MUNICIPAL INVT TR FD MULTISTATE SER 64 DEFINED ASSET FUNDS, 487, 1994-06-16

MUNICIPAL INVT TR FD MULTISTATE SER 64 DEFINED ASSET FUNDS
487, 1994-06-16

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 16, 1994

REGISTRATION NO. 33-53581

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

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 - 64
DEFINED ASSET FUNDS

B. NAMES OF DEPOSITORS:

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY 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 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 June 16, 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 California, Maryland and
- ------------------------------New Jersey Trusts, each of which is a portfolio of
MULTISTATE SERIES - 64 preselected securities issued by or on behalf of
(UNIT INVESTMENT TRUSTS) the State for which the Trust is named and
CALIFORNIA TRUST (INSURED) political subdivisions and public authorities
5.53% thereof or certain United States territories or
ESTIMATED CURRENT RETURN possessions. The Fund is formed for the purpose of
5.59% providing interest income which in the opinion of
ESTIMATED LONG TERM RETURN counsel is, with certain exceptions, exempt from
MARYLAND TRUST regular Federal income taxes and from certain
5.39% state and local personal income taxes in the State
ESTIMATED CURRENT RETURN for which each Trust is named but may be subject
5.43% to other state and local taxes. In addition, the
ESTIMATED LONG TERM RETURN Debt Obligations included in the California and
NEW JERSEY TRUST (INSURED) New Jersey Trusts are insured. This insurance
5.43% guarantees the timely payment of principal and
ESTIMATED CURRENT RETURN interest on but does not guarantee the market
5.47% value of the Debt Obligations or the value of the
ESTIMATED LONG TERM RETURN Units. As a result of this insurance, Units of the
AS OF JUNE 15, 1994 California and New Jersey Trusts are rated AAA by
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 Inc. TRUSTEE AT 1-800-323-1508.
PaineWebber Incorporated PROSPECTUS DATED JUNE 16, 1994.
Prudential Securities Incorporated READ AND RETAIN THIS PROSPECTUS FOR
Dean Witter Reynolds Inc. FUTURE REFERENCE.

<PAGE>
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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.
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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..................................... 15
Taxes....................................................... 18
Public Sale of Units........................................ 20
Market for Units............................................ 23
Redemption.................................................. 24
Expenses and Charges........................................ 25
Administration of the Fund.................................. 26
Resignation, Removal and Limitations on Liability........... 28
Miscellaneous............................................... 29
Description of Ratings...................................... 32
Exchange Option............................................. 34
Appendix:
The California Trust........................................ A-1
The Maryland Trust.......................................... A-9
The New Jersey Trust........................................ A-14

A-2

<PAGE>

INVESTMENT SUMMARY AS OF JUNE 15, 1994 (THE BUSINESS DAY PRIOR TO THE INITIAL
DATE OF DEPOSIT)(a)

CALIFORNIA MARYLAND NEW JERSEY
TRUST TRUST TRUST
-------------- -------------- --------------
ESTIMATED CURRENT RETURN(b)
(based on Public Offering
Price)--...................... 5.53% 5.39% 5.43%
ESTIMATED LONG TERM RETURN(b)
(based on Public Offering
Price)--...................... 5.59% 5.43% 5.47%
PUBLIC OFFERING PRICE PER UNIT
(including 4.50% sales
charge).......................$ 1,000.48(c)$ 1,013.65(c)$ 1,012.88(c)
FACE AMOUNT OF DEBT
OBLIGATIONS...................$ 3,500,000 $ 3,250,000 $ 3,250,000
INITIAL NUMBER OF UNITS(d)...... 3,500 3,250 3,250
FRACTIONAL UNDIVIDED INTEREST IN
TRUST REPRESENTED BY EACH
UNIT.......................... 1/3,500th 1/3,250th 1/3,250th
MONTHLY INCOME DISTRIBUTIONS
First distribution to be paid
on the 25th day of September
1994 to Holders of record on
the 10th day of September
1994........................$ 3.69 $ 3.58 $ 4.02
Calculation of second and
following distributions:
Estimated net annual interest
rate per Unit times
$1,000......................$ 55.32 $ 54.60 $ 54.96
Divided by 12.................$ 4.61 $ 4.55 $ 4.58
SPONSORS' REPURCHASE PRICE AND
REDEMPTION PRICE PER
UNIT(e)
(based on bid side
evaluation)...................$ 951.46(c)$ 963.68(c)$ 963.30(c)
REDEMPTION PRICE PER UNIT LESS
THAN:
Public Offering Price by....$ 49.02 $ 49.97 $ 49.58
Sponsors' Initial Repurchase
Price by....................$ 4.00 $ 4.36 $ 4.00
CALCULATION OF PUBLIC OFFERING
PRICE
Aggregate offer side
evaluation of Debt
Obligations
in Trust..................$ 3,344,122.00 $ 3,146,122.40 $ 3,143,715.00
-------------- -------------- --------------
Divided by Number of
Units.......................$ 955.46 $ 968.04 $ 967.30
Plus sales charge of 4.50%
of Public Offering Price
(4.712% of net amount
invested in Debt
Obligations)(f)........... 45.02 45.61 45.58
-------------- -------------- --------------
Public Offering Price per
Unit........................$ 1,000.48 $ 1,013.65 $ 1,012.88
Plus accrued interest(g).... 1.07 1.06 1.06
-------------- -------------- --------------
Total.....................$ 1,001.55 $ 1,014.71 $ 1,013.94
-------------- -------------- --------------
-------------- -------------- --------------
CALCULATION OF ESTIMATED NET
ANNUAL INTEREST RATE PER UNIT
(based on face amount of
$1,000 per Unit)
Annual interest rate per
Unit........................ 5.751% 5.681% 5.719%
Less estimated annual
expenses per Unit
expressed as a
percentage................ .219% .221% .223%
-------------- -------------- --------------
Estimated net annual
interest rate per
Unit.................... 5.532% 5.460% 5.496%
-------------- -------------- --------------
-------------- -------------- --------------
DAILY RATE AT WHICH ESTIMATED
NET INTEREST ACCRUES PER
UNIT.......................... .0153% .0151% .0152%
SPONSORS' PROFIT (LOSS) ON
DEPOSIT.......................$ 23,080.00 $ 30,589.15 $ 29,957.50
TRUSTEE'S ANNUAL FEE AND
EXPENSES........................$ 2.19(h)$ 2.21(i)$ 2.23(i)
Per Unit commencing
September 1994, June 1994
and June 1994 for the
California, Maryland and
New Jersey 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 $0.44 for the
California Trust. Estimated annual interest income per Unit (estimated annual
interest rate per Unit times $1,000) during the first year will be $57.07 and
estimated expenses per Unit will be $1.75 for the California Trust. Estimated
net annual interest income per Unit will remain the same (see Description of the
Fund--Income; Estimated Current Return; Estimated Long Term Return).

(i) In the event that any Debt Obligations have a delayed delivery, the
Trustee's Annual Fee and Expenses will be reduced over a period in the amount of
interest that would have accrued on the Debt Obligations between the date of
settlement for the Units and the actual date of delivery of the Debt
Obligations. The Trustee will be reimbursed for this reduction (see Description
of Fund--Income; Estimated Current Return; Estimated Long Term Return).

A-3

<PAGE>

INVESTMENT SUMMARY AS OF JUNE 15, 1994 (CONTINUED)

CALIFORNIA MARYLAND NEW JERSEY
TRUST TRUST TRUST
------------- ------------- -------------
NUMBER OF ISSUES IN PORTFOLIO-- 7 8 7
NUMBER OF ISSUES BY
SOURCE OF REVENUE(a):
Miscellaneous-- -- -- 1
Industrial Development Revenue-- -- 2 1
Airports/Ports/Highways-- -- 1 --
State/Local Municipal Electric
Utilities-- 1 -- --
Special Tax-- 3 -- --
General Obligation-- 1 1 --
Hospitals/Healthcare Facilities-- 1 3 2
Municipal Water/Sewer Utilities-- 1 1 1
Universities/Colleges-- -- -- 2
NUMBER OF ISSUES RATED BY
STANDARD &
POOR'S/RATING-- AAA-- 7(b) 3 7(b)
AA-- -- 1 --
A-- -- 3 --
MOODY'S INVESTOR
SERVICE/RATING(c)-- A-- -- 1 --
RANGE OF FIXED FINAL MATURITY DATES
OF DEBT
OBLIGATIONS...................... 2021-2024 2015-2024 2018-2033
TYPE OF ISSUE EXPRESSED AS A
PERCENTAGE OF THE AGGREGATE FACE
AMOUNT OF PORTFOLIO
General Obligation Issues........ 14% 16% --
Issues Payable from Income of
Specific Project or
Authority..................... 86% 84% 100%
Debt Obligations Issued at an
'Original Issue
Discount'(d).................. 74% 33% 46%
Obligations Insured by certain
Insurance Companies:(e)
AMBAC......................... -- -- 46%
Financial Guaranty............ -- 15% --
MBIA.......................... 100% 32% 54%
CONCENTRATIONS(a) EXPRESSED AS A
PERCENTAGE OF THE AGGREGATE FACE
AMOUNT OF PORTFOLIO(f)
Universities/Colleges......... -- -- 31%
Special Tax................... 41% -- --
Hospital/Healthcare
Facilities.................... -- 33% 31%
Industrial Development
Revenue....................... -- 31% --
PREMIUM AND DISCOUNT ISSUES IN
PORTFOLIO
Face amount of Debt
Obligations
with offer side
evaluation: at
par-- 29% 16% --
over par-- -- 46% 31%
at a discount from par-- 71% 38% 69%
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)(g).......................... 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) A Moody's rating is included only if Standard & Poor's has not rated an
issue. The ratings assigned by the rating agencies may change from time to time.
Certain ratings may be provisional or conditions (See Description of Ratings).
(d) See Taxes.
(e) See Risk Factors--Obligations Backed by Insurance.
(f) A Trust is considered to be 'concentrated' in these categories when they
constitute 25% or more of the aggregate face amount of the Portfolio.
(g) 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 CALIFORNIA RESIDENTS

<TABLE><CAPTION>
COMBINED
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 20.10 3.75 4.38 5.01 5.63 6.26 6.88 7.51
- ------------------------------------------------------------------------------------------------------------------------------------
$0-22,100 20.10 3.75 4.38 5.01 5.63 6.26 6.88 7.51
- ------------------------------------------------------------------------------------------------------------------------------------
$36,900-89,150 34.70 4.59 5.36 6.13 6.89 7.66 8.42 9.19
- ------------------------------------------------------------------------------------------------------------------------------------
$22,100-53,500 34.70 4.59 5.36 6.13 6.89 7.66 8.42 9.19
- ------------------------------------------------------------------------------------------------------------------------------------
$89,150-140,000 38.59 4.89 5.70 6.51 7.33 8.14 8.96 9.77
- ------------------------------------------------------------------------------------------------------------------------------------
$53,500-115,000 38.59 4.89 5.70 6.51 7.33 8.14 8.96 9.77
- ------------------------------------------------------------------------------------------------------------------------------------
$140,000-250,000 43.04 5.27 6.14 7.02 7.90 8.78 9.66 10.53
- ------------------------------------------------------------------------------------------------------------------------------------
$115,000-250,000 43.04 5.27 6.14 7.02 7.90 8.78 9.66 10.53
- ------------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 46.24 5.58 6.51 7.44 8.37 9.30 10.23 11.16
- ------------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 46.24 5.58 6.51 7.44 8.37 9.30 10.23 11.16
- ------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
TAXABLE INCOME 1994*

SINGLE RETURN 6.5% 7%

- ------------------
<S> <C> <C>
8.14 8.76
- ------------------
$0-22,100 8.14 8.76
- ------------------
9.95 10.72
- ------------------
$22,100-53,500 9.95 10.72
- ------------------
10.58 11.40
- ------------------
$53,500-115,000 10.58 11.40
- ------------------
11.41 12.29
- ------------------
$115,000-250,000 11.41 12.29
- ------------------
12.09 13.02
- ------------------
OVER $250,000 12.09 13.02
- ------------------

</TABLE>
FOR MARYLAND RESIDENTS

<TABLE><CAPTION>
COMBINED
TAXABLE INCOME 1993* 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 19.25 3.72 4.33 4.95 5.57 6.19 6.81 7.43
- ----------------------------------------------------------------------------------------------------------------------------------
$0-22,100 19.25 3.72 4.33 4.95 5.57 6.19 6.81 7.43
- ----------------------------------------------------------------------------------------------------------------------------------
$36,900-89,150 31.60 4.39 5.12 5.85 6.58 7.31 8.04 8.77
- ----------------------------------------------------------------------------------------------------------------------------------
$22,100-53,500 31.60 4.39 5.12 5.85 6.58 7.31 8.04 8.77
- ----------------------------------------------------------------------------------------------------------------------------------
$89,150-140,000 35.14 4.63 5.40 6.17 6.94 7.71 8.48 9.25
- ----------------------------------------------------------------------------------------------------------------------------------
$53,500-115,000 35.14 4.63 5.40 6.17 6.94 7.71 8.48 9.25
- ----------------------------------------------------------------------------------------------------------------------------------
$140,000-250,000 39.84 4.99 5.82 6.65 7.48 8.31 9.14 9.97
- ----------------------------------------------------------------------------------------------------------------------------------
$115,000-250,000 39.84 4.99 5.82 6.65 7.48 8.31 9.14 9.97
- ----------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 43.22 5.28 6.16 7.05 7.93 8.81 9.69 10.57
- ----------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 43.22 5.28 6.16 7.05 7.93 8.81 9.69 10.57
- ----------------------------------------------------------------------------------------------------------------------------------

TAXABLE INCOME 1993*

SINGLE RETURN 6.5% 7%
<S> <C> <C>
- ------------------
8.05 8.67
- ------------------
$0-22,100 8.05 8.67
- ------------------
9.50 10.23
- ------------------
$22,100-53,500 9.50 10.23
- ------------------
10.02 10.79
- ------------------
$53,500-115,000 10.02 10.79
- ------------------
10.80 11.64
- ------------------
$115,000-250,000 10.80 11.64
- ------------------
11.45 12.33
- ------------------
OVER $250,000 11.45 12.33
- ------------------
</TABLE>

FOR NEW JERSEY 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 17.02 3.62 4.22 4.82 5.42 6.03 6.63 7.23
- ----------------------------------------------------------------------------------------------------------------------------------
$0-22,100 17.02 3.62 4.22 4.82 5.42 6.03 6.63 7.23
- ----------------------------------------------------------------------------------------------------------------------------------
$36,900-89,150 32.45 4.44 5.18 5.92 6.66 7.40 8.14 8.88
- ----------------------------------------------------------------------------------------------------------------------------------
$22,100-53,500 32.45 4.44 5.18 5.92 6.66 7.40 8.14 8.88
- ----------------------------------------------------------------------------------------------------------------------------------
$89,150-140,000 35.59 4.66 5.43 6.21 6.99 7.76 8.54 9.32
- ----------------------------------------------------------------------------------------------------------------------------------
$53,500-115,000 35.59 4.66 5.43 6.21 6.99 7.76 8.54 9.32
- ----------------------------------------------------------------------------------------------------------------------------------
$140,000-250,000 40.26 5.02 5.86 6.70 7.53 8.37 9.21 10.04
- ----------------------------------------------------------------------------------------------------------------------------------
$115,000-250,000 40.26 5.02 5.86 6.70 7.53 8.37 9.21 10.04
- ----------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 43.62 5.32 6.21 7.09 7.98 8.87 9.75 10.64
- ----------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 43.62 5.32 6.21 7.09 7.98 8.87 9.75 10.64
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
TAXABLE INCOME 1994*

SINGLE RETURN 6.5% 7%
<S> <C> <C>
- ------------------
7.83 8.44
- ------------------
$0-22,100 7.83 8.44
- ------------------
9.62 10.36
- ------------------
$22,100-53,500 9.62 10.36
- ------------------
10.09 10.87
- ------------------
$53,500-115,000 10.09 10.87
- ------------------
10.88 11.72
- ------------------
$115,000-250,000 10.88 11.72
- ------------------
11.53 12.42
- ------------------
OVER $250,000 11.53 12.42
- ------------------
</TABLE>

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 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. 6665 NEW YORK, NY NECESSARY
IF MAILED
POSTAGE WILL BE PAID BY ADDRESSEE IN THE
BANKERS TRUST COMPANY UNITED STATES
UNIT INVESTMENT TRUST
FOUR ALBANY STREET
7th FLOOR
NEW YORK, NY 10015

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

<PAGE>

INVESTMENT SUMMARY FOR EACH TRUST AS OF JUNE 15, 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 $0.35 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.

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 JUNE 15, 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.

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 75.00%
Smith Barney Inc. Two World Trade Center--101st Floor, New York, N.Y.
10048 5.50
PaineWebber Incorporated 1285 Avenue of the Americas, New York, N.Y. 10019 7.50
Prudential Securities Incorporated One Seaport Plaza--199 Water Street, New York, N.Y.
10292 6.00
Dean Witter Reynolds Inc. Two World Trade Center--59th Floor, New York, N.Y.
10048 6.00
----------
100.00%
----------
----------
</TABLE>

A-7

<PAGE>

INVESTMENT SUMMARY AS OF JUNE 15, 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%
---------
</TABLE>

<TABLE><CAPTION>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS1)
CALIFORNIA MARYLAND NEW JERSEY
TRUST TRUST TRUST
------------ ------------ --------------
<S> <C> <C> <C>
Trustee's Fee....................................................................... .073% .073% .073%
Portfolio Supervision, Bookkeeping and Administrative Fees.......................... .047% .047% .047%
Other Operating Expenses............................................................ .109% .110% .112%
------------ ------------ --------------
Total............................................................................ .229% .230% .232%
------------ ------------ --------------
------------ ------------ --------------
</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
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
California Trust (.229%)............................................... $ 47.24 $ 52.04 $ 57.32 $ 72.86
Maryland Trust (.230%)................................................. 47.26 52.10 57.42 73.10
New Jersey Trust (.232%)............................................... 47.29 52.20 57.58 73.46

</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
the California and New Jersey Trusts and $4.36 per Unit for the Maryland Trust.
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, Trustee and Holders of Municipal Investment Trust Fund,
Multistate Series - 64, Defined Asset Funds (California, Maryland and New Jersey
Trusts):

We have audited the accompanying statements of condition, including the
portfolios, of Municipal Investment Trust Fund, Multistate Series - 64, Defined
Asset Funds (California, Maryland and New Jersey Trusts) as of June 16, 1994.
These financial statements are the responsibility of the Trustee. 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 June 16,
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
Bankers Trust Company, the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, 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 - 64, Defined Asset Funds (California, Maryland and New
Jersey Trusts) at June 16, 1994 in conformity with generally accepted accounting
principles.

DELOITTE & TOUCHE
New York, N.Y.
June 16, 1994

A-9
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES - 64
DEFINED ASSET FUNDS
STATEMENTS OF CONDITION AS OF INITIAL DATE OF DEPOSIT, JUNE 16, 1994

CALIFORNIA MARYLAND NEW JERSEY
TRUST TRUST TRUST
-------------- -------------- --------------
FUND PROPERTY
Investment in Debt
Obligations(1)
Contracts to purchase
Debt Obligations.........$ 3,344,122.00 $ 3,146,122.40 $ 3,143,715.00
Accrued interest to Initial Date
of Deposit on underlying Debt
Obligations................... 47,706.43 43,044.16 43,390.62
-------------- -------------- --------------
Total...............$ 3,391,828.43 $ 3,189,166.56 $ 3,187,105.62
-------------- -------------- --------------
-------------- -------------- --------------
LIABILITY AND INTEREST OF
HOLDERS
Liability--Accrued interest to
Initial Date of Deposit on
underlying Debt
Obligations(2)................$ 47,706.43 $ 43,044.16 $ 43,390.62
-------------- -------------- --------------
Interest of Holders--
Units of fractional undivided
interest outstanding
(California Trust--3,500;
Maryland Trust--3,250;
New Jersey Trust--3,250)
Cost to investors(3).......$ 3,501,692.00 $ 3,294,354.90 $ 3,291,850.00
Gross underwriting
commissions(4).............$ (157,570.00) $ (148,232.50) $ (148,135.00)
-------------- -------------- --------------
Net amount applicable to
investors.................. 3,344,122.00 3,146,122.40 3,143,715.00
-------------- -------------- --------------
Total...............$ 3,391,828.43 $ 3,189,166.56 $ 3,187,105.62
-------------- -------------- --------------
-------------- -------------- --------------

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

(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 $9,693,007.92 has been deposited with
the Trustee. The amount of such letter or letters of credit includes
$9,550,332.75 (equal to the aggregate purchase price to the Sponsors) for
the purchase of $10,000,000 face amount of Debt Obligations in connection
with contracts to purchase Debt Obligations, plus $142,675.17 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 DG Bank, 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 - 64
ON THE INITIAL DATE OF DEPOSIT,
DEFINED ASSET FUNDS
JUNE 16, 1994
PORTFOLIO OF THE CALIFORNIA 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 California, Various Purp. G.O. Bonds AAA $ 500,000 6.00% 10/1/21 10/1/02 @ 102
(MBIA Ins.)
2. California Statewide Communities Dev. Auth., AAA 550,000 5.50 8/15/23 8/15/03 @ 102
Sutter Hlth. Oblig. Group, Certs. of Part.
(MBIA Ins.)
3. Northern California Pwr. Agency, Hydroelectric AAA 500,000 5.50 7/1/23 7/1/02 @ 100
Proj. Number One, Rev. Bonds, 1992 Rfdg.
Ser. A (MBIA Ins.)
4. Fontana Pub. Fin. Auth., CA, Tax Alloc. Rev. AAA 550,000 5.625 9/1/24 9/1/04 @ 102
Bonds (North Fontana Redevelopment Proj.),
1993 Ser. A (MBIA Ins.)
5. Redevelopment Agency of the City of Riverside, AAA 400,000 5.625 8/1/23 8/1/02 @ 102
CA, Tax Allocation Rfdg. Bonds, 1993 Ser. A
(MBIA Ins.)
6. The City of Los Angeles, CA, Wastewater Sys. AAA 500,000 5.875 6/1/24 6/1/04 @ 102
Rev. Bonds, Ser. 1994-A (MBIA Ins.)
7. Palmdale Civic Auth., Los Angeles Cnty., CA, AAA 500,000 6.15 9/1/24 9/1/04 @ 102
1994 Rev. Bonds, Ser. A (Merged
Redevelopment Proj. Areas) (MBIA Ins.)
-------------
$ 3,500,000
-------------
-------------
<CAPTION>
SINKING COST OF YIELD TO MATURITY
FUND DEBT OBLIGATIONS ON INITIAL DATE OF
REDEMPTIONS (2) TO TRUST (3) DEPOSIT (3)
--------------- ----------------- -------------------
<S> <C> <C> <C>
1. 10/1/20 $ 500,000.00 5.999%

2. 8/15/14 505,224.50 6.100

3. 7/1/19 459,390.00 6.100

4. 9/1/21 517,687.50 6.050

5. 8/1/09 376,820.00 6.050

6. 6/1/09 485,000.00 6.094

7. 9/1/16 500,000.00 6.149

-----------------
$ 3,344,122.00
-----------------
-----------------
</TABLE>

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 $3,330,122.00,
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 June 15, 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 6
and 7 (approximately 29% 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 5 to 6 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-12
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND, MULTISTATE SERIES - 64
ON THE INITIAL DATE OF DEPOSIT,
DEFINED ASSET FUNDS
JUNE 16, 1994
<TABLE><CAPTION>
PORTFOLIO OF THE MARYLAND TRUST

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. Maryland Hlth. and Educl. Facs. Auth., Rev. AAA $ 500,000 6.125% 7/1/19 7/1/04 @ 102
Bonds, Maryland Gen. Hosp. Iss., Ser. 1994
(MBIA Ins.)
2. Maryland Hlth. and Higher Educl. Facs. Auth., AAA 500,000 5.00 7/1/18 7/1/03 @ 102
Rfdg. Rev. Bonds, Francis Scott Key Med.
Ctr. Iss., Ser. 1993 (Financial Guaranty
Ins.)
3. Anne Arundel Cnty., MD, Poll. Ctl. Rev. Rfdg. A 500,000 6.00 4/1/24 4/1/04 @ 102
Bonds (Baltimore Gas and Elec. Co. Proj.),
Ser. 1994
4. Prince George's Cnty., MD, Poll. Ctl. Rev. A+ 500,000 6.00 9/1/22 9/1/02 @ 102
Rfdg. Bonds (Potomac Elec. Proj.), 1992 Ser.
5. Prince George's Cnty., MD, Proj. and Rfdg. A(m) 80,000 5.30 7/1/24 7/1/04 @ 102
Rev. Bonds (Dimensions Hlth. Corp. Iss.),
Ser. 1994
6. Mayor and City Council of Ocean City, MD, G.O. AAA 525,000 5.75 3/15/15 3/15/04 @ 102
Muni. Purp. and Rfdg. Bonds of 1994 (MBIA
Ins.)
7. Washington Suburban Sanitary Dist., MD AA 500,000 5.25 6/1/17 6/1/03 @ 102
(Montgomery and Prince George's Counties),
Gen. Construction Bonds of 1993 (Second
Ser.)
8. Puerto Rico Highway and Transportation Auth., A 145,000 5.75 7/1/18 7/1/02 @ 100
Highway Rev. Rfdg. Bonds, Ser. V
-------------
$ 3,250,000
-------------
-------------
<CAPTION>
SINKING COST OF YIELD TO MATURITY
FUND DEBT OBLIGATIONS ON INITIAL DATE OF
REDEMPTIONS (2) TO TRUST (3) DEPOSIT (3)
--------------- ----------------- -------------------
<S> <C> <C> <C>
1. 7/1/15 $ 503,155.00 6.050%+

2. 7/1/14 433,905.00 6.050

3. -- 504,150.00 5.900+

4. -- 503,740.00 5.900+

5. 7/1/15 68,318.40 6.400

6. -- 525,000.00 5.749

7. -- 468,335.00 5.750

8. 7/1/13 139,519.00 6.050

-----------------
$ 3,146,122.40
-----------------
-----------------

</TABLE>

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

(1) All ratings are by Standard & Poor's unless followed by '(m)' which
indicates a Moody's Investors Service, Inc. rating. 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.)

(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 $3,131,962.40,
which is $14,160.00 (approximately .44% 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
June 7, 1994 to June 15, 1994. All contracts are expected to be settled by
the initial settlement date for purchase of Units.

The Debt Obligations in Portfolio Numbers 1, 2 and 6 have been insured 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 - 64
ON THE INITIAL DATE OF DEPOSIT,
DEFINED ASSET FUNDS
JUNE 16, 1994
<TABLE><CAPTION>
PORTFOLIO OF THE NEW JERSEY 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. New Jersey Educl. Fac. Auth. Rev. Bonds, New AAA $ 500,000 6.00% 7/1/24 7/1/04 @ 102
Jersey Institute of Tech. Iss., Ser. 1994 A
(MBIA Ins.)
2. New Jersey Econ. Dev. Auth., Rev. Bonds AAA 500,000 6.125 7/1/24 7/1/04 @ 102
(Rutgers, The State Univ.-Civic Square
Proj.), Ser. 1994 (AMBAC Ins.)
3. New Jersey Econ. Dev. Auth., Econ. Dev. Rev. AAA 250,000 5.45 9/1/23 9/1/03 @ 102
Bonds (Greater New York Councils, Boy Scouts
of America-1993 Proj.) (MBIA Ins.)
4. New Jersey Hlth. Care Fac. Fin. Auth., Rev. AAA 500,000 5.20 7/1/18 7/1/03 @ 102
Bonds, Allegany Hlth. Sys.-Our Lady of
Lourdes Med. Ctr. Iss., Ser. 1993 (MBIA
Ins.)
5. New Jersey Hlth. Care Fac. Fin. Auth., Rev. AAA 500,000 5.70 7/1/23 7/1/03 @ 102
Bonds, Underwood-Mem. Hosp. Iss., Ser. B
(AMBAC Ins.)
6. The Poll. Ctl. Fin. Auth., Salem Cnty., NJ, AAA 500,000 5.55 11/1/33 11/1/03 @ 102
Poll. Ctl. Rev. Rfdg. Bonds, 1993 Ser. C
(Pub. Serv. Elec. and Gas Co. Proj.) (MBIA
Ins.)
7. Passaic Valley Sewerage Commissioners, NJ, AAA 500,000 5.875 12/1/22 12/1/02 @ 102
Swr. Sys. Bonds, Ser. D (AMBAC Ins.)
-------------
$ 3,250,000
-------------
-------------
<CAPTION>
SINKING COST OF YIELD TO MATURITY
FUND DEBT OBLIGATIONS ON INITIAL DATE OF
REDEMPTIONS (2) TO TRUST (3) DEPOSIT (3)
--------------- ----------------- -------------------
<S> <C> <C> <C>
1. 7/1/16 $ 504,245.00 5.900%+

2. 7/1/20 509,580.00 5.900+

3. 9/1/08 234,395.00 5.900

4. 7/1/14 455,315.00 5.900

5. 7/1/14 482,800.00 5.950

6. -- 459,110.00 6.100

7. 12/1/19 498,270.00 5.900

-----------------
$ 3,143,715.00
-----------------
-----------------
</TABLE>

A-15
<PAGE>
- ------------
NOTES

(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 $3,130,715.00,
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 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
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).

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

1
<PAGE>
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. 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).

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

2
<PAGE>
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 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

3
<PAGE>
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
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,

4
<PAGE>
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 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

5
<PAGE>
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) 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

6
<PAGE>
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 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.

7
<PAGE>
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.

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.

8
<PAGE>
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 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.

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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
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

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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, 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.

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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.

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

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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.

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.

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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 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 (the
'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

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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 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

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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 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

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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, 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

17
<PAGE>
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.

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.

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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 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

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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.

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.

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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
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

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(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 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

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category A or better by a recognized rating agency (see Description of Ratings)
(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.

Each Trust consists of the Securities (or contracts to purchase the
Securities) listed under its Portfolio (including any replacement Securities) 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 dispose of Securities 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. 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

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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 expenses
expressed as a percentage. This rate will change as Securities mature, are
exchanged, redeemed, paid or sold as replacement obligations are purchased 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 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

24
<PAGE>
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 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.

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<PAGE>
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 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.

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<PAGE>
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.

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

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<PAGE>
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 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.

* * * * *

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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 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.

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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 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.

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<PAGE>
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 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

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each), purchased in the secondary market on the same day will be added in
determining eligibility for this reduction. 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.

33
<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. 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

34
<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).

35
<PAGE>
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.

36
<PAGE>
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

37
<PAGE>
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. 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. 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.

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

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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).

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

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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.

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.

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SPONSORS

Any Sponsor may resign if one remaining Sponsor maintains a net worth of $
2,000,000 and is agreeable to the resignation (Section 7.04). A new Sponsor may
be appointed by the remaining Sponsors and the Trustee to assume the duties of
the resigning Sponsor. If there is only one Sponsor and it fails to perform its
duties or becomes incapable of acting or becomes bankrupt or its affairs are
taken over by public authorities, then the Trustee may (a) appoint a successor
Sponsor at rates of compensation deemed by the Trustee to be reasonable and as
may not exceed amounts prescribed by the SEC, or (b) terminate the Indentures
and liquidate the Trusts or (c) continue to act as Trustee without terminating
the Indentures (Section 8.01 e]). The Agent for the Sponsors has been appointed
by the other Sponsors for purposes of taking action under the Indentures
(Section 7.01). If the Sponsors are unable to agree with respect to action to be
taken jointly by them under the Indentures and they cannot agree as to which
Sponsors shall continue to act as Sponsors, then Merrill Lynch, Pierce, Fenner &
Smith Incorporated shall continue to act as sole Sponsor (Section 7.02b]). If
one of the Sponsors fails to perform its duties or becomes incapable of acting
or becomes bankrupt or its affairs are taken over by public authorities, then
that Sponsor is automatically discharged and the other Sponsors shall act as
Sponsors (Section 7.02a]). The Sponsors shall be under no liability to the
Trusts or to the Holders for taking any action or for refraining from taking any
action in good faith or for errors in judgment and shall not be liable or
responsible in any way for depreciation or loss incurred by reason of the sale
of any Security. This provision, however, shall not protect the Sponsors in
cases of wilful misfeasance, bad faith, gross negligence or reckless disregard
of their obligations and duties (Section 7.05). The Sponsors and their
successors are jointly and severally liable under the Indentures. A Sponsor may
transfer all or substantially all of its assets to a corporation or partnership
which carries on its business and duly assumes all of its obligations under the
Indentures and in that event it shall be relieved of all further liability under
the Indentures (Section 7.03).

MISCELLANEOUS

TRUSTEE

The Trustee of the Fund is named on the back cover page of this Prospectus
and is either Bankers Trust Company, a New York banking corporation with its
corporate trust office at Four Albany Street, 7th Floor, New York, New York
10015 (which is subject to supervision by the New York Superintendent of Banks,
the FDIC and the Board of Governors of the Federal Reserve System (the 'Federal
Reserve')); The Chase Manhattan Bank, N.A., a national banking association with
its Unit Trust Department at 1 Chase Manhattan Plaza-3B, New York, New York
10081 (which is subject to supervision by the Comptroller of the Currency, the
FDIC and the Federal Reserve); or (acting as Co-Trustees) Investors Bank & Trust
Company, a Massachusetts trust company with its unit investment trust servicing
group at One Lincoln Plaza, Boston, Massachusetts 02111 (which is subject to
supervision by the Massachusetts Commissioner of Banks, the FDIC and the Federal
Reserve) and The First National Bank of Chicago, a national banking association
with its corporate trust office at One First National Plaza, Suite 0126,
Chicago, Illinois 60670-0126 (which is subject to supervision by the Comptroller
of the Currency, the FDIC and the Federal Reserve).

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<PAGE>
LEGAL OPINION

The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsors. Bingham, Dana & Gould, 150 Federal Street, Boston, Massachusetts
02110, act as counsel for The First National Bank of Chicago and Investors Bank
& Trust Company, as Co-Trustees. Hawkins, Delafield & Wood, 67 Wall Street, New
York, New York 10005, act as counsel for Bankers Trust Company, as Trustee.

AUDITORS

The Statements of Condition, including the Portfolios, of the Trusts
included herein have been audited by Deloitte & Touche, independent
accountants, as stated in their opinion appearing herein and have been so
included in reliance upon that opinion given on the authority of that firm as
experts in accounting and auditing.

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 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. On July 31, 1993, Smith Barney, Harris Upham & Co. Incorporated ('SBHU'),
together with certain of its affiliates and The Travelers Inc. (formerly
Primerica Corporation) acquired the domestic retail brokerage and asset
management businesses of Shearson Lehman

44
<PAGE>
Brothers Holdings Inc. and its subsidiaries. Shearson was combined with the
operations of SBHU and its affiliates and SBHU was renamed Smith Barney Shearson
Inc. and more recently Smith Barney Inc. Smith Barney 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.

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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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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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.

NR--Should no rating be assigned, the reason may be one of the following:
(a) an application for rating was not received or accepted; (b) the issue or
issuer belongs to a group of securities that are not rated as a matter of
policy; (c) there is a lack of essential data pertaining to the issue or issuer
or (d) the issue was privately placed, in which case the rating is not published
in Moody's publications.

FITCH

AAA--These bonds are considered to be investment grade and of the highest
quality. The obligor has an extraordinary ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA--These bonds are considered to be investment grade and of high quality.
The obligor's ability to pay interest and repay principal, while very strong, is
somewhat less than for AAA rated securities or more subject to possible change
over the term of the issue.

A--These bonds are considered to be investment grade and of good quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB--These bonds are considered to be investment grade and of satisfactory
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however are more likely to weaken this ability than bonds with higher ratings.

A 'I' or a '-' sign after a rating symbol indicates relative standing in
its rating.

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<PAGE>
DUFF & PHELPS

AAA--Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA--High credit quality. Protection factors are strong. Risk is modest but
may vary slightly from time to time because of economic conditions.

A--Protection factors are average but adequate. However, risk factors are
more variable and greater in periods of economic stress.

A 'I' or a '-' sign after a rating symbol indicates relative standing in
its rating.

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 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.

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.

50
<PAGE>
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 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).

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<PAGE>
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).

<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

52
<PAGE>

<CAPTION>
MAXIMUM REDUCED
NAME OF APPLICABLE SALES CHARGE FOR INVESTMENT
EXCHANGE FUND SALES CHARGE* SECONDARY MARKET** CHARACTERISTICS
- --------------------------------------------- --------------- ----------------------- ---------------------------------------
<S> <C> <C> <C>
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
DEFINED ASSET FUNDS--CORPORATE INCOME FUND
Monthly Payment Series 5.50% $15 per unit long-term, fixed rate, taxable income
Intermediate Term Series 4.75% $15 per unit intermediate-term, fixed rate, taxable
income
Cash or Accretion Bond Series and SELECT 3.50% $15 per 1,000 units intermediate-term, fixed rate,
Series underlying securities composed of
compound interest obligations
principally secured by collateral
backed by the full faith and credit of
the United States, taxable return,
appropriate for IRA's or tax-deferred
retirement plans
Insured Series 5.50% $15 per unit long-term, fixed rate, taxable income,
underlying securities are insured

</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.
* 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.

53
<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--EQUITY INCOME FUND
Utility Common Stock Series 4.50% $15 per 1,000 units++ dividends, taxable income, underlying
securities are common stocks of public
utilities
Concept Series 4.00% $15 per 100 units underlying securities constitute a
professionally selected portfolio of
common stocks consistent with an
investment idea or concept
Select Ten Portfolios 2.75% $17.50 per 1,000 units 10 highest dividend yielding stocks in
(both domestic and international) a specified securities Index; seeks
higher total return than that Index;
terminates after one year

</TABLE>
- ---------------
** 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.
+ Subject to reduction depending on the maturities of the underlying
Securities.

++ 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 CALIFORNIA TRUST

The Portfolio of the California Trust contains different issues of
long-term debt obligations issued by or on behalf of the State of California
(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 California Trust should be made with an
understanding that the value of the underlying Portfolio may decline with
increases in interest rates.

Risk Factors--Economic Factors. The Governor's 1993-1994 Budget, introduced
on January 8, 1993, proposed general fund expenditures of $37.3 billion, with
projected revenues of $39.9 billion. It also proposed special fund expenditures
of $12.4 billion and special fund revenues of $12.1 billion. To balance the
budget in the face of declining revenues, the Governor proposed a series of
revenue shifts from local government, reliance on increased federal aid, and
reductions in state spending.

The Department of Finance of the State of California's May Revision of
General Fund Revenues and Expenditures (the 'May Revision'), released on May 20,
1993, indicated that the revenue projections of the January budget proposal were
tracking well, with the full year 1992-1993 about $80 million higher than the
January projection. Personal income tax revenue was higher than projected, sales
tax was close to target, and bank and corporation taxes were lagging behind
projections. The May Revision projected the State would have an accumulated
deficit of about $2.75 billion by June 30, 1993. The Governor proposed to
eliminate this deficit over an 18-month period. He also agreed to retain the
0.5% sales tax scheduled to expire June 30 for a six-month period, dedicated to
local public safety purposes, with a November election to determine a permanent
extension. Unlike previous years, the Governor's Budget and May Revision did not
calculate a 'gap' to be closed, but rather set forth revenue and expenditure
forecasts and proposals designed to produce a balanced budget.

The 1993-1994 budget act (the '1993-94 Budget Act') was signed by the
Governor on June 30, 1993, along with implementing legislation. The Governor
vetoed about $71 million in spending.

The 1993-94 Budget Act is predicated on general fund revenues and transfers
estimated at $40.6 billion, $400 million below 1992-93 (and the second
consecutive year of actual decline). The principal reasons for declining revenue
are the continued weak economy and the expiration (or repeal) of three fiscal
steps taken in 1991--a half cent temporary sales tax, a deferral of operating
loss carryforwards, and repeal by initiative of a sales tax on candy and snack
foods.

The 1993-94 Budget Act also assumes special fund revenues of $11.9 billion,
an increase of 2.9 percent over 1992-93.

The 1993-94 Budget Act includes general fund expenditures of $38.5 billion
(a 6.3 percent reduction from projected 1992-93 expenditures of $41.1 billion),
in order to keep a balanced budget within the available revenues. The 1993-94
Budget Act also includes special fund expenditures of $12.1 billion, a 4.2
percent increase. The 1993-94 Budget Act reflects the following major
adjustments:

1. Changes in local government financing to shift about $2.6 billion in
property taxes from cities, counties, special districts and redevelopment
agencies to school and community college districts, thereby reducing
general fund support by an equal amount. About $2.5 billion would be
permanent, reflecting termination of the State's 'bailout' of local
governments following the property tax cuts of Proposition 13 in 1978 (See
'Constitutional, Legislative and Other Factors' below).

The property tax revenue losses for cities and counties are offset in
part by additional sales tax revenues and mandate relief. The temporary 0.5
percent sales tax has been extended through December 31, 1993, for
allocation to counties for public safety programs. The voters approved
Proposition 172 in November 1993 and the 0.5 percent sales tax was extended
permanently for public safety purposes.

Legislation also has been enacted to eliminate state mandates in order
to provide local governments flexibility in making their programs
responsive to local needs. Legislation provides mandate relief for local
justice systems which affect county audit requirements, court reporter
fees, and court consolidation; health and welfare relief involving advisory
boards, family planning, state audits and realignment maintenance

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<PAGE>
efforts; and relief in areas such as county welfare department
self-evaluations, noise guidelines and recycling requirements.

Lawsuits have been filed by several local governmental entities
challenging the shift of property taxes. The trial court and the District
Court of Appeal in one case, County of Los Angeles v. Sasaki, have ruled in
favor of the State. The State's petition to coordinate the other lawsuits
into a single proceeding has been granted. Following the Court of Appeal
decision, the trial court in the consolidated proceedings has ruled in
favor of the state.

2. The 1993-94 Budget Act keeps K-12 Proposition 98 funding on a cash
basis at the same per-pupil level as 1992-93 by providing schools a $609
million loan payable from future years' Proposition 98 funds.

3. The 1993-94 Budget Act assumed receipt of about $692 million of aid
to the State from the federal government to offset health and welfare costs
associated with foreign immigrants living in the State, which would reduce
a like amount of General Fund expenditures. About $411 million of this
amount was one-time funding. Congress ultimately appropriated only $450
million.

4. Reductions of $600 million in health and welfare programs.

5. Reductions of $400 million in support for higher education. These
reductions will be partly offset by fee increases at all three units of
higher education.

6. A 2-year suspension of the renters' tax credit ($390 million
expenditure reduction in 1993-94). A constitutional amendment will be
placed on the June 1994 ballot to restore the renter's tax credit after
1994-95.

7. Various miscellaneous cuts (totalling approximately $150 million) in
State government services in many agencies, up to 15 percent.

8. Miscellaneous one-time items, including deferral of payment to the
Public Employees Retirement Fund ($339 million) and a change in accounting
for debt service from accrual to cash basis, saving $107 million.

The 1993-94 Budget Act contains no general fund tax/revenue increases other
than a two year suspension of the renters' tax credit.

The 1994-95 Governor's Budget released January 7, 1994 indicates that the
continued sluggish performance of the State's economy will have an adverse
effect on results for the 1993-94 Fiscal Year. Revenues are now projected to be
$39.7 billion, about $900 million less than the 1993-94 Budget Act, even though
revenues in the first half of the fiscal year have been very close to original
projections.

Expenditures for the 1993-94 Fiscal Year are now projected in the 1994-95
Governor's Budget to be $39.3 billion, about $800 million above the original
1993-94 Budget Act. The main reasons for this change are increased health and
welfare caseloads, lower local property taxes (which require State support for
K-14 education to make up the shortfall), and lower than expected federal
government payments for immigration-related costs. The 1994-95 Governor's Budget
does not reflect possible additional General Fund costs in the 1993-94 Fiscal
Year for earthquake relief.

The Department of Finance's April Bulletin reports that revenues in March
were $294 million above forecast, bringing the year to date total to $57 million
above forecast. Sales and use tax receipts in March were slightly above
forecast, but staying very close to projections. Personal income tax receipts
were far above projections; refunds were lower than anticipated, so this gain
may be offset with refunds in April and May. Withholding remained at or above
forecast. Corporate taxes were $68 million below forecast, indicating that
corporate profits in 1993 were lower than expected. Weakness also was shown in
insurance tax receipts.

On January 17, 1994, a major earthquake measuring an estimated 6.8 on the
Richter Scale struck Los Angeles. Significant property damage to private and
public facilities occurred in a four-county area including northern Los Angeles
County, Ventura County, and parts of Orange and San Bernardino Counties, which
were declared as State and federal disaster areas by January 18. Preliminary
estimates of total property damage (private and public) are in the range of $15
billion or more. However, precise estimates of the damage are being developed
and may change.

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<PAGE>
Despite such damage, on the whole, the vast majority of structures in the
areas, including large manufacturing and commercial buildings and all modern
high-rise offices, survived the earthquake with minimal or no damage, validating
the cumulative effect of strict building codes and thorough preparation for such
an emergency by the State and local agencies.

State-owned facilities including transportation corridors and facilities
such as Interstate Highways 5 and 10 and State Highways 14, 118 and 210, and
certain other State facilities, such as the campus at California State
University--Northridge (which was heavily damaged and is only partly open), the
Van Nuys State Office Building and the University of California at Los Angeles,
sustained some damage. Aside from the road and bridge closures, it is not
expected that this damage will interfere significantly with ongoing State
government operations. Work to date has allowed reopening of the most heavily
damaged sections of the Santa Monica Freeway (Interstate 10).

The State in conjunction with the federal government is committed to
providing assistance to local governments, individuals and businesses suffering
damage as a result of the earthquake, as well as to provide for the repair and
replacement of State-owned facilities. The federal government will provide
substantial earthquake assistance.

The President immediately allocated some available disaster funds, and
Congress has approved additional funds for a total of at least $9.5 billion of
federal funds for earthquake relief, including assistance to homeowners and
small businesses, and costs for repair of damaged public facilities. The
Governor has announced that the State will have to pay about $1.9 billion for
earthquake relief costs, including a 10 percent match to some of the federal
funds, and costs for some programs not covered by the federal aid. The Governor
has proposed to cover $1.05 billion of these costs from a general obligation
bond issue which has been placed on the June, 1994 ballot. Under the Governor's
plan, some of the additional costs would be paid by the General Fund, and some
borrowed from the federal government in a manner similar to that used by the
State of Florida after Hurricane Andrew.

The 1994-95 Fiscal Year will represent the fourth consecutive year the
Governor and Legislature will be faced with a very difficult budget environment
to produce a balanced budget. Many program cuts and budgetary adjustments have
already been made in the last three years. The Governor's Budget once again does
not calculate a 'gap' which must be 'closed'; rather it sets forth revenue and
expenditure forecasts and revenue and expenditure proposals which result in a
balanced budget, including elimination of the accumulated 1992-93 budget deficit
of $2.8 billion.

The Governor's Budget projects General Fund revenues and transfers in
1994-95 of $41.3 billion, about $1.4 billion above 1993-94. Included in these
projections are receipt of $2.0 billion in new federal aid to reimburse the
State for the cost of educating and incarcerating undocumented foreign
immigrants, the transfer of 0.5 percent of the State sales tax to counties, and
tax relief of about $95 million proposed by the Governor for low and moderate
income taxpayers. The Governor's Budget also includes receipt of $600 million
assuming the State will prevail in the Barclays Bank case now before the U.S.
Supreme Court.

The Governor's Budget projects Special Fund revenues of $13.7 billion, an
increase of 9.6 percent over 1993-94 (in part reflecting the tax shift to
counties).

The Governor's Budget projects General Fund expenditures of $38.8 billion
(a 1.3 percent reduction from projected 1993-94 expenditures of $39.3 billion),
in order to keep a balanced budget which pays off the accumulated deficit,
within the available revenues. The Governor's Budget also proposes Special Fund
expenditures of $13.7 billion, a 5.4 percent increase.

The Governor proposes to achieve the General Fund reductions and balance
the 1994-95 Budget with the following major adjustments:

1. Receipt in 1994-95 of about $1.1 billion in additional federal funds
for health and welfare costs which would reduce a like amount of General
Fund expenditures. This is based on a possible change in the federal
formula for dividing such aid among the states ($600 million), a request
for additional aid for undocumented immigrants ($300 million) and various
other health and welfare proposals ($200 million).

2. Reductions of approximately $800 million in health and welfare
programs. In addition, the Governor proposes to transfer approximately $3.3
billion of health and welfare programs to counties, as described below.

3. The Governor's Budget provides continued support for the base level
of funding for the University of California and the California State
University, but does not include additional funding for enrollment

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<PAGE>
growth. The Governor's Budget does not propose student fee increases for
either the UC or CSU systems, but will entertain fee increase proposals
from them. To mitigate any potential student fee increases, the Governor's
Budget proposes an increase of $113 million in student financial aid and
$20 million for the Cal-Grant program. The Governor's Budget includes $90
million in new funds to expand financial aid for community colleges, to be
partially offset with an increase in student fees from $13 per unit to $20
per unit.

4. The Governor's Budget proposes an increase of about $2.0 billion in
Proposition 98 General Fund support for K-14 education, exceeding the
Proposition 98 guarantee, reflecting an increase for enrollment growth and
a small decrease for inflation. See 'State Finances Proposition 98' above.
Per student funding is proposed to remain the same as the prior year. The
proposal also reflects retransfer back to counties from school districts of
$1.1 billion of property taxes, with the General Fund to make up the shift.

5. Various miscellaneous cuts (totalling approximately $75 million). The
Govenror did not propose across-the-board cuts, and would suspend the 4
percent automatic budget reduction 'trigger,' as was done in 1993-94, so
cuts can be focused.

The Governor's Budget proposes the largest restructuring of the
State-county relationship since Proposition 13. The proposal's objectives are to
(1) promote economic development, (2) promote local control and accountability,
(3) establish fiscal incentives for program performance, and (4) reduce
bureaucracy. In total, the proposal is a $5.4 billion transaction constructed
with existing revenue sources. However, the proposal is fiscally neutral and
primarily affects counties with a minor benefit for cities. Special districts
and redevelopment agencies are not included in the proposal.

The proposal calls for expanding the realignment program from $2.1 billion
to $5.4 billion by increasing the counties' share of the State sales tax from 12
cents to 1 cent ($1.4 billion), transferring some property tax revenue from
schools to counties ($1.1 billion), and increasing other county revenues ($0.3
billion). In addition, the State would assume responsibility for a greater share
of trial court costs ($0.4 billion). With these additional county resources, the
counties will assume a greater share of costs for AFDC ($1.1 billion), and
Medi-Cal ($1.3 billion) as well as assume full responsibility for Foster Care,
In-Home Supportive Services, Alcohol and Drug programs and functions previously
funded from the County Services Block Grant ($0.8 billion).

The Governor's Budget proposes no tax/revenue increases. Therefore, if the
health and welfare proposals are not adopted or if the federal aid will not be
forthcoming as proposed, additional program cuts or budget adjustments will have
to be made in the 1994-95 Fiscal Year to keep the budget in balance. The
Governor's Budget projects the June 30, 1995 ending balance of the budget
reserve, the Special Fund for Economic Uncertainties to be about $260 million,
or less than 0.5 percent of General Fund revenues. In addition, the State has
filed lawsuits against the federal government for the federal funding of
education, incarceration and providing health services to undocumented
immigrants.

President Clinton's 1995 Fiscal Year Budget does not contain any additional
funds to the State for immigrant-related costs or for revising the formula for
paying health and welfare costs. The Governor and other officials intend to
vigorously pursue these additional federal funds through the Congressional
budget process.

The Governor's Budget assumes the State's regular cash flow borrowing
program in 1994-95, and assumes the budget will be adopted on time. Cash
resources at the start of the 1994-95 fiscal year are projected to be
insufficient to meet all obligations without external borrowing, such as revenue
anticipation notes, reimbursement or refunding warrants or registered warrants
as occurred in 1992.

The Governor's Budget continues to predict that population growth in the
1990s will keep upward pressure on major state programs, such as K-14 education,
health, welfare, and corrections, outstripping projected revenue growth in an
economy only very slowly emerging from a deep recession. The Governor's health,
welfare and local government realignment continue his efforts to keep
expenditures in line with resources in the long term. The Governor's Budget also
proposes significant restructuring of State government, with elimination and
consolidation of several agencies and numerous smaller boards, and a change to
'performance budgeting' which would be more efficient and cost-effective.

On March 7, 1994, the Governor signed an urgency bill (AB971) commonly
referred to as the 'Three Strikes' law. Among other things, this bill provides
for an immediate increase in prison terms for certain persons convicted of
felonies. Until all legislative actions on this subject are completed and final
court interpretations are made, the full impact of this law to the state's
correctional system cannot be predicted. However, the state expects

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to incur significant additional costs associated with the construction and
operation of additional prisons as this law is implemented.

Constitutional, Legislative and Other Factors. Certain California
constitutional amendments, legislative measures, executive orders,
administrative regulations and voter initiatives could result in the adverse
effects described below. The following information constitutes only a brief
summary, does not purport to be a complete description, and is based on
information drawn from official statements and prospectuses relating to
securities offerings of the State of California and various local agencies in
California, available as of the date of this Prospectus. While the Sponsors have
not independently verified such information, they have no reason to believe that
such information is not correct in all material respects.

Certain Debt Obligations in the Portfolio may be obligations of issuers
which rely in whole or in part on California State revenues for payment of these
obligations. Property tax revenues and a portion of the State's general fund
surplus are distributed to counties, cities and their various taxing entities
and the State assumes certain obligations theretofore paid out of local funds.
Whether and to what extent a portion of the State's general fund will be
distributed in the future to counties, cities and their various entities, is
unclear.

On November 1, 1993 the United States Supreme Court agreed to review the
California court decisions in Barclays Bank International, Ltd. v. Franchise Tax
Board and Colgate-Palmolive Company, Inc. v. Franchise Tax Board which upheld
California's worldwide combined reporting ('WWCR') method of taxing corporations
engaged in a unitary business operation against challenges under the foreign
commerce and due process clauses. In 1983, in Container Corporation v. Franchise
Tax Board, the Supreme Court held that the WWCR method did not violate the
foreign commerce clause in the case of a domestic-based unitary business group
with foreign-domiciled subsidiaries, but specifically left open the question of
whether a different result would obtain for a foreign-based multinational
unitary business. Barclays concerns a foreign-based multinational and Colgate-
Palmolive concerns a domestic-based multinational in light of federal foreign
policy developments since 1983. In a brief filed at the Supreme Court's request,
the Clinton Administration had argued that the Court should not hear the
Barclays case, even though there are 'serious questions' about the California
Supreme Court's analysis and holdings, because the recent changes in the law
noted below means the issue in Barclays 'lacks substantial recurring
importance.' The Clinton Administration had previously decided not to become
involved in the Barclays petition. The United States Government under the Bush
Administration, along with various foreign Governments, had appeared as amicus
on behalf of Barclays before the California Courts. The Clinton Administration
appeared as amicus on the merits in the United States Supreme Court supporting
the California Franchise Tax Board, arguing that the Court should judge WWCR by
looking at federal policies in effect at the time the taxes were collected and
stating that the federal government had not indicated to the States during the
1970s and 1980s that it objected to WWCR.

Oral argument was held March 28, 1994. If the Court does not uphold the
State's prior method of taxation, the State could be liable for tax refunds and
will be unable to collect taxes previously assessed, with an aggregate impact of
$3.5 billion to $4 billion.

In 1988, California enacted legislation providing for a water's-edge
combined reporting method if an election fee was paid and other conditions met.
On October 6, 1993, California Governor Pete Wilson signed Senate Bill 671
(Alquist) which modifies the unitary tax law by deleting the requirements that a
taxpayer electing to determine its income on a water's-edge basis pay a fee and
file a domestic disclosure spreadsheet and instead requiring an annual
information return. Significantly, the Franchise Tax Board can no longer
disregard a taxpayer's election. The Franchise Tax Board is reported to have
estimated state revenue losses from the Legislation as growing from $27 million
in 1993-94 to $616 million in 1999-2000, but others, including Assembly Speaker
Willie Brown, disagree with that estimate and assert that more revenue will be
generated for California, rather than less, because of an anticipated increase
in economic activity and additional revenue generated by the incentives in the
Legislation. The United Kingdom has been encouraged by the legislative
developments in California and threatened retaliatory taxation by the United
Kingdom is on hold.

Certain of the Debt Obligations may be obligations of issuers who rely in
whole or in part on ad valorem real property taxes as a source of revenue. On
June 6, 1978, California voters approved an amendment to the California
Constitution known as Proposition 13, which added Article XIIIA to the
California Constitution. The effect of Article XIIIA is to limit ad valorem
taxes on real property and to restrict the ability of taxing entities to
increase real property tax revenues. On November 7, 1978, California voters
approved Proposition 8, and on June 3, 1986, California voters approved
Proposition 46, both of which amended Article XIIIA.

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Section 1 of Article XIIIA limits the maximum ad valorem tax on real
property to 1% of full cash value (as defined in Section 2), to be collected by
the counties and apportioned according to law; provided that the 1% limitation
does not apply to ad valorem taxes or special assessments to pay the interest
and redemption charges on (i) any indebtedness approved by the voters prior to
July 1, 1978, or (ii) any bonded indebtedness for the acquisition or improvement
of real property approved on or after July 1, 1978, by two-thirds of the votes
cast by the voters voting on the proposition. Section 2 of Article XIIIA defines
'full cash value' to mean 'the County Assessor's valuation of real property as
shown on the 1975/76 tax bill under 'full cash value' or, thereafter, the
appraised value of real property when purchased, newly constructed, or a change
in ownership has occurred after the 1975 assessment.' The full cash value may be
adjusted annually to reflect inflation at a rate not to exceed 2% per year, or
reduction in the consumer price index or comparable local data, or reduced in
the event of declining property value caused by damage, destruction or other
factors. The California State Board of Equalization has adopted regulations,
binding on county assessors, interpreting the meaning of 'change in ownership'
and 'new construction' for purposes of determining full cash value of property
under Article XIIIA.

Legislation enacted by the California Legislature to implement Article
XIIIA (Statutes of 1978, Chapter 292, as amended) provides that notwithstanding
any other law, local agencies may not levy any ad valorem property tax except to
pay debt service on indebtedness approved by the voters prior to July 1, 1978,
and that each county will levy the maximum tax permitted by Article XIIIA of
$4.00 per $100 assessed valuation (based on the former practice of using 25%,
instead of 100%, of full cash value as the assessed value for tax purposes). The
legislation further provided that, for the 1978/79 fiscal year only, the tax
levied by each county was to be apportioned among all taxing agencies within the
county in proportion to their average share of taxes levied in certain previous
years. The apportionment of property taxes for fiscal years after 1978/79 has
been revised pursuant to Statutes of 1979, Chapter 282 which provides relief
funds from State moneys beginning in fiscal year 1979/80 and is designed to
provide a permanent system for sharing State taxes and budget funds with local
agencies. Under Chapter 282, cities and counties receive more of the remaining
property tax revenues collected under Proposition 13 instead of direct State
aid. School districts receive a correspondingly reduced amount of property
taxes, but receive compensation directly from the State and are given additional
relief. Chapter 282 does not affect the derivation of the base levy ($4.00 per
$100 assessed valuation) and the bonded debt tax rate.

On November 6, 1979, an initiative known as 'Proposition 4' or the 'Gann
Initiative' was approved by the California voters, which added Article XIIIB to
the California Constitution. Under Article XIIIB, State and local governmental
entities have an annual 'appropriations limit' and are not allowed to spend
certain moneys called 'appropriations subject to limitation' in an amount higher
than the 'appropriations limit.' Article XIIIB does not affect the appropriation
of moneys which are excluded from the definition of 'appropriations subject to
limitation,' including debt service on indebtedness existing or authorized as of
January 1, 1979, or bonded indebtedness subsequently approved by the voters. In
general terms, the 'appropriations limit' is required to be based on certain
1978/79 expenditures, and is to be adjusted annually to reflect changes in
consumer prices, population, and certain services provided by these entities.
Article XIIIB also provides that if these entities' revenues in any year exceed
the amounts permitted to be spent, the excess is to be returned by revising tax
rates or fee schedules over the subsequent two years.

At the November 8, 1988 general election, California voters approved an
initiative known as Proposition 98. This initiative amends Article XIIIB to
require that (i) the California Legislature establish a prudent state reserve
fund in an amount as it shall deem reasonable and necessary and (ii) revenues in
excess of amounts permitted to be spent and which would otherwise be returned
pursuant to Article XIIIB by revision of tax rates or fee schedules, be
transferred and allocated (up to a maximum of 4%) to the State School Fund and
be expended solely for purposes of instructional improvement and accountability.
No such transfer or allocation of funds will be required if certain designated
state officials determine that annual student expenditures and class size meet
certain criteria as set forth in Proposition 98. Any funds allocated to the
State School Fund shall cause the appropriation limits established in Article
XIIIB to be annually increased for any such allocation made in the prior year.

Proposition 98 also amends Article XVI to require that the State of
California provide a minimum level of funding for public schools and community
colleges. Commencing with the 1988-89 fiscal year, state monies to support
school districts and community college districts shall equal or exceed the
lesser of (i) an amount equalling the percentage of state general revenue bonds
for school and community college districts in fiscal year 1986-87, or (ii) an
amount equal to the prior year's state general fund proceeds of taxes
appropriated under Article XIIIB plus allocated proceeds of local taxes, after
adjustment under Article XIIIB. The initiative permits the enactment of
legislation, by a two-thirds vote, to suspend the minimum funding requirement
for one year.

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On June 30, 1989, the California Legislature enacted Senate Constitutional
Amendment 1, a proposed modification of the California Constitution to alter the
spending limit and the education funding provisions of Proposition 98. Senate
Constitutional Amendment 1, on the June 5, 1990 ballot as Proposition 111, was
approved by the voters and took effect on July 1, 1990. Among a number of
important provisions, Proposition 111 recalculates spending limits for the State
and for local governments, allows greater annual increases in the limits, allows
the averaging of two years' tax revenues before requiring action regarding
excess tax revenues, reduces the amount of the funding guarantee in recession
years for school districts and community college districts (but with a floor of
40.9 percent of State general fund tax revenues), removes the provision of
Proposition 98 which included excess moneys transferred to school districts and
community college districts in the base calculation for the next year, limits
the amount of State tax revenue over the limit which would be transferred to
school districts and community college districts, and exempts increased gasoline
taxes and truck weight fees from the State appropriations limit. Additionally,
Proposition 111 exempts from the State appropriations limit funding for capital
outlays.

Article XIIIB, like Article XIIIA, may require further interpretation by
both the Legislature and the courts to determine its applicability to specific
situations involving the State and local taxing authorities. Depending upon the
interpretation, Article XIIIB may limit significantly a governmental entity's
ability to budget sufficient funds to meet debt service on bonds and other
obligations.

On November 4, 1986, California voters approved an initiative statute known
as Proposition 62. This initiative (i) requires that any tax for general
governmental purposes imposed by local governments be approved by resolution or
ordinance adopted by a two-thirds vote of the governmental entity's legislative
body and by a majority vote of the electorate of the governmental entity, (ii)
requires that any special tax (defined as taxes levied for other than general
governmental purposes) imposed by a local governmental entity be approved by a
two-thirds vote of the voters within that jurisdiction, (iii) restricts the use
of revenues from a special tax to the purposes or for the service for which the
special tax was imposed, (iv) prohibits the imposition of ad valorem taxes on
real property by local governmental entities except as permitted by Article
XIIIA, (v) prohibits the imposition of transaction taxes and sales taxes on the
sale of real property by local governments, (vi) requires that any tax imposed
by a local government on or after August 1, 1985 be ratified by a majority vote
of the electorate within two years of the adoption of the initiative or be
terminated by November 15, 1988, (vii) requires that, in the event a local
government fails to comply with the provisions of this measure, a reduction in
the amount of property tax revenue allocated to such local government occurs in
an amount equal to the revenues received by such entity attributable to the tax
levied in violation of the initiative, and (viii) permits these provisions to be
amended exclusively by the voters of the State of California.

In September 1988, the California Court of Appeal in City of Westminster v.
County of Orange, 204 Cal. App. 3d 623, 215 Cal. Rptr. 511 (Cal. Ct. App. 1988),
held that Proposition 62 is unconstitutional to the extent that it requires a
general tax by a general law city, enacted on or after August 1, 1985 and prior
to the effective date of Proposition 62, to be subject to approval by a majority
of voters. The Court held that the California Constitution prohibits the
imposition of a requirement that local tax measures be submitted to the
electorate by either referendum or initiative. It is not possible to predict the
impact of this decision on charter cities, on special taxes or on new taxes
imposed after the effective date of Proposition 62.

On November 8, 1988, California voters approved Proposition 87. Proposition
87 amended Article XVI, Section 16, of the California Constitution by
authorizing the California Legislature to prohibit redevelopment agencies from
receiving any of the property tax revenue raised by increased property tax rates
levied to repay bonded indebtedness of local governments which is approved by
voters on or after January 1, 1989. It is not possible to predict whether the
California Legislature will enact such a prohibition nor is it possible to
predict the impact of Proposition 87 on redevelopment agencies and their ability
to make payments on outstanding debt obligations.

Certain Debt Obligations in the Portfolio may be obligations which are
payable solely from the revenues of health care institutions. Certain provisions
under California law may adversely affect these revenues and, consequently,
payment on those Debt Obligations.

The Federally sponsored Medicaid program for health care services to
eligible welfare beneficiaries in California is known as the Medi-Cal program.
Historically, the Medi-Cal Program has provided for a cost-based system of
reimbursement for inpatient care furnished to Medi-Cal beneficiaries by any
hospital wanting to participate in the Medi-Cal program, provided such hospital
met applicable requirements for participation. California law now provides that
the State of California shall selectively contract with hospitals to provide
acute

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inpatient services to Medi-Cal patients. Medi-Cal contracts currently apply only
to acute inpatient services. Generally, such selective contracting is made on a
flat per diem payment basis for all services to Medi-Cal beneficiaries, and
generally such payment has not increased in relation to inflation, costs or
other factors. Other reductions or limitations may be imposed on payment for
services rendered to Medi-Cal beneficiaries in the future.

Under this approach, in most geographical areas of California, only those
hospitals which enter into a Medi-Cal contract with the State of California will
be paid for non-emergency acute inpatient services rendered to Medi-Cal
beneficiaries. The State may also terminate these contracts without notice under
certain circumstances and is obligated to make contractual payments only to the
extent the California legislature appropriates adequate funding therefor.

In February 1987, the Governor of the State of California announced that
payments to Medi-Cal providers for certain services (not including hospital
acute inpatient services) would be decreased by ten percent through June 1987.
However, a federal district court issued a preliminary injunction preventing
application of any cuts until a trial on the merits can be held. If the
injunction is deemed to have been granted improperly, the State of California
would be entitled to recapture the payment differential for the intended
reduction period. It is not possible to predict at this time whether any
decreases will ultimately be implemented.

California enacted legislation in 1982 that authorizes private health plans
and insurers to contract directly with hospitals for services to beneficiaries
on negotiated terms. Some insurers have introduced plans known as 'preferred
provider organizations' ('PPOs'), which offer financial incentives for
subscribers who use only the hospitals which contract with the plan. Under an
exclusive provider plan, which includes most health maintenance organizations
('HMOs'), private payors limit coverage to those services provided by selected
hospitals. Discounts offered to HMOs and PPOs may result in payment to the
contracting hospital of less than actual cost and the volume of patients
directed to a hospital under an HMO or PPO contract may vary significantly from
projections. Often, HMO or PPO contracts are enforceable for a stated term,
regardless of provider losses or of bankruptcy of the respective HMO or PPO. It
is expected that failure to execute and maintain such PPO and HMO contracts
would reduce a hospital's patient base or gross revenues. Conversely,
participation may maintain or increase the patient base, but may result in
reduced payment and lower net income to the contracting hospitals.

These Debt Obligations may also be insured by the State of California
pursuant to an insurance program implemented by the Office of Statewide Health
Planning and Development for health facility construction loans. If a default
occurs on insured Debt Obligations, the State Treasurer will issue debentures
payable out of a reserve fund established under the insurance program or will
pay principal and interest on an unaccelerated basis from unappropriated State
funds. At the request of the Office of Statewide Health Planning and
Development, Arthur D. Little, Inc. prepared a study in December, 1983, to
evaluate the adequacy of the reserve fund established under the insurance
program and based on certain formulations and assumptions found the reserve fund
substantially underfunded. In September of 1986, Arthur D. Little, Inc. prepared
an update of the study and concluded that an additional 10% reserve be
established for 'multi-level' facilities. For the balance of the reserve fund,
the update recommended maintaining the current reserve calculation method. In
March of 1990, Arthur D. Little, Inc. prepared a further review of the study and
recommended that separate reserves continue to be established for 'multi-level'
facilities at a reserve level consistent with those that would be required by an
insurance company.

Certain Debt Obligations in the Portfolio may be obligations which are
secured in whole or in part by a mortgage or deed of trust on real property.
California has five principal statutory provisions which limit the remedies of a
creditor secured by a mortgage or deed of trust. Two limit the creditor's right
to obtain a deficiency judgment, one limitation being based on the method of
foreclosure and the other on the type of debt secured. Under the former, a
deficiency judgment is barred when the foreclosure is accomplished by means of a
nonjudicial trustee's sale. Under the latter, a deficiency judgment is barred
when the foreclosed mortgage or deed of trust secures certain purchase money
obligations. Another California statute, commonly known as the 'one form of
action' rule, requires creditors secured by real property to exhaust their real
property security by foreclosure before bringing a personal action against the
debtor. The fourth statutory provision limits any deficiency judgment obtained
by a creditor secured by real property following a judicial sale of such
property to the excess of the outstanding debt over the fair value of the
property at the time of the sale, thus preventing the creditor from obtaining a
large deficiency judgment against the debtor as the result of low bids at a
judicial sale. The fifth statutory provision gives the debtor the right to
redeem the real property from any judicial foreclosure sale as to which a
deficiency judgment may be ordered against the debtor.

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Upon the default of a mortgage or deed of trust with respect to California
real property, the creditor's nonjudicial foreclosure rights under the power of
sale contained in the mortgage or deed of trust are subject to the constraints
imposed by California law upon transfers of title to real property by private
power of sale. During the three-month period beginning with the filing of a
formal notice of default, the debtor is entitled to reinstate the mortgage by
making any overdue payments. Under standard loan servicing procedures, the
filing of the formal notice of default does not occur unless at least three full
monthly payments have become due and remain unpaid. The power of sale is
exercised by posting and publishing a notice of sale for at least 20 days after
expiration of the three-month reinstatement period. Therefore, the effective
minimum period for foreclosing on a mortgage could be in excess of seven months
after the initial default. Such time delays in collections could disrupt the
flow of revenues available to an issuer for the payment of debt service on the
outstanding obligations if such defaults occur with respect to a substantial
number of mortgages or deeds of trust securing an issuer's obligations.

In addition, a court could find that there is sufficient involvement of the
issuer in the nonjudicial sale of property securing a mortgage for such private
sale to constitute 'state action,' and could hold that the private-right-of-sale
proceedings violate the due process requirements of the Federal or State
Constitutions, consequently preventing an issuer from using the nonjudicial
foreclosure remedy described above.

Certain Debt Obligations in the Portfolio may be obligations which finance
the acquisition of single family home mortgages for low and moderate income
mortgagors. These obligations may be payable solely from revenues derived from
the home mortgages, and are subject to California's statutory limitations
described above applicable to obligations secured by real property. Under
California antideficiency legislation, there is no personal recourse against a
mortgagor of a single family residence purchased with the loan secured by the
mortgage, regardless of whether the creditor chooses judicial or nonjudicial
foreclosure.

Under California law, mortgage loans secured by single-family
owner-occupied dwellings may be prepaid at any time. Prepayment charges on such
mortgage loans may be imposed only with respect to voluntary prepayments made
during the first five years during the term of the mortgage loan, and cannot in
any event exceed six months' advance interest on the amount prepaid in excess of
20%of the original principal amount of the mortgage loan. This limitation could
affect the flow of revenues available to an issuer for debt service on the
outstanding debt obligations which financed such home mortgages.

CALIFORNIA TAXES

In the opinion of O'Melveny & Myers, Los Angeles, California, special
counsel on California tax matters, under existing California law:

The Trust Fund is not an association taxable as a corporation for
California tax purposes. Each Holder will be considered the owner of a pro
rata portion of the Trust Fund and will be deemed to receive his pro rata
portion of the income therefrom. To the extent interest on the Debt
Obligations is exempt from California personal income taxes, said interest
is similarly exempt from California personal income taxes in the hands of
the Holders, except to the extent such Holders are banks or corporations
subject to the California franchise tax. Holders will be subject to
California income tax on any gain on the disposition of all or part of his
pro rata portion of a Debt Obligation in the Trust Fund. A Holder will 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. A Holder
will also be considered to have disposed of all or part of his pro rata
portion of a Debt Obligation when all or part of the Debt Obligation is
sold by the Trust Fund or is redeemed or paid at maturity. The Debt
Obligations and the Units are not taxable under the California personal
property tax law.

THE MARYLAND TRUST TRUST

The Portfolio of the Maryland Trust contains different issues of debt
obligations issued by or on behalf of the State of Maryland (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 Maryland Trust should be made with an understanding that the
value of the underlying Portfolio may decline with increases in interest rates.

RISK FACTORS--State Debt. The Public indebtedness of the State of Maryland
and its instrumentalities is divided into three general types. The State issues
general obligation bonds for capital improvements and for various State projects
to the payment of which the State ad valorem property tax is exclusively
pledged. In addition, the Maryland Department of Transportation issues for
transportation purposes its limited, special

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obligation bonds payable primarily from specific, fixed-rate excise taxes and
other revenues related mainly to highway use. Certain authorities issue
obligations payable solely from specific non-tax, enterprise fund revenues and
for which the State has no liability and has given no moral obligation
assurance.

General obligation bonds of the State are authorized and issued primarily
to provide funds for State-owned capital improvements, including institutions of
higher learning, and the construction of locally owned public schools. Bonds
have also been issued for local government improvements, including grants and
loans for water quality improvement projects and correctional facilities, to
provide funds for repayable loans or outright grants to private, non-profit
cultural or educational institutions, and to fund certain loan and grant
programs.

The Maryland Constitution prohibits the contracting of State debt unless it
is authorized by a law levying an annual tax or taxes sufficient to pay the debt
service within 15 years and prohibiting the repeal of the tax or taxes or their
use for another purpose until the debt is paid. As a uniform practice, each
separate enabling act which authorizes the issuance of general obligation bonds
for a given object or purpose has specifically levied and directed the
collection of an ad valorem property tax on all taxable property in the State.
The Board of Public Works is directed by law to fix by May 1 of each year the
precise rate of such tax necessary to produce revenue sufficient for debt
service requirements of the next fiscal year, which begins July 1. However, the
taxes levied need not be collected if or to the extent that funds sufficient for
debt service requirements in the next fiscal year have been appropriated in the
annual State budget. Accordingly, the Board, in annually fixing the rate of
property tax after the end of the regular legislative session in April, takes
account of appropriations of general funds for debt service.

In the opinion of counsel, the courts of Maryland have jurisdiction to
entertain proceedings and power to grant mandatory injunctive relief to (i)
require the Governor to include in the annual budget a sufficient appropriation
to pay all general obligation bond debt service for the ensuing fiscal year;
(ii) prohibit the General Assembly from taking action to reduce any such
appropriation below the level required for that debt service; (iii) require the
Board of Public Works to fix and collect a tax on all property in the State
subject to assessment for State tax purposes at a rate and in an amount
sufficient to make such payments to the extent that adequate funds are not
provided in the annual budget; and (iv) provide such other relief as might be
necessary to enforce the collection of such taxes and payment of the proceeds of
the tax collection to the holders of general obligation bonds, pari passu,
subject to the inherent constitutional limitations referred to below.

It is also the opinion of counsel that, while the mandatory injunctive
remedies would be available and while the general obligation bonds of the State
are entitled to constitutional protection against the impairment of the
obligation of contracts, such constitutional protection and the enforcement of
such remedies would not be absolute. Enforcement of a claim for payment of the
principal of or interest on the bonds could be subject to the provisions of any
statutes that may be constitutionally enacted by the United States Congress or
the Maryland General Assembly extending the time for payment or imposing other
constraints upon enforcement.

There is no general debt limit imposed by the Maryland Constitution or
public general laws, but a special committee created by statute annually submits
to the Governor an estimate of the maximum amount of new general obligation debt
that prudently may be authorized. Although the committee's responsibilities are
advisory only, the Governor is required to give due consideration to the
committee's findings in preparing a preliminary allocation of new general debt
authorization for the next ensuing fiscal year.

Consolidated Transportation Bonds are limited obligations issued by the
Maryland Department of Transportation, the principal of which must be paid
within 15 years from the date of issue, for highway, port, transit, rail or
aviation facilities or any combination of such facilities. Debt service on
Consolidated Transportation Bonds is payable from those portions of the excise
tax on each gallon of motor vehicle fuel and the motor vehicle titling tax, all
mandatory motor vehicle registration fees, motor carrier fees, and the corporate
income tax as are credited to the Maryland Department of Transportation, plus
all departmental operating revenues and receipts. Holders of such bonds are not
entitled to look to other sources for payment.

The Maryland Department of Transportation also issues its bonds to provide
financing of local road construction and various other county transportation
projects and facilities. Debt service on these bonds is payable from the
subdivisions' share of highway user revenues held to their credit in a special
State fund.

The Maryland Transportation Authority operates certain highway, bridge and
tunnel toll facilities in the State. The tolls and other revenues received from
these facilities are pledged as security for revenue bonds of the Authority
issued under and secured by a trust agreement between the authority and a
corporate trustee.

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The Maryland Stadium Authority is responsible for financing and directing
the acquisition and construction of one or more new professional sports
facilities in Maryland. Currently, the Stadium Authority operates the newly
opened Oriole Park at Camden Yards. The Stadium Authority is authorized to issue
revenue bonds, subject to the approval of the Board of Public Works.

The Authority's financings, as well as any future financing for a football
stadium, are lease-backed revenue obligations, payment of which is secured by,
among other things, an assignment of revenues to be received under a lease of
the sports facilities from the Authority to the State of Maryland; rental
payments due from the State under that lease will be subject to annual
appropriation by the Maryland General Assembly. The State anticipates that
revenues to fund the lease payments will be generated from a variety of sources,
including in each year sports lottery revenues, the net operating revenues of
the Authority and funds from the City of Baltimore.

Certain other instrumentalities of the State government are authorized to
borrow money under legislation which expressly provides that the loan
obligations shall not be deemed to constitute a debt or a pledge of the faith
and credit of the State. The Community Development Administration of the
Department of Housing and Community Development, the Board of Trustees of St.
Mary's College of Maryland, the Maryland Environmental Service, the Board of
Regents of the University of Maryland System, the Board of Regents of Morgan
State University, and the Maryland Food Center Authority have issued and have
outstanding bonds of this type. The principal of and interest on bonds issued by
these bodies are payable solely from various sources, principally fees generated
from use of the facilities or enterprises financed by the bonds.

The Water Quality Revolving Loan Fund is administered by the Water Quality
Financing Administration in the Department of the Environment. The Fund may be
used to provide loans, subsidies and other forms of financial assistance to
local government units for wastewater treatment projects as contemplated by the
1987 amendments to the federal Water Pollution Control Act. The Administration
is authorized to issue bonds secured by revenues of the Fund, including loan
repayments, federal capitalization grants, and matching State grants.

The University of Maryland System, Morgan State University, and St. Mary's
College of Maryland are authorized to issue revenue bonds for the purpose of
financing academic and auxiliary facilities. Auxiliary facilities are any
facilities that furnish a service to students, faculty, or staff, and that
generate income. Auxiliary facilities include housing, eating, recreational,
campus, infirmary, parking, athletic, student union or activity, research
laboratory, testing, and any related facilities.

On August 7, 1989, the Governor issued an Executive Order assigning to the
Department of Budget and Fiscal Planning responsibility to review certain
proposed issuances of revenue and enterprise debt other than private activity
bonds. The Executive Order also provides that the Governor may establish a
ceiling of such debt to be issued during the fiscal year, which ceiling may be
amended by the Governor.

Although the State has authority to make short-term borrowings in
anticipation of taxes and other receipts up to a maximum of $100 million, in the
past it has not issued short-term tax anticipation and bond anticipation notes
or made any other similar short-term borrowings. However, the State has issued
certain obligations in the nature of bond anticipation notes for the purpose of
assisting several savings and loan associations in qualifying for Federal
insurance and in connection with the assumption by a bank of the deposit
liabilities of an insolvent savings and loan association.

The State has financed the construction and acquisition of various
facilities through in conditional purchase, sale-leaseback, and similar
transactions. All of the lease payments under these arrangements are subject to
annual appropriation by the Maryland General Assembly. In the event that
appropriations are not made, the State may not be held contractually liable for
the payments.

Savings and Loan Matters. During the first half of calendar year 1985,
several State-chartered savings and loan associations, the savings accounts of
which were privately insured, experienced unusually heavy withdrawals of funds
by depositors. The resulting decline in the associations' liquid assets led to
the appointment of receivers for the assets of six associations and the creation
of an agency of the State to succeed, by statutory merger, the private insurer.
The savings accounts of all savings and loan associations operating in the State
of Maryland must be insured by either the State agency or the Federal Savings
and Loan Insurance Corporation. The State agency assumed the insurance
liabilities of the private insurer with respect to deposits made prior to May
18, 1985, and insures amounts deposited after that date up to a certain limit.
The legislation establishing the insurance agency provides that: 'It is the
policy of this State that funds will be appropriated to the insurance agency to
the extent necessary to protect holders of savings accounts in member
associations.' As of December 31, 1989, depositors of all non-disputed insured
accounts at associations in receivership have been paid in full. The insurance
agency

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believes that the allowance for estimated insurance losses will be sufficient to
provide for the agency's ultimate liability.

Ratings. The general obligation bonds of the State of Maryland have been
rated by Moody's Investors Service, Inc. as Aaa, by Standard & Poor's
Corporation as AAA, and by Fitch Investors service, Inc. as AAA.

Local Subdivision Debt. The counties and incorporated municipalities in
Maryland issue general obligation debt for general governmental purposes. The
general obligation debt of the counties and incorporated municipalities is
generally supported by ad valorem taxes on real estate, tangible personal
property and intangible personal property subject to taxation. The issuer
typically pledges its full faith and credit and unlimited taxing power to the
prompt payment of the maturing principal and interest on the general obligation
debt and to the levy and collection of the ad valorem taxes as and when such
taxes become necessary in order to provide sufficient funds to meet the debt
service requirements. The amount of debt which may be authorized may in some
cases be limited by the requirement that it not exceed a stated percentage of
the assessable base upon which such taxes are levied.

In the opinion of counsel, the issuer may be sued in the event that it
fails to perform its obligations under the general obligation debt to the
holders of the debt, and any judgments resulting from such suits would be
enforceable against the issuer. Nevertheless, a holder of the debt who has
obtained any such judgment may be required to seek additional relief to compel
the issuer to levy and collect such taxes as may be necessary to provide the
funds from which a judgment may be paid. Although there is no Maryland law on
this point, it is the opinion of counsel that the appropriate courts of Maryland
have jurisdiction to entertain proceedings and power to grant additional relief,
such as a mandatory injunction, if necessary, to enforce the levy and collection
of such taxes and payment of the proceeds of the collection of the taxes to the
holders of general obligation debt, pari passu, subject to the same
constitutional limitations on enforcement, as described above, as apply to the
enforcement of judgments against the State.

Local subdivisions, including counties and municipal corporations, are also
authorized by law to issue special and limited obligation debt for certain
purposes other than general governmental purposes. The source of payment of that
debt is limited to certain revenues of the issuer derived from commercial
activities operated by the issuer, payments made with respect to certain
facilities or loans, and any funds pledged for the benefit of the holders of the
debt. That special and limited obligation debt does not constitute a debt of the
State, the issuer or any other political subdivision of either within the
meaning of any constitutional or statutory limitation. Neither the State nor the
issuer or any other political subdivision of either is obligated to pay the debt
or the interest on the debt except from the revenues of the issuer specifically
pledged to the payment of the debt. Neither the faith and credit nor the taxing
power of the State, the issuer or any other political subdivision of either is
pledged to the payment of the debt. The issuance of the debt is not directly or
indirectly or contingently an obligation, moral or other, of the State, the
issuer or any other political subdivision of either to levy any tax for its
payment.

Washington Suburban Sanitary District Debt. The Washington Suburban
Sanitary District operates as a public corporation of the State to provide, as
authorized, water, sewerage and drainage systems, including water supply, sewage
disposal, and storm water drainage facilities for Montgomery County, Maryland
and Prince George's County, Maryland. For the purpose of paying the principal of
and interest on bonds of the District, Maryland law provides for the levy,
annually, against all the assessable property within the District by the County
Council of Montgomery County and the County Council of Prince George's County of
ad valorem taxes sufficient to pay such principal and interest when due and
payable.

Storm water drainage bonds for specific projects are payable from an ad
valorem tax upon all of the property assessed for county tax purposes within the
portion of the District situated in the county in which the storm water project
was, or is to be, constructed. Storm water drainage bonds of the District are
also guaranteed by such county, which guaranty operates as a pledge of the full
faith and credit of the county to the payment of the bonds and obligates the
county council, to the extent that the tax revenues referred to above and any
other money available or to become available are inadequate to provide the funds
necessary to pay the principal of and the interest on the bonds, to levy upon
all property subject to taxation within the county ad valorem taxes in rate and
in amount sufficient to make up any such deficiency.

Substantially all of the debt service on the bonds, except storm water
drainage bonds, is being paid from revenues derived by the District from water
consumption charges, front foot benefit charges, and sewage usage charges.
Notwithstanding the payment of principal of and interest on those bonds from
those charges, the

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underlying security of all bonds of the District is the levy of ad valorem taxes
on the assessable property as stated above.

Special Authority Debt. The State and local governments have created
several special authorities with the power to issue debt on behalf of the State
or local government for specific purposes, such as providing facilities for
non-profit health care and higher educational institutions, facilities for the
disposal of solid waste, funds to finance single family and low-to-moderate
income housing, and similar purposes. The Maryland Health and Higher Educational
Facilities Authority, the Northeast Maryland Waste Disposal Authority, the
Housing Opportunities Commission of Montgomery County, and the Housing Authority
of Prince George's County are some of the special authorities which have issued
and have outstanding debt of this type.

The debts of the authorities issuing debt on behalf of the State and the
local governments are limited obligations of the authorities payable solely from
and secured by a pledge of the revenues derived from the facilities or loans
financed with the proceeds of the debt and from any other funds and receipts
pledged under an indenture with a corporate trustee. The debt does not
constitute a debt, liability or pledge of the faith and credit of the State or
of any political subdivision or of the authorities. Neither the State nor any
political subdivision thereof nor the authorities shall be obligated to pay the
debt or the interest on the debt except from such revenues, funds and receipts.
Neither the faith and credit nor the taxing power of the State or of any
political subdivision of the State or the authorities is pledged to the payment
of the principal of or the interest on such debt. The issuance of the debt is
not directly or indirectly an obligation, moral or other, of the State or of any
political subdivision of the State or of the authority to levy or to pledge any
form of taxation whatsoever, or to make any appropriation, for their payment.
The authorities have no taxing power.

Hospital Bonds. The rates charged by non-governmental Maryland hospitals
are subject to review and approval by the Maryland Health Services Cost Review
Commission. Maryland hospitals subject to regulation by the Commission are not
permitted to charge for services at rates other than those established by the
Commission. In addition, the Commission is required to permit any nonprofit
institution subject to its jurisdiction to charge reasonable rates which will
permit the institution to provide, on a solvent basis, effective and efficient
service in the public interest.

Under an agreement between Medicare and the Commission, Medicare agrees to
pay Maryland hospitals on the basis of Commission-approved rates, less a 6%
differential. Under this so-called 'Medicare Waiver', Maryland hospitals are
exempt from the Medicare Prospective Payment System which pays hospitals fixed
amounts for specific services based upon patient diagnosis. No assurance can be
given that Maryland will continue to meet any current or future tests for the
continuation of the Medicare Waiver.

In setting hospital rates, the Commission takes into account each
hospital's budgeted volume of services and cash financial requirements for the
succeeding year. It then establishes the rates of the hospital for the
succeeding year based upon the projected volume and those financial requirements
of the institution which the Commission has deemed to be reasonable. Financial
requirements allowable for inclusion in rates generally include budgeted
operating costs, a 'capital facilities allowance', other financial
considerations (such as charity care and bad debts) and discounts allowed
certain payors for prompt payment. Variations from projected volumes of services
are reflected in the rates for the succeeding year. The Commission, on a
selective basis by the application of established review criteria, grants
Maryland hospitals increases in rates to compensate for inflation experienced by
hospitals and for other factors beyond the hospitals' control.

Regulations of the Commission provide that overcharges will in certain
circumstances be deducted from prospective rates. Similarly, undercharges will
in certain circumstances not be recoverable through prospective rates.

The Commission has entered into agreements with certain hospitals to adjust
rates in accordance with a prospectively approved, guaranteed inpatient revenue
per admission program. Those agreements are in addition to the rate adjustment
methodology discussed above. Under the program, a hospital's revenue per
admission is compared to the revenue per admission, as adjusted, for a base
year. Variations from the adjusted base year revenues per admission are added or
deducted, as the case may be, from the hospital's gross revenue and rates for
the following year.

There can be no assurance that the Commission will continue to utilize its
present rate-setting methodology or approve rates which will be sufficient to
ensure payment on an individual hospital's obligations. Future actions by the
Commission or the loss of the Medicare Waiver may adversely affect the
operations of individual hospitals.

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MARYLAND TAXES

In the opinion of Weinberg and Green, Baltimore, Maryland, special counsel
on Maryland tax matters, under existing Maryland law:

1. The Maryland Trust will not be recognized as an association taxable
as a corporation, and the income of the Maryland Trust will be treated as
the income of the Holders of Units ('Holder'). The Maryland Trust is not a
'financial institution' subject to the Maryland Franchise Tax measured by
net earnings. The Maryland Trust is not subject to Maryland property taxes
imposed on the intangible personal property of certain corporations.

2. A Holder will not be required to include the Holder's share of the
earnings of, or distributions from, the Maryland Trust in the Holder's
Maryland taxable income to the extent that such earnings or distributions
represent interest excludable from gross income for Federal income tax
purposes received by the Maryland Trust on obligations of the State of
Maryland, or the Government of Puerto Rico, or the Government of Guam and
their respective political subdivisions and authorities. Interest on Debt
Obligations is subject to the Maryland Franchise Tax imposed on 'financial
institutions' and measured by net earnings.

3. In the case of taxpayers who are individuals, Maryland presently
imposes an income tax on items of tax preference with reference to such
items as defined in the Internal Revenue Code, as amended, for purposes of
calculating the federal alternative minimum tax. Interest paid on certain
private activity bonds is a preference item for purposes of calculating the
federal alternative minimum tax. Accordingly, if the Maryland Trust holds
such bonds, 50% of the interest on such bonds in excess of a threshold
amount is taxable by Maryland.

4. A Holder may recognize taxable gain or loss, which will be capital
gain or loss except in the case of a dealer or a financial institution,
when the Holder disposes of all or part of the Holder's pro rata portion of
the Debt Obligations in the Maryland Trust. A Holder will be considered to
have disposed of all or part of the Holder's pro rata portion of each Debt
Obligation when the Holder sells or redeems all or some of the Holder's
Units. A Holder will also be considered to have disposed of all or part of
the Holder's pro rata portion of a Debt Obligation when all or part of the
Debt Obligation is disposed of by the Maryland Trust or is redeemed or paid
at maturity. Capital gains included in the gross income of Holders for
federal income tax purposes may be subtracted from income for Maryland
income tax purposes only to the extent that the gain is derived from the
disposition of Debt Obligations issued by the State of Maryland and its
political subdivisions. Profits realized on the sale or exchange of Debt
Obligations are subject to the Maryland Franchise Tax imposed on 'financial
institutions' and measured by net earnings.

5. Units of the Maryland Trust will be subject to Maryland inheritance
and estate tax only if held by Maryland residents.

6. Neither the Debt Obligations nor the Units will be subject to
Maryland personal property tax.

7. The sales of Units in Maryland or the holding of Units in Maryland
will not be subject to Maryland Sales or Use Tax.

THE NEW JERSEY TRUST

The Portfolio of the New Jersey Trust contains different issues of debt
obligations issued by or on behalf of the State of New Jersey (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 Jersey 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 recent financial
difficulties and pressures which the State of New Jersey and certain of its
public authorities have undergone.

The State's 1994 Fiscal Year budget became law on June 30, 1993.

The New Jersey State Constitution prohibits the legislature from making
appropriations in any fiscal year in excess of the total revenue on hand and
anticipated, as certified by the Governor. It additionally prohibits a debt or
liability that exceeds 1% of total appropriations for the year, unless it is in
connection with a refinancing to produce a debt service savings or it is
approved at a general election. Such debt must be authorized by law and

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applied to a single specified object or work. Laws authorizing such debt provide
the ways and means, exclusive of loans, to pay as it becomes due and the
principal within 35 years from the time the debt is contracted. These laws may
not be repealed until the principal and interest are fully paid. These
Constitutional provisions do not apply to debt incurred because of war,
insurrection or emergencies caused by disaster.

Pursuant to Article VIII, Section II, par. 2 of the New Jersey
Constitution, no monies may be drawn from the State Treasury except for
appropriations made by law. In addition, the monies for the support of State
government and all State purposes, as far as can be ascertained, must be
provided for in one general appropriation law covering one and the same fiscal
year. The State operates on a fiscal year beginning July 1 and ending June 30.
For example, 'fiscal 1994' refers to the year ended June 30, 1994.

In addition to the Constitutional provisions, the New Jersey statutes
contain provisions concerning the budget and appropriation system. Under these
provisions, each unit of the State requests an appropriation from the Director
of the Division of Budget and Accounting, who reviews the budget requests and
forwards them with his recommendations to the Governor. The Governor then
transmits his recommended expenditures and sources of anticipated revenue to the
legislature, which reviews the Governor's Budget Message and submits an
appropriations bill to the Governor for his signature by July 1 of each year. At
the time of signing the bill, the Governor may revise appropriations or
anticipated revenues. That action can be reversed by a two-thirds vote of each
House. No supplemental appropriation may be enacted after adoption of the act,
except where there are sufficient revenues on hand or anticipated, as certified
by the Governor, to meet the appropriation. Finally, the Governor may, during
the course of the year, prevent the expenditure of various appropriations when
revenues are below those anticipated or when he determines that such expenditure
is not in the best interest of the State.

In 1992, employment in services and government turned around in the State,
growing over the year by 0.7% and 0.3%, respectively. These increases were
outweighed by declines in other sectors -- especially in manufacturing,
wholesale and retail trade, and construction -- resulting in a net decline in
non-farm employment of 1.7% in 1992. Non-farm employment continued to decline in
1993 but the rate of decline has tapered off. Employment in the first nine
months of 1993 was 1.0% lower than in the same period in 1992. Gains were
recorded in services, government, finance/insurance/real estate and
transportation/communication/public utilities. Declines continued in trade,
construction and manufacturing.

The economic recovery is likely to be slow and uneven in both New Jersey
and the nation. Some sectors, like commercial and industrial construction, will
undoubtedly lag because of continued excess capacity. Also, employers in
rebounding sectors can be expected to remain cautious about hiring until they
become convinced that improved business will be sustained. Other firms will
continue to merge or downsize to increase profitability. As a result, job gains
will probably come grudgingly and unemployment will recede at a correspondingly
slow pace.

One of the major reasons for cautious optimism is found in the construction
industry. Total construction contracts awarded in New Jersey have turned around,
rising by 7.0% in 1993 compared with 1992. By far, the largest boost came from
residential construction awards which increased by 26% in 1993 compared with
1992. In addition, non-residential building construction awards have turned
around, posting a 17% gain.

Nonbuilding construction awards have been at high levels since 1991 due to
substantial outlays for roads, bridges and other infrastructure projects.
Although nonbuilding construction awards declined in 1993 compared with 1992,
this was due to an unusually large amount of contracts in the Spring of 1992.

Finally, even in the labor market there are signs of recovery. Thanks to a
reduced layoff rate and the reappearance of job opportunities in some parts of
the economy, unemployment in the State has been receding since July 1992, when
it peaked at 9.6% according to U.S. Bureau of Labor Statistics estimates based
on the federal government's monthly household survey. The same survey showed
joblessness dropped to an average of 6.7% in the fourth quarter of 1993. The
unemployment rate registered an average of 7.8% in the first quarter of 1994,
but this rate cannot be compared with prior date due to the changes in the U.S.
Department of Labor procedures for determining the unemployment rate that went
into effect in January 1994.

For Fiscal Year 1994, the State has made appropriations of $119.9 million
for principal and interest payments for general obligation bonds. For Fiscal
Year 1995, the Governor has recommended appropriations of $103.5 million for
principal and interest payments for general obligation bonds. Of the $15,410.7
million appropriated in Fiscal Year 1994 from the General Fund, the Property Tax
Relief Fund, the Gubernatorial Elections Fund, the Casino Control Fund and the
Casino Revenue Fund, $5,812.4 million (37.8%) was appropriated for State Aid to
Local Governments, $3,698.9 million (24.0%) is appropriated for Grants-in-Aid,

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$5,335.5 million (34.6%) for Direct State Services, $119.9 million (0.7%) for
Debt Service on State general obligation bonds and $443.9 million (2.9%) for
Capital Construction.

State Aid to Local Governments was the largest portion of Fiscal Year 1994
appropriations. In Fiscal Year 1994, $5,812.4 million of the State's
appropriations consisted of funds which are distributed to municipalities,
counties and school districts. The largest State Aid appropriation, in the
amount of $4,044.3 million, is provided for local elementary and secondary
education programs. Of this amount, $2,538.2 million was provided as foundation
aid to school districts by formula based upon the number of students and the
ability of a school district to raise taxes from its own base. In addition, the
State provided $582.5 million for special education programs for children with
disabilities. A $293.0 million program was also funded for pupils at risk of
educational failure, including basic skills improvement. The State appropriated
$776.9 million on behalf of school districts as the employer share of the
teachers' pension and benefits programs, $263.8 million to pay for the cost of
pupil transportation and $57.4 million for transition aid, which guaranteed
school districts a 6.5% increase over the aid received in Fiscal Year 1991 and
is being phased out over four years.

Appropriations to the Department of Community Affairs totalled $650.4
million in State Aid monies for Fiscal Year 1994. The principal programs funded
were the Supplemental Municipal Property Tax Act ($365.7 million); the Municipal
Revitalization Program ($165.0 million); municipal aid to urban communities to
maintain and upgrade municipal services ($40.4 million); and the Safe and Clean
Neighborhoods Program ($58.9 million). Appropriations to the State Department of
the Treasury totalled $327.5 million in State Aid monies for Fiscal Year 1994.
The principal programs funded by these appropriations were payments under the
Business Personal Property Tax Replacement Programs ($158.7 million); the cost
of senior citizens, disabled and veterans property tax deductions and exemptions
($41.7 million); aid to densely populated municipalities ($33.0 million);
Municipal Purposes Tax Assistance ($30.0 million); and payments to
municipalities for services to state owned property ($34.9 million); and the
Safe and Clean Communities program ($15.0 million).

Other appropriations of State Aid in Fiscal Year 1994 include welfare
programs ($477.4 million); aid to county colleges ($114.6 million); and aid to
county mental hospitals ($88.8 million).

The second largest portion of appropriations in Fiscal Year 1994 is applied
to Direct State Services: the operation of State government's 19 departments,
the Executive Office, several commissions, the State Legislature and the
Judiciary. In Fiscal Year 1994, appropriations for Direct State Services
aggregated $5,335.5 million. Some of the major appropriations for Direct State
Services during Fiscal Year 1994 are detailed below.

$602.3 million was appropriated for programs administered by the Department
of Human Services. Of that amount, $448.2 million was appropriated for mental
health and mental retardation programs, including the operation of seven
psychiatric institutions and nine schools for the retarded.

The Department of Labor is appropriated $51.4 million for the
administration of programs for workers' compensation, unemployment and
disability insurance, manpower development, and health safety inspection.

The Department of Health is appropriated $37.6 million for the prevention
and treatment of diseases, alcohol and drug abuse programs, regulation of health
care facilities, and the uncompensated care program.

$673.0 million is appropriated to the Department of Higher Education for
the support of nine State colleges, Rutgers University, the New Jersey Institute
of Technology, and the University of Medicine and Dentistry.

$932.6 million is appropriated to the Department of Law and Public Safety
and the Department of Corrections. Among the programs funded by this
appropriation were the administration of the State's correctional facilities and
parole activities, the registration and regulation of motor vehicles and
licensed drivers and the investigative and enforcement activities of the State
Police.

$99.8 million is appropriated to the Department of Transportation for the
various programs it administers, such as the maintenance and improvement of the
State highway system and subsidies for railroads and bus companies.

$156.4 million is appropriated to the Department of Environmental
Protection for the protection of air, land, water, forest, wildlife and
shellfish resources and for the provision of outdoor recreational facilities.

The primary method for State financing of capital projects is through the
sale of the general obligation bonds of the State. These bonds are backed by the
full faith and credit of the State. tax revenues and certain other fees are
pledged to meet the principal and interest payments required to pay the debt
fully. No general obligation debt can be issued by the State without prior voter
approval, except that no voter approval is required for any law

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authorizing the creation of a debt for the purpose of refinancing all or a
portion of outstanding debt of the State, so long as such law requires that the
refinancing provide a debt service savings.

In addition to payment from bond proceeds, capital construction can also be
funded by appropriation of current revenues on a pay-as-you-go basis. This
amount represents 2.9 percent of the total budget for fiscal year 1994. In
fiscal 1994, the amount is $166.4 million for transportation projects.

The aggregate outstanding general obligation bonded indebtedness of the
State as of June 30, 1993 was $3,594.7 billion. The debt service obligation for
outstanding indebtedness is $119.9 million for fiscal year 1994.

On November 2, 1993, Christine Todd-Whitman was elected Governor of the
State. As a matter of record, Governor Whitman, during her campaign, publicized
her intention to reduce taxes in the State. Effective January 1, 1994, New
Jersey's personal income tax rates were reduced by 5% for all taxpayers. The
effect of this tax reduction cannot be evaluated at this time.

All appropriations for capital projects and all proposals for State bond
authorizations are subject to the review and recommendation of the New Jersey
Commission on Capital Budgeting and Planning. This permanent commission was
established in November, 1975, and is charged with the preparation of the State
Capital Improvement Plan, which contains proposals for State spending for
capital projects.

At any given time, there are various numbers of claims and cases pending
against the State, State agencies and employees, seeking recovery of monetary
damages that are primarily paid out of the fund created pursuant to the Tort
Claims Act N.J.S.A. 59:1-1 et seq. In addition, at any given time there are
various contract claims against the State and State agencies seeking recovery of
monetary damages. The State is unable to estimate its exposure for these claims
and cases. An independent study estimated an aggregate potential exposure of $50
million for tort claims pending, as of January 1, 1982. It is estimated that
were a similar study made of claims currently pending the amount of estimated
exposure would be higher. Moreover, New Jersey is involved in a number of other
lawsuits in which adverse decisions could materially affect revenue or
expenditures. Such cases include challenges to its system of educational
funding, the methods by which the State Department of Human Services shares with
county governments the maintenance recoveries and costs for residents in state
psychiatric hospitals and residential facilities for the developmentally
disabled.

Other lawsuits, that could materially affect revenue or expenditures
include a suit by a number of taxpayers seeking refunds of taxes paid to the
Spill Compensation Fund pursuant to NJSA 58:10-23.11, a suit alleging that
unreasonably low Medicaid payment rates have been implemented for long-term care
facilities in New Jersey, a suit alleging unfair taxation on interstate
commerce, a suit by Essex County seeking to invalidate the State's method of
funding the judicial system and a suit seeking return of moneys paid by various
counties for maintenance of Medicaid or Medicare eligible residents of
institutions and facilities for the developmentally disabled and a suit
challenging the imposition of premium tax surcharges on insurers doing business
in New Jersey, and assessments upon property and casualty liability insurers
pursuant to the Fair Automobile Insurance Reform Act.

Legislation enacted June 30, 1992, called for revaluation of several public
employee pension funds, authorized an adjustment to the assumed rate of return
on investment and refunds $773 million in public employer contributions to the
State from various pension funds, reflected as a revenue source for Fiscal Year
1992 and $226 million in Fiscal Year 1993 and each fiscal year thereafter.
Several labor unions filed suit seeking a judgment directing the State Treasurer
to refund all monies transferred from the pension funds and paid into the
General Fund.

On February 5, 1993, the Superior Court granted the State's motion for
summary judgment as to all claims. An appeal has been filed with the Appellate
Division of the Superior Court. An adverse determination in this matter would
have a significant impact on fiscal year 1993 and subsequent fiscal year fund
balances.

Bond Ratings--Citing a developing pattern of reliance on non-recurring
measures to achieve budgetary balance, four years of financial operations marked
by revenue shortfalls and operating deficits, and the likelihood that financial
pressures will persist, on August 24, 1992 Moody's lowered from Aaa to Aa1 the
rating assigned to New Jersey general obligation bonds. On July 6, 1992,
Standard & Poor's affirmed its AAI ratings on New Jersey's general obligation
and various lease and appropriation backed debt, but its ratings outlook was
revised to negative for the longer term horizon (beyond four months) for
resolution of two items cited in the Credit Watch listing: (i) the Federal
Health Care Facilities Administration ruling concerning retroactive medicaid
hospital reimbursements and (ii) the state's uncompensated health care funding
system, which is under review by the United States Supreme Court. On August 25,
1992, Moody's lowered its rating from Aaa to Aa-1 on the state's general
obligation bonds. The downgrade reflects Moody's concern that the state's
chronic budgetary problems detract from bondholder security. The Aa-1 rating
from Moody's is equivalent to Standard & Poor's AA rating.

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NEW JERSEY TAXES

In the opinion of Shanley & Fisher, P.C., Morristown, New Jersey, special
counsel on New Jersey tax matters, under existing New Jersey law:

1. The proposed activities of the New Jersey Trust will not cause it to
be subject to the New Jersey Corporation Business Tax Act.

2. The income of the New Jersey Trust will be treated as the income of
individuals, estates and trusts who are the Holders of Units of the New
Jersey Trust for purposes of the New Jersey Gross Income Tax Act, and
interest which is exempt from tax under the New Jersey Gross Income Tax Act
when received by the New Jersey Trust will retain its status as tax exempt
in the hands of such Unit Holders. Gains arising from the sale or
redemption by a Holder of his Units or from the sale or redemption by the
New Jersey Trust of any Debt Obligation are exempt from taxation under the
New Jersey Gross Income Tax Act, as enacted and construed on the date
hereof, to the extent such gains are attributable to Debt Obligations the
interest on which is exempt from tax under the New Jersey Gross Income Tax
Act.

3. Units of the New Jersey Trust may be subject, in the estates of New
Jersey residents, to taxation under the Transfer Inheritance Tax Law of the
State of New Jersey.

a-18

<PAGE>

Def ined
Asset FundsSM

SPONSORS: MUNICIPAL INVESTMENT
Merrill Lynch, TRUST FUND
Pierce, Fenner & Smith Inc. Multistate Series - 64
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 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
TRUSTEE:
Bankers Trust Company
Unit Investment Trust
Four Albany Street
7th Floor
New York, N.Y. 10015
1-800-735-7777

14862--6/94

<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 Inc................................ 33-29106
PaineWebber Incorporated........................ 2-87965
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 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 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 Inc................................ 13-1912900
PaineWebber Incorporated........................ 13-2638166
Prudential Securities Incorporated.............. 13-6134767
Dean Witter Reynolds Inc........................ 94-1671384
Bankers Trust Company, Trustee.................. 13-4941297

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 16TH DAY OF
JUNE, 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 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 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:
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 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 - 64,
Defined Asset Funds (California, Maryland and New Jersey Trusts):

We hereby consent to the use in this Registration Statement No. 33-53581 of our
opinion dated June 16, 1994, relating to the Statements of Condition of
Municipal Investment Trust Fund, Multistate Series - 64, Defined Asset Funds
(California, Maryland and New Jersey 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.
June 16, 1994

R-8

EXHIBIT 3.1
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
JUNE 16, 1994

Municipal Investment Trust Fund,
Multistate Series - 64
Defined Asset Funds

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Smith Barney 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 - 64 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' 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

June 16, 1994

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

Bankers Trust Company
Four Albany Street--7th Floor
New York, NY 10015

Re: Municipal Investment Trust Fund, Multistate Series - 64, Defined Asset Funds

Gentlemen:

We have examined the Registration Statement File No. 33-53581 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
June 16, 1994

Merrill Lynch Pierce Bankers Trust Company
Fenner & Smith Incorporated Four Albany Street--7th Floor
Unit Investment Trusts New York, NY 10015
P.O. Box 9051
Princeton, NJ 08543-9051

Re: Municipal Investment Trust Fund, Multistate Series - 64
Defined Asset Funds (California and New Jersey Insured Trusts)

Gentlemen:

Pursuant to your request for a Standard & Poor's rating on the units of the
above-captioned trusts, SEC No. 33-53581, 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