject to federal, state and local regulation relating to the adequacy of
medical care, equipment, personnel, operating policies and procedures,
rate-setting, and compliance with building codes and environmental laws.
Facilities are subject to periodic inspection by governmental and other
authorities to assure continued compliance with the various standards necessary
for licensing and accreditation. These regulatory requirements are subject to

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change and, to comply, it may be necessary for a hospital or other health care
facility to incur substantial capital expenditures or increased operating
expenses to effect changes in its facilities, equipment, personnel and services.

Hospitals and other health care facilities are subject to claims and legal
actions by patients and others in the ordinary course of business. Although
these claims are generally covered by insurance, there can be no assurance that
a claim will not exceed the insurance coverage of a health care facility or that
insurance coverage will be available to a facility. In addition, a substantial
increase in the cost of insurance could adversely affect the results of
operations of a hospital or other health care facility. The Clinton
Administration may impose regulations which could limit price increases for
hospitals or the level of reimbursements for third-party payors or other
measures to reduce health care costs and make health care available to more
individuals, which would reduce profits for hospitals. Some states, such as New
Jersey, have significantly changed their reimbursement systems. If a hospital
cannot adjust to the new system by reducing expenses or raising rates, financial
difficulties may arise. Also, Blue Cross has denied reimbursement for some
hospitals for services other than emergency room services. The lost volume would
reduce revenue unless replacement patients were found.

Certain hospital bonds may provide for redemption at par prior to maturity
at any time upon the sale by the issuer of the hospital facilities to a
non-affiliated entity, if the hospital becomes subject to ad valorem taxation,
or in various other circumstances. For example, certain hospitals may have the
right to call bonds at par if the hospital may legally be required because of
the bonds to perform procedures against specified religious principles or to
disclose information that it considers confidential or privileged. Certain
FHA-insured bonds may provide that all or a portion of those bonds, otherwise
callable at a premium, can be called at par in certain circumstances. If a
hospital defaults upon a bond obligation, the realization of Medicare and
Medicaid receivables may be uncertain and, if the bond obligation is secured by
the hospital facilities, legal restrictions on the ability to foreclose upon the
facilities and the limited alternative uses to which a hospital can be put may
reduce severely its collateral value.

The Internal Revenue Service is currently engaged in a program of intensive
audits of certain large tax-exempt hospital and health care facility
organizations. Although these audits have not yet been completed, it has been
reported that the tax-exempt status of some of these organizations may be
revoked. At this time, it is uncertain whether any of the hospital and health
care facility obligations held by the Fund will be affected by such audit
proceedings.

AIRPORT, PORT AND HIGHWAY REVENUE OBLIGATIONS

Certain facility revenue bonds are payable from and secured by the revenues
from the ownership and operation of particular facilities, such as airports
(including airport terminals and maintenance facilities), marine terminals,
bridges, turnpikes and port authorities. For example, the major portion of gross
airport operating income is generally derived from fees received from signatory
airlines pursuant to use agreements which consist of annual payments for airport
use, occupancy of certain terminal space, facilities, service fees, concessions
and leases. Airport operating income may therefore be affected by the ability of
the airlines to meet their obligations under the use agreements. The air
transport industry is experiencing significant variations in earnings and
traffic,

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due to increased competition, excess capacity, increased aviation fuel,
deregulation, traffic constraints, the current recession and other factors. As a
result, several airlines are experiencing severe financial difficulties. Several
airlines including America West Airlines have sought protection from their
creditors under Chapter 11 of the Bankruptcy Code. In addition, other airlines
such as Eastern Airlines, Inc. and Pan American Corporation have been
liquidated. However, over the last 13 months, Continental Airlines and Trans
World Airlines have emerged from bankruptcy. The Sponsors cannot predict what
effect these industry conditions may have on airport revenues which are
dependent for payment on the financial condition of the airlines and their usage
of the particular airport facility. Furthermore, there is a bill in Congress
that would provide the U.S. Secretary of Transportation with the temporary
authority to freeze airport fees upon the occurrence of disputes between a
particular airport facility and the airlines utilizing that facility. Finally,
bonds issued for the yet-to-be opened Denver International Airport have the
added risk that the opening date may be further delayed. To date, it has been
delayed on four occasions and no new opening date has been announced.

Similarly, payment on bonds related to other facilities is dependent on
revenues from the projects, such as use fees from ports and parking lots, tolls
on turnpikes and bridges and rents from buildings. Therefore, payment may be
adversely affected by reduction in revenues due to such factors and increased
cost of maintenance or decreased use of a facility, lower cost of alternative
modes of transportation or scarcity of fuel and reduction or loss of rents.

TRANSIT AUTHORITY OBLIGATIONS

Mass transit is generally not self-supporting from fare revenues.
Therefore, additional financial resources must be made available to ensure
operation of mass transit systems as well as the timely payment of debt service.
Often such financial resources include Federal and state subsidies, lease
rentals paid by funds of the state or local government or a pledge of a special
tax such as a sales tax or a property tax. If fare revenues or the additional
financial resources do not increase appropriately to pay for rising operating
expenses, the ability of the issuer to adequately service the debt may be
adversely affected.

MUNICIPAL WATER AND SEWER REVENUE BONDS

Water and sewer bonds are generally payable from user fees. The ability of
state and local water and sewer authorities to meet their obligations may be
affected by failure of municipalities to utilize fully the facilities
constructed by these authorities, economic or population decline and resulting
decline in revenue from user charges, rising construction and maintenance costs
and delays in construction of facilities, impact of environmental requirements,
failure or inability to raise user charges in response to increased costs, the
difficulty of obtaining or discovering new supplies of fresh water, the effect
of conservation programs and the impact of 'no growth' zoning ordinances. In
some cases this ability may be affected by the continued availability of Federal
and state financial assistance and of municipal bond insurance for future bond
issues.

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SOLID WASTE DISPOSAL BONDS

Bonds issued for solid waste disposal facilities are generally payable from
tipping fees and from revenues that may be earned by the facility on the sale of
electrical energy generated in the combustion of waste products. The ability of
solid waste disposal facilities to meet their obligations depends upon the
continued use of the facility, the successful and efficient operation of the
facility and, in the case of waste-to-energy facilities, the continued ability
of the facility to generate electricity on a commercial basis. All of these
factors may be affected by a failure of municipalities to fully utilize the
facilities, an insufficient supply of waste for disposal due to economic or
population decline, rising construction and maintenance costs, any delays in
construction of facilities, lower-cost alternative modes of waste processing and
changes in environmental regulations. Because of the relatively short history of
this type of financing, there may be technological risks involved in the
satisfactory construction or operation of the projects exceeding those
associated with most municipal enterprise projects. Increasing environmental
regulation on the federal, state and local level has a significant impact on
waste disposal facilities. While regulation requires more waste producers to use
waste disposal facilities, it also imposes significant costs on the facilities.
These costs include compliance with frequently changing and complex regulatory
requirements, the cost of obtaining construction and operating permits, the cost
of conforming to prescribed and changing equipment standards and required
methods of operation and, for incinerators or waste-to-energy facilities, the
cost of disposing of the waste residue that remains after the disposal process
in an environmentally safe manner. In addition, waste disposal facilities
frequently face substantial opposition by environmental groups and officials to
their location and operation, to the possible adverse effects upon the public
health and the environment that may be caused by wastes disposed of at the
facilities and to alleged improper operating procedures. Waste disposal
facilities benefit from laws which require waste to be disposed of in a certain
manner but any relaxation of these laws could cause a decline in demand for the
facilities' services. Finally, waste-to-energy facilities are concerned with
many of the same issues facing utilities insofar as they derive revenues from
the sale of energy to local power utilities (see State and Local Municipal
Utility Obligations above).

UNIVERSITY AND COLLEGE OBLIGATIONS

The ability of universities and colleges to meet their obligations is
dependent upon various factors, including the size and diversity of their
sources of revenues, enrollment, reputation, management expertise, the
availability and restrictions on the use of endowments and other funds, the
quality and maintenance costs of campus facilities, and, in the case of public
institutions, the financial condition of the relevant state or other
governmental entity and its policies with respect to education. The
institution's ability to maintain enrollment levels will depend on such factors
as tuition costs, demographic trends, geographic location, geographic diversity
and quality of the student body, quality of the faculty and the diversity of
program offerings.

Legislative or regulatory action in the future at the Federal, state or
local level may directly or indirectly affect eligibility standards or reduce or
eliminate the availability of funds for certain types of student loans or grant
programs, including student aid, research grants and work-study programs, and
may affect indirect assistance for education.

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PUERTO RICO

The Portfolio may contain Debt Obligations of issuers which will be
affected by general economic conditions in Puerto Rico. Puerto Rico's
unemployment rate remains significantly higher than the U.S. unemployment rate.
Furthermore, the economy is largely dependent for its development upon U.S.
policies and programs that are being reviewed and may be eliminated.

The Puerto Rican economy is affected by a number of Commonwealth and
Federal investment incentive programs. For example, Section 936 of the Internal
Revenue Code (the 'Code') provides for a credit against Federal income taxes for
U.S. companies operating on the island if certain requirements are met. The
Omnibus Budget Reconciliation Act of 1993 imposes limits on such credit,
effective for tax years beginning after 1993. In addition, from time to time
proposals are introduced in Congress which, if enacted into law, would eliminate
some or all of the benefits of Section 936. Although no assessment can be made
at this time of the precise effect of such limitation, it is expected that the
limitation of Section 936 credits would have a negative impact on Puerto Rico's
economy.

Aid for Puerto Rico's economy has traditionally depended heavily on Federal
programs, and current Federal budgetary policies suggest that an expansion of
aid to Puerto Rico is unlikely. An adverse effect on the Puerto Rican economy
could result from other U.S. policies, including a reduction of tax benefits for
distilled products, further reduction in transfer payment programs such as food
stamps, curtailment of military spending and policies which could lead to a
stronger dollar.

In a plebiscite held in November, 1993, the Puerto Rican electorate chose
to continue Puerto Rico's Commonwealth status. Previously proposed legislation,
which was not enacted, would have preserved the federal tax exempt status of the
outstanding debts of Puerto Rico and its public corporations regardless of the
outcome of the referendum, to the extent that similar obligations issued by the
states are so treated and subject to the provisions of the Code currently in
effect. There can be no assurance that any pending or future legislation finally
enacted will include the same or similar protection against loss or tax
exemption. The November 1993 plebiscite can be expected to have both direct and
indirect consequences on such matters as the basic characteristics of future
Puerto Rico debt obligations, the markets for these obligations, and the types,
levels and quality of revenue sources pledged for the payment of existing and
future debt obligations. Such possible consequences include, without limitation,
legislative proposals seeking restoration of the status of Section 936 benefits
otherwise subject to the limitations discussed above. However, no assessment can
be made at this time of the economic and other effects of a change in federal
laws affecting Puerto Rico as a result of the November 1993 plebiscite.

OBLIGATIONS BACKED BY LETTERS OF CREDIT

Certain Debt Obligations may be secured by letters of credit issued by
commercial banks or collateralized letters of credit issued by savings banks,
savings and loan associations and similar institutions ('thrifts') or direct
obligations of banks or thrifts pursuant to 'loans-to-lenders' programs. The
letter of credit may be drawn upon, and the Debt Obligations consequently
redeemed should an issuer fail to make payments of amounts due on a Debt
Obligation backed by a letter of credit or default under its reimbursement
agreement with the issuer of the letter of credit or, in certain cases, in the
event the interest on a Debt Obligation should be deemed to be taxable

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and full payment of amounts due is not made by the issuer. The letters of credit
are irrevocable obligations of the issuing institutions, which are subject to
extensive governmental regulations which may limit both the amounts and types of
loans and other financial commitments which may be made and interest rates and
fees which may be charged.

The profitability of financial institutions is largely dependent upon the
availability and cost of funds for the purpose of financing lending operations
under prevailing money market conditions. Also, general economic conditions play
an important part in the operations of this industry and exposure to credit
losses arising from possible financial difficulties of borrowers might affect an
institution's ability to meet its obligations. Since the late 1980's the ratings
of U.S. and foreign banks and holding companies have been subject to extensive
downgrades due primarily to deterioration in asset quality and the attendant
impact on earnings and capital adequacy. Major U.S. banks, in particular,
suffered from a decline in asset quality in the areas of loans to Lesser
Developed Countries (LDC's), construction and commercial real estate loans and
lending to support Highly Leveraged Transactions (HLT's). LDC and HLT problems
have been largely addressed, although, construction and commercial real estate
loans remain areas of concern. The Federal Deposit Insurance Corporation
('FDIC') indicated that in 1990, 169 federally insured banks with an aggregate
total of $15.7 billion in assets failed and that in 1991, 127 federally insured
banks with an aggregate total of $63.2 billion in assets failed. During 1992,
the FDIC resolved 120 failed banks with combined assets of $44.2 billion in
assets.

The Federal Deposit Insurance Corporation Improvement Act of 1991
('FDICIA') and the Resolution Trust Corporation Refinancing, Restructuring, and
Improvement Act of 1991 imposed many new limitations on the way in which banks,
savings banks, and thrifts may conduct their business and mandated early and
aggressive regulatory intervention for unhealthy institutions. Periodic efforts
by recent Administrations to introduce legislation broadening the ability of
banks and thrifts to compete with new products have not been successful, but if
enacted could lead to more failures as a result of increased competition and
added risks. Failure to enact such legislation, on the other hand, may lead to
declining earnings and an inability to compete with unregulated financial
institutions. Efforts to expand the ability of federal thrifts to branch on an
interstate basis have been initially successful through promulgation of
regulations, but legislation to liberalize interstate branching for banks
stalled in the Congress. Consolidation is likely to continue in both cases. The
Securities and Exchange Commission ('SEC') is attempting to require the expanded
use of market value accounting by banks and thrifts, and has imposed rules
requiring market accounting for investment securities held for sale. Adoption of
additional such rules may result in increased volatility in the reported health
of the industry and mandated regulatory intervention to correct such problems.

In addition, historically, thrifts primarily financed residential and
commercial real estate by making fixed-rate mortgage loans and funded those
loans from various types of deposits. Thrifts were restricted as to the types of
accounts which could be offered and the rates that could be paid on those
accounts. During periods of high interest rates, large amounts of deposits were
withdrawn as depositors invested in Treasury bills and notes and in money market
funds which provided liquidity and high yields not subject to regulation. As a
result the cost of thrifts' funds exceeded income from mortgage loan portfolios
and other investments, and their financial positions were adversely affected.
Laws and regulations eliminating interest rate ceilings and restrictions on
types of

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accounts that may be offered by thrifts were designed to permit thrifts to
compete for deposits on the basis of current market rates and to improve their
financial positions.

However, with respect to any Debt Obligations included in the Trusts that
are secured by collateralized letters of credit or guarantees of thrifts, on the
basis of the current financial positions of the thrifts, the Sponsors believe
that investors in the Units should rely solely on the collateral securing the
performance of the thrifts' obligations with respect to those Debt Obligations
and not on the financial positions of the thrifts.

In certain cases, the Sponsors have agreed that their sole recourse in
connection with any default, including insolvency, by the thrifts whose
collateralized letter of credit or guarantee may back any of the Debt
Obligations will be to exercise available remedies with respect to the
collateral pledged by the thrift; should such collateral be insufficient, the
Sponsors will therefore be unable to pursue any default judgment against that
thrift.

Certain of these collateralized letters of credit or guarantees may provide
that they are to be drawn upon in the event the thrift becomes or is deemed to
be insolvent. Accordingly, investors should recognize that they are subject to
having the principal amount of their investment represented by a Debt Obligation
secured by such a collateralized letter of credit or guarantee returned prior to
the termination date of the Fund or the maturity or disposition dates of the
Debt Obligations if the thrift becomes or is deemed to be insolvent.

Certain Debt Obligations in the Portfolios of the Trusts may be supported
by guarantees or letters of credit which are secured by a security interest in
'Eligible Collateral'. Eligible Collateral may consist of mortgage-backed
securities issued by private parties and guaranteed as to full and timely
payment of interest and principal by the Government National Mortgage
Association ('GNMA') ('GNMA Pass-Throughs') or by the Federal National Mortgage
Association ('FNMA') ('FNMA Pass-Throughs'), mortgage-backed securities issued
by the Federal Home Loan Mortgage Corporation ('FHLMC') and guaranteed as to
full and timely payment of interest and full collection of principal by FHLMC
('FHLMC PCs'), conventional, FHA insured, VA guaranteed and privately insured
mortgages ('Mortgages'), debt obligations of states and their political
subdivisions and public authorities ('Municipal Obligations'), debt obligations
of public nongovernmental corporations rated at least A by Standard & Poor's (or
another acceptable rating agency at the time rating the Fund) ('Corporate
Obligations'), U.S. Government Securities and cash. In addition, Eligible
Collateral may also consist of other securities specified by the Sponsors.

With respect to each Debt Obligation as to which Eligible Collateral has
been pledged, the Sponsors have established minimum percentage levels
('Collateral Requirements') of the aggregate market value of each type of
Eligible Collateral consistent with the standards described under The Portfolio
below. Eligible Collateral is to be valued no less often than quarterly. If on
any valuation date it is determined that the aggregate market value of the
Eligible Collateral does not satisfy the applicable Collateral Requirements,
additional Eligible Collateral must be delivered. Eligible Collateral may be
withdrawn or substituted at any time, provided that the remaining or substituted
Eligible Collateral meets the applicable Collateral Requirements. Although the
Sponsors believe that the Collateral Requirements are sufficient to provide a
high degree of protection against loss on the Debt Obligations backed by
collateralized letters of credit or guarantees, investors in the Units should be
aware that if liquidation of the collateral is required and proves insufficient
to provide for payment in full of the principal and

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accrued interest on such Debt Obligations, then the full principal amount of
their investment could not be returned.

OBLIGATIONS BACKED BY INSURANCE

Certain Debt Obligations (the 'Insured Debt Obligations') may be insured or
guaranteed by AMBAC Indemnity Corporation ('AMBAC'), Asset Guaranty Reinsurance
Co. ('Asset Guaranty'), Capital Guaranty Insurance Company ('CGIC'), Capital
Markets Assurance Corp. ('CAPMAC'), Connie Lee Insurance Company ('Connie Lee'),
Continental Casualty Company ('Continental'), Financial Guaranty Insurance
Company ('Financial Guaranty'), Financial Security Assurance Inc. ('FSA'),
Firemen's Insurance Company of Newark, New Jersey ('Firemen's'), Municipal Bond
Investors Assurance Corporation ('MBIA') or National Union Fire Insurance
Company of Pittsburgh, Pa. ('National Union') (collectively, the 'Insurance
Companies'). The claims-paying ability of each of these companies, unless
otherwise indicated, is rated AAA by Standard & Poor's or another acceptable
national rating agency. The ratings are subject to change at any time at the
discretion of the rating agencies. In determining whether to insure bonds, the
Insurance Companies severally apply their own standards. The cost of this
insurance is borne either by the issuers or previous owners of the bonds or by
the Sponsors. The insurance policies are non-cancellable and will continue in
force so long as the Insured Debt Obligations are outstanding and the insurers
remain in business. The insurance policies guarantee the timely payment of
principal and interest on but do not guarantee the market value of the Insured
Debt Obligations or the value of the Units. The insurance policies generally do
not provide for accelerated payments of principal or cover redemptions resulting
from events of taxability. If the issuer of any Insured Debt Obligation should
fail to make an interest or principal payment, the insurance policies generally
provide that the Trustee or its agent shall give notice of nonpayment to the
Insurance Company or its agent and provide evidence of the Trustee's right to
receive payment. The Insurance Company is then required to disburse the amount
of the failed payment to the Trustee or its agent and is thereafter subrogated
to the Trustee's right to receive payment from the issuer.

The following are brief descriptions of certain of the insurance companies
that may insure or guarantee certain Debt Obligations. It should be noted that
the financial information which is referred to as having been determined on a
statutory basis is unaudited.

AMBAC is a Wisconsin-domiciled stock insurance company, regulated by the
Insurance Department of the State of Wisconsin, and licensed to do business in
various states, with admitted assets of approximately $1,956,000,000 and
policyholders' surplus of approximately $737,000,000 as of December 31, 1993.
AMBAC is a wholly-owned subsidiary of AMBAC Inc., a financial holding company
which is publicly owned following a complete divestiture by Citibank during the
first quarter of 1992.

Asset Guaranty is a New York State insurance company licensed to write
financial guarantee, credit, residual value and surety insurance. Asset Guaranty
commenced operations in mid-1988 by providing reinsurance to several major
monoline insurers. The parent holding company of Asset Guaranty, Asset Guarantee
Inc. (AGI), merged with Enhance Financial Services (EFS) in June, 1990 to form
Enhance Financial Services Group Inc. (EFSG). The two main, 100%-owned
subsidiaries of EFSG, Asset Guaranty and Enhance Reinsurance Company,

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share common management and physical resources. EFSG is 14% owned by Merrill
Lynch & Co. Inc. and its affiliates. Both EFSG and Asset Guaranty are rated
'AAA' for claims paying ability by Duff & Phelps but are not rated by Standard &
Poor's. As of December 31, 1993 Asset Guaranty had admitted assets of
approximately $138,000,000 and policyholders' surplus of approximately
$73,000,000.

CGIC, a monoline bond insuror headquartered in San Francisco, California,
was established in November 1986 to assume the financial guaranty business of
United States Fidelity and Guaranty Company ('USF&G'). It is a wholly-owned
subsidiary of Capital Guaranty Corporation ('CGC') whose stock is owned by:
Constellation Investments, Inc., an affiliate of Baltimore Gas & Electric,
Fleet/Norstar Financial Group, Inc., Safeco Corporation, Sibag Finance
Corporation, an affiliate of Siemens AG, USF&G, the eighth largest
property/casualty company in the U.S. as measured by net premiums written, and
CGC management. As of December 31, 1993, CGIC had total admitted assets of
approximately $285,000,000 and policyholders' surplus of approximately
$168,000,000.

CAPMAC commenced operations in December 1987, as the second mono-line
financial guaranty insurance company (after FSA) organized solely to insure
non-municipal obligations. CAPMAC, a New York corporation, is a wholly-owned
subsidiary of CAPMAC Holdings, Inc. (CHI), which was sold in 1992 by Citibank
(New York State) to a group of 12 investors led by the following: Dillon Read's
Saratoga Partners II; L.P. (Saratoga), an acquisition fund; Caprock Management,
Inc., representing Rockefeller family interests; Citigrowth Fund, a Citicorp
venture capital group; and CAPMAC senior management and staff. These groups
control approximately 70% of the stock of CHI. CAPMAC had traditionally
specialized in guaranteeing consumer loan and trade receivable asset-backed
securities. Under the new ownership group CAPMAC intends to become involved in
the municipal bond insurance business, as well as their traditional
non-municipal business. As of December 31, 1993 CAPMAC's admitted assets were
approximately $182,000,000 and its policyholders' surplus was approximately
$146,000,000.

Connie Lee is a wholly owned subsidiary of College Construction Loan
Insurance Association ('CCLIA'), a government-sponsored enterprise established
by Congress to provide American academic institutions with greater access to
low-cost capital through credit enhancement. Connie Lee, the operating insurance
company, was incorporated in 1987 and began business as a reinsurer of
tax-exempt bonds of colleges, universities, and teaching hospitals with a
concentration on the hospital sector. During the fourth quarter of 1991 Connie
Lee began underwriting primary bond insurance which will focus largely on the
college and university sector. CCLIA's founding shareholders are the U.S.
Department of Education, which owns 36% of CCLIA, and the Student Loan Marketing
Association ('Sallie Mae'), which owns 14%. The other principal owners are:
Pennsylvania Public School Employees' Retirement System, Metropolitan Life
Insurance Company, Kemper Financial Services, Johnson family funds and trusts,
Northwestern University, Rockefeller & Co., Inc. administered trusts and funds,
and Stanford University. Connie Lee is domiciled in the state of Wisconsin and
has licenses to do business in 47 states and the District of Columbia. As of
December 31, 1993, its total admitted assets were approximately $182,000,000 and
policyholders' surplus was approximately $105,000,000.

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Continental is a wholly-owned subsidiary of CNA Financial Corp. and was
incorporated under the laws of Illinois in 1948. As of December 31, 1993,
Continental had policyholders' surplus of approximately $3,598,000,000 and
admitted assets of approximately $23,849,000,000. Continental is the lead
property-casualty company of a fleet of carriers nationally known and marketed
as 'CNA Insurance Companies'. CNA is rated AAI by Standard & Poor's.

Financial Guaranty, a New York stock insurance company, is a wholly-owned
subsidiary of FGIC Corporation, which is wholly owned by General Electric
Capital Corporation. The investors in the FGIC Corporation are not obligated to
pay the debts of or the claims against Financial Guaranty. Financial Guaranty
commenced its business of providing insurance and financial guarantees for a
variety of investment instruments in January 1984 and is currently authorized to
provide insurance in 49 states and the District of Columbia. It files reports
with state regulatory agencies and is subject to audit and review by those
authorities. As of December 31, 1993, its total admitted assets were
approximately $1,947,000,000 and its policyholders' surplus was approximately
$777,000,000.

FSA is a monoline property and casualty insurance company incorporated in
New York in 1984. It is a wholly-owned subsidiary of Financial Security
Assurance Holdings Ltd., which was acquired in December 1989 by US West, Inc.,
the regional Bell Telephone Company serving the Rocky Mountain and Pacific
Northwestern states. U.S. West is currently seeking to sell FSA. FSA is licensed
to engage in the surety business in 42 states and the District of Columbia. FSA
is engaged exclusively in the business of writing financial guaranty insurance,
on both tax-exempt and non-municipal securities. As of December 31, 1993, FSA
had policyholders' surplus of approximately $357,000,000 and total admitted
assets of approximately $748,000,000.

Firemen's, which was incorporated in New Jersey in 1855, is a wholly-owned
subsidiary of The Continental Corporation and a member of The Continental
Insurance Companies, a group of property and casualty insurance companies the
claims paying ability of which is rated AA-by Standard & Poor's. It provides
unconditional and non-cancellable insurance on industrial development revenue
bonds. As of December 31, 1993, the total admitted assets of Firemen's were
approximately $2,253,000,000 and its policyholders' surplus was approximately
$503,000,000.

MBIA is the principal operating subsidiary of MBIA Inc. The principal
shareholders of MBIA Inc. were originally Aetna Casualty and Surety Company, The
Fund American Companies, Inc., subsidiaries of CIGNA Corporation and Credit
Local de France, CAECL, S.A. These principal shareholders now own approximately
13% of the outstanding common stock of MBIA Inc. following a series of four
public equity offerings over a five-year period. As of December 31, 1993, MBIA
had admitted assets of approximately $3,051,000,000 and policyholders' surplus
of approximately $978,000,000.

National Union is a stock insurance company incorporated in Pennsylvania
and a wholly-owned subsidiary of American International Group, Inc. National
Union was organized in 1901 and is currently licensed to provide insurance in 50
states and the District of Columbia. It files reports with state insurance
regulatory agencies and is subject to regulation, audit and review by those
authorities including the State of New York Insurance

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Department. As of December 31, 1993, the total admitted assets and
policyholders' surplus of National Union were approximately $7,993,000,000 and
approximately $1,401,000,000, respectively.

Insurance companies are subject to regulation and supervision in the
jurisdictions in which they do business under statutes which delegate
regulatory, supervisory and administrative powers to state insurance
commissioners. This regulation, supervision and administration relate, among
other things, to: the standards of solvency which must be met and maintained;
the licensing of insurers and their agents; the nature of and limitations on
investments; deposits of securities for the benefit of policyholders; approval
of policy forms and premium rates; periodic examinations of the affairs of
insurance companies; annual and other reports required to be filed on the
financial condition of insurers or for other purposes; and requirements
regarding reserves for unearned premiums, losses and other matters. Regulatory
agencies require that premium rates not be excessive, inadequate or unfairly
discriminatory. Insurance regulation in many states also includes 'assigned
risk' plans, reinsurance facilities, and joint underwriting associations, under
which all insurers writing particular lines of insurance within the jurisdiction
must accept, for one or more of those lines, risks unable to secure coverage in
voluntary markets. A significant portion of the assets of insurance companies is
required by law to be held in reserve against potential claims on policies and
is not available to general creditors.

Although the Federal government does not regulate the business of
insurance, Federal initiatives can significantly impact the insurance business.
Current and proposed Federal measures which may significantly affect the
insurance business include pension regulation (ERISA), controls on medical care
costs, minimum standards for no-fault automobile insurance, national health
insurance, personal privacy protection, tax law changes affecting life insurance
companies or the relative desirability of various personal investment vehicles
and repeal of the current antitrust exemption for the insurance business. (If
this exemption is eliminated, it will substantially affect the way premium rates
are set by all property-liability insurers.) In addition, the Federal government
operates in some cases as a co-insurer with the private sector insurance
companies.

Insurance companies are also affected by a variety of state and Federal
regulatory measures and judicial decisions that define and extend the risks and
benefits for which insurance is sought and provided. These include judicial
redefinitions of risk exposure in areas such as products liability and state and
Federal extension and protection of employee benefits, including pension,
workers' compensation, and disability benefits. These developments may result in
short-term adverse effects on the profitability of various lines of insurance.
Longer-term adverse effects can often be minimized through prompt repricing of
coverages and revision of policy terms. In some instances these developments may
create new opportunities for business growth. All insurance companies write
policies and set premiums based on actuarial assumptions about mortality,
injury, the occurrence of accidents and other insured events. These assumptions,
while well supported by past experience, necessarily do not take account of
future events. The occurrence in the future of unforeseen circumstances could
affect the financial condition of one or more insurance companies. The insurance
business is highly competitive and with the deregulation of financial service
businesses, it should become more competitive. In addition, insurance companies
may expand into non-traditional lines of business which may involve different
types of risks.

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The above financial information relating to the Insurance Companies has
been obtained from publicly available information. No representation is made as
to the accuracy or adequacy of the information or as to the absence of material
adverse changes since the information was made available to the public.

Standard & Poor's has rated the Units of any Insured Trust AAA because the
Insurance Companies have insured the Debt Obligations. The assignment of such
AAA ratings is due to Standard & Poor's assessment of the creditworthiness of
the Insurance Companies and of their ability to pay claims on their policies of
insurance. In the event that Standard & Poor's reassesses the creditworthiness
of any Insurance Company which would result in the rating of an Insured Trust
being reduced, the Sponsors are authorized to direct the Trustee to obtain other
insurance (see Expenses and Charges).

LITIGATION AND LEGISLATION

To the best knowledge of the Sponsors, there is no litigation pending as of
the Initial Date of Deposit in respect of any Debt Obligations which might
reasonably be expected to have a material adverse effect upon the Trusts
comprising the Fund. At any time after the Initial Date of Deposit, litigation
may be initiated on a variety of grounds with respect to Debt Obligations in any
Trust. Litigation, for example, challenging the issuance of pollution control
revenue bonds under environmental protection statutes may affect the validity of
Debt Obligations or the tax-free nature of their interest. While the outcome of
litigation of this nature can never be entirely predicted, opinions of bond
counsel are delivered on the date of issuance of each Debt Obligation to the
effect that the Debt Obligation has been validly issued and that the interest
thereon is exempt from Federal income tax. In addition, other factors may arise
from time to time which potentially may impair the ability of issuers to make
payments due on Debt Obligations.

Under the Federal Bankruptcy Act, a political subdivision or public agency
or instrumentality of any state, including municipalities, may proceed to
restructure or otherwise alter the terms of its obligations, including those of
the type comprising the Portfolios. The Sponsors are unable to predict what
effect, if any, this legislation will have on the Trusts.

From time to time Congress considers proposals to tax the interest on State
and local obligations, such as the Debt Obligations. The Supreme Court clarified
in South Carolina v. Baker (decided April 20, 1988) that the U.S. Constitution
does not prohibit Congress from passing a non-discriminatory tax on interest on
State and local obligations. This type of legislation, if enacted into law,
could adversely affect an investment in Units. Holders are urged to consult
their own tax advisers.

PAYMENT OF THE DEBT OBLIGATIONS AND LIFE OF THE FUND

Because certain of the Debt Obligations from time to time may be redeemed
or prepaid or will mature in accordance with their terms or may be sold under
certain circumstances described herein, no assurance can be given that any Trust
will retain for any length of time its present size and composition (see
Redemption). Many of the Debt Obligations may be subject to redemption prior to
their stated maturity dates pursuant to optional refunding or sinking fund
redemption provisions or otherwise. In general, optional refunding redemption

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provisions are more likely to be exercised when the offer side evaluation is at
a premium over par than when it is at a discount from par. Generally, the offer
side evaluation of Debt Obligations will be at a premium over par when market
interest rates fall below the coupon rate on the Debt Obligations. The
percentage of the face amount of Debt Obligations in each Portfolio which were
acquired on the Date of Deposit at an offer side evaluation in excess of par is
set forth under Investment Summary. Certain Debt Obligations in the Portfolios
may be subject to sinking fund provisions early in the life of the Trusts. These
provisions are designed to redeem a significant portion of an issue gradually
over the life of the issue; obligations to be redeemed are generally chosen by
lot. The Portfolios contain a listing of the sinking fund and optional
redemption provisions with respect to the Debt Obligations. Additionally, the
size and composition of the Fund will be affected by the level of redemptions of
Units that may occur from time to time and the consequent sale of Debt
Obligations (see Redemption). Principally, this will depend upon the number of
Holders seeking to sell or redeem their Units and whether or not the Sponsors
continue to reoffer Units acquired by them in the secondary market. Factors that
the Sponsors will consider in the future in determining to cease offering Units
acquired in the secondary market include, among other things, the diversity of
the portfolio remaining at that time, the size of the Fund relative to its
original size, the ratio of Fund expenses to income, the Fund's current and
long-term returns and the degree to which Units may be selling at a premium over
par relative to other funds sponsored by the Sponsors, and the cost of
maintaining a current prospectus for the Fund. These factors may also lead the
Sponsors to seek to terminate the Fund earlier than would otherwise be the case
(see Administration of the Fund--Amendment and Termination).

TAX EXEMPTION

In the opinion of bond counsel rendered on the date of issuance of each
Debt Obligation, the interest on each Debt Obligation is excludable from gross
income under existing law for regular Federal income tax purposes (except in
certain circumstances depending on the Holder) but may be subject to state and
local taxes. As discussed under Taxes below, interest on some or all of the Debt
Obligations may become subject to regular Federal income tax, perhaps
retroactively to their date of issuance, as a result of changes in Federal law
or as a result of the failure of issuers (or other users of the proceeds of the
Debt Obligations) to comply with certain ongoing requirements.

Moreover, the Internal Revenue Service announced on June 14, 1993 that it
will be expanding its examination program with respect to tax-exempt bonds. The
expanded examination program will consist of, among other measures, increased
enforcement against abusive transactions, broader audit coverage (including the
expected issuance of audit guidelines) and expanded compliance achieved by means
of expected revisions to the tax-exempt bond information return forms. At this
time, it is uncertain whether the tax-exempt status of any of the Debt
Obligations would be affected by such proceedings, or whether such effect, if
any, would be retroactive.

In certain cases, a Debt Obligation may provide that if the interest on the
Debt Obligation should ultimately be determined to be taxable, the Debt
Obligation would become due and payable by its issuer, and, in addition, may
provide that any related letter of credit or other security could be called upon
if the issuer failed to satisfy all or part of its obligation. In other cases,
however, a Debt Obligation may not provide for the acceleration or redemption of
the Debt Obligation or a call upon the related letter of credit or other
security upon a

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determination of taxability. In those cases in which a Debt Obligation does not
provide for acceleration or redemption or in which both the issuer and the bank
or other entity issuing the letter of credit or other security are unable to
meet their obligations to pay the amounts due on the Debt Obligation as a result
of a determination of taxability, the Trustee would be obligated to sell the
Debt Obligation and, since it would be sold as a taxable security, it is
expected that it would have to be sold at a substantial discount from current
market price. In addition, as mentioned above, under certain circumstances
Holders could be required to pay income tax on interest received prior to the
date on which the interest is determined to be taxable.

STATE RISK FACTORS

Investors should consult the Appendix to this Prospectus for information on
specific States.

DESCRIPTION OF THE FUND

THE PORTFOLIOS

The Portfolio of each Trust contains different issues of debt obligations
with fixed final maturity dates. See Investment Summary for a summary of
particular matters relating to the Portfolio.

Each security and issuer must be approved by Defined Asset Funds research
analysts. Since 1970, the Sponsors have purchased more than $90 billion of
securities for Defined Asset Funds. Experienced professional buyers and research
analysts for Defined Asset Funds, with access to thousands of different issues
and extensive information, who are in close contact with the markets for
suitable securities, select securities for deposit in the Trusts considering the
following factors, among others: (i) whether the Debt Obligations were rated in
the category A or better by either Standard & Poor's or Moody's Investors
Service, Inc. ('Moody's') (or had, in the opinion of Defined Asset Funds
research analysts, comparable credit characteristics) or, for an Insured Trust,
whether the Debt Obligations (as insured) were rated AAA by Standard & Poor's
(see Description of Ratings); (ii) the yield and price of the Debt Obligations
relative to other comparable debt securities; and (iii) the diversification of
the Portfolio of each Trust as to purpose of issue, taking into account the
availability in the market of issues that meet the Fund's criteria. Subsequent
to the Initial Date of Deposit, a Debt Obligation may cease to be rated or its
rating may be reduced. Neither event requires an elimination of that Debt
Obligation from the Portfolio of a Trust, but may be considered in the Sponsors'
determination to direct the disposal of the Debt Obligation (see Administration
of the Fund--Portfolio Supervision). There is no leverage or borrowing to
increase risk, nor is the Portfolio modified with other kinds of securities to
enhance yields.

The yields on debt obligations of the type deposited in the Trusts are
dependent on a variety of factors, including general money market conditions,
general conditions of the municipal bond market, size of a particular offering,
the maturity of the obligation and rating of the issue. The ratings represent
the opinions of the rating organizations as to the quality of the debt
obligations that they undertake to rate. It should be emphasized, however, that
ratings are general and are not absolute standards of quality. Consequently,
debt obligations with the same maturity, coupon and rating may have different
yields, while debt obligations of the same maturity and coupon with different
ratings may have the same yield.

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Each Trust consists of the Securities (or contracts to purchase the
Securities) listed under its Portfolio (including any replacement debt
obligations and Additional Securities deposited in the Trust in connection with
the sale of additional Units to the public as described below) as long as they
may continue to be held from time to time in the Trust, together with accrued
and undistributed interest thereon and undistributed and uninvested cash
realized from the disposition or redemption of Securities (see Administration of
the Fund--Portfolio Supervision).

The Indenture authorizes the Sponsors to increase the size and the number
of Units of each Trust by the deposit of Additional Securities and the issue of
a corresponding number of additional Units subsequent to the Initial Date of
Deposit provided that the original relationship among the face amounts of
Securities of specified interest rates and maturities is maintained subject to
certain events (Sections 3.07, 3.08 and 3.10). Also, Securities may be sold
under certain circumstances. (See Redemption; Administration of the
Fund--Portfolio Supervision). As a result, the aggregate face amount of the
Securities in the Portfolio will vary over time.

Each portfolio is divided into Units, representing equal shares of
underlying assets. On the Initial Date of Deposit each Unit represented the
fractional undivided interest in a Trust set forth under Investment Summary.
Thereafter, if any Units are redeemed by the Trustee the face amount of
Securities in the Trust will be reduced by amounts allocable to redeemed Units,
and the fractional undivided interest represented by each Unit in the balance
will be increased. However, if additional Units are issued by the Trust, the
aggregate value of Securities in the Trust will be increased by amounts
allocable to additional Units and the fractional undivided interest represented
by each Unit in the balance will be decreased. Units will remain outstanding
until redeemed upon tender to the Trustee by any Holder (which may include the
Sponsors) or until the termination of the Indenture (see Redemption;
Administration of the Fund--Amendment and Termination).

Neither the Sponsors nor the Trustee shall be liable in any way for any
default, failure or defect in any Security. In the event of a failure to deliver
any Debt Obligation that has been purchased for the Trust under a contract
deposited hereunder ('Failed Debt Obligation'), including any Debt Obligation
purchased on a when, as and if issued basis, the Sponsors are authorized under
the Indenture to direct the Trustee to acquire replacement obligations
substantially similar to those originally contracted for and not delivered to
make up the original Portfolio of the Trust. If replacement obligations are not
acquired, the Sponsors will, on or before the next following Distribution Day,
cause to be refunded the attributable sales charge, plus the attributable Cost
of Debt Obligations to Trust listed under Portfolio, plus interest attributable
to the Failed Debt Obligations. (See Administration of the Fund--Portfolio
Supervision.)

INCOME; ESTIMATED CURRENT RETURN; ESTIMATED LONG TERM RETURN

Generally. Each Unit receives an equal share of monthly distributions of
interest income and of any principal distributions as bonds mature or are
called, redeemed or sold. The estimated net annual interest rate per Unit of
each Trust on the business day prior to the date of this Prospectus is set forth
under Investment Summary. This rate shows the percentage return based on $1,000
face amount per Unit, after deducting estimated annual fees and

24
<PAGE>
expenses expressed as a percentage. This rate will change as Securities mature,
are exchanged, redeemed, paid or sold as replacement obligations are purchased,
as Additional Securities are deposited and, as the expenses of the Trust change.
Because the Portfolio is not actively managed, the Fund's income distributions
would not necessarily be affected by changes in interest rates. Depending on the
financial condition of the issuers, the amount of tax-free monthly income from
fixed income obligations in the Portfolio would be substantially maintained as
long as the Portfolio remains unchanged. However, optional bond redemptions or
other Portfolio changes may occur more frequently when interest rates decline,
which would result in early return of principal.

The Sponsors deliver to the Trustee on the Initial Date of Deposit and on
each subsequent date of deposit a letter or letters of credit in the amount of
the cost (plus accrued interest) of Securities to be acquired pursuant to
contracts deposited in the Trusts. The Trustee may draw down on this letter of
credit at any time and deposit the cash so drawn in a non-interest bearing
account for the Trusts. The Trustee has the use of these funds, on which it pays
no interest, for the period prior to its purchase of when-issued and
delayed-delivery Securities. The use of these funds compensates the Trustee for
the reduction of the Trustee's Annual Fee and Expenses.

Interest on the Securities in each Trust, less estimated fees of the
Trustee and Sponsors and certain other expenses, is expected to accrue at the
daily rate (based on a 360-day year) shown under Investment Summary. The actual
daily rate will vary as Securities are exchanged, redeemed, paid or sold or as
the expenses of the Fund change.

The Estimated Current Return and the Estimated Long Term Return on the
business day prior to the date of this Prospectus are set forth under Investment
Summary and give different information about the return to investors. Estimated
Current Return on a Unit represents annual cash receipts from coupon-bearing
debt obligations in the Trust's Portfolio (after estimated annual expenses)
divided by the Public Offering Price (including the sales charge). A table of
projected cash flows on each Trust will be made available on request to the
Agent for the Sponsors.

Unlike Estimated Current Return, Estimated Long Term Return is a measure of
the estimated return to the investor earned over the estimated life of the
Trust. The Estimated Long Term Return represents an average of the yields to
maturity (or earliest call date for obligations trading at prices above the
particular call price) of the Debt Obligations in the Portfolio, calculated in
accordance with accepted bond practice and adjusted to reflect expenses and
sales charges. Under accepted bond practice, bonds are customarily offered to
investors on a 'yield price' basis, which involves computation of yield to
maturity (or earlier call date), and which takes into account not only the
interest payable on the bonds but also the amortization or accretion to a
specified date of any premium over or discount from the par (maturity) value in
the bond's purchase price. In calculating Estimated Long Term Return, the
average yield for the Portfolio is derived by weighting each Debt Obligation's
yield by the market value of the Debt Obligation and by the amount of time
remaining to the date to which the Debt Obligation is priced. Once the average
Portfolio yield is computed, this figure is then adjusted for estimated expenses
and the effect of the maximum sales charge paid by investors. The Estimated Long
Term Return calculation does not take into account certain delays in
distributions of income and the timing of other receipts

25
<PAGE>
and distributions on Units and may, depending on maturities, over or understate
the impact of sales charges. Both of these factors may result in a lower figure.

While relatively fixed at the time of purchase, both Estimated Current
Return and Estimated Long Term Return are subject to fluctuation with changes in
Portfolio composition, (including the redemption, sale or other disposition of
Debt Obligations in the Portfolio), changes in market value of the underlying
Debt Obligations and changes in fees and expenses, including sales charges, and
therefore can be materially different than the figures set forth herein. The
size of any difference between Estimated Current Return and Estimated Long Term
Return can also be expected to fluctuate at least as frequently. In addition,
both return figures may not be directly comparable to yield figures used to
measure other investments, and since the return figures are based on certain
assumptions and variables the actual returns received by a Unitholder may be
higher or lower.

Sales charges on Defined Asset Funds range from under 1.0% to 5.5%. This
may be less than you might pay to buy a comparable mutual fund. These Funds have
no 12b-1 or back-end load fees. While sales charges on certain Defined Funds are
deferred, only the previously accrued but unpaid portion of the sales charge is
deducted from sales proceeds. Defined Funds can be a cost-effective way to
purchase and hold investments. Annual operating expenses are generally lower
than for managed funds. Because Defined Funds have no management fees, limited
transaction costs and no ongoing marketing expenses, operating expenses are
generally less than 0.25% per year. When compounded annually, small differences
in expense ratios can make a big difference in earnings.

Accrued Interest. In addition to the Public Offering Price, the price of a
Unit of a Trust includes accrued interest on the Securities from the Initial
Date of Deposit. The accrued interest that is added to the Public Offering Price
represents the amount of accrued interest on the Securities from the Initial
Date of Deposit to, but not including, the settlement date for Units. However,
Securities deposited in a Trust also include accrued but unpaid interest up to
the Initial Date of Deposit. To avoid having Holders pay this additional accrued
interest (which earns no return) when they purchase Units, the Trustee is
responsible for the payment of accrued interest on the Debt Obligations to the
Initial Date of Deposit and then recovers this amount from the earliest interest
payments received by the Trust. Thus, the Sponsors can sell the Units at a price
that includes interest from the Initial Date of Deposit to the settlement date
for the Units.

Additionally, interest on the Debt Obligations in a Trust is paid on a
semi-annual (or less frequently, annual) basis. Therefore, it may take several
months after the Initial Date of Deposit for the Trustee to receive sufficient
interest payments on the Securities to begin distributions to Holders (see
Investment Summary for estimates of the amounts of the first and following
Monthly Income Distributions). Further, because interest on the Securities is
not received by a Trust at a constant rate throughout the year, any Monthly
Income Distribution may be more or less than the interest actually received by
the Trust. In order to eliminate fluctuations, the Trustee is required to
advance the amounts necessary to provide approximately equal Monthly Income
Distributions. The Trustee will be reimbursed, without interest, for these
advances from interest received on the Securities. Therefore, to account for
those factors, accrued interest is always added to the value of the Units. And,
because of the varying interest payment dates of the Securities, accrued
interest at any time will be greater than the amount of interest

26
<PAGE>
actually received by the Trust and distributed to Holders. If a Holder sells all
or a portion of his Units, he will receive his proportionate share of the
accrued interest from the purchaser of his Units. Similarly, if a Holder redeems
all or a portion of his Units, the Redemption Price per Unit will include
accrued interest on the Securities. And if a Security is sold, redeemed or
otherwise disposed of, accrued interest will be received by the Trust and will
be distributed periodically to Holders.

Certain Debt Obligations may have been purchased on a when, as and if
issued basis or may have a delayed delivery (see Investment Summary). Holders of
Units will be 'at risk' with respect to these Debt Obligations (i.e., may derive
either gain or loss from fluctuations in the offer side evaluation of the Debt
Obligations) from the date they commit for Units. Since interest on when-issued
and delayed-delivery Debt Obligations does not begin accruing to the benefit of
Holders until their respective dates of delivery, in order to provide tax exempt
income to the Holders for this non-accrual period, the Trustee's Annual Fee and
Expenses (set forth under Investment Summary) will be reduced by an amount equal
to the amount of interest that would have accrued on these Debt Obligations
between the date of settlement for the Units and the dates of delivery of the
Debt Obligations. The reduction of the Trustee's Annual Fee and Expenses
eliminates the necessity of reducing Monthly Income Distributions until
when-issued or delayed-delivery Debt Obligations are delivered and sufficient
interest payments are received to begin distributions to Holders. Should
when-issued Debt Obligations be issued later than the expected date of issue,
the amount of the reduction will be equal to the amount of interest which would
have accrued on the Debt Obligations between the expected date of issue and the
actual date of issue. If the amount of the Trustee's Annual Fee and Expenses is
inadequate to cover the additional accrued interest, the Sponsors will treat the
contracts as failed contracts.

TAXES

The following discussion addresses only the tax consequences of Units held
as capital assets and does not address the tax consequences of Units held by
dealers, financial institutions or insurance companies.

In the opinion of Davis Polk & Wardwell, special counsel for the Sponsors,
under existing law:

The Trusts are not associations taxable as corporations for Federal
income tax purposes, and income received by the Trusts will be treated as
the income of the Holders in the manner set forth below.

Each Holder of Units of a Trust will be considered the owner of a pro
rata portion of each Debt Obligation in the Trust under the grantor trust
rules of Sections 671-679 of the Internal Revenue Code of 1986, as amended
(the 'Code'). In order to determine the face amount of a Holder's pro rata
portion of each Debt Obligation on the Initial Date of Deposit, see Face
Amount under Portfolio. The total cost to a Holder of his Units, including
sales charges, is allocated to his pro rata portion of each Debt
Obligation, in proportion to the fair market values thereof on the date the
Holder purchases his Units, in order to determine his tax basis for his pro
rata portion of each Debt Obligation. In order for a Holder who purchases
his Units on the Initial Date of Deposit to determine the fair market value
of his pro rata portion of each Debt Obligation on such date, see Cost of
Debt Obligations to Trust under Portfolio.

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<PAGE>
Each Holder of Units of a Trust will be considered to have received the
interest on his pro rata portion of each Debt Obligation when interest on
the Debt Obligation is received by the Trust. In the opinion of bond
counsel (delivered on the date of issuance of each Debt Obligation), such
interest will be excludable from gross income for regular Federal income
tax purposes (except in certain limited circumstances referred to below).
Amounts received by a Trust pursuant to a bank letter of credit, guarantee
or insurance policy with respect to payments of principal, premium or
interest on a Debt Obligation in the Trust will be treated for Federal
income tax purposes in the same manner as if such amounts were paid by the
issuer of the Debt Obligation.

The Trusts may contain Debt Obligations which were originally issued at
a discount ('original issue discount'). The following principles will apply
to each Holder's pro rata portion of any Debt Obligation originally issued
at a discount. In general, original issue discount is defined as the
difference between the price at which a debt obligation was issued and its
stated redemption price at maturity. Original issue discount on a
tax-exempt obligation issued after September 3, 1982, is deemed to accrue
as tax-exempt interest over the life of the obligation under a formula
based on the compounding of interest. Original issue discount on a tax-
exempt obligation issued before July 2, 1982 is deemed to accrue as
tax-exempt interest ratably over the life of the obligation. Original issue
discount on any tax-exempt obligation issued during the period beginning
July 2, 1982 and ending September 3, 1982 is also deemed to accrue as
tax-exempt interest over the life of the obligation, although it is not
clear whether such accrual is ratable or is determined under a formula
based on the compounding of interest. If a Holder's tax basis for his pro
rata portion of a Debt Obligation issued with original issue discount is
greater than its 'adjusted issue price' but less than its stated redemption
price at maturity (as may be adjusted for certain payments), the Holder
will be considered to have purchased his pro rata portion of the Debt
Obligation at an 'acquisition premium.' A Holder's adjusted tax basis for
his pro rata portion of the Debt Obligation issued with original issue
discount will include original issue discount accrued during the period
such Holder held his Units. Such increases to the Holder's tax basis in his
pro rata portion of the Debt Obligation resulting from the accrual of
original issue discount, however, will be reduced by the amount of any such
acquisition premium.

If a Holder's tax basis for his pro rata portion of a Debt Obligation in
the Holder's Trust exceeds the redemption price at maturity thereof
(subject to certain adjustments), the Holder will be considered to have
purchased his pro rata portion of the Debt Obligation with 'amortizable
bond premium'. The Holder is required to amortize such premium over the
term of the Debt Obligation. Such amortization is only a reduction of basis
for his pro rata portion of the Debt Obligation and does not result in any
deduction against the Holder's income. Therefore, under some circumstances,
a Holder may recognize taxable gain when his pro rata portion of a Debt
Obligation is disposed of for an amount equal to or less than his original
tax basis therefor.

A Holder will recognize taxable gain or loss when all or part of his pro
rata portion of a Debt Obligation in his Trust is disposed of by the Trust
for an amount greater or less than his adjusted tax basis. Any such taxable
gain or loss will be capital gain or loss, except that any gain from the
disposition of a Holder's pro rata portion of a Debt Obligation acquired by
the Holder at a 'market discount' (i.e., where the Holder's original tax
basis for his pro rata portion of the Debt Obligation (plus any original
issue discount which will

28
<PAGE>
accrue thereon until its maturity) is less than its stated redemption price
at maturity) would be treated as ordinary income to the extent the gain
does not exceed the accrued market discount. Capital gains are generally
taxed at the same rate as ordinary income. However, the excess of net
long-term capital gains over net short-term capital losses may be taxed at
a lower rate than ordinary income for certain noncorporate taxpayers. A
capital gain or loss is long-term if the asset is held for more than one
year and short-term if held for one year or less. The deduction of capital
losses is subject to limitations. A Holder will also be considered to have
disposed of all or part of his pro rata portion of each Debt Obligation
when he sells or redeems all or some of his Units.

Under Section 265 of the Code, a Holder (except a corporate Holder) is
not entitled to a deduction for his pro rata share of fees and expenses of
a Trust because the fees and expenses are incurred in connection with the
production of tax-exempt income. Further, if borrowed funds are used by a
Holder to purchase or carry Units of any Trust, interest on such
indebtedness will not be deductible for Federal income tax purposes. In
addition, under rules used by the Internal Revenue Service, 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.
Similar rules may be applicable for state tax purposes.

Holders will be taxed in the manner described above regardless of
whether distributions from the Trusts are actually received by the Holders
or are automatically reinvested in the Municipal Fund Accumulation Program,
Inc.

From time to time proposals are introduced in Congress and state
legislatures which, if enacted into law, could have an adverse impact on
the tax-exempt status of the Debt Obligations. It is impossible to predict
whether any legislation in respect of the tax status of interest on such
obligations may be proposed and eventually enacted at the Federal or state
level.

The foregoing discussion relates only to Federal income taxes. For
information about certain state taxes of the states for which the Trusts
are named, investors should consult the Appendix to this Prospectus.
Holders may be subject to state and local taxation in such states or in
other jurisdictions, and should consult their own tax advisers in this
regard.

* * * * *

Interest on certain tax-exempt bonds issued after August 7, 1986 will be a
preference item for purposes of the alternative minimum tax ('AMT'). The
Sponsors believe that interest (including any original issue discount) on the
Debt Obligations should not be subject to the AMT for individuals or
corporations under this rule. A corporate Holder should be aware, however, that
the accrual or receipt of tax-exempt interest not subject to the AMT may give
rise to an alternative minimum tax liability (or increase an existing liability)
because the interest income will be included in the corporation's 'adjusted
current earnings' for purposes of the adjustment to alternative minimum taxable
income required by Section 56(g) of the Code, and will be taken into account for
purposes of the environmental tax on corporations under Section 59A of the Code,
which is based on alternative minimum taxable income. In addition, interest on
the Debt Obligations must be taken into consideration in computing the portion,
if any, of social security benefits that will be included in an individual's
gross income and

29
<PAGE>
subject to Federal income tax. Holders are urged to consult their own tax
advisers concerning an investment in Units.

At the time of issuance of each Debt Obligation in each Trust, an opinion
relating to the validity of the Debt Obligation and to the exemption of interest
thereon from regular Federal income taxes and personal income taxes of the State
for which the Trust is named was or will be rendered by bond counsel. Neither
the Sponsors, Davis Polk & Wardwell nor any of the special counsel for state tax
matters have made or will make any review of the proceedings relating to the
issuance of the Debt Obligations or the basis for these opinions. The tax
exemption is dependent upon the issuer's (and other users') compliance with
certain ongoing requirements, and the opinion of bond counsel assumes that these
requirements will be complied with. However, there can be no assurance that the
issuer (and other users) will comply with these requirements, in which event the
interest on the Debt Obligation could be determined to be taxable retroactively
from the date of issuance.

In the case of certain of the Debt Obligations, the opinions of bond
counsel indicate that interest on such Debt Obligations received by a
'substantial user' of the facilities being financed with the proceeds of such
Debt Obligations, or persons related thereto, for periods while such Debt
Obligations are held by such a user or related person, will not be exempt from
regular Federal income taxes, although interest on such Debt Obligations
received by others would be exempt from regular Federal income taxes.
'Substantial user' is defined under U.S. Treasury Regulations to include only a
person whose gross revenue derived with respect to the facilities financed by
the issuance of bonds is more than 5% of the total revenue derived by all users
of such facilities, or who occupies more than 5% of the usable area of such
facilities or for whom such facilities or a part thereof were specifically
constructed, reconstructed or acquired. 'Related persons' are defined to include
certain related natural persons, affiliated corporations, partners and
partnerships. Similar rules may be applicable for state tax purposes.

After the end of each calendar year, the Trustee will furnish to each
Holder an annual statement containing information relating to the interest
received by the Trust on the Debt Obligations, the gross proceeds received by
the Trust from the disposition of any Debt Obligation (resulting from redemption
or payment at maturity of any Debt Obligation or the sale by the Trust of any
Debt Obligation), and the fees and expenses paid by the Trust. The Trustee will
also furnish annual information returns to each Holder and to the Internal
Revenue Service. Holders are required to report to the Internal Revenue Service
the amount of tax-exempt interest received during the year.

PUBLIC SALE OF UNITS

PUBLIC OFFERING PRICE

INITIAL OFFERING PERIOD

The Public Offering Price of the Units of a Trust during the initial offer
period and any offering of additional Units is computed by dividing the offer
side evaluation of the Securities in the Trust (as determined by the Evaluator)
by the number of Units of the Trust outstanding and adding thereto the sales
charge at the applicable percentage stated below of the offer side evaluation
per Unit (the net amount invested). The Public Offering Price of the Units of a
Trust on the date of this Prospectus or on any subsequent date will vary from
the Public Offering

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<PAGE>
Price of the Trust on the business day prior to the date of this Prospectus (set
forth under Investment Summary) in accordance with fluctuations in the
evaluations of the underlying Securities.

The following table sets forth the applicable percentage of sales charge,
the concession to dealers and the concession to introducing dealers (i.e.,
dealers that buy and clear directly through a Sponsor or an Underwriter who is
an affiliate of a Sponsor). These amounts are reduced on a graduated scale for
sales to any purchaser of at least 250 Units and will be applied on whichever
basis is more favorable to the purchaser. To qualify for the reduced sales
charge and concession applicable to quantity purchases, the dealer must confirm
that the sale is to a single purchaser as defined below or is purchased for its
own account and not for distribution. Sales charges and dealer concessions are
as follows:

SALES CHARGE
(GROSS UNDERWRITING PROFIT)
-------------------------------- DEALER
AS PERCENT OF CONCESSION AS PRIMARY MARKET
OFFER SIDE AS PERCENT OF PERCENT OF CONCESSION TO
OF PUBLIC NET AMOUNT PUBLIC INTRODUCING
UNITS OFFERING PRICE INVESTED OFFERING PRICE DEALERS
- --------------------------------------------------------------------------------
Less than 250... 4.5% 4.712% 2.925% $ 32.40
250 - 499....... 3.5 3.627 2.275 25.20
500 - 749....... 3.0 3.093 1.950 21.60
750 - 999....... 2.5 2.564 1.625 18.00
1,000 or more... 2.0 2.041 1.300 14.40

The above graduated sales charges will apply on all purchases of Units of a
Trust on any one day during the initial offering period by the same purchaser of
Units only in the amounts stated. These purchases will not be aggregated with
concurrent purchases of any other unit trusts sponsored by the Sponsors. Units
held in the name of the spouse of the purchaser or in the name of a child of the
purchaser under 21 years of age are deemed to be registered in the name of the
purchaser. The graduated sales charges are also applicable to a trustee or other
fiduciary purchasing securities for a single trust estate or single fiduciary
account.

On any subsequent purchase of Units of a Trust during its initial offering
period, the sales charge on that purchase will be determined based on the
aggregate number of Units purchased on that and any previous purchase date. To
be eligible for this right of accumulation, the purchaser or his securities
dealer must notify the Sponsors at the time of purchase that such purchase
qualifies for this right of accumulation and supply sufficient information to
permit confirmation of qualification. Acceptance of the purchase order is
subject to such confirmation. This right of accumulation may be amended or
terminated at any time without notice.

SECONDARY MARKET

The Public Offering Price in the secondary market reflects sales charges
which may be at different rates depending on the maturities of the various bonds
in the Portfolio. The Public Offering Price per Unit will be computed by adding
to the Evaluator's determination of the bid side evaluation of each Security, a
sales charge at

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<PAGE>
a rate based on the time to maturity of that Security as described below, and
dividing the sum of these calculations for all Securities in the Portfolio by
the number of Units outstanding. For this purpose, a Security will be considered
to mature on its stated maturity date unless: (a) the Security has been called
for redemption or funds or securities have been placed in escrow to redeem it on
an earlier call date, in which case the call date will be used; or (b) the
Security is subject to a mandatory tender, in which case the mandatory tender
date will be used.
SALES CHARGE

(AS PERCENT (AS PERCENT
TIME TO OF BID SIDE OF PUBLIC
MATURITY EVALUATION) OFFERING PRICE)
- --------------------------------------------------------------------------------
Less than six months 0% 0%
Six months to 1 year 0.756% 0.75%
Over 1 year to 2 years 1.523% 1.50%
Over 2 years to 4 years 2.564% 2.50%
Over 4 years to 8 years 3.627% 3.50%
Over 8 years to 15 years 4.712% 4.50%
Over 15 years 5.820% 5.50%

The total sales charge per Unit, as a percent of the Public Offering Price,
is referred to below as the 'Effective Sales Charge'. For example, a Fund
consisting entirely of Securities maturing in more than 8 but no more than 15
years would have an Effective Sales Charge of 4.50% of the Public Offering Price
(4.712% of the net amount invested) while a Fund consisting entirely of
Securities maturing in more than 15 years would have an Effective Sales Charge
of 5.50% of the Public Offering Price (5.820% of the net amount invested) and so
forth. A Fund consisting of Securities in each of these maturity ranges would
have an Effective Sales Charge between these rates.

The sales charge per Unit will be reduced on a graduated scale for sales to
any single purchaser, as described above, on a single day of specified numbers
of Units set forth below. The number of units of other series sponsored by the
Sponsors (or an equivalent number in case of units originally offered at about
$1, $10 or $100 each), purchased in the secondary market on the same day will be
added in determining eligibility for this reduction, provided that only units of
series with Effective Sales Charges within a range of 0.5% of their public
offering prices will be eligible. For example, if an investor purchases units of
three series of Municipal Investment Trust Fund in the secondary market on the
same day--200 units with an Effective Sales Charge of 3.4%, 200 units with an
Effective Sales Charge of 3.6% and 100 units with an Effective Sales Charge of
3.9%, he would be entitled to a 40% reduction on each sales charge (an actual
sales charge of 60% of each Effective Sales Charge based on purchase of 500
units). If the lowest sales charge was 3.3%, the purchaser would only be
entitled to a

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<PAGE>
20% reduction on two of those purchases (actual sales charge of 80% of Effective
Sales Charge based on purchase of more than 249 units). The reduction will be
applied on whichever basis is more favorable for the purchaser.

ACTUAL SALES CHARGE DEALER CONCESSION AS
AS % OF EFFECTIVE % OF EFFECTIVE SALES
SALES CHARGE CHARGE DETERMINED
NUMBER OF UNITS DETERMINED ABOVE ABOVE
- --------------------------------------------------------------------------------
1-249 100% 65%
250-499 80% 52%
500-749 60% 39%
750-999 45% 29.25%
1,000 or more 35% 22.75%

To qualify for the reduced sales charge and concession applicable to quantity
purchases, the selling dealer must confirm that the sale is to a single
purchaser, as described above, or is purchased for its own account and not for
distribution.

PRICE PAID BY PURCHASERS

In both the initial offering period and the secondary market, a
proportionate share of any cash held by the Fund in the Capital Account not
allocated to the purchase of specific Securities and net accrued and
undistributed interest on the Securities to the date of delivery of the Units to
the purchaser is added to the Public Offering Price.

Employees of certain of the Sponsors and their affiliates and non-employee
directors of Merrill Lynch & Co., Inc. may purchase Units of this Fund at prices
based on a reduced sales charge of not less than $5.00 per Unit.

Evaluations of the Securities are determined by the Evaluator taking into
account the same factors referred to under Redemption--Computation of Redemption
Price per Unit. The determinations are made each business day as of the
Evaluation Time set forth under Investment Summary, effective for all sales made
since the last of these evaluations (Section 4.01). With respect to the
evaluation of Debt Obligations during their initial syndicate offering period,
the 'current offering price', as determined by the Evaluator, will normally be
equal to the syndicate offering price as of the Evaluation Time, unless the
Evaluator determines that a material event has occurred which it believes may
result in the syndicate offering price not accurately reflecting the market
value of the Debt Obligations, in which case the Evaluator, in making its
determination, will consider not only the syndicate offering price but also the
factors described in (b) and (c) in the description of how the bid side
evaluation of the Securities is determined for purposes of redemption of Units
(see Redemption--Computation of Redemption Price per Unit). The term 'business
day', as used herein and under 'Redemption', shall exclude Saturdays, Sundays
and the following holidays as observed by the New York Stock Exchange: New
Year's Day, Washington's Birthday, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas.

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<PAGE>
COMPARISON OF PUBLIC OFFERING PRICE, SPONSORS' INITIAL REPURCHASE PRICE,
SECONDARY MARKET REPURCHASE PRICE AND REDEMPTION PRICE

On the business day prior to the Initial Date of Deposit with respect to
each Trust the Public Offering Price per Unit (which includes the sales charge)
and the Sponsors' Initial Repurchase Price per Unit (each based on the offer
side evaluation of the Securities in the Fund--see above) exceeded the
Redemption Price per Unit (based on the bid side evaluation thereof--see
Redemption) by the amounts set forth under Investment Summary.

The initial Public Offering Price per Unit of the Trust and the initial
Repurchase Price are based on the offer side evaluations of the Securities. The
secondary market Public Offering Price and the Sponsors' Repurchase Price in the
secondary market are based on bid side evaluations of the Securities. In the
past, the bid prices of publicly offered tax-exempt issues have been lower than
the offer prices by as much as 3 1/2% or more of face amount in the case of
inactively traded issues and as little as 1/2 of 1% in the case of actively
traded issues, but the difference between the offer and bid prices has averaged
between 1 and 2% of face amount; the amount of this difference as of the
Evaluation Time on the business day prior to the Initial Date of Deposit, as
determined by the Evaluator, is set forth under the Portfolio of each Trust. For
this and other reasons (including fluctuations in the market prices of the
Securities and the fact that the Public Offering Price includes the sales
charge), the amount realized by a Holder upon any sale or redemption of Units
may be less than the price paid by him for the Units.

PUBLIC DISTRIBUTION

During the initial offering period Units of the Trusts will be distributed
to the public at the Public Offering Price through the Underwriting Account set
forth under Investment Summary and dealers. The initial offering period is 30
days or less if all Units are sold. So long as all Units initially offered have
not been sold, the Sponsors may extend the initial offering period for up to
four additional successive 30-day periods. Upon the completion of the initial
offering, Units which remain unsold or which may be acquired in the secondary
market (see Market for Units) may be offered directly to the public by this
Prospectus at the secondary market Public Offering Price determined in the
manner described above.

The Sponsors intend to qualify Units of each Trust for sale in the State
for which the Trust is named and in selected other states, through the
Underwriting Account and by dealers who are members of the National Association
of Securities Dealers, Inc. Only a Virginia Trust will be registered and offered
for sale in Virginia. The Sponsors do not intend to qualify Units for sale in
any foreign countries and this Prospectus does not constitute an offer to sell
Units in any country where Units cannot lawfully be sold. Sales to dealers and
to introducing dealers, if any, will initially be made at prices which represent
a concession of the applicable rate specified in the table above, but Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as agent for the Sponsors ('Agent
for the Sponsors') reserves the right to change the rate of the concession to
dealers and the concession to introducing dealers from time to time. Any dealer
or introducing dealer may reallow a concession not in excess of the concession
to dealers.

34
<PAGE>
UNDERWRITERS' AND SPONSORS' PROFITS

Upon sale of the Units, the Underwriters named under Underwriting Account,
including the Sponsors, will receive sales charges at the rates set forth in the
table above. The Sponsors also realized a profit or loss on deposit of the
Securities in the Trusts in the amounts set forth under Investment Summary. This
is the difference between the cost of the Securities to the Trust (which is
based on the offer side evaluation of the Securities on the Initial Date of
Deposit) and the cost of the Securities to the Sponsors. The amounts of any
additional fees received in connection with the direct placement of certain Debt
Obligations deposited in the Portfolios are also set forth under Investment
Summary. On each subsequent deposit in connection with the creation of
additional Units, the Sponsors may also realize a profit or loss. In addition,
any Sponsor or Underwriter may realize profits or sustain losses in respect of
Debt Obligations deposited in the Trusts which were acquired by the Sponsor or
Underwriter from underwriting syndicates of which the Sponsor or Underwriter was
a member. During the offering period the Underwriting Account also may realize
profits or sustain losses as a result of fluctuations after the Initial Date of
Deposit in the Public Offering Price of the Units (see Investment Summary).
Cash, if any, made available by buyers of Units to the Sponsors prior to a
settlement date for the purchase of Units may be used in the Sponsors'
businesses subject to the limitations of Rule 15c3-3 under the Securities
Exchange Act of 1934 and may be of benefit to the Sponsors.

In maintaining a market for the Units (see Market for Units), the Sponsors
will also realize profits or sustain losses in the amount of any difference
between the prices at which they buy Units (based on the bid side evaluation of
the Securities) and the prices at which they resell these Units (which include
the sales charge) or the prices at which they redeem the Units (based on the bid
side evaluation of the Securities), as the case may be.

MARKET FOR UNITS

During the initial offering period the Sponsors intend to offer to purchase
Units of this Series at prices based upon the offer side evaluation of the
Securities. Thereafter, while the Sponsors are not obligated to do so, it is
their intention to maintain a secondary market for Units of each Trust of this
Series and continuously to offer to purchase Units of each Trust of this Series
at prices, subject to change at any time, which will be computed based on the
bid side of the market, taking into account the same factors referred to in
determining the bid side evaluation of Securities for purposes of redemption
(see Redemption). This secondary market provides Holders with a fully liquid
investment. They can cash in units at any time without a fee. The Sponsors may
discontinue purchases of Units of any Trust at prices based on the bid side
evaluation of the Securities should the supply of Units exceed demand or for
other business reasons. In this event the Sponsors may nonetheless under certain
circumstances purchase Units, as a service to Holders, at prices based on the
current redemption prices for those Units (see Redemption). The Sponsors, of
course, do not in any way guarantee the enforceability, marketability or price
of any Securities in the Trusts or of the Units. Prospectuses relating to
certain other unit trusts indicate an intention, subject to change on the part
of the respective sponsors of such trusts, to purchase units of those trusts 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 repurchase price of
other sponsors for units of their trusts may be computed on a somewhat more
favorable basis than the repurchase price offered by the Sponsors for Units of
this Series in

35
<PAGE>
secondary market transactions. As in this Series, the purchase price per unit of
such unit trusts will depend primarily on the value of the bonds in the
portfolio of the trust.

The Sponsors may redeem any Units they have purchased in the secondary
market or through the Trustee in accordance with the procedures described below
if they determine it is undesirable to continue to hold these Units in their
inventories. Factors which the Sponsors will consider in making this
determination will include the number of units of all series of all funds which
they hold in their inventories, the saleability of the units and their estimate
of the time required to sell the units and general market conditions. For a
description of certain consequences of any redemption for remaining Holders, see
Redemption.

A Holder who wishes to dispose of his Units should inquire of his bank or
broker as to current market prices in order to determine if there exist
over-the-counter prices in excess of the repurchase price.

REDEMPTION

While it is anticipated that Units in most cases can be sold in the
over-the-counter market for an amount equal to the Redemption Price per Unit
(see Market for Units), Units may be redeemed at the office of the Trustee set
forth on the back cover of this Prospectus, upon tender on any business day, as
defined under Public Sale of Units-- Public Offering Price, of Certificates or,
in the case of uncertificated Units, delivery of a request for redemption, and
payment of any relevant tax, without any other fee (Section 5.02). Certificates
to be redeemed must be properly endorsed or accompanied by a written instrument
or instruments of transfer. Holders must sign exactly as their names appear on
the face of the Certificate with the signatures guaranteed by an eligible
guarantor institution, or in some other manner acceptable to the Trustee. In
certain instances the Trustee may require additional documents including, but
not limited to, trust instruments, certificates of death, appointments as
executor or administrator or certificates of corporate authority.

On the seventh calendar day following the tender (or if the seventh
calendar day is not a business day on the first business day prior thereto), the
Holder will be entitled to receive the proceeds of the redemption in an amount
per Unit equal to the Redemption Price per Unit (see below) as determined as of
the Evaluation Time next following the tender. The price received upon
redemption may be more or less than the amount paid by the Holder depending on
the value of the Securities in the Portfolio at the time of redemption.
Principal is normally distributed as bonds mature, or are called, redeemed, or
sold. Except for sales of Securities (which would be at then current market
prices) and subject to the bond issuers paying the amounts due, return of
principal to Holders who retain their Units until termination of the Trust
should be relatively unaffected by changes in interest rates. Of course, a gain
or loss could be recognized if Units are sold before then. So long as the
Sponsors are maintaining a market at prices not less than the Redemption Price
per Unit, the Sponsors will repurchase any Units tendered for redemption no
later than the close of business on the second business day following the tender
(see Market for Units). The Trustee is authorized in its discretion, if the
Sponsors do not elect to repurchase any Units tendered for redemption or if a
Sponsor tenders Units for redemption, to sell the Units in the over-the-counter
market at prices which will return to the Holder a net amount in cash equal to
or in excess of the Redemption Price per Unit for the Units (Section 5.02).

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Securities are to be sold in order to make funds available for redemption
of Units of that Trust (Section 5.02) if funds are not otherwise available in
the Capital and Income Accounts (see Administration of the Fund-- Accounts and
Distributions). The Securities to be sold will be selected by the Sponsors in
accordance with procedures specified in the Indenture on the basis of market and
credit factors as they may determine are in the best interests of the Trust.
Provision is made under the Indenture for the Sponsors to specify minimum face
amounts in which blocks of Securities are to be sold in order to obtain the best
price for the Trust.

To the extent that Securities in a Trust are sold, the size and diversity
of the Trust will be reduced. Sales will usually be required at a time when
Securities would not otherwise be sold and may result in lower prices to the
Trust than might otherwise be realized.

The right of redemption may be suspended and payment postponed (1) for any
period during which the New York Stock Exchange, Inc. is closed other than for
customary weekend and holiday closings, or (2) for any period during which, as
determined by the SEC, (i) trading on that Exchange is restricted or (ii) an
emergency exists as a result of which disposal or evaluation of the Securities
is not reasonably practicable, or (3) for any other periods which the SEC may by
order permit (Section 5.02).

COMPUTATION OF REDEMPTION PRICE PER UNIT

Redemption Price per Unit of a Trust is computed by the Trustee, as of the
Evaluation Time, on each June 30 and December 31 (or the last business day prior
thereto), on any business day as of the Evaluation Time next following the
tender of any Unit for redemption, and on any other business day desired by the
Trustee or the Sponsors, by adding (a) the aggregate bid side evaluation of the
Securities in the Trust, (b) cash on hand in the Trust (other than cash covering
contracts to purchase Securities or credited to a reserve account), (c) accrued
but unpaid interest on the Securities up to but not including the date of
redemption (less amounts beneficially owned by the Trustee resulting from
unreimbursed advances) and (d) the aggregate value of all other assets of the
Trust; deducting therefrom the sum of (v) taxes or other governmental charges
against the Trust not previously deducted, (w) accrued but unpaid expenses of
the Trust, (x) amounts payable for reimbursement of Trustee advances, (y) cash
held for redemption of units for distribution to Holders of record as of a date
prior to the evaluation and (z) the aggregate value of all other liabilities of
the Trust; and dividing the result by the number of Units outstanding as of the
date of computation (Section 5.01).

The aggregate current bid or offer side evaluation of the Securities is
determined by the Evaluator in the following manner: if the Securities are
traded on the over-the-counter market, this evaluation is generally based on the
closing sale prices on the over-the-counter market (unless the Evaluator deems
these prices inappropriate as a basis for evaluation). If closing sale prices
are unavailable, the evaluation is generally determined (a) on the basis of
current bid or offering prices for the Securities, (b) if bid or offer prices
are not available for any Securities, on the basis of current bid or offer
prices for comparable securities, (c) by appraising the value of the Securities
on the bid or offer side of the market or (d) by any combination of the above.

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The value of any insurance is reflected in the market value of any Insured
Debt Obligations. It is the position of the Sponsors that this is a fair method
of valuing the Insured Debt Obligations and the insurance and reflects a proper
valuation method in accordance with the provisions of the Investment Company Act
of 1940.

EXPENSES AND CHARGES

INITIAL EXPENSES

All expenses incurred in establishing the Trusts, including the cost of the
initial preparation and printing of documents relating to the Fund, cost of the
initial evaluations, the initial fees and expenses of the Trustee, legal
expenses, advertising and selling expenses and any other out-of-pocket expenses,
will be paid from the Underwriting Account at no charge to the Trusts.

FEES

An estimate of the total annual expenses of each Trust is set forth under
Investment Summary. The Trustee (or Co-Trustees, in the case of Investors Bank &
Trust Company and The First National Bank of Chicago) receives for its services
as Trustee and for reimbursement of expenses incurred on behalf of a Trust,
payable in monthly installments, the amount per Unit set forth under Investment
Summary as Trustee's Annual Fee and Expenses. Of this amount, the Trustee
receives annually for its services as Trustee $0.70 per $1,000 face amount of
Debt Obligations. The Trustee's Annual Fee and Expenses also includes the
Evaluator's fee, the estimated Portfolio Supervision Fee, estimated reimbursable
bookkeeping or other administrative expenses paid to the Sponsors and certain
mailing and printing expenses. Expenses in excess of this amount will be borne
by the Fund. The Trustee also receives benefits to the extent that it holds
funds on deposit in the various non-interest bearing accounts created under the
Indenture. The Portfolio Supervision Fee with respect to a Trust is based on the
face amount of Debt Obligations in the Trust on the Initial Date of Deposit and
on the first business day of each calendar year thereafter, except that if in
any calendar year Additional Securities are deposited, the fee for the balance
of the year will be based on the face amounts on each Record Day. This fee,
which is not to exceed the maximum amount set forth under Investment Summary,
may exceed the actual costs of providing portfolio supervisory services for a
Trust, but at no time will the total amount the Sponsors receive for portfolio
supervisory services rendered to all series of Municipal Investment Trust Fund
in any calendar year exceed the aggregate cost to them of supplying these
services in that year (Section 7.05). In addition, the Sponsors may also be
reimbursed for bookkeeping or other administrative services provided to the Fund
in amounts not exceeding their costs of providing these services (Section 7.06).
The foregoing fees may be adjusted for inflation in accordance with the terms of
the Indenture without approval of Holders (Sections 3.04, 4.03 and 8.05).

OTHER CHARGES

Other charges include with respect to a Trust: (a) fees of the Trustee for
extraordinary services (Section 8.05), (b) certain expenses of the Trustee
(including legal and auditing expenses) and of counsel designated by the

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Sponsors (Sections 3.04, 3.09, 7.05(b), 8.01 and 8.05), (c) various governmental
charges (Sections 3.03 and 8.01 h]), (d) expenses and costs of action taken to
protect the Trust (Section 8.01 d]), (e) indemnification of the Trustee for any
losses, liabilities and expenses incurred without gross negligence, bad faith or
willful misconduct on its part (Section 8.05), (f) indemnification of the
Sponsors for any losses, liabilities and expenses incurred without gross
negligence, bad faith, wilful misconduct or reckless disregard of their duties
(Section 7.05b]), (g) expenditures incurred in contacting Holders upon
termination of the Trust (Section 9.02) and (h) premiums for extra insurance
necessary to maintain the rating of an Insured Trust. The amounts of these
charges and fees are secured by a lien on the Trust and, if the balances in the
Income and Capital Accounts (see below) are insufficient, the Trustee has the
power to sell Securities to pay these amounts (Section 8.05).

ADMINISTRATION OF THE FUND

RECORDS

The Trustee keeps a register of the names, addresses and holdings of all
Holders of each Trust. The Trustee also keeps records of the transactions of
each Trust, including a current list of the Securities and a copy of the
Indenture, which are available to Holders for inspection at the office of the
Trustee at reasonable times during business hours (Sections 6.01, 8.02 and
8.04).

ACCOUNTS AND DISTRIBUTIONS

Interest received by each Trust is credited to an Income Account for the
Trust and other receipts to a Capital Account for the Trust (Sections 3.01 and
3.02). The Monthly Income Distribution for each Holder as of each Record Day
will be made on the following Distribution Day or shortly thereafter and shall
consist of an amount substantially equal to the Holder's pro rata share of the
estimated net income accrued during the month preceding the Record Day, after
deducting estimated expenses. Estimates of the amounts of the first and
subsequent Monthly Income Distributions are set forth under Investment Summary.
The amount of the Monthly Income Distributions will change as Securities are
redeemed, paid or sold. At the same time the Trustee will distribute the
Holder's pro rata share of the distributable cash balance of the Capital Account
of the Trust computed as of the close of business on the preceding Record Day
(if at least equal to the Minimum Capital Distribution set forth under
Investment Summary). Principal proceeds received from the disposition, payment
or prepayment of any of the Securities subsequent to a Record Day and prior to
the succeeding Distribution Day will be held in the Capital Account to be
distributed on the second succeeding Distribution Day. The first distribution
for persons who purchase Units between a Record Day and a Distribution Day will
be made on the second Distribution Day following their purchase of Units. A
Reserve Account may be created by the Trustee by withdrawing from the Income or
Capital Accounts, from time to time, amounts deemed necessary to reserve for any
material amount that may be payable out of the Trust (Section 3.03). Funds held
by the Trustee in the various accounts created under the Indenture do not bear
interest (Section 8.01).

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INVESTMENT ACCUMULATION PROGRAM

Monthly Income Distributions of interest and any principal or premium
received by the Trusts will be paid in cash. However, a Holder may elect to have
these monthly distributions reinvested without sales charge in the Municipal
Fund Accumulation Program, Inc. (the 'Program'). The Program is an open-end
management investment company whose primary investment objective is to obtain
income that is exempt from regular Federal income tax through investment in a
diversified portfolio consisting primarily of state, municipal and public
authority debt obligations with credit characteristics comparable to those of
securities in this Series of Municipal Investment Trust Fund. Most or all of the
securities in the portfolio of the Program, however, will not be insured.
Reinvesting compounds the earnings Federally tax-free. Holders participating in
the Program will be taxed on their reinvested distributions in the manner
described in Taxes even though distributions are reinvested in the Program. For
more complete information about the Program, including charges and expenses,
return the enclosed form for a prospectus. Read it carefully before you decide
to participate. Notice of election to participate must be received by the
Trustee in writing at least ten days before the Record Day for the first
distribution to which the notice is to apply.

PORTFOLIO SUPERVISION

The Fund is a unit investment trust which normally follows a buy and hold
investment strategy and is not actively managed. Traditional methods of
investment management for a managed fund (such as a mutual fund) typically
involve frequent changes in a portfolio of securities on the basis of economic,
financial and market analyses. The Portfolios of the Trusts comprising this
Series, however, will not be actively managed and therefore the adverse
financial condition of an issuer will not necessarily require the sale of its
Securities from a Portfolio. Defined Asset Funds investment professionals are
dedicated exclusively to selecting and then monitoring securities held by the
various Defined Funds. On an ongoing basis, experienced financial analysts
regularly review the Portfolios and may direct the disposition of Securities
under any of the following circumstances: (i) a default in payment of amounts
due on any Security, (ii) institution of certain legal proceedings, (iii)
existence of any other legal questions or impediments affecting a Security or
the payment of amounts due on the Security, (iv) default under certain documents
adversely affecting debt service or default in payment of amounts due on other
securities of the same issuer or guarantor, (v) decline in projected income
pledged for debt service on revenue bond issues, (vi) decline in price of the
Security or the occurrence of other market or credit factors, including advance
refunding (i.e., the issuance of refunding bonds and the deposit of the proceeds
thereof in trust or escrow to retire the refunded Securities on their respective
redemption dates), that in the opinion of the Sponsors would make the retention
of the Security detrimental to the interests of the Holders, (vii) if a Security
is not consistent with the investment objective of the Fund or (viii) if the
Trustee has a right to sell or redeem a Security pursuant to any applicable
guarantee or other credit support. If a default in the payment of amounts due on
any Security occurs and if the Agent for the Sponsors fails to give instructions
to sell or hold the Security, the Indenture provides that the Trustee, within 30
days of the failure shall sell the Security (Section 3.08).

The Sponsors are required to instruct the Trustee to reject any offer made
by an issuer of any of the Debt Obligations to issue new Debt Obligations in
exchange or substitution for any Debt Obligations pursuant to a

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refunding or refinancing plan, except that the Sponsors may instruct the Trustee
to accept or reject any offer or to take any other action with respect thereto
as the Sponsors may deem proper if (a) the issuer is in default with respect to
these Debt Obligations or (b) in the written opinion of the Sponsors the issuer
will probably default with respect to these Debt Obligations in the reasonably
foreseeable future. Any Debt Obligations so received in exchange or substitution
will be held by the Trustee subject to the terms and conditions of the Indenture
to the same extent as Debt Obligations originally deposited thereunder (Section
3.11). Within five days after the deposit of Debt Obligations in exchange or
substitution for existing Debt Obligations, the Trustee is required to give
notice thereof to each Holder, identifying the Debt Obligations removed from the
Portfolio and the Debt Obligations substituted therefor (Section 3.07).

The Sponsors are authorized to direct the Trustee to deposit replacement
securities ('Replacement Securities') into the Portfolio to replace any Failed
Debt Obligations or, in connection with the deposit of Additional Securities,
when Securities of an issue originally deposited are unavailable at the time of
subsequent deposit as described more fully below. Replacement Securities that
are replacing Failed Debt Obligations will be deposited into a Trust within 110
days of the date of deposit of the contracts which have failed, at a purchase
price that does not exceed the amount of funds reserved for the purchase of
Failed Debt Obligations and that results in a yield to maturity and in a current
return, in each case as of that date of deposit, that are equivalent (taking
into consideration then current market conditions and the relative
creditworthiness of the underlying obligation) to the yield to maturity and
current return of the Failed Debt Obligations. The Replacement Securities shall
(i) be tax-exempt bonds issued by the state for which the Trust is named or its
political subdivisions or by the Government of Puerto Rico or by its authority
or by the Government of Guam or by its authority; (ii) have fixed maturity dates
substantially the same as those of the Failed Debt Obligations; (iii) be rated
in the category A or better by either Standard & Poor's or Moody's (or have, in
the opinion of the Agent for the Sponsors, comparable credit characteristics, if
not actually rated) or if the Trust is an Insured Trust, be insured by an
Insurance Company and have the benefits of such insurance under terms equivalent
to the insurance of the Insurance Company with respect to the Failed Debt
Obligations and not cause the Units of the Fund to cease to be rated AAA by
Standard & Poor's; and (iv) not be when, as and if issued obligations.
Replacement Securities shall be selected by the Sponsors from a list of
Securities maintained by them and updated from time to time. The Securities on
the current list from which Replacement Securities are to be selected are set
forth under Investment Summary. Whenever a Replacement Security has been
acquired for a Trust, the Trustee shall, on the next monthly distribution date
that is more than 30 days thereafter, make a pro rata distribution of the
amount, if any, by which the cost to the Trust of the Failed Debt Obligation
exceeded the cost of the Replacement Security plus accrued interest. If
Replacement Securities are not acquired, the Sponsors will, on or before the
next following Distribution Day, cause to be refunded to Holders the
attributable sales charge, plus the attributable Cost of Debt Obligations to
Trust listed under Portfolio, plus interest attributable to the Failed Debt
Obligation. The portion of interest paid to a Holder that accrued after the
expected date of settlement for purchase of his Units will be paid by the
Sponsors and accordingly will not be treated as tax exempt income.

The Indenture also authorizes the Sponsors to increase the size and number
of Units of a Trust by the deposit of Additional Securities, contracts to
purchase Additional Securities or cash or a letter of credit with instructions

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to purchase Additional Securities in exchange for the corresponding number of
additional Units during the 90-day period subsequent to the Initial Date of
Deposit, provided that the original proportionate relationship among the face
amounts of each Security established on the Initial Date of Deposit (the
'Original Proportionate Relationship') is maintained to the extent practicable.
Deposits of Additional Securities subsequent to the 90-day period following the
Initial Date of Deposit must replicate exactly the original proportionate
relationship among the face amounts of Securities comprising the Portfolio at
the end of the initial 90-day period, subject to certain events (Sections 3.07,
3.08 and 3.10).

With respect to deposits of Additional Securities in connection with
creating additional Units of the Trust during the 90-day period following the
Initial Date of Deposit, the Sponsors may specify minimum face amounts in which
Additional Securities will be deposited or purchased. If a deposit is not
sufficient to acquire minimum amounts of each Security, Additional Securities
may be acquired in the order of the Security most under-represented immediately
before the deposit when compared to the Original Proportionate Relationship. If
Securities of an issue originally deposited are unavailable at the time of
subsequent deposit or cannot be purchased at reasonable prices or their purchase
is prohibited or restricted by law, regulation or policies applicable to the
Trust or any of the Sponsors, the Sponsors may (1) deposit cash or a letter of
credit with instructions to purchase the Security when it becomes available
(provided that it becomes available within 110 days after the Initial Date of
Deposit), or (2) deposit (or instruct the Trustee to purchase) (i) Securities of
one or more other issues originally deposited or (ii) a Replacement Security
which will meet the conditions described above except that it must have a rating
at least equal to that of the Security it replaces (or, in the opinion of the
Sponsors, have comparable credit characteristics, if not rated). Any funds held
to acquire Additional or Replacement Securities which have not been used to
purchase Securities at the end of the 90-day period beginning with the Initial
Date of Deposit, shall be used to purchase Securities as described above or
shall be distributed to Holders together with the attributable sales charge.

REPORTS TO HOLDERS

With each distribution, the Trustee will furnish Holders with a statement
of the amounts of interest and other receipts, if any, that are being
distributed, expressed in each case as a dollar amount per Unit. After the end
of each calendar year during which a Monthly Income Distribution was made to
Holders, the Trustee will furnish to each person who at any time during the
calendar year was a Holder of record a statement (i) summarizing transactions
for that year in the Income and Capital Accounts of the Trust, (ii) listing the
Securities held and the number of Units outstanding at the end of that calendar
year, (iii) stating the Redemption Price per Unit based upon the computation
thereof made at the end of that calendar year and (iv) specifying the amounts
distributed during that calendar year from the Income and Capital Accounts
(Section 3.07). The accounts of each Trust shall be audited at least annually by
independent certified public accountants designated by the Sponsors and the
report of the accountants shall be furnished by the Trustee to Holders upon
request (Section 8.01 h]).

In order to enable them to comply with Federal and state tax reporting
requirements, Holders will be furnished upon request to the Trustee with
evaluations of Securities furnished to it by the Evaluator (Section 4.02).

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CERTIFICATES

Each purchaser is entitled to receive, upon request, a registered
Certificate for his Units. Certain of the Sponsors may collect charges for
registering and shipping Certificates to purchasers. These Certificates are
transferable or interchangeable upon presentation at the office of the Trustee,
with a payment of $2.00 if required by the Trustee (or other amounts specified
by the Trustee and approved by the Sponsors) for each new Certificate and any
sums payable for taxes or other governmental charges imposed upon the
transaction (Section 6.01) and compliance with the formalities necessary to
redeem Certificates (see Redemption). Mutilated, destroyed, stolen or lost
Certificates will be replaced upon delivery of satisfactory indemnity and
payment of expenses incurred (Section 6.02).

AMENDMENT AND TERMINATION

The Sponsors and Trustee may amend the Indenture for a Trust, without the
consent of the Holders, (a) to cure any ambiguity or to correct or supplement
any provision thereof which may be defective or inconsistent, (b) to change any
provision thereof as may be required by the SEC or any successor governmental
agency or (c) to make any other provisions which do not materially adversely
affect the interest of the Holders (as determined in good faith by the
Sponsors). The Indentures may also be amended in any respect by the Sponsors and
the Trustee, or any of the provisions thereof may be waived, with the consent of
the Holders of 51% of the Units of a Trust, provided that none of these
amendments or waivers will reduce the interest in the Trust of any Holder
without the consent of the Holder or reduce the percentage of Units required to
consent to any of these amendments or waivers without the consent of all Holders
(Section 10.01).

Each Trust will terminate and each Trust will be liquidated upon the
maturity, sale, redemption or other disposition of the last Security held
thereunder, but in no event is it to continue beyond the mandatory termination
date set forth under Investment Summary. A Trust may be terminated by the
Sponsors if the value of a Trust is less than the minimum value set forth under
Investment Summary, and may be terminated at any time by written instrument
executed by the Sponsors and consented to by Holders of 51% of the then
outstanding Units (Sections 8.01 g] and 9.01). The Trustee will deliver written
notice of any termination to each Holder within a reasonable period of time
prior to the termination, specifying the times at which the Holders may
surrender their Certificates for cancellation. Within a reasonable period of
time after the termination, the Trustee must sell all of the Securities then
held and distribute to each Holder, upon surrender for cancellation of his
Certificates and after deductions for accrued but unpaid fees, taxes and
governmental and other charges, the Holder's interest in the Income and Capital
Accounts (Section 9.01). This distribution will normally be made by mailing a
check in the amount of each Holder's interest in these accounts to the address
of the Holder appearing on the record books of the Trustee.

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RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY

TRUSTEE

The Trustee or any successor may resign upon notice to the Sponsors. The
Trustee may be removed upon the direction of the Holders of 51% of the Units at
any time or by the Sponsors without the consent of any of the Holders if the
Trustee becomes incapable of acting or becomes bankrupt or its affairs are taken
over by public authorities, or if for any reason the Sponsors determine in good
faith that the replacement of the Trustee is in the best interest of the
Holders. The resignation or removal shall become effective upon the acceptance
of appointment by the successor which may, in the case of a resigning or removed
Co-Trustee, be one or more of the remaining Co-Trustees. The Sponsors are to use
their best efforts to appoint a successor promptly and if upon resignation of
the Trustee no successor has accepted appointment within thirty days after
notification, the Trustee may apply to a court of competent jurisdiction for the
appointment of a successor (Section 8.06). The Trustee shall be under no
liability for any action taken in good faith in reliance on prima facie properly
executed documents or for the disposition of monies or Securities under the
Indenture. This provision, however, shall not protect the Trustee in cases of
wilful misfeasance, bad faith, negligence or reckless disregard of its
obligations and duties. In the event of the failure of the Sponsors to act, the
Trustee may act under the Indenture and shall not be liable for any of these
actions taken in good faith. The Trustee shall not be personally liable for any
taxes or other governmental charges imposed upon or in respect of the Securities
or upon the interest thereon. In addition, the Indenture contains other
customary provisions limiting the liability of the Trustee (Sections 8.01 and
8.05).

EVALUATOR

The Evaluator may resign or may be removed, effective upon the acceptance
of appointment by its successor, by the Sponsors, who are to use their best
efforts to appoint a successor promptly. If upon resignation of the Evaluator no
successor has accepted appointment within thirty days after notification, the
Evaluator may apply to a court of competent jurisdiction for the appointment of
a successor (Section 4.05). Determinations by the Evaluator under the Indenture
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 Sponsors or the Holders for errors in judgment. This provision,
however, shall not protect the Evaluator in cases of wilful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations and duties
(Section 4.04). The Trustee, the Sponsors and the Holders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility for the
accuracy thereof.

SPONSORS

Each Sponsor is a Delaware corporation and is engaged in the underwriting,
securities and commodities brokerage business, and is a member of the New York
Stock Exchange, Inc., other major securities exchanges and commodity exchanges,
and the National Association of Securities Dealers, Inc. Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Merrill Lynch Asset Management, a Delaware
corporation, each of which is a subsidiary of Merrill Lynch & Co., Inc., are
engaged in the investment advisory business. Smith Barney Shearson Inc., an
investment banking and securities broker-dealer firm, is an indirect
wholly-owned subsidiary of The Travelers Inc. Prudential Securities
Incorporated, a wholly-owned subsidiary of Prudential Securities Group Inc. and
an indirect wholly-owned subsidiary of the Prudential Insurance Company of
America, is engaged in the investment advisory business. PaineWebber
Incorporated is engaged in the investment advisory business and is a wholly-
owned subsidiary of PaineWebber Group Inc. Dean Witter Reynolds Inc., a
principal operating subsidiary of Dean Witter, Discover & Co., is engaged in the
investment advisory business. Each Sponsor has acted as principal underwriter
and managing underwriter of other investment companies. The Sponsors, in
addition to participating as members of various selling groups or as agents of
other investment companies, execute orders on behalf of investment companies for
the purchase and sale of securities of these companies and sell securities to
these companies in their capacities as brokers or dealers in securities.

Each Sponsor (or a predecessor) has acted as Sponsor of various series of
Defined Asset Funds. A subsidiary of Merrill Lynch, Pierce, Fenner & Smith
Incorporated succeeded in 1970 to the business of Goodbody & Co., which had been
a co-Sponsor of Defined Asset Funds since 1964. That subsidiary resigned as
Sponsor of each of the Goodbody series in 1971. Merrill Lynch, Pierce, Fenner &
Smith Incorporated has been co-Sponsor and the Agent for the Sponsors of each
series of Defined Asset Funds created since 1971. Shearson Lehman Brothers Inc.
('Shearson') and certain of its predecessors were underwriters beginning in 1962
and co-Sponsors from 1965 to 1967 and from 1980 to 1993 of various Defined Asset
Funds. As a result of the acquisition of certain of Shearson's assets by Smith
Barney, Harris Upham & Co. Incorporated and Primerica Corporation (now The
Travelers Inc.), Smith Barney Shearson Inc. now serves as co-Sponsor of various
Defined Asset Funds. Prudential Securities Incorporated and its predecessors
have been underwriters of Defined Asset Funds since 1961 and co-Sponsors since
1964, in which year its predecessor became successor co-Sponsor to the original
Sponsor. Dean Witter Reynolds Inc. and its predecessors have been underwriters
of various Defined Asset Funds since 1964 and co-Sponsors since 1974.
PaineWebber Incorporated and its predecessor have co-Sponsored certain Defined
Asset Funds since 1983.

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The Sponsors have maintained secondary markets in Defined Asset Funds for
over 20 years. For decades informed investors have purchased unit investment
trusts for dependability and professional selection of investments. Defined
Asset Funds offers an array of simple and convenient investment choices, suited
to fit a wide variety of personal financial goals--a buy and hold strategy for
capital accumulation, such as for children's education or a nest egg for
retirement, or attractive, regular current income consistent with relative
protection of capital. There are Defined Funds to meet the needs of just about
any investor. Unit investment trusts are particularly suited for the many
investors who prefer to seek long-term profits by purchasing sound investments
and holding them, rather than through active trading. Few individuals have the
knowledge, resources, capital or time to buy and hold a diversified portfolio on
their own; it would generally take a considerable sum of money to obtain the
breadth and diversity offered by Defined Funds. Sometimes it takes a combination
of Defined Funds to plan for your objectives.

One of the most important decisions an investor faces may be how to
allocate his investments among asset classes. Diversification among different
kinds of investments can balance the risks and rewards of each one. Most
investment experts recommend stocks for long-term capital growth. Long-term
corporate bonds offer relatively high rates of interest income. By purchasing
both defined equity and defined bond funds, investors can receive attractive
current income as well as growth potential, offering some protection against
inflation.

The following chart shows the average annual compounded rate of return of
selected asset classes over the 10-year and 20-year periods ending December 31,
1993, compared to the rate of inflation over the same periods. Of course, this
chart represents past performance of these investment categories and there is no
guarantee of

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future results, either of these categories or of Defined Funds. Defined Funds
also have sales charges and expenses, which are not reflected in the chart.

Stocks (S&P 500)
20 yr 12.76%
10 yr 14.94%
Small-company stocks
20 yr 18.82%
10 yr 9.96%
Long-term corporate bonds
20 yr 10.16%
10 yr 14.00%
U.S. Treasury bills (short-term)
20 yr 7.49%
10 yr 6.35%
Consumer Price Index
20 yr 5.92%
10 yr 3.73%
0 2 4 6 8 10 12%

Source: Ibbotson Associates (Chicago).
Used with permission. All rights reserved.

Instead of having to select individual securities on their own, purchasers
of Defined Funds benefit from the expertise of Defined Asset Funds' experienced
buyers and research analysts. In addition, they gain the advantage of
diversification by investing in Units of a Defined Fund holding securities of
several different issuers. Such diversification can reduce risk, but does not
eliminate it. While the portfolio of a managed fund, such as a mutual fund,
continually changes, defined bond funds offer a defined portfolio and a schedule
of income distributions identified in the prospectus. Investors know, generally,
when they buy, the issuers, maturities, call dates and ratings of the securities
in the portfolio. Of course, the portfolio may change somewhat over time as
additional securities are deposited, as securities mature or are called or
redeemed or as they are sold to meet redemptions and in certain other limited
circumstances. Investors buy bonds for dependability--they know what they can
expect to earn and that principle is distributed as the bonds mature. Investors
also know at the time of purchase their estimated income and current and
long-term returns, subject to credit and market risks and to changes in the
portfolio or the fund's expenses.

Defined Asset Funds offers a variety of fund types. The tax exemption of
municipal securities, which makes them attractive to high-bracket taxpayers, is
offered by Defined Municipal Investment Trust Funds. Municipal

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Defined Funds offer a simple and convenient way for investors to earn monthly
income free from regular Federal income tax. Defined Municipal Investment Trust
Funds have provided investors with tax-free income for more than 30 years.
Defined Corporate Income Funds, with higher current returns than municipal or
government funds, are suitable for Individual Retirement Accounts and other
tax-advantaged accounts and provide monthly income. Defined Government
Securities Income Funds provide a way to participate in markets for U.S.
government securities while earning an attractive current return. Defined
International Bond Funds, invested in bonds payable in foreign currencies, offer
the potential to profit from changes in currency values and possibly from
interest rates higher than paid on comparable U.S. bonds, but investors incur a
higher risk for these potentially greater returns. Historically, stocks have
offered growth of capital, and thus some protection against inflation, over the
long term. Defined Equity Income Funds offer participation in the stock market,
providing current income as well as the possibility of capital appreciation. The
S&P Index Trusts offer a convenient and inexpensive way to participate in broad
market movements. Concept Series seek to capitalize on selected anticipated
economic, political or business trends. Utility Stock Series, consisting of
stocks of issuers with established reputations for regular cash dividends, seek
to benefit from dividend increases. Select Ten Portfolios seek total return by
investing for one year in the ten highest yielding stocks on a designated stock
index.

DESCRIPTION OF RATINGS (as described by the rating companies themselves).

STANDARD & POOR'S

A Standard & Poor's rating on the units of an investment trust (hereinafter
referred to collectively as 'units' and 'funds') is a current assessment of
creditworthiness with respect to the investments held by the fund. This
assessment takes into consideration the financial capacity of the issuers and of
any guarantors, insurers, lessees, or mortgagors with respect to such
investments. The assessment, however, does not take into acount the extent to
which fund expenses will reduce payment to the unit holder of the interest and
principal required to be paid on portfolio assets. In addition, the rating is
not a recommendation to purchase, sell, or hold units, as the rating does not
comment as to market price of the units or suitability for a particular
investor.

AAA--Units rated AAA represent interests in funds composed exclusively of
securities that, together with their credit support, are rated AAA by Standard &
Poor's and/or certain short-term investments. This AAA rating is the highest
rating assigned by Standard & Poor's to a security. Capacity to pay interest and
repay principal is extremely strong.

AA--Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.

A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing

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<PAGE>
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher rated categories.

BB, B, CCC, CC--Debt rated BB, B, CCC and CC is regarded, on balance, as
predominately speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.

The ratings may be modified by the addition of a plus or minus sign to show
relative standing within the major rating categories.

A provisional rating, indicated by 'p' following a rating, assumes the
successful completion of the project being financed by the issuance of the debt
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
of the project, makes no comment on the likelihood of, or the risk of default
upon failure of, such completion.

MOODY'S

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

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 present
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.

Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well

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<PAGE>
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Rating symbols may include numerical modifiers 1, 2 or 3. The numerical
modifier 1 indicates that the security ranks at the high end, 2 in the
mid-range, and 3 nearer the low end, of the generic category. These modifiers
are to give investors a more precise indication of relative debt quality in each
of the historically defined categories.

Conditional ratings, indicated by 'Con.', are sometimes given when the
security for the bond depends upon the completion of some act or the fulfillment
of some condition. Such bonds are given a conditional rating that denotes their
probable credit stature upon completion of that act or fulfillment of that
condition.

EXCHANGE OPTION

ELECTION

Holders may elect to exchange any or all of their Units of a Trust for
units of one or more of the series of Funds listed in the table set forth below
(the 'Exchange Funds'), which normally are sold in the secondary market at
prices which include the sales charge indicated in the table. Certain series of
the Funds listed have lower maximum applicable sales charges than those stated
in the table; also the rates of sales charges may be changed from time to time.
No series with a maximum applicable sales charge of less than 3.50% of the
public offering price is eligible to be acquired under the Exchange Option, with
the following exceptions: (1) Freddie Mac Series may be acquired by exchange
during the initial offering period from any of the Exchange Funds listed in the
table and (2) Units of any Select Ten Portfolio, if available, may be acquired
during their initial offering period or thereafter by exchange from any Exchange
Fund Series; units of Select Ten Portfolios may be exchanged only for units of
another Select Ten Series, if available. Units of the Exchange Funds may be
acquired at prices which include the reduced sales charge for Exchange Fund
units listed in the table, subject, however, to these important limitations:

First, there must be a secondary market maintained by the Sponsors in
units of the series being exchanged and a primary or secondary market in
units of the series being acquired and there must be units of the
applicable Exchange Fund lawfully available for sale in the state in which
the Holder is resident. There is no legal obligation on the part of the
Sponsors to maintain a market for any units or to maintain the legal
qualification for sale of any of these units in any state or states.
Therefore, there is no assurance that a market for units will in fact exist
or that any units will be lawfully available for sale on any given date at
which a Holder wishes to sell his Units of this Series and thus there is no
assurance that the Exchange Option will be available to any Holder.

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<PAGE>
Second, when units held for less than five months are exchanged for
units with a higher regular sales charge, the sales charge will be the
greater of (a) the reduced sales charge set forth in the table below or (b)
the difference between the sales charge paid in acquiring the units being
exchanged and the regular sales charge for the quantity of units being
acquired, determined as of the date of the exchange.

Third, exchanges will be effected in whole units only. If the proceeds
from the Units being surrendered are less than the cost of a whole number
of units being acquired, the exchanging Holder will be permitted to add
cash in an amount to round up to the next highest number of whole units.

Fourth, the Sponsors reserve the right to modify, suspend or terminate
the Exchange Option at any time without further notice to Holders. In the
event the Exchange Option is not available to a Holder at the time he
wishes to exercise it, the Holder will be immediately notified and no
action will be taken with respect to his Units without further instruction
from the Holder.

PROCEDURES

To exercise the Exchange Option, a Holder should notify one of the Sponsors
of his desire to use the proceeds from the sale of his Units of this Series to
purchase units of one or more of the Exchange Funds. If units of the applicable
outstanding series of the Exchange Fund are at that time available for sale, the
Holder may select the series or group of series for which he desires his Units
to be exchanged. Of course, the Holder will be provided with a current
prospectus or prospectuses relating to each series in which he indicates
interest. The exchange transaction will operate in a manner essentially
identical to any secondary market transaction, i.e., Units will be repurchased
at a price equal to the aggregate bid side evaluation per Unit of the Securities
in the Portfolio plus accrued interest. Units of the Exchange Fund will be sold
to the Holder at a price equal to the bid side evaluation per unit of the
underlying securities in the Portfolio plus interest plus the applicable sales
charge listed in the table below. Units of Equity Income Fund are sold, and will
be repurchased, at a price normally based on the closing sale prices on the New
York Stock Exchange, Inc. of the underlying securities in the Portfolio. The
maximum applicable sales charges for units of the Exchange Funds are also listed
in the table. Excess proceeds not used to acquire whole Exchange Fund units will
be paid to the exchanging Holder.

CONVERSION OPTION

Owners of units of any registered unit investment trust sponsored by others
which was initially offered at a maximum applicable sales charge of at least
3.0% ('Conversion Trust') may elect to apply the cash proceeds of sale or
redemption of those units directly to acquire available units of any Exchange
Fund at the reduced sales charge, subject to the terms and conditions applicable
to the Exchange Option (except that no secondary market is required in
Conversion Trust units). To exercise this option, the owner should notify his
retail broker. He will be given a prospectus of each series in which he
indicates interest of which units are available. The broker must sell or redeem
the units of the Conversion Trust. Any broker other than a Sponsor must certify
to the Sponsors that the purchase of units of the Exchange Fund is being made
pursuant to and is eligible for this conversion option. The broker will be
entitled to two thirds of the applicable reduced sales charge. The Sponsors
reserve the right to modify, suspend or terminate the conversion option at any
time without further notice, including the right to

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<PAGE>
increase the reduced sales charge applicable to this option (but not in excess
of $5 more per unit than the corresponding fee then charged for the Exchange
Option).

THE EXCHANGE FUNDS

The current return from taxable fixed income securities is normally higher
than that available from tax exempt fixed income securities. Certain of the
Exchange Funds do not provide for periodic payments of interest and are best
suited for purchase by IRA's, Keogh plans, pension funds or other tax-deferred
retirement plans. Consequently, some of the Exchange Funds may be inappropriate
investments for some Holders and therefore may be inappropriate exchanges for
Units of this Series. The table below indicates certain characteristics of each
of the Exchange Funds which a Holder should consider in determining whether each
Exchange Fund would be an appropriate investment vehicle and an appropriate
exchange for Units of this Series.

TAX CONSEQUENCES

An exchange of Units pursuant to the Exchange or Conversion Option for
units of a series of another Fund should constitute a 'taxable event' under the
Code, requiring a Holder to recognize a tax gain or loss, subject to the
following limitation. The Internal Revenue Service may seek to disallow a loss
(or a pro rata portion thereof) on an exchange of units if the units received by
a Holder in connection with such an exchange represent securities that are not
materially different from the securities that his previous units represented
(e.g., both Funds contain securities issued by the same obligor that have the
same material terms). Holders are urged to consult their own tax advisers as to
the tax consequences to them of exchanging units in particular cases.

EXAMPLE

Assume that a Holder, who has three units of a fund with a 5.50% sales
charge in the secondary market and a current price (based on bid side evaluation
plus accrued interest) of $1,100 per unit, sells his units and exchanges the
proceeds for units of a series of an Exchange Fund with a current price of $950
per unit and the same sales charge. The proceeds from the Holder's units will
aggregate $3,300. Since only whole units of an Exchange Fund may be purchased
under the Exchange Option, the Holder would be able to acquire four units in the
Exchange Fund for a total cost of $3,860 ($3,800 for units and $60 for the $15
per unit sales charge) by adding an extra $560 in cash. Were the Holder to
acquire the same number of units at the same time in the regular secondary
market maintained by the Sponsors, the price would be $4,021.16 ($3,800 for the
units and $221.16 for the 5.50% sales charge).

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<PAGE>

<TABLE><CAPTION>
MAXIMUM REDUCED
NAME OF APPLICABLE SALES CHARGE FOR INVESTMENT
EXCHANGE FUND SALES CHARGE* SECONDARY MARKET** CHARACTERISTICS
- --------------------------------------------- --------------- ----------------------- ---------------------------------------
<S> <C> <C> <C>
DEFINED ASSET FUNDS-- GOVERNMENT SECURITIES
INCOME FUND
GNMA Series (other than those below) 4.25% $15 per unit long-term, fixed rate, taxable income,
underlying securities backed by the
full faith and credit of the United
States
GNMA Series E or other GNMA Series having 4.25% $15 per 1,000 units long-term, fixed rate, taxable income,
units with an initial face value of underlying securities backed by the
$1.00 full faith and credit of the United
States, appropriate for IRA's or
tax-deferred retirement plans
Freddie Mac Series 3.50% $15 per 1,000 units intermediate term, fixed rate, taxable
income, underlying securities are
backed by Federal Home Loan Mortgage
Corporation but not by U.S. Government
DEFINED ASSET FUNDS-- INTERNATIONAL BOND FUND
Multi-Currency Series 5.50% $15 per unit intermediate-term, fixed rate, payable
in foreign currencies, taxable income
Australian and New Zealand Dollar Bonds 3.75% $15 per unit intermediate-term, fixed rate, payable
Series in Australian and New Zealand dollars,
taxable income
Australian Dollar Bonds Series 3.75% $15 per unit intermediate-term, fixed rate, payable
in Australian dollars, taxable income
Canadian Dollar Bonds Series 3.75% $15 per unit short intermediate term, fixed rate,
payable in Canadian dollars, taxable
income
DEFINED ASSET FUNDS--MUNICIPAL INVESTMENT
TRUST FUND
Monthly Payment, State and Multistate 5.50%+ $15 per unit long-term, fixed-rate, tax-exempt
Series income
Intermediate Term Series 4.75%+ $15 per unit intermediate-term, fixed rate, tax-
exempt income
Insured Series 5.50%+ $15 per unit long-term, fixed-rate, tax-exempt
current income, underlying securities
insured by insurance companies
AMT Monthly Payment Series 5.50%+ $15 per unit long-term, fixed rate, income exempt
from regular federal income tax but
partially subject to Alternative
Minimum Tax.
DEFINED ASSET FUNDS--MUNICIPAL INCOME FUND
Insured Discount Series 5.50%+ $15 per unit long-term, fixed rate, tax-exempt
current income, taxable capital gains

</TABLE>
- ---------------
* As described in the prospectuses relating to certain Exchange Funds, this
sales charge for secondary market sales may be reduced on a graduated scale
in the case of quantity purchases.

** The reduced sales charge for Units acquired during their initial offering
period is: $20 per unit for Series for which the Reduced Sales Charge for
Secondary Market (above) is $15 per unit; $20 per 1,000 units for Series
for which the Reduced Sales Charge for Secondary Market (above) is $15 per
1,000 units.

+ Subject to reduction depending on the maturities of the underlying
Securities.

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<PAGE>

- ---------------
* As described in the prospectuses relating to certain Exchange Funds, this
sales charge for secondary market sales may be reduced on a graduated scale
in the case of quantity purchases.

** The reduced sales charge for Units acquired during their initial offering
period is: $20 per unit for Series for which the Reduced Sales Charge for
Secondary Market (above) is $15 per unit; $20 per 100 units for Series for
which the Reduced Sales Charge for Secondary Market is $15 per 100 units;
and $20 per 1,000 units for Series for which the Reduced Sales Charge for
Secondary Market is $15 per 1,000 units.

++ The reduced sales charge for Utility Common Stock Series 6 is $15 per 2,000
units and for prior Utility Common Stock Series is $7.50 per unit.

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<PAGE>
APPENDIX

THE FLORIDA TRUST

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 other 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).
Investment in the Florida Trust should be made with an understanding that the
value of the underlying Portfolio may decline with increases in interest rates.

RISK FACTORS--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, 1993, ranked fourth with an
estimated population of 13.6 million, an increase of approximately 44.7% since
1980. Since the beginning of the eighties, Florida has surpassed Ohio, Illinois
and Pennsylvania in total population. Florida's attraction, as both a growth and
retirement state, has kept net migration fairly steady with an average of
292,988 new residents each year, from 1982 through 1993. Since 1983 the prime
working age population (18-44) has grown at an average annual rate of 2.6%. The
share of Florida's total working age population (18-59) to total State
population is approximately 54%. Non-farm employment has grown by approximately
54.4% since 1980. The service sector is Florida's largest employment sector,
presently accounting for 32.1% of total non-farm employment. 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.
Job gains in Florida's manufacturing sector have exceeded national averages
increasing by 11.7% between 1980 and 1993. Foreign Trade has contributed
significantly to Florida's employment growth. Florida's dependence on highly
cyclical construction and construction related manufacturing has declined. Total
contract construction employment as a share of total non-farm employment has
fallen from 10% in 1973, to 7% in 1980 to 5% in 1993. Although the job creation
rate for the State of Florida since 1980 is over two times the rate for the
nation as a whole, since 1989 the unemployment rate for the State has risen
faster than the national average. The average rate of unemployment for Florida
since 1980 is 6.5%, while the national average is 7.1%. Because Florida has a
proportionately greater retirement age population, property income (dividends,
interest and rent) and transfer payments (Social Security and pension benefits)
are a relatively more important source of income. In 1993, Florida employment
income represented 62% of total personal income while nationally, employment
income represented 72% of total personal income.

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

The State Budget. The State operates under a biennial budget which is
formulated in even numbered years and presented for approval to the Legislature
in odd numbered years. A supplemental budget request process is utilized in the
even numbered years for refining and modifying the primary budget. 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 three types of funds: the General
Revenue Fund, Trust Funds and Working Capital Fund. The majority of the State's
tax revenues are deposited in the General Revenue Fund and moneys in the General
Revenue Fund are expended pursuant to appropriations acts. In fiscal year
1992-93, expenditures for education, health and welfare and public safety
represented approximately 49%, 30% and 11%, respectively, of expenditures from
the General

a-1
<PAGE>
Revenue Fund. The Trust Funds consist of moneys 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. Estimated General Revenue and Working Capital Fund
revenues of $13,582.7 million for 1993-94 (excluding Hurricane Andrew related
revenues and expenses) represent an increase of 8.4% over revenues for 1992-93.
This amount reflects a transfer of $190 million, out of an estimated $220
million in non-recurring revenue due to Hurricane Andrew, to a hurricane relief
trust fund. Estimated Revenue for 1994-95 of $14,293.5 million (excluding
Hurricane Andrew impacts) represent an increase of 5.2% over 1993-1994. This
amount reflects a transfer of $159 million in non-recurring revenue due to
Hurricane Andrew, to a hurricane relief trust fund.

In fiscal year 1992-1993, the State derived approximately 62% of its total
direct revenues for deposit in the General Revenue Fund, Trust Funds and Working
Capital Fund from State taxes. Federal funds and other special revenues
accounted for the remaining revenues. The greatest single source of tax receipts
in the State is the 6% sales and use tax. For the fiscal year ended June 30,
1993, receipts from the sales and use tax totalled $9,426 million, an increase
of approximately 12.5% over fiscal year 1991-92. This amount includes
non-recurring increases attributable to the rebuilding and reconstruction
following the hurricane. 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. For the fiscal year ended June 30, 1992,
collections of this tax totalled $1,475.5 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, 1993, receipts from the corporate income tax totalled
$846.6 million, an increase of approximately 5.6% from fiscal year 1991-92. The
Documentary Stamp Tax collections totalled $639 million during fiscal year
1992-93, or approximately 27% over fiscal year 1991-92. The Alcoholic Beverage
Tax, an excise tax on beer, wine and liquor totalled $442.2 million in 1992-93,
an increase of 1.6% from fiscal year 1991-92. The Florida lottery produced sales
of $2.13 billion of which $810.4 million was used for education in fiscal year
1992-93.

While the State does not levy ad valorem taxes on real property or tangible
personal property, counties, municipalities and school districts are authorized
by law, and special districts may be authorized by law, to levy ad valorem
taxes. Under the State Constitution, ad valorem taxes may not be levied by
counties, municipalities, school districts and water management districts in
excess of the following respective millages upon the assessed value of real
estate and tangible personal property; for all county purposes, ten mills; for
all municipal purposes, ten mills; for all school purposes, ten mills; and for
water management purposes, either 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.

On November 3, 1992, the voters of the State of Florida passed an amendment
to the Florida Constitution establishing a limitation on the annual increase in
assessed valuation of homestead property commencing January 1, 1994, of the
lesser of 3% or the increase in the Consumer Price Index during the relevant
year, except in the event of a sale thereof during such year, and except as to
improvements thereto during such year. The amendment did not alter any of the
millage rates described above.

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 amendment 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

a-2
<PAGE>
levies are approaching the constitutional cap and whose tax base consists
largely of residential real estate, may, as a result of the above-described
amendment, need to place greater reliance on non-ad valorem revenue sources to
meet their operating budget needs.

A joint resolution to amend the State Constitution has been adopted by the
Florida Legislature. The amendment, if approved by the voters of the state at
the November 1994 general election, would limit 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. Growth is defined as the amount equal to the average
annual rate of growth in Florida personal income over the most recent twenty
quarters times the state revenues allowed for the prior fiscal year. The
revenues allowed for any fiscal year could be increased by a two-thirds vote of
the Legislature, The limit would be effective starting with fiscal year 1995-
1996. Any excess revenues generated would be put in the budget stabilization
fund until it is fully funded and then refunded to taxpayers. Included among the
categories of revenues which are exempt from the proposed revenue limitation,
however, are revenues pledged to state bonds.

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

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

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

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

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

Litigation. Due to its size and its broad range of activities, the State
(and its officers and employees) are involved in numerous routine lawsuits. The
managers of the departments of the State involved in such routine lawsuits
believed 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 a suit, plaintiff has sought title to Hugh Taylor Birch State
Recreation Area by virtue of a reverter clause in the deed from Hugh Taylor
Birch to the State. A final judgment at trial was entered in favor of the
State. The case has been appealed to the Fourth District Court of Appeal.
The Department of Natural Resources anticipates the area will remain in
State lands; however, in the event the court should rule in favor of the
plaintiff, the State is subject to a loss of real property valued at
approximately $400 million.

B. In a suit, the Florida Supreme Court prospectively invalidated a tax
preference methodology under former Sections 554.06 and 565.12 of the
Florida Statutes (1985). This ruling was appealed to the United States
Supreme Court which reversed the State Supreme Court and remanded the
matter back to the State court. The Supreme Court's opinion suggested that
one of the State's options for correcting the constitutional

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problems would be to assess and collect back taxes at the higher rates
applicable to those who were ineligible for the tax preference from all
taxpayers who had benefitted from the tax preference during the contested
tax period. The State chose to seek a recovery of taxes from those who
benefitted from the tax preference by requiring them to pay taxes at the
higher rate that applied to out-of-state manufacturers and distributors.
The Florida Supreme Court remanded the matter to the Circuit Court for the
2nd Judicial Circuit to hear arguments on the method chosen by the State to
provide a clear and certain remedy. The trial court's decision against the
State is on appeal at the First District Court of Appeal. With the
exception of two parties, all parties have settled their claims with the
State. Should an unfavorable outcome result in this case, approximately $33
million may be refunded.

C. A class action suit brought against the Department of Corrections,
alleging race discrimination in hiring and employment practices, originally
went to trial in 1982 with the Department prevailing on all claims except a
partial summary judgment to a plaintiff sub-class claiming a discriminatory
impact on hiring caused by an examination requirement. Jurisdictional
aspects of the testing issue were appealed to the Eleventh Circuit Court of
Appeals which vacated the trial court's order and was upheld by the United
States Supreme Court. The district court consolidated three successor
lawsuits with this case and entered a final judgment in favor of the State.
The judgment, however, has been appealed to the Eleventh Circuit Court of
Appeals. Should the department fail in future appeals, the liability of the
State for back pay and other monetary relief could exceed $40 million.

D. Complaints were filed in the Second Judicial Circuit seeking a
declaration that Sections 624.509, 624.512 and 624.514, F.S. (1988) violate
various U.S. and Florida Constitutional provisions. Relief was sought in
the form of a tax refund. The Florida Supreme Court reversed the trial
court in favor of the State. Plaintiffs have petitioned for certiorari with
the United States Supreme Court. The State has settled all outstanding
litigation in this area. Similar issues had been raised in the following
cases which were part of the settlement: Ford Motor Company v. Bill Gunter,
Case No. 86-3714, 2nd Judicial Circuit, and General Motors Corporation v.
Tom Gallagher, Case Nos. 90-2045 and 88-2925, 2nd Judicial Circuit, where
the plaintiffs are challenging Section 634.131, F.S., which imposes taxes
on the premiums received for certain motor vehicle service agreements.
Current estimates indicate that the State's potential refund exposure under
the remaining refund application yet to be denied is approximately $150
million. However, the State hopes that refund exposure will be reduced as
these refund requests begin to be denied based upon the Florida Supreme
Court decision in the instant case.

E. In two cases, plaintiffs have sought approximately $25 million in
intangible tax refunds based partly upon claims that Florida's intangible
tax statutes are unconstitutional.

F. A lawsuit was filed against the Department of Health and
Rehabilitative Services (DHRS) and the Comptroller of the State of Florida
involving a number of issues arising out of the implementation of a DHRS
computer system and seeking declaratory relief and money damages. The
estimated potential liability to the State is in excess of $40 million.

G. Plaintiffs in a case have sought a declaration that statutory
assessments on certain hospital net revenues are invalid, unconstitutional,
and unenforceable and request temporary and permanent injunctive relief be
granted prohibiting the enforcement or collection of the assessment and
that all monies paid to the State by the plaintiffs and the class members
within the four years preceding the filing of the action be reimbursed by
the defendants with interest. An unfavorable outcome to this case could
result in the possibility of refunds exceeding $50 million. This case was
voluntarily dismissed but may be refiled.

H. In an inverse condemnation suit claiming that the actions of the
State constitute a taking of certain leases for which compensation is due,
the Circuit judge granted the State's motion for summary judgment finding
that the State had not deprived plaintiff of any royalty rights they might
have. Plaintiff has appealed. Additionally, plaintiff's request for a
drilling permit was rejected after administrative proceedings before the
Department of Environmental Protection. Plaintiff is expected to challenge
the decision.

I. In an inverse condemnation suit alleging the regulatory taking of
property without compensation in the Green Swamp Area of Critical State
Concern, discovery is concluding and a motion for a summary judgment will
likely be made. If the judgment should be for the plaintiff, condemnation
procedures would be instituted with costs of $30 million, plus interest
from 1975.

J. In two cases, plaintiffs have challenged the constitutionality of the
$295 fee imposed on the issuance of certificates of title for vehicles
previously titled outside the State. The circuit court granted summary

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judgment to the plaintiff, finding that the fee violated the Commerce
Clause of the U.S. Constitution. The Court enjoined further collection of
the fee and has ordered refunds to all those who have paid since the
statute came into existence in mid-1991. The State has noticed an appeal
and is entitled to a stay of the lower court ruling's effectiveness, thus
the fee continues to be collected during the appeal. The potential refund
exposure may be in excess of $100 million.

K. Santa Rosa County has filed a complaint for declaratory relief
against the State requesting the Circuit Court to: (1) find that Section
206.60(2)(a), F.S., does not allow the Department to deduct administrative
expenses unrelated to the collection, administration, and distribution of
the county gas tax; and (2) order the department to pay Santa Rosa County
all moneys shown to have been unlawfully deducted from the motor fuel tax
revenues plus interest. Santa Rosa County obtained a prospective
injunction, but was denied the refund it sought. There has been no appeal
by either party. The Legislature changed the statute in accordance with the
Court's decision.

L. Lee Memorial Hospital has contested the calculation of its
disproportionate share payment for the 1992-93 State fiscal year. An
unfavorable outcome to this case could result in a possible settlement of
$20 to $30 million.

M. A lawsuit has challenged the freezing of nursing home reimbursement
rates for the period January 1, 1990 through July 1, 1990. The First
District Court of Appeal ruled against the Agency for Health Care
Administration (AHCA). The AHCA has petitioned the Florida Supreme Court
for review of this declaration. An unfavorable outcome to this case could
result in a potential liability of $40 million.

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

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

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

FLORIDA TAXES

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

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

2. Because Florida does not impose a personal income tax, non-corporate
Holders 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 Debt Obligations it holds; (ii) amounts which are distributed by the
Florida Trust to non-corporate Holders of Units of the Florida Trust; or
(iii) any gain realized on the sale or redemption of Debt Obligations by
the Florida Trust or of a Unit of the Florida Trust by a non-corporate
Holder. However, corporations as defined in Chapter 220, Florida Statutes
(1991), 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

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Trust and on any gain realized by a corporate Holder on the sale or
redemption of Units of the Florida Trust by the corporate Holder.

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

4. Bonds issued by the State of Florida or its political subdivisions
are exempt from Florida intangible personal property taxation under Chapter
199, Florida Statutes (1991), 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 Debt Obligations 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.

THE NEW YORK TRUST

The Portfolio of the New York Trust contains different issues of debt
obligations issued by or on behalf of the State of New York (the 'State') and
counties, municipalities and other political subdivisions and other 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).
Investment in the New York Trust should be made with an understanding that the
value of the underlying Portfolio may decline with increases in interest rates.

RISK FACTORS--Prospective investors should consider the financial
difficulties and pressures which the State of New York and several of its public
authorities and municipal subdivisions have undergone. The following briefly
summarizes some of these difficulties and the current financial situation, based
principally on certain official statements currently available; copies may be
obtained without charge from the issuing entity, or through the Agent for the
Sponsors upon payment of a nominal fee. While the Sponsors have not
independently verified this information, they have no reason to believe that it
is not correct in all material respects.

New York State. In recent fiscal years, there have been extended delays in
adopting the State's budget, repeated revisions of budget projections,
significant revenue shortfalls (as well as increased expenses) and year-end
borrowing to finance deficits. These developments reflect faster long-term
growth in State spending than revenues and that the State was earlier and more
severely affected by the recent economic recession than most of the rest of the
country, as well as its substantial reliance on non-recurring revenue sources.
The State's general fund incurred cash basis deficits of $775 million, $1,081
million and $575 million, respectively, for the 1990-1992 fiscal years. Measures
to deal with deteriorating financial conditions included transfers from reserve
funds, recalculating the State's pension fund obligations (subsequently ruled
illegal), hiring freezes and layoffs, reduced aid to localities, sales of State
property to State authorities, and additional borrowings (including issuance of
additional short-term tax and revenue anticipation notes payable out of
impounded revenues in the next fiscal year). The general fund realized a $671
million surplus for the fiscal year ended March 31, 1993, and a $1.54 billion
surplus is projected for the fiscal year ended March 31, 1994.

Approximately $5.3 billion of State general obligation debt was outstanding
at December 31, 1993. The State's net tax-supported debt (restated to reflect
LGAC's assumption of certain obligations previously funded through issuance of
short-term debt) was $23.4 billion at March 31, 1993, up from $11.7 billion in
1984. A taxpayer filed various lawsuits challenging the constitutionality of
appropriation-backed debt issued by State authorities without voter approval. A
temporary restraining order against issuance of debt by the Metropolitan
Transportation Authority and the New York State Thruway Authority was lifted in
July 1993; an appeal is pending. A proposed constitutional amendment passed by
the Legislature in 1993 would prohibit lease-purchase and contractual obligation
financing for State facilities, but would authorize the State without voter
referendum to issue revenue bonds within a formula-based cap, secured solely by
a pledge of certain State tax receipts. It would also restrict State debt to
capital projects included in a multi-year capital financing plan. The proposal
is subject to approval by the current Legislature and then by voters. Standard &
Poor's reduced its rating of the State's general obligation bonds on January 13,
1992 to A-(its lowest rating for any state). Moody's reduced its ratings of
State general obligation bonds from A1 to A on June 6, 1990 and to Baa1, its
rating of $14.2 billion of appropriation-backed debt of the State and State
agencies (over two-thirds of the total debt) on January 6, 1992.

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In May 1991 (nearly 2 months after the beginning of the 1992 fiscal year),
the State Legislature adopted a budget to close a projected $6.5 billion gap
(including repayment of $905 million of fiscal 1991 deficit notes). Measures
included $1.2 billion in new taxes and fees, $0.9 billion in non-recurring
measures and about $4.5 billion of reduced spending by State agencies (including
layoffs), reduced aid to localities and school districts, and Medicaid cost
containment measures. After the Governor vetoed $0.9 billion in spending, the
State adopted $0.7 billion in additional spending, together with various
measures including a $100 million increase in personal income taxes and $180
million of additional non-recurring measures. Due primarily to declining
revenues and escalating Medicaid and social service expenditures, $0.4 billion
of administrative actions, $531 million of year-end short-term borrowing and a
$44 million withdrawal from the Tax Stabilization Reserve Fund were required to
meet the State's cash flow needs.

On April 2, 1992, the State adopted a budget to close a projected $4.8
billion gap for the State's 1993 fiscal year (including repayment of the fiscal
1992 short-term borrowing) through a combination of $3.5 billion of spending
reductions (including measures to reduce Medicaid and social service spending,
as well as further employee layoffs, reduced aid to municipalities and schools
and reduced support for capital programs), deferral of scheduled tax reductions,
and some new and increased fees. The State Comptroller concluded that the budget
included $1.18 billion of nonrecurring measures (the Division of the Budget
reported a figure of $450 million). The City and its Board of Education sued the
Governor and various other State officials in March 1993, claiming that the
State's formula for allocating aid to education discriminated against City
schools by at least $274 million in the 1993 fiscal year.

To close a projected budget gap of nearly $3 billion for the fiscal year
ended March 31, 1994, the State budget contained various measures including
deferral of scheduled income tax reductions for a fourth year, some tax
increases, $1.6 billion in spending cuts, especially for Medicaid, and further
reduction of the State's work force. The budget increased aid to schools, and
modelled a formula to channel more aid to districts with lower-income students
and high property tax burdens. State legislation requires deposit of receipts
from the petroleum business tax and certain other transportation-related taxes
into funds dedicated to transportation purposes. Nevertheless, $516 million of
these monies were retained in the general fund during this fiscal year. The
Division of the Budget has estimated that non-recurring income items other than
the $671 million surplus from the 1993 fiscal year aggregated, $318 million. $89
million savings from bond refinancings was deposited in a reserve to fund
litigation settlements, particularly to repay monies received under the State's
abandoned property law, which the State will be required to give up as described
below.

The Governor has proposed a budget for the fiscal year that began April 1,
1994, which would increase spending by 3.8% (greater than inflation for the
first time in six years). Tax revenue projections are based on assumed modest
growth in the State economy. An estimated $130 million would come from proposed
lottery games and $70 million, from requiring bottling companies to pay the
State unredeemed deposits on bottles and cans. The proposal would reduce or
phase out certain business taxes over several years, provide a tax credit for
low income families and increase aid to education by $198 million ($88 million
to New York City), especially the poorer districts. The litigation fund would be
increased to over $300 million. However, the State would not increase its share
of Medicaid costs and would reduce coverage and place additional restrictions on
certain health care services. (The Governor in November 1993 proposed to close
certain State psychiatric facilities over the next several years and apply most
of the savings to additional clinical care, rehabilitation and vocational
training.) Over $1 billion would be saved by further postponement of scheduled
reductions in personal income taxes and in taxes on hospital income; another
$300 million represents rolling over the then projected surplus from the current
fiscal year. Other non-recurring measures would be reduced to $78 million. The
budget has yet to be adopted. In November 1993 the State's Court of Appeals
ruled unconstitutional 1990 legislation which postponed employee pension
contributions by the State and localities (other than New York City). The
amounts to be made up, estimated to aggregate $4 billion (half from the State),
would be repaid in increasing amounts over 12-20 years under a plan proposed by
the State Comptroller, trustee of the State pension system, and previous
contribution levels will not be exceeded until 1999. State and other estimates
are subject to uncertainties including the effects of Federal tax legislation
and economic developments. The Division of the Budget has cautioned that its
projections are subject to risks including adverse decisions in pending
litigations (particularly those involving Federal Medicaid reimbursements and
payments by hospitals and health maintenance organizations).

The State normally adjusts its cash basis balance by deferring until the
first quarter of the succeeding fiscal year substantial amounts of tax refunds
and other disbursements. For many years, it also paid in that quarter more than
40% of its annual assistance to local governments. Payment of these annual
deferred obligations and the State's accumulated deficit was substantially
financed by issuance of short-term tax and revenue anticipation

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notes shortly after the beginning of each fiscal year. The New York Local
Government Assistance Corporation ('LGAC') was established in 1990 to issue
long-term bonds over several years, payable from a portion of the State sales
tax, to fund certain payments to local governments traditionally funded through
the State's annual seasonal borrowing. The legislation will normally limit the
State's short-term borrowing, together with net proceeds of LGAC bonds ($4.0
billion to date), to a total of $4.7 billion. The State's latest seasonal
borrowing, in May 1993, was $850 million. The Governor's budget for the current
fiscal year would finally eliminate this seasonal borrowing program.

Generally accepted accounting principles ('GAAP') for municipal entities
apply modified accrual accounting and give no effect to payment deferrals. On an
audited GAAP basis, the State's government funds group recorded operating
deficits of $1.2 billion and $1.4 billion for the 1990 and 1991 fiscal years.
For the same periods the general fund recorded deficits (net of transfers from
other funds) of $0.7 billion and $1.0 billion. Reflecting $1.6 billion and $881
million of payments by LGAC to local governments out of proceeds from bond
sales, the general fund realized surpluses of $1.7 billion and $2.1 billion for
the 1992 and 1993 fiscal years, respectively, leaving an accumulated deficit of
$2.551 billion.

For decades, the State's economy has grown more slowly than that of the
rest of the nation as a whole. Part of the reason for this decline has been
attributed to the combined State and local tax burden, which is the second
highest in the nation (about 40% above the national average). The State's
dependence on Federal funds and sensitivity to changes in economic cycles, as
well as the high level of taxes, may continue to make it difficult to balance
State and local budgets in the future. The total employment growth rate in the
State has been below the national average since 1984. The State lost 524,000
jobs in 1990-1993. The jobless rate was 8.2% in April 1994, contrasted to the
national average of 6.4%.

New York City (the 'City'). The City is the State's major political
subdivision. In 1975, the City encountered severe financial difficulties,
including inability to refinance $6 billion of short-term debt incurred to meet
prior annual operating deficits. The City lost access to the public credit
markets for several years and depended on a variety of fiscal rescue measures
including commitments by certain institutions to postpone demands for payment, a
moratorium on note payment (later declared unconstitutional), seasonal loans
from the Federal government under emergency congressional legislation, Federal
guarantees of certain City bonds, and sales and exchanges of bonds by The
Municipal Assistance Corporation for the City of New York ('MAC') to fund the
City's debt.

MAC has no taxing power and pays its obligations out of sales taxes imposed
within the City and per capita State aid to the City. The State has no legal
obligation to back the MAC bonds, although it has a 'moral obligation' to do so.
MAC is now authorized to issue bonds only for refunding outstanding issues and
up to $1.5 billion should the City fail to fund specified transit and school
capital programs. The State also established the Financial Control Board ('FCB')
to review the City's budget, four-year financial plans, borrowings and major
contracts. These were subject to FCB approval until 1986 when the City satisfied
statutory conditions for termination of such review. The FCB is required to
reimpose the review and approval process in the future if the City were to
experience certain adverse financial circumstances. The City's fiscal condition
is also monitored by a Deputy State Comptroller.

The City projects that it is beginning to emerge from four years of
economic recession. Since 1989 the gross city product has declined by 10.1% and
employment, by almost 11%, while the public assistance caseload has grown by
over 25%. Unemployment averaged 10.8% in 1992 and 10.1% in 1993, peaking at
13.4% in January 1993, the highest level in 25 years. It dropped to 9.5% in
April, 1994. The number of persons on welfare exceeds 1.1 million, the highest
level since 1972, and one in seven residents is currently receiving some form of
public assistance.

While the City, as required by State law, has balanced its budgets in
accordance with GAAP since 1981, this has required exceptional measures in
recent years. The FCB has commented that City expenditures have grown faster
than revenues each year since 1986, masked in part by a large number of
non-recurring gap closing actions. To eliminate potential budget gaps of $1-$3
billion each year since 1988 the City has taken a wide variety of measures. In
addition to increased taxes and productivity increases, these have included
hiring freezes and layoffs, reductions in services, reduced pension
contributions, and a number of nonrecurring measures such as bond refundings,
transfers of surplus funds from MAC, sales of City property and reduction of
reserves. The FCB concluded that the City has neither the economy nor the
revenues to do everything its citizens have been accustomed to expect.

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The City closed a budget gap for the 1993 fiscal year (estimated at $1.2
billion) through actions including service reductions, productivity initiatives,
transfer of $0.5 billion surplus from the 1992 fiscal year and $100 million from
MAC. A November 1992 revision proposed to meet an additional $561 million in
projected expenditures through measures including a refunding to reduce current
debt service costs, reduction in the reserve and an additional $81 million of
gap closing measures. Over half of the City's actions to eliminate the gap were
non-recurring.

The Financial Plan for the City's current fiscal year (ending June 30,
1994) relies on increases in State and Federal aid, as well as the 1993 $280
million surplus and a partial hiring freeze, to close a gap resulting primarily
from labor settlements and decline in property tax revenues. However, overall
spending would increase by about the rate of inflation. The Plan contains over
$1.3 billion of one-time revenue measures including bond refundings, sale of
various City assets and borrowing against future property tax receipts. On July
2, 1993, the previous Mayor ordered spending reductions of about $130 million
for the current fiscal year and $400 million for the 1995 fiscal year. A new
Mayor and City Comptroller assumed office in January 1994. The budget continues
to include revenues from sales of $215 million of delinquent property tax
receivables, originally proposed by the previous Mayor. Legislation introduced
in the City Council in May 1994 would require the Mayor to demonstrate that the
sale is necessary and that more fiscally responsible measures are not available.
Various fiscal monitors have criticized increased reliance on non-recurring
revenues, with attendant increases in the gaps for future years. Their reports
note continued cost overruns by the Board of Education and overtime in uniformed
services (in part because of repeated snow storms), as well as a budget gap in
the Health and Hospitals Corp. ('HHC') and shortfalls in certain budget
balancing measures such as increased Federal assistance. The new Mayor has
initiated a program to reduce non-personnel costs by up to $150 million. A $98
million surplus is projected. The new City Comptroller has urged more aggressive
measures to collect amounts owed by the State and Federal governments to reduce
the short-term borrowing costs, and has criticized continued reliance on sale of
delinquent property tax receivables.

In May 1994, the new Mayor proposed an executive budget to eliminate a
projected $2.3 billion budget gap for the fiscal year beginning July 1, 1994,
reduce overall spending for the first time in over a decade, reduce non-
recurring revenue measures, and begin cutting taxes (to encourage job growth).
Proposals include spending cuts (mostly through reduction of 15,000 jobs by June
1995 unless equivalent productivity savings are negotiated with the unions),
partial employee payment of health insurance costs, and further deferral of City
pension fund contributions. It also projects increases aggregating about $400
million in State and Federal aid, including the State's taking on the City's
share of Medicaid costs. It has also been reported that the City plans to divert
$120 million of the proposed $250 million in increased State education aid to
help close the budget gap. The previously proposed delay of $3.2 billion in
capital spending until fiscal 1998 would be retained. However, $225 million
would be saved by refinancing outstanding bonds, which will increase future debt
service, another $110 million would be derived from sale of the City radio
station and a hotel, and another $51 million by altering the repayment schedule
for a $2.5 billion debt to the City's pension funds. Other initiatives include
fingerprinting of welfare recipients and initial steps toward merging the City's
three separate police forces. The City's Budget Director cautions that the HHC
may require $80-$120 million additional City assistance to eliminate its budget
gap. The various fiscal monitors, while applauding the new Mayor's February 1994
proposals toward structural balance (such as reduction of new debt issuance to
control debt service costs), find many of his proposed gap-closing measures to
be 'high risk' because they depend on actions by the State and Federal
governments, the City Council, the City actuary and labor unions of which there
is no assurance. With the aid of $200 million from MAC (conditioned on a
commitment to reach the 15,000 job reduction goal), the City offered an
incentive package to encourage voluntary severance by about 7600 workers (6800
have been approved) and union leaders agreed not to oppose transfers of
remaining employees between agencies. Union leaders have objected to the Mayor's
proposal that employees bear part of their health-care costs. The State
Comptroller objected to a proposal to change actuarial assumptions in order to
reduce City pension fund contributions by $300 million in the 1995 and 1996
fiscal years.

The Mayor is exploring the possibility of privitizing some of the City's
services. The City Council passed legislation which would authorize the Council
to hold hearings before any significant privitization is implemented and would
require submission of a cost-benefit analysis. The Mayor has also been exploring
how to obtain greater mayoral control over spending by independent authorities
and agencies such as the Board of Education, the HHC and the TA. The Schools
Chancellor has agreed to meet the Mayor's job-reduction goal for the Board of
Education over the current and 1995 fiscal years. In April the Mayor appointed a
fiscal monitor of the Board of Education. To avert the Chancellor's announced
resignation in response, the Mayor agreed that the monitor will act as a Deputy
Commissioner in the Department of Investigation. The Mayor's capital budget
proposed in May

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does not include $4.2 billion requested by the Chancellor for constructing new
school buildings. A tentative labor agreement for school custodians reached a
few days later, while praised by the Chancellor for achieving job rule
concessions, has been rejected by the Mayor. In March 1994 the Mayor reduced
cash incentives to landlords renting apartments to the homeless, and it has been
reported that he is considering proposals including eliminating City financing
of a program that creates housing for single homeless people, requiring
able-bodied welfare recipients to render community service, charging shelter
occupants who refuse offers of treatment or training a modest rent for use of
the shelter, and replacing some of the subsidies to day care centers with a
voucher system. Some critics have asserted that the effects of many of the
Mayor's expense reduction proposals would fall disproportionately on the City's
poor. The potential impact on other City services is also unclear. The budget
must be passed by the Democratic-controlled City council and many of the
proposals also need approval by the State and others. Budget gaps of $3.2
billion and $3.3 billion are projected for the 1996 and 1997 fiscal years.

A major uncertainty is the City's labor costs, which represent about 50% of
its total expenditures. The City's workforce grew by 34% during the 1980s. A
January 1993 agreement covering approximately 44% of City workers followed
negotiations lasting nearly two years. Workers will receive wage and benefit
raises totalling 8.25% over 39 months ending March 1995. Although this is less
than the inflation rate, the settlement achieved neither any of the productivity
savings that the previous Mayor had counted on to help balance the City's budget
nor are the increases beyond those previously budgeted offset by labor
concessions. An agreement announced in August 1993 provides wage increases for
City teachers averaging 9% over the 48 1/2 months ending October 1995. The City
is seeking to negotiate workforce productivity initiatives, savings from which
would be shared with the workers involved. The current Financial Plan assumes no
further wage increases after the 1995 fiscal year. Also, costs of some previous
wage increases were offset by reduced contributions to pension funds; if fund
performance is less than the 9% annual earnings projected, the City could incur
increased expenses in future years.

Budget balance may also be adversely affected by the effect of the economy
on economically sensitive taxes. Reflecting the downturn in real estate prices,
estimates of property tax revenues have been reduced. Other uncertainties
include additional expenditures to combat deterioration in the City's
infrastructure (such as bridges, schools and water supply), costs of developing
alternatives to ocean dumping of sewage sludge (which the City expects to defray
through increased water and sewer charges), cost of the AIDS epidemic, problems
of drug addiction and homelessness and the impact of any future State assistance
payment reductions. An independent report in 1991 concluded that 50% of City
roads need resurfacing or reconstruction. In September 1993 the City reported
that 56.4% of its bridges are structurally deficient and need repairs; some
repairs have been halted due to environmental concerns. In response to evidence
of widespread errors and falsification in 1986-89 inspections of City schools
for presence of asbestos, the City in August 1993 conducted an emergency
reinspection program. The costs of additional asbestos removal, $83 million, may
require curtailment or deferral of other school repairs and maintenance. In
December 1993 the U.S. Environmental Protection Agency ('EPA') agreed for now
not to require the City to build a water filtration plant, at an estimated cost
of $2-8 billion, if it substantially implements more than 150 steps to prevent
pollution of the upstate watershed area that supplies most of the City's
drinking water. However, the City will be required to complete a preliminary
design of the plant. The EPA will evaluate the City's progress by December 1996
and could still require it to build the plant if the steps are not successful. A
$9 billion suit by developers in the area challenges that the City's actions
devalue their property without fair compensation. Plans for an incinerator at
the Brooklyn Navy Yard may be delayed further by emergence of a 1988 report that
the site is somewhat contaminated by toxic wastes. Plans to build additional
incinerators may also need to be reconsidered following a May 1994 U.S. Supreme
Court decision that the resulting sludge must be disposed of as toxic waste. It
has been reported that the Mayor will seek approval from the EPA to modify a
City commitment to build additional sludge treatment plants, to allow it to
transport the sludge for disposal out of state. Recent court decisions found
that the City has failed to provide adequate shelter for many homeless persons,
fined and held several City officials in contempt for failure to comply with a
State rule requiring provision of immediate shelter for homeless persons and
ordered the City to pay $3.5 million in fines. In February 1994, the State's
Court of Appeals ruled that the City's recycling program does not comply with
City law; a State Supreme Court subsequently gave the City until July 1996 to
comply with the law's requirements, rejecting a City proposal to delay further
recycling for up to four years; compliance could cost an additional $100 million
in the 1995 fiscal year alone. Elimination of any additional budget gaps will
require various actions, including by the State, a number of which are beyond
the City's control. Staten Island voters in 1993 approved a proposed charter
under which Staten Island would secede from the City. Secession will require
enabling legislation by the State Legislature; it would also be subject to legal
challenge by the City. The effects of secession on the City cannot be determined
at this time, but questions include responsibility for outstanding debt, a

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diminished tax base, and continued use of the Fresh Kills landfill, the City's
only remaining garbage dump. A similar measure with respect to Queens was
approved by the New York State Senate.

In December 1993, a report commissioned by the City was released,
describing the nature of the City's structural deficit. It projects that the
City will need to identify and implement $5 billion in annual gap closing
measures by 1998. The report suggests a variety of possible measures for City
consideration. While the new Mayor rejected out of hand many of the proposals
such as tax increases, the State Comptroller urged him to reconsider the report.

The City sold $2.3 billion, $1.4 billion and $1.8 billion of short-term
notes, respectively, during the 1992, 1993 and current fiscal years. At December
31, 1993, there were outstanding $21.4 billion of City bonds (not including City
debt held by MAC), $4.5 billion of MAC bonds and $0.8 billion of City-related
public benefit corporation indebtedness, each net of assets held for debt
service. Standard & Poor's and Moody's during the 1975-80 period either withdrew
or reduced their ratings of the City's bonds. Standard & Poor's currently rates
the City's debt A-with a negative outlook while Moody's rates City bonds Baa1.
City-related debt almost doubled since 1987, although total debt declined as a
percentage of estimated full value of real property. The City's financing
program projects long-term financing during fiscal years 1994-1997 to aggregate
$19.9 billion. The City's latest Ten Year Capital Strategy plans capital
expenditures of $51.6 billion during 1994-2003 (93% to be City funded). The
State Comptroller has criticized some City bond refinancings for producing
short-term savings at the expense of greater overall costs, especially in future
years. Annual debt service is projected to increase to about $3.2 billion by
fiscal 1997 (from $1.2 billion in fiscal 1990).

Other New York Localities. In 1992, other localities had an aggregate of
approximately $15.7 billion of indebtedness outstanding. In recent years,
several experienced financial difficulties. A March 1993 report by Moody's
Investors Service concluded that the decline in ratings of most of the State's
largest cities in recent years resulted from the decline in the State's
manufacturing economy. Seventeen localities had outstanding indebtedness for
deficit financing at the close of their respective 1992 fiscal years. In
response to requests from an unprecedented 10 local government units (including
Nassau and Suffolk counties) in 1992 for legislative authority to issue bonds to
fund deficits, the State Comptroller recommended legislation to establish
earlier State oversight of municipal deficits. In September, 1992, the previous
Comptroller proposed regulations which would prohibit use of certificates of
participation by municipalities for deficit financing or refundings. Some local
leaders complained that the deficits resulted from reduced State aid accompanied
by increases in State-mandated expenditures. Any reductions in State aid to
localities may cause additional localities to experience difficulty in achieving
balanced budgets. If special local assistance were needed from the State in the
future, this could adversely affect the State's as well as the localities'
financial condition. Most localities depend on substantial annual State
appropriations. Legal actions by utilities to reduce the valuation of their
municipal franchises, if successful, could result in localities becoming liable
for substantial tax refunds.

State Public Authorities. In 1975, after the Urban Development Corporation
('UDC'), with $1 billion of outstanding debt, defaulted on certain short-term
notes, it and several other State authorities became unable to market their
securities. Since 1975 the State has provided substantial direct and indirect
financial assistance to UDC, the Housing Finance Agency ('HFA'), the
Environmental Facilities Corporation and other authorities. Practical and legal
limitations on these agencies' ability to pass on rising costs through rents and
fees could require further State appropriations. 18 State authorities had an
aggregate of $63.5 billion of debt outstanding at September 30, 1993.
Approximately $0.5 billion of State public authority obligations was
State-guaranteed, $7.7 billion was moral obligation debt (including $4.8 billion
of MAC debt) and $19.5 billion was financed under lease-purchase or contractual
obligation financing arrangements with the State. Various authorities continue
to depend on State appropriations or special legislation to meet their budgets.

The Metropolitan Transportation Authority ('MTA'), which oversees operation
of the City's subway and bus system by the City Transit Authority (the 'TA') and
operates certain commuter rail lines, has required substantial State and City
subsidies, as well as assistance from several special State taxes. Projections
of TA revenues were reduced due to declining ridership, increasing fare evasion,
reductions in State and City aid and declining revenues from City real estate
taxes. It was reported in December 1993 that a twenty-year trend in declining
bus ridership is expected to continue. While the MTA used bond refinancings and
other measures to avert a commuter rail line fare increase in 1992, measures
including a fare increase eliminated the TA's 1992 budget gap. Measures to
balance the TA's 1993 budget included increased funding by the City, increased
bridge and tunnel tolls and allocation of part of the revenues from the
Petroleum Business Tax. Cash basis gaps of $500-800 million are projected for
each of the 1995, 1996 and 1997 years. Measures proposed to close these gaps
include various additional State aid and possible fare increases. However, it
was projected in May 1994 that the

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effect of the improving economy on transportation-dedicated taxes and on
ridership, as well as implementation of cost savings, would permit deferral of
fare increases until at least July 1995.

The MTA's Chairman proposed a 5 year financial strategy, including a
variety of fare changes; however, even if these are approved, an estimated $700
million in additional funds will be needed from State and City financial
assistance. Substantial claims have been made against the TA and the City for
damages from a 1990 subway fire and a 1991 derailment. The MTA infrastructure,
especially in the City, needs substantial rehabilitation. A one-year $1.6
billion 1992 MTA Capital Plan was approved. In December 1993, a $9.5 billion MTA
Capital Plan was finally approved for 1992-1996, although $500 million is
contingent on increased contributions from the City; the City has until late
1994 to decide if it will make these contributions. The MTA's Chairman has
threatened to raise subway fares and borrow more if the City fails to make up
this amount. In response to a constitutional challenge to implementing a $6
billion State transportation borrowing plan without voter approval, a temporary
restraining order was issued in May 1993, but was lifted in July. It is
anticipated that the MTA and the TA will continue to require significant State
and City support. Moody's reduced its rating of certain MTA obligations to Baa
on April 14, 1992.

Because of reduced rates under the State's revised medical reimbursement
programs, as well as proposals to reduce reimbursement of hospital capital costs
and to change Medicaid funding, New York hospitals have experienced increasing
financial pressure. To mitigate unprecedented rate increases by Empire State
Blue Cross, the State in January 1993 made available $100 million from the
medical malpractice fund. A Federal District Court ruled in February 1993 that
State surcharges of up to 24% on hospital bills paid by commercial insurance
companies and health maintenance organizations, much of which is used to
subsidize care of uninsured patients, violate Federal law; however, the Court
permitted continuance of the system pending appeal of the ruling.

Litigation. The State and the City are defendants in numerous legal
proceedings, including challenges to the constitutionality and effectiveness of
various welfare programs, alleged torts and breaches of contract, condemnation
proceedings and other alleged violations of laws. Adverse judgments in these
matters could require substantial financing not currently budgeted. For example,
in addition to real estate certiorari proceedings, claims in excess of $343
billion were outstanding against the City at June 30, 1993, for which it
estimated its potential future liability at $2.2 billion. Another action seeks a
judgment that, as a result of an overestimate by the State Board of Equalization
and Assessment, the City's 1992 real estate tax levy exceeded constitutional
limits. In March 1993, the U.S. Supreme Court ruled that if the last known
address of a beneficial owner of accounts held by banks and brokerage firms
cannot be ascertained, unclaimed funds therein belong to the state of the
broker's incorporation rather than where its principal office is located. New
York has obtained about $350 million of abandoned funds that could have to be
paid to other States. It has agreed to pay Delaware $200 million over a
five-year period. The case has been remanded to a special master to determine
disposition of these monies.

Final adverse decisions in any of these cases could require extraordinary
appropriations at either the State or City level or both.

NEW YORK TAXES

In the opinion of Davis Polk & Wardwell, special counsel for the Sponsors,
under existing New York law:

Under the income tax laws of the State and City of New York, the Trust
is not an association taxable as a corporation and income received by the
Trust will be treated as the income of the Holders in the same manner as
for Federal income tax purposes. Accordingly, each Holder will be
considered to have received the interest on his pro rata portion of each
Debt Obligation when interest on the Debt Obligation is received by the
Trust. In the opinion of bond counsel delivered on the date of issuance of
the Debt Obligation, such interest will be exempt from New York State and
City personal income taxes except where such interest is subject to Federal
income taxes (see Taxes). A noncorporate Holder of Units of the Trust who
is a New York State (and City) resident will be subject to New York State
(and City) personal income taxes on any gain recognized when he disposes of
all or part of his pro rata portion of a Debt Obligation. A noncorporate
Holder who is not a New York State resident will not be subject to New York
State or City personal income taxes on any such gain unless such Units are
attributable to a business, trade, profession or occupation carried on in
New York. A New York State (and City) resident should determine his tax
basis for his pro rata portion of each Debt Obligation for New York State
(and City) income tax purposes in the same manner as for Federal income tax
purposes. Interest income on a Holder's pro rata portion of the Debt
Obligations is generally not excludable from income in computing New York
State and City corporate franchise taxes.

THE PENNSYLVANIA TRUST

The Portfolio of the Pennsylvania Trust contains different issues of debt
obligations issued by or on behalf of the Commonwealth of Pennsylvania (the
'Commonwealth') and counties, municipalities and other political subdivisions
and other public authorities thereof or by the Government of Puerto Rico or the
Government of

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Guam or by their respective authorities, all rated in the category A or better
by at least one national rating organization (see Investment Summary).
Investment in the Pennsylvania Trust should be made with an understanding that
the value of the underlying Portfolio may decline with increases in interest
rates.

RISK FACTORS--Prospective investors should consider the financial
difficulties and pressures which the Commonwealth of Pennsylvania and certain of
its municipal subdivisions have undergone. Both the Commonwealth and the City of
Philadelphia are experiencing significant revenue shortfalls. There can be no
assurance that the Commonwealth will not experience a further decline in
economic conditions or that portions of the municipal obligations contained in
the Portfolio of the Pennsylvania Trust will not be affected by such a decline.
Without intending to be complete, the following briefly summarizes some of these
difficulties and the current financial situation, as well as some of the complex
factors affecting the financial situation in the Commonwealth. It is derived
from sources that are generally available to investors and is based in part on
information obtained from various agencies in Pennsylvania. No independent
verification has been made of the following information.

State Economy. Pennsylvania has been historically identified as a heavy
industry state although that reputation has changed recently as the industrial
composition of the Commonwealth diversified when the coal, steel and railroad
industries began to decline. The major new sources of growth in Pennsylvania are
in the service sector, including trade, medical and the health services,
education and financial institutions. Pennsylvania's agricultural industries are
also an important component of the Commonwealth's economic structure, accounting
for more than $3.6 billion in crop and livestock products annually while
agribusiness and food related industries support $38 billion in economic
activity annually.

Non-agricultural employment in the Commonwealth declined by 5.1 percent
during the recessionary period from 1980 to 1983. In 1984, the declining trend
was reversed as employment grew by 2.9 percent over 1983 levels. Since 1984,
non-agricultural employment has continued to grow each year. The growth in
employment experienced in Pennsylvania is comparable to the nationwide growth in
employment which has occurred during this period. As a percentage of total
non-agricultural employment within the Commonwealth, non-manufacturing
employment has increased steadily since 1980 to its 1992 level of 81.3 percent
of total employment. Consequently, manufacturing employment constitutes a
diminished share of total employment within the Commonwealth. In 1993,
manufacturing employment represented 18.4 percent of all non-agricultural
employment in the Commonwealth while the services sector accounted for 29.9
percent and the trade sector accounted for 22.4 percent.

The Commonwealth recently experienced a slowdown in its economy. Moreover,
economic strengths and weaknesses vary in different parts of the Commonwealth.
In general, heavy industry and manufacturing have recently been facing
increasing competition from foreign producers. During 1993, the annual average
unemployment rate in Pennsylvania was 7.0 percent compared to 6.8 percent for
the United States. For April 1994 the unadjusted unemployment rate was 6.7
percent in Pennsylvania and 6.2 percent in the United States, while the
seasonally adjusted unemployment rate for the Commonwealth was 6.6 percent and
for the United States was 6.4 percent.

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

All funds received by the Commonwealth are subject to appropriation in
specific amounts by the General Assembly or by executive authorization by the
Governor. Total appropriations enacted by the General Assembly may not exceed
the ensuing year's estimated revenues, plus (less) the unappropriated fund
balance (deficit) of the preceding year, except for constitutionally authorized
debt service payments. Appropriations from the principal operating funds of the
Commonwealth (the General Fund, the Motor License Fund and the State Lottery
Fund) are generally made for one fiscal year and are returned to the
unappropriated surplus of the fund if not spent or encumbered by the end of the
fiscal year. The Constitution specifies that a surplus of operating funds at the
end of a fiscal year must be appropriated for the ensuing year.

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Pennsylvania uses the 'Fund' method of accounting for receipts and
disbursements. For purposes of government accounting, a 'fund' is an independent
fiscal and accounting entity with a self-balancing set of accounts, recording
cash and/or other resources together with all related liabilities and equities.
In the Commonwealth, over 120 funds have been established by legislative
enactment or in certain cases by administrative action for the purpose of
recording the receipt and disbursement of moneys received by the Commonwealth.
Annual budgets are adopted each fiscal year for the principal operating funds of
the Commonwealth and several other special revenue funds. Expenditures and
encumbrances against these funds may only be made pursuant to appropriation
measures enacted by the General Assembly and approved by the Governor. The
General Fund, the Commonwealth's largest fund, receives all tax revenues,
non-tax revenues and federal grants and entitlements that are not specified by
law to be deposited elsewhere. The majority of the Commonwealth's operating and
administrative expenses are payable from the General Fund. Debt service on all
bond indebtedness of the Commonwealth, except that issued for highway purposes
or for the benefit of other special revenue funds, is payable from the General
Fund.

Financial information for the principal operating funds of the Commonwealth
is maintained on a budgetary basis of accounting, which is used for the purpose
of insuring compliance with the enacted operating budget. The Commonwealth also
prepares annual financial statements in accordance with generally accepted
accounting principles ('GAAP'). Budgetary basis financial reports are based on a
modified cash basis of accounting as opposed to a modified accrual basis of
accounting prescribed by GAAP. Financial information is adjusted at fiscal
year-end to reflect appropriate accruals for financial reporting in conformity
with GAAP.

Recent Financial Results. From fiscal 1984, when the Commonwealth first
prepared its financial statements on a GAAP basis, through fiscal 1989, the
Commonwealth reported a positive unreserved-undesignated fund balance for its
government fund types (General Fund, Special Revenue Fund and Capital Projects
Fund) at the fiscal year end. Slowing economic growth during 1990, leading to a
national economic recession beginning in fiscal 1991, reduced revenue growth and
increased expenditures and contributed to negative unreserved-undesignated fund
balances at the end of the 1990 and 1991 fiscal years. At the end of fiscal 1990
and fiscal 1991, the unreserved-undesignated fund balance was a negative $205.8
million and a negative $1,189.2 million, respectively, a drop of $579.6 million
and $983.4 million, respectively, from the year-earlier amounts. The decline in
the fiscal 1990 unreserved-undesignated fund balance for government fund types
was largely the result of a $718.2 million operating deficit in the General Fund
which caused the total fund balance of the General Fund to fall to a negative
$119.8 million at June 30, 1990. The decline in the fiscal 1991
unreserved-undesignated fund balance was principally the result of operating
deficits of $1,076.6 million and $66.2 million, respectively, in the General
Fund and the State Lottery Fund.

Rising demands on state programs caused by the economic recession,
particularly for medical assistance and cash assistance programs, and the
increased costs of special education programs and correction facilities and
programs, contributed to increased expenditures in fiscal 1991 while tax
revenues for the 1991 fiscal year were severely affected by the economic
recession. Total corporation tax receipts and sales and use tax receipts during
fiscal 1991 were, respectively, 7.3 percent and 0.9 percent below amounts
collected during fiscal 1990. Personal income tax receipts also were affected by
the recession but not to the extent of the other major General Fund taxes,
increasing only 2.0 percent over fiscal 1990 collections.

The Commonwealth experienced a $454 million general fund deficit as of the
end of its 1991 fiscal year. The deficit reflected below-estimate economic
activity and growth rates of economic indicators and total tax revenue
shortfalls of $817 million (4.1 percent) below those assumed in the enacted
budget. Economic conditions also affected expenditure trends during the 1991
fiscal year, with expenditures for medical assistance costs and other human
service programs running $512 million above estimates assumed in the 1991
budget. In January 1991, the Commonwealth initiated a number of cost-saving
measures, including the firing of 2,000 state employees, deferral of paychecks
and reduction of funds to state universities, which resulted in approximately
$871 million in cost savings.

Actions taken during fiscal 1992 to bring the General Fund budget back into
balance, including tax increases and expenditure restraints resulted in a $1.1
billion reduction for the unreserved-undesignated fund deficit for combined
governmental fund types and a return to a positive fund balance. Total general
fund revenues for fiscal 1992 were $14,516.8 million which is approximately 22
percent higher than fiscal 1991 revenues of $11,877.3 million due in large part
to tax increases. The increased revenues funded substantial increases in
education, social services and corrections programs. As a result of tax
increases and certain appropriation lapses, fiscal 1992 ended with an $8.8
million surplus after having started the year with an unappropriated balance
deficit of $454 million.

Financial performance continued to improve during fiscal 1993 resulting in
a positive unreserved-undesignated balance for combined governmental fund types
at June 30, 1993, as a result of a $420.4 million increase in the balance. These
gains were produced by continued efforts to control expenditures growth.

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Fiscal 1993 Budget. On June 30, 1992 the Pennsylvania legislature
presented the Governor with a $14.126 billion general fund budget for the 1993
fiscal year, which began on July 1, 1992. Before signing the budget, the
Governor deleted approximately $73 million in certain state expenditures such as
aid to county courts and district justices. As a result, the budget for the 1993
fiscal year was approximately $14.046 billion, which is approximately $105
million more than the fiscal 1992 budget. On February 9, 1993, the Governor
announced that he anticipated that the fiscal 1993 budget would be in balance at
the end of the fiscal year.

Fiscal 1994 Budget. On May 28, 1993, the Governor signed a $15 billion
general fund budget, an increase of approximately five percent from the fiscal
1993 budget. A substantial amount of the increase is targeted for medical
assistance programs and prisons.

Debt Limits and Outstanding Debt. The Constitution of Pennsylvania permits
the issuance of the following types of debt: (i) debt to surpress insurrection
or rehabilitate areas affected by disaster; (ii) electorate approved debt; (iii)
debt for capital projects subject to an aggregate debt limit of 1.75 times the
annual average tax revenues of the preceding five fiscal years; and (iv) tax
anticipation notes payable in the fiscal year of issuance.

Under the Pennsylvania Fiscal Code, the Auditor General is required
annually to certify to the Governor and the General Assembly certain information
regarding the Commonwealth's indebtedness. According to the most recent Auditor
General certificate, the average annual tax revenues deposited in all funds in
the five fiscal years ended June 30, 1993 was $14.5 billion, and, therefore, the
net debt limitation for the 1994 fiscal year is $27.1 billion. Outstanding net
debt totalled $4.0 billion at June 30, 1993, a decrease of $42.2 million from
June 30, 1992. At September 1, 1993, the amount of debt authorized by law to be
issued, but not yet incurred was $15.1 billion.

Debt Ratings. All outstanding general obligation bonds of the Commonwealth
are rated AA-by Standard & Poor's and A1 by Moody's.

City of Philadelphia. The City of Philadelphia experienced a series of
general fund deficits for fiscal years 1988 through 1992, which have culminated
in the City's present serious financial difficulties. In its 1992 Comprehensive
Annual Financial Report, Philadelphia reported a cumulative general fund deficit
of $71.4 million for fiscal year 1992.

In June 1991, the Governor of Pennsylvania signed into law legislation
establishing the Pennsylvania Inter-Governmental Cooperation Authority ('PICA'),
a five-member board which would oversee the fiscal affairs of the City of
Philadelphia. The legislation empowers PICA to issue notes and bonds on behalf
of Philadelphia and also authorizes Philadelphia to levy a one-percent sales tax
the proceeds of which would be used to pay off the bonds. In return for PICA's
fiscal assistance, Philadelphia was required, among other things, to establish a
five-year financial plan that includes balanced annual budgets. Under the
legislation, if Philadelphia does not comply with such requirements, PICA may
withhold bond revenues and certain state funding.

In May 1992, the City Council of Philadelphia approved the Mayor's first
five-year plan and adopted a fiscal 1993 budget. On June 5, 1992, PICA sold
approximately $480 million in bonds at yields ranging from 5.25 percent to 6.88
percent. The proceeds of the bonds were used to cover shortfalls accumulated
over the last four fiscal years, projected deficits for fiscal year 1992 and
fiscal year 1993, construction projects and other capital expenditures. In
accordance with the enabling legislation, the authority was guaranteed a
percentage of the wage tax revenue expected to be collected from Philadelphia
residents to permit repayment of the bonds. In connection with PICA's issuance
of the bonds, S&P raised the rating on Philadelphia's general obligation bonds
to 'BB.' Moody's rating is currently 'Ba.'

In January 1993, Philadelphia anticipated a cumulative general fund budget
deficit of $57 million for fiscal year 1993. In response to the anticipated
deficit, the Mayor unveiled a financial plan eliminating the budget deficit for
fiscal year 1993 through significant service cuts that included a plan to
privatize certain city-provided services. Due to an upsurge in tax receipts,
cost-cutting and additional PICA borrowings, Philadelphia completed fiscal year
1993 with a balanced general fund budget.

In January 1994, the Mayor proposed a $2.3 billion city general fund budget
that included no tax increases, no significant service cuts and a series of
modest health and welfare program increases. At that time, the Mayor also
unveiled a $2.2 billion program (the 'Philadelphia Economic Stimulus Program')
designed to stimulate Philadelphia's economy and stop the loss of 1,000 jobs a
month. However, the success of the Philadelphia Economic Stimulus Program has
been predicated upon several contingencies including, among others, $250 million
in revenues from riverboat gambling over the next three years, which first must
be approved by the state legislature, and $100 million in federal 'empowerment
zone' subsidies, which Philadelphia may or may not receive. Currently, the 1994
Philadelphia general fund budget is running at a deficit of approximately $10
million. The Mayor has predicted that the general fund will be balanced by the
end of fiscal year 1994.

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Litigation. The Commonwealth is a party to numerous lawsuits in which an
adverse final decision could materially affect the Commonwealth's governmental
operations and consequently its ability to pay debt service on its obligations.
The Commonwealth also faces tort claims made possible by the limited waiver of
sovereign immunity effected by Act 152, approved September 28, 1978.

PENNSYLVANIA TAXES

The following summarizes the opinion of Dechert Price & Rhoads,
Philadelphia, Pennsylvania, special counsel on Pennsylvania tax matters, under
existing law:

1. The Pennsylvania Trust will be recognized as a trust and will not be
taxable as a corporation for Pennsylvania state and local tax purposes.

2. Units of the Pennsylvania Trust are not subject to any of the
personal property taxes presently in effect in Pennsylvania to the extent
of that proportion of the Trust represented by Debt Obligations issued by
the Commonwealth of Pennsylvania, its agencies and instrumentalities, or by
any county, city, borough, town, township, school district, municipality or
local housing or parking authority in the Commonwealth of Pennsylvania
('Pennsylvania Obligations'). The taxes referred to above include the
County Personal Property Tax, the additional personal property taxes
imposed on Pittsburgh residents by the School District of Pittsburgh and by
the City of Pittsburgh. Fund Units may be taxable under the Pennsylvania
inheritance and estate taxes.

3. The proportion of interest income representing interest income from
Pennsylvania Obligations distributable to Holders of the Pennsylvania Trust
is not taxable under the Pennsylvania Personal Income Tax or under the
Corporate Net Income Tax imposed on corporations by Article IV of the
Pennsylvania Tax Reform Code, nor will such interest be taxable under the
Philadelphia School District Investment Income Tax imposed on Philadelphia
resident individuals.

4. Although there is no published authority on the subject, counsel is
of the opinion that any insurance proceeds paid in lieu of interest on
defaulted tax-exempt debt obligations will be exempt from the Pennsylvania
Personal Income Tax either as payment in lieu of tax-exempt interest or as
payments of insurance proceeds which are not included in any of the classes
of income specified as taxable under the Pennsylvania Personal Income Tax
Law. Further, because such insurance proceeds are excluded from the Federal
income tax base, such proceeds will not be subject to the Pennsylvania
Corporate Net Income Tax. Proceeds from insurance policies are expressly
excluded from the Philadelphia School District Investment Income Tax and,
accordingly, insurance proceeds paid to replace defaulted payments under
any Debt Obligations will not be subject to this tax.

5. The disposition by the Pennsylvania Trust of a Pennsylvania
Obligation (whether by sale, exchange, redemption or payment at maturity)
will not constitute a taxable event to a Holder under the Pennsylvania
Personal Income Tax if the Pennsylvania Obligation was issued prior to
February 1, 1994. Further, although there is no published authority on the
subject, counsel is of the opinion that (i) a Holder of the Pennsylvania
Trust will not have a taxable event under the Pennsylvania state and local
income taxes referred to in the preceding paragraph upon the redemption or
sale of his Unit to the extent that the Trust is then comprised of
Pennsylvania Obligations issued prior to February 1, 1994 and (ii) the
disposition by the Trust of a Pennsylvania Obligation (whether by sale,
exchange, redemption or payment at maturity) will not constitute a taxable
event to a Holder under the Corporate Net Income Tax or the Philadelphia
School District Investment Income Tax if the Pennsylvania Obligation was
issued prior to February 1, 1984. (The School District tax has no
application to gain on the disposition of property held by the taxpayer for
more than six months.) Gains on the sale, exchange, redemption, or payment
at maturity of a Pennsylvania Obligation issued on or after February 1,
1994, will be taxable under all of these taxes, as will gains on the
redemption or sale of a unit to the extent that the Trust is comprised of
Pennsylvania Obligations issued on or after February 1, 1994.

6. To the extent the value of Units is represented by obligations of
the Commonwealth of Puerto Rico or obligations of the territory of Guam,
such value will not be subject to Pennsylvania personal property taxes to
the extent required by Federal statutes. The proportion of income received
by Holders derived from interest on such obligations is not taxable under
any of the Pennsylvania State and local income taxes referred to above.
Although Federal law does not expressly exclude from taxation gain realized
on the disposition of obligations of Puerto Rico or of Guam, because
interest is exempt on such obligations, Pennsylvania does not tax gain from
the disposition of such obligations under the Personal Income Tax.

a-16

<PAGE>

Def ined
Asset FundsSM

SPONSORS: MUNICIPAL INVESTMENT
Merrill Lynch, TRUST FUND
Pierce, Fenner & Smith Inc. Multistate Series - 62
Unit Investment Trusts (Unit Investment Trusts)
P.O. Box 9051 PROSPECTUS
Princeton, N.J. 08543-9051 This Prospectus does not contain all of
(609) 282-8500 the information with respect to the
Smith Barney Shearson Inc. investment company set forth in its
Unit Trust Department registration statement and exhibits
Two World Trade Center--101st Floor relating thereto which have been filed
New York, N.Y. 10048 with the Securities and Exchange
1-800-298-UNIT Commission, Washington, D.C. under the
PaineWebber Incorporated Securities Act of 1933 and the
1200 Harbor Blvd. Investment Company Act of 1940, and to
Weehawken, N.J. 07087 which reference is hereby made.
(201) 902-3000 No person is authorized to give any
Prudential Securities Incorporated information or to make any
One Seaport Plaza representations with respect to this
199 Water Street investment company not contained in this
New York, N.Y. 10292 Prospectus; and any information or
(212) 776-1000 representation not contained herein must
Dean Witter Reynolds Inc. not be relied upon as having been
Two World Trade Center--59th Floor authorized. This Prospectus does not
New York, N.Y. 10048 constitute an offer to sell, or a
(212) 392-2222 solicitation of an offer to buy,
EVALUATOR: securities in any state to any person to
Kenny S&P Evaluation Services whom it is not lawful to make such offer
65 Broadway in such state.
New York, N.Y. 10006
INDEPENDENT ACCOUNTANTS:
Deloitte & Touche
1633 Broadway
3rd Floor
New York, N.Y. 10019

CO-TRUSTEES:
The First National Bank of Chicago
Investors Bank & Trust Company
P.O. Box 1537
Boston, MA 02205-1537
1-800-338-6019

14860--5/94

<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS

A. The following information relating to the Depositors is incorporated by
reference to the SEC filings
indicated and made a part of this Registration Statement.

SEC FILE OR
IDENTIFICATION
NUMBER
--------------------
I. Bonding Arrangements and Date of Organization of the
Depositors filed pursuant to Items A and B of
Part II of the Registration Statement on Form
S-6 under the Securities Act of 1933:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................... 2-52691
Smith Barney Shearson Inc....................... 33-29106
PaineWebber Incorporated........................ 2-87695
Prudential Securities Incorporated.............. 2-61418
Dean Witter Reynolds Inc........................ 2-60599
II. Information as to Officers and Directors of the
Depositors filed pursuant to Schedules A and D
of Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................... 8-7721
Smith Barney Shearson Inc....................... 8-8177
PaineWebber Incorporated........................ 8-16267
Prudential Securities Incorporated.............. 8-12321
Dean Witter Reynolds Inc........................ 8-14172
III. Charter documents of the Depositors filed as
Exhibits to the Registration Statement on Form
S-6 under the Securities Act of 1933 (Charter,
By-Laws):
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................... 2-73866, 2-77549
Smith Barney Shearson Inc....................... 33-20499
PaineWebber Incorporated........................ 2-87965, 2-87965
Prudential Securities Incorporated.............. 2-86941, 2-86941
Dean Witter Reynolds Inc........................ 2-60599, 2-86941

B. The Internal Revenue Service Employer Identification
Numbers of the Sponsors and Trustee are as
follows:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................... 13-5674085
Smith Barney Shearson Inc....................... 13-1912900
PaineWebber Incorporated........................ 13-2638166
Prudential Securities Incorporated.............. 13-6134767
Dean Witter Reynolds Inc........................ 94-1671384
The First National Bank of Chicago,
Co-Trustee...................................... 36-0899825
Investors Bank & Trust Company, Co-Trustee...... 04-3086138

UNDERTAKING
The Sponsors undertake that they will not instruct the Trustee to accept from
(i) Asset Guaranty Reinsurance Company, Municipal Bond Investors Assurance
Corporation or any other insurance company affiliated with any of the Sponsors,
in settlement of any claim, less than an amount sufficient to pay any principal
or interest (and, in the case of a taxability redemption, premium) then due on
any Security in accordance with the municipal bond guaranty insurance policy
attached to such Security or (ii) any affiliate of the Sponsors who has any
obligation with respect to any Security, less than the full amount due pursuant
to the obligation, unless such instructions have been approved by the Securities
and Exchange Commission pursuant to Rule 17d-1 under the Investment Company Act
of 1940.

II-1
<PAGE>
SERIES OF MUNICIPAL INVESTMENT TRUST FUND
DESIGNATED PURSUANT TO RULE 487 UNDER THE SECURITIES ACT OF 1933

SEC
SERIES FILE NUMBER
- --------------------------------------------------------------------------------
Thirty-Third Intermediate Term Series....................... 2-82126
Four Hundred Thirty-Eighth Monthly Payment Series........... 33-16561
Multistate Series 6E........................................ 33-29412
Thirty-Eighth Insured Series................................ 2-96953
Multistate Series--48....................................... 33-50247

CONTENTS OF REGISTRATION STATEMENT
The Registration Statement on Form S-6 comprises the following papers and
documents:

The facing sheet of Form S-6.

The Cross-Reference Sheet (incorporated by reference to the Cross-Reference
Sheet to the Registration Statement of Municipal Investment Trust Fund,
Forty-Fourth Intermediate Term Series D, 1933 Act File No. 2-88251).

The Prospectus.

Additional Information not included in the Prospectus (Part II).

Consent of independent accountants.

The following exhibits:

1.1 --Form of Trust Indenture (incorporated by reference to
Exhibit 1.1 to the Registration Statement of Municipal
Investment Trust Fund, Multistate Series-48, 1933 Act File
No. 33-50247).
1.1.1 --Form of Standard Terms and Conditions of Trust Effective
October 21, 1993 (incorporated by reference to Exhibit
1.1.1 to the Registration Statement of Municipal
Investment Trust Fund, Multistate Series-48, 1933 Act File
No. 33-50247).
1.2 --Form of Master Agreement Among Underwriters (incorporated
by reference to Exhibit 1.2 to the Registration Statement
of The Corporate Income Fund, One Hundred Ninety-Fourth
Monthly Payment Series, 1933 Act File No. 2-90925).
2.1 --Form of Certificate of Beneficial Interest (included in
Exhibit 1.1.1).
3.1 --Opinion of counsel as to the legality of the securities
being issued including their consent to the use of their
names under the headings 'Taxes', 'The New York Trust--New
York Taxes' and 'Miscellaneous--Legal Opinion' in the
Prospectus.
4.1.1 --Consent of the Evaluator.
4.1.2 --Consent of the Rating Agency as to Insured Trusts.

R-1
<PAGE>
SIGNATURES

The registrant hereby identifies the series numbers of Municipal Investment
Trust Fund listed on page R-1 for the purposes of the representations required
by Rule 487 and represents the following:

1) That the portfolio securities deposited in the series as to which this
registration statement is being filed do not differ materially in type
or quality from those deposited in such previous series;

2) That, except to the extent necessary to identify the specific portfolio
securities deposited in, and to provide essential information for, the
series with respect to which this registration statement is being filed,
this registration statement does not contain disclosures that differ in
any material respect from those contained in the registration statements
for such previous series as to which the effective date was determined
by the Commission or the staff; and

3) That it has complied with Rule 460 under the Securities Act of 1933.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY
AUTHORIZED IN THE CITY OF NEW YORK AND STATE OF NEW YORK ON THE 26TH DAY OF MAY,
1994.

SIGNATURES APPEAR ON PAGES R-3, R-4, R-5, R-6 AND R-7.

A majority of the members of the Board of Directors of Merrill Lynch,
Pierce, Fenner & Smith Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.

A majority of the members of the Board of Directors of Smith Barney
Shearson Inc. has signed this Registration Statement or Amendment to the
Registration Statement pursuant to Powers of Attorney authorizing the person
signing this Registration Statement or Amendment to the Registration Statement
to do so on behalf of such members.

A majority of the members of the Executive Committee of the Board of
Directors of PaineWebber Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.

A majority of the members of the Board of Directors of Prudential
Securities Incorporated has signed this Registration Statement or Amendment to
the Registration Statement pursuant to Powers of Attorney authorizing the person
signing this Registration Statement or Amendment to the Registration Statement
to do so on behalf of such members.

A majority of the members of the Board of Directors of Dean Witter Reynolds
Inc. has signed this Registration Statement or Amendment to the Registration
Statement pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.

R-2
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR

By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Board of Directors of Merrill Form SE and the following 1933 Act
Lynch, Pierce, File
Fenner & Smith Incorporated: Number: 33-43466 and 33-51607

HERBERT M. ALLISON, JR.
BARRY S. FREIDBERG
EDWARD L. GOLDBERG
STEPHEN L. HAMMERMAN
JEROME P. KENNEY
DAVID H. KOMANSKY
DANIEL T. NAPOLI
THOMAS H. PATRICK
JOHN L. STEFFENS
DANIEL P. TULLY
ROGER M. VASEY
ARTHUR H. ZEIKEL

By
ERNEST V. FABIO
(As authorized signatory for
Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Attorney-in-fact for the persons listed above)

R-3
<PAGE>
SMITH BARNEY SHEARSON INC.
DEPOSITOR

By the following persons, who constitute Powers of Attorney have been filed
a majority of under the
the Board of Directors of Smith Barney following 1933 Act File Numbers:
Shearson Inc.: 33-49753 and 33-51607

RONALD A. ARTINIAN
STEVEN D. BLACK
JAMES BOSHART III
ROBERT A.CASE
ROBERT K. DIFAZIO
JAMES DIMON
ROBERT DRUSKIN
HERBERT DUNN
TONI ELLIOTT
LEWIS GLUCKSMAN
ROBERT F. GREENHILL
THOMAS GUBA
HENRY U. HARRIS
JOHN B. HOFFMAN
A. RICHARD JANIAK, JR.
HERBERT B. KANE
ROBERT Q. JONES
JEFFREY LANE
JACK H. LEHMAN III
ROBERT H. LESSIN
JOEL N. LEVY
THOMAS A. MAGUIRE, JR.
HOWARD D. MARSH
JOHN F. MCCANN
WILLIAM J. MILLS II
JOHN C. MORRIS
CHARLES O'CONNOR
HUGH J. O'HARE
JOSEPH J. PLUMERI II
JACK L. RIVKIN
A. GEORGE SAKS
BRUCE D. SARGENT
DON M. SHAGRIN
DAVID M. STANDRIDGE
MELVIN B. TAUB
JACQUES S. THERIOT
STEPHEN J. TREADWAY
PAUL UNDERWOOD
PHILIP M. WATERMAN

By GINA LEMON
(As authorized signatory for
Smith Barney Shearson Inc. and
Attorney-in-fact for the persons listed above)

R-4
<PAGE>
PAINEWEBBER INCORPORATED
DEPOSITOR

By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Executive Committee of the Board Form SE and the following 1933 Act
of Directors File
of PaineWebber Incorporated: Number: 33-28452

JOHN A. BULT
PAUL B. GUENTHER
DONALD B. MARRON
JAMES C. TREADWAY

By
ROBERT E. HOLLEY
(As authorized signatory for PaineWebber Incorporated
and Attorney-in-fact for the persons listed above)

R-5
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED
DEPOSITOR

By the following persons, who constitute Powers of Attorney have been filed
a majority of the under Form SE and the following
Board of Directors of Prudential 1933 Act File Number: 33-41631
Securities Incorporated:

ALAN D. HOGAN
HOWARD A. KNIGHT
GEORGE A. MURRAY
LELAND B. PATON
HARDWICK SIMMONS

By
WILLIAM W. HUESTIS
(As authorized signatory for Prudential Securities
Incorporated and Attorney-in-fact for the persons
listed above)

R-6
<PAGE>
DEAN WITTER REYNOLDS INC.
DEPOSITOR

By the following persons, who constitute Powers of Attorney have been filed
a majority of under Form SE and the following 1933
the Board of Directors of Dean Witter Act File Number: 33-17085
Reynolds Inc.:

NANCY DONOVAN
CHARLES A. FIUMEFREDDO
JAMES F. HIGGINS
STEPHEN R. MILLER
PHILIP J. PURCELL
THOMAS C. SCHNEIDER
WILLIAM B. SMITH
By
MICHAEL D. BROWNE
(As authorized signatory for Dean Witter Reynolds Inc.
and Attorney-in-fact for the persons listed above)

R-7
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS

The Sponsors and Trustee of Municipal Investment Trust Fund, Multistate
Series - 62,
Defined Asset Funds (Florida, New York and Pennsylvania Trusts):

We hereby consent to the use in this Registration Statement No. 33-53285 of our
opinion dated May 26, 1994, relating to the Statements of Condition of Municipal
Investment Trust Fund, Multistate Series - 62, Defined Asset Funds (Florida, New
York and Pennsylvania Trusts) and to the reference to us under the heading
'Auditors' in the Prospectus which is a part of this Registration Statement.

DELOITTE & TOUCHE
New York, N.Y.
May 26, 1994

R-8

EXHIBIT 3.1
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
MAY 26, 1994

Municipal Investment Trust Fund,
Multistate Series - 62
Defined Asset Funds

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Smith Barney Shearson Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
Dean Witter Reynolds Inc.
c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
Unit Investment Trusts
P.O. Box 9051
Princeton, NJ 08543-9051

Dear Sirs:

We have acted as special counsel for you, as sponsors (the 'Sponsors') of
Multistate Series - 62 of Municipal Investment Trust Fund, Defined Asset Funds
(the 'Fund'), in connection with the issuance of units of fractional undivided
interest in the Fund (the 'Units') in accordance with the Trust Indentures
relating to the Fund (the 'Indentures').

We have examined and are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of such documents and instruments as
we have deemed necessary or advisable for the purpose of this opinion.

Based upon the foregoing, we are of the opinion that (i) the execution and
delivery of the Indentures and the issuance of the Units have been duly
authorized by the Sponsors and (ii) the Units, when duly issued and delivered by
the Sponsors and the Trustee in accordance with the applicable Indentures, will
be legally issued, fully paid and non-assessable.

We hereby consent to the use of this opinion as Exhibit 3.1 to the
Registration Statement relating to the Units filed under the Securities Act of
1933 and to the use of our name in such Registration Statement and in the
related prospectus under the headings 'Taxes', 'The New York Trust--New York
Taxes' and 'Miscellaneous--Legal Opinion'.

Very truly yours,

DAVIS POLK & WARDWELL

EXHIBIT 4.1.1

KENNY S&P EVALUATION SERVICES
A Division of Kenny Information Systems, Inc.
65 Broadway
New York, New York 10006
Telephone: 212/770-4405
Fax: 212/797-8681
John R. Fitzgerald
Vice President

May 26, 1994

Merrill Lynch Pierce Fenner & Smith Inc.
Unit Investment Trust Division
P.O. Box 9051
Princeton, NJ 08543-9051

Investors Bank & Trust Company
The First National Bank of Chicago
c/o One Lincoln Plaza
89 South Street
Boston, MA 02111

Re: Municipal Investment Trust Fund, Multistate Series - 62, Defined Asset Funds

Gentlemen:

We have examined the Registration Statement File No. 33-53285 for the
above-captioned fund. We hereby acknowledge that Kenny S&P Evaluation Services,
a division of Kenny Information Systems, Inc. is currently acting as the
evaluator for the fund. We hereby consent to the use in the Registration
Statement of the reference to Kenny S&P Evaluation Services, a division of Kenny
Information Systems, Inc. as evaluator.

In addition, we hereby confirm that the ratings indicated in the
Registration Statement for the respective bonds comprising the trust portfolio
are the ratings indicated in our KENNYBASE database as of the date of the
Evaluation Report.

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

Sincerely,

JOHN R. FITZGERALD
VICE PRESIDENT

EXHIBIT 4.1.2
STANDARD & POOR'S RATINGS GROUP
BOND INSURANCE ADMINISTRATION
25 BROADWAY
NEW YORK, NEW YORK 10004
TELEPHONE (212) 208-1061
May 26, 1994

Merrill Lynch Pierce Investors Bank & Trust Company
Fenner & Smith Incorporated The First National Bank of Chicago
Unit Investment Trusts c/o One Lincoln Plaza
P.O. Box 9051 89 South Street
Princeton, NJ 08543-9051 Boston, MA 02111

Re: Municipal Investment Trust Fund, Multistate Series - 62
Defined Asset Funds (Florida, New York and Pennsylvania Insured Trusts)

Gentlemen:

Pursuant to your request for a Standard & Poor's rating on the units of the
above-captioned trusts, SEC No. 33-53285, we have reviewed the information
presented to us and have assigned a 'AAA' rating to the units of the trusts and
a 'AAA' rating to the securities contained in the trusts. The ratings are direct
reflections, of the portfolios of the trusts, which will be composed solely of
securities covered by bond insurance policies that insure against default in the
payment of principal and interest on the securities so long as they remain
outstanding. Since such policies have been issued by one or more insurance
companies which have been assigned 'AAA' claims paying ability ratings by S&P,
S&P has assigned a 'AAA' rating to the units of the trusts and to the securities
contained in the trusts.

You have permission to use the name of Standard & Poor's Corporation and
the above-assigned ratings in connection with your dissemination of information
relating to these units, provided that it is understood that the ratings are not
'market' ratings nor recommendations to buy, hold, or sell the units of the
trusts or the securities contained in the trusts. Further, it should be
understood the rating on the units does not take into account the extent to
which trust expenses or portfolio asset sales for less than the trust's purchase
price will reduce payment to the unit holders of the interest and principal
required to be paid on the portfolio assets. S&P reserves the right to advise
its own clients, subscribers, and the public of the ratings. S&P relies on the
sponsor and its counsel, accountants, and other experts for the accuracy and
completeness of the information submitted in connection with the ratings. S&P
does not independently verify the truth or accuracy of any such information.

This letter evidences our consent to the use of the name of Standard &
Poor's Corporation in connection with the rating assigned to the units in the
registration statement or prospectus relating to the units or the trusts.
However, this letter should not be construed as a consent by us, within the
meaning of Section 7 of the Securities Act of 1933, to the use of the name of
Standard & Poor's Corporation in connection with the ratings assigned to the
securities contained in the trusts. You are hereby authorized to file a copy of
this letter with the Securities and Exchange Commission.
<PAGE>
Please be certain to send us three copies of your final prospectus as soon
as it becomes available. Should we not receive them within a reasonable time
after the closing or should they not conform to the representations made to us,
we reserve the right to withdraw the rating.

We are pleased to have had the opportunity to be of service to you. If we
can be of further help, please do not hesitate to call upon us.

Very truly yours,

VINCENT S. ORGO
Standard & Poor's Corporation