MUNICIPAL INVT TR FD MULTISTATE SER 75 DEFINED ASSET FUNDS, 487, 1994-11-16

MUNICIPAL INVT TR FD MULTISTATE SER 75 DEFINED ASSET FUNDS
487, 1994-11-16

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 16, 1994
REGISTRATION NO. 33-55781

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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AMENDMENT NO. 1
TO
FORM S-6

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

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A. EXACT NAME OF TRUST:

MUNICIPAL INVESTMENT TRUST FUND

MULTISTATE SERIES - 75

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:
DOUGLAS LOWE, ESQ. 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 November 16, 1994 pursuant to Rule 487.

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<PAGE>

Defined
Asset FundsSM

MUNICIPAL INVESTMENT This Defined Fund consists of separate underlying
TRUST FUND Trusts, each of which is a portfolio of
- ------------------------------preselected securities issued by or on behalf of
MULTISTATE SERIES - 75 the State for which the Trust is named and
(UNIT INVESTMENT TRUSTS) political subdivisions and public authorities
CALIFORNIA TRUST (INSURED) thereof or certain United States territories or
6.26% possessions. The Fund is formed for the purpose of
ESTIMATED CURRENT RETURN providing interest income which in the opinion of
6.50% counsel is, with certain exceptions, exempt from
ESTIMATED LONG TERM RETURN regular Federal income taxes and from certain
FLORIDA TRUST (INSURED) state and local personal income taxes in the State
6.29% for which each Trust is named but may be subject
ESTIMATED CURRENT RETURN to other state and local taxes. In addition, the
6.43% Debt Obligations included in each Trust are
ESTIMATED LONG TERM RETURN insured. This insurance guarantees the timely
NEW JERSEY TRUST (INSURED) payment of principal and interest on but does not
6.37% guarantee the market value of the Debt Obligations
ESTIMATED CURRENT RETURN or the value of the Units. As a result of this
6.46% insurance, Units of each Trust are rated AAA by
ESTIMATED LONG TERM RETURN Standard & Poor's Ratings Group, a division of
NEW YORK TRUST (INSURED) McGraw Hill, Inc. ('Standard & Poor's'). The value
6.31% of the Units of each Trust will fluctuate with the
ESTIMATED CURRENT RETURN value of the Portfolio of underlying Debt
6.52% Obligations in the Trust.
ESTIMATED LONG TERM RETURN The Estimated Current Return and Estimated Long
OHIO TRUST (INSURED) Term Return figures shown give different
6.32% information about the return to investors.
ESTIMATED CURRENT RETURN Estimated Current Return on a Unit shows a net
6.39% annual current cash return based on the initial
ESTIMATED LONG TERM RETURN Public Offering Price and the maximum applicable
PENNSYLVANIA TRUST (INSURED) sales charge and is computed by multiplying the
6.39% estimated net annual interest rate per Unit by
ESTIMATED CURRENT RETURN $1,000 and dividing the result by the Public
6.52% Offering Price per Unit (including the sales
ESTIMATED LONG TERM RETURN charge but not including accrued interest).
AS OF NOVEMBER 15, 1994 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
are available upon request from the Sponsors at no
charge.
Minimum purchase: 1 Unit.

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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 Incorporated INQUIRIES SHOULD BE DIRECTED TO THE
Smith Barney Inc. TRUSTEE AT 1-800-221-7771.
PaineWebber Incorporated PROSPECTUS DATED NOVEMBER 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-7
Underwriting Account........................................ A-10
Fee Table................................................... A-11
Report of Independent Accountants........................... A-12
Statements of Condition..................................... A-13

Portfolios.................................................. A-15

Description of Fund Investments............................. 1
Risk Factors................................................ 2
How To Buy.................................................. 16
How To Sell................................................. 17
Income and Distributions.................................... 18
Exchange Option............................................. 21
Taxes....................................................... 22
Administration of the Fund.................................. 24
Trust Indenture............................................. 24
Miscellaneous............................................... 25
Appendix A.................................................. A-1
Appendix B.................................................. B-1
Appendix C.................................................. C-1
Appendix D:

The California Trust........................................ D-1
The Florida Trust........................................... D-9
The New Jersey Trust........................................ D-14
The New York Trust.......................................... D-18
The Ohio Trust.............................................. D-24
The Pennsylvania Trust...................................... D-28

A-2

<PAGE>

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

CALIFORNIA FLORIDA NEW JERSEY
TRUST TRUST TRUST
-------------- -------------- --------------
ESTIMATED CURRENT RETURN(b)
(based on Public Offering
Price)--...................... 6.26% 6.29% 6.37%
ESTIMATED LONG TERM RETURN(b)
(based on Public Offering
Price)--...................... 6.50% 6.43% 6.46%
PUBLIC OFFERING PRICE PER UNIT
(including a 4.50% sales
charge).......................$ 901.00(c)$ 959.05(c)$ 973.53(c)
FACE AMOUNT OF DEBT
OBLIGATIONS...................$ 3,250,000 $ 3,500,000 $ 3,250,000
INITIAL NUMBER OF UNITS(d)...... 3,250 3,500 3,250
FRACTIONAL UNDIVIDED INTEREST IN
TRUST REPRESENTED BY EACH
UNIT.......................... 1/3,250th 1/3,500th 1/3,250th
MONTHLY INCOME DISTRIBUTIONS
First distribution to be paid
on the 25th day of February
1995 to Holders of record on
the 10th day of February
1995........................$ 3.60 $ 4.49 $ 4.20
Calculation of second and
following distributions:
Estimated net annual interest
rate per Unit times
$1,000....................$ 56.40 $ 60.36 $ 62.04
Divided by 12.................$ 4.70 $ 5.03 $ 5.17
SPONSORS' REPURCHASE PRICE AND
REDEMPTION PRICE PER UNIT(e)
(based on bid side
evaluation)...................$ 856.46(c)$ 911.89(c)$ 925.72(c)
REDEMPTION PRICE PER UNIT LESS
THAN:
Public Offering Price by....$ 44.54 $ 47.16 $ 47.81
Sponsors' Initial Repurchase
Price by....................$ 4.00 $ 4.00 $ 4.00
CALCULATION OF PUBLIC OFFERING
PRICE
Aggregate offer side
evaluation of Debt
Obligations $ 2,796,494.00 $ 3,205,628.50 $ 3,021,585.00
-------------- -------------- --------------
Divided by Number of
Units.....................$ 860.46 $ 915.89 $ 929.72
Plus sales charge of 4.50%
of Public Offering Price
(4.712% of net amount
invested)(f).............. 40.54 43.16 43.81
-------------- -------------- --------------
Public Offering Price per
Unit........................$ 901.00 $ 959.05 $ 973.53
Plus accrued interest(g).... 1.09 1.17 1.20
-------------- -------------- --------------
Total.....................$ 902.09 $ 960.22 $ 974.73
-------------- -------------- --------------
-------------- -------------- --------------
CALCULATION OF ESTIMATED NET
ANNUAL INTEREST RATE PER UNIT
(based on face amount of
$1,000 per Unit)
Annual interest rate per
Unit........................ 5.861% 6.254% 6.430%
Less estimated annual
expenses per Unit
expressed as a
percentage................ .221% .218% .226%
-------------- -------------- --------------
Estimated net annual
interest rate per
Unit.................... 5.640% 6.036% 6.204%
-------------- -------------- --------------
-------------- -------------- --------------
DAILY RATE AT WHICH ESTIMATED
NET INTEREST ACCRUES PER
UNIT.......................... .0156% .0167% .0172%
SPONSORS' PROFIT (LOSS) ON
DEPOSIT.......................$ 23,338.50 $ 29,607.25 $ 15,372.50
TRUSTEE'S ANNUAL FEE AND
EXPENSES........................$ 2.21(h)$ 2.18(i)$ 2.26(h)
Per Unit commencing November
1994 for the California
Trust, April 1995 for the
Florida Trust and November
1994 for the New Jersey
Trust.

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(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
maximum applicable 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 How To Sell.)
(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 Appendix B). 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 How To Buy--Accrued Interest).
(h) 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 Income and
Distributions--Income).
(i) During the first year this amount will be reduced by $0.75 for the
Florida Trust. Estimated annual interest income per Unit (estimated annual
interest rate per Unit times $1,000) during the first year will be $61.79 and
estimated expenses per Unit will be $1.43 for the Florida Trust. Estimated net
annual interest income per Unit for the Trust will remain the same (see Income
and Distributions--Income).

A-3

<PAGE>

INVESTMENT SUMMARY AS OF NOVEMBER 15, 1994 (CONTINUED)

CALIFORNIA FLORIDA NEW JERSEY
TRUST TRUST TRUST
------------- ------------- -------------
NUMBER OF ISSUES IN PORTFOLIO-- 7 8 7
NUMBER OF ISSUES BY
SOURCE OF REVENUE(a):
State/Local Government Supported-- -- -- 1
Industrial Development Revenue-- -- 1 2
Municipal Water/Sewer Utilities-- 1 1 1
Lease Rental-- 2 2 1
Hospitals/Healthcare Facilities-- 2 2 1
Housing-- 1 -- 1
Special Tax Issue-- 1 2 --
NUMBER OF ISSUES RATED BY
STANDARD &
POOR'S/RATING: -- AAA-- 7(b) 8(b) 7(b)
RANGE OF FIXED FINAL MATURITY DATES
OF DEBT
OBLIGATIONS...................... 2016-2024 2014-2025 2016-2031
TYPE OF ISSUE EXPRESSED AS A
PERCENTAGE OF THE AGGREGATE FACE
AMOUNT OF PORTFOLIO
Issues Payable from Income of
Specific Project or
Authority..................... 100% 100% 100%
Debt Obligations Issued at an
'Original Issue
Discount'(c).................. 54% 100% 54%
Obligations Insured by certain
Insurance Companies:(d)
AMBAC......................... 31% 28% 31%
CGIC.......................... -- -- 8%
Financial Guaranty............ 15% 14% --
MBIA.......................... 54% 58% 61%
CONCENTRATIONS(a) EXPRESSED AS A
PERCENTAGE OF THE AGGREGATE FACE
AMOUNT OF PORTFOLIO(e)
Industrial Development
Revenue....................... -- -- 31%
Hospitals/Health Care
Facilities.................... -- 29% --
Lease Rental.................. 31% 29% --
PREMIUM AND DISCOUNT ISSUES IN
PORTFOLIO
Face amount of Debt
Obligations
with offer side
evaluation: over par-- -- -- 15%
at a discount from par-- 100% 100% 85%
PERCENTAGE OF PORTFOLIO ACQUIRED
FROM
UNDERWRITING SYNDICATE IN WHICH
CERTAIN SPONSORS PARTICIPATED AS
SOLE UNDERWRITER, MANAGING
UNDERWRITER OR MEMBER............ -- -- --
PERCENTAGE OF PORTFOLIOS SUBJECT TO
OPTIONAL
REDEMPTIONS BUT NOT PRIOR TO
2003, 2002 AND 2004 (AT PRICES
INITIALLY AT LEAST 102%, 101% AND
101% OF PAR), RESPECTIVELY(f).... 100% 100% 100%

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

A-4

<PAGE>

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

NEW YORK OHIO PENNSYLVANIA
TRUST TRUST TRUST
-------------- -------------- --------------
ESTIMATED CURRENT RETURN(b)
(based on Public Offering
Price)--...................... 6.31% 6.32% 6.39%
ESTIMATED LONG TERM RETURN(b)
(based on Public Offering
Price)--...................... 6.52% 6.39% 6.52%
PUBLIC OFFERING PRICE PER UNIT
(including a 4.50% sales
charge).......................$ 916.73(c)$ 1,005.27(c)$ 944.44(c)
FACE AMOUNT OF DEBT
OBLIGATIONS...................$ 5,000,000 $ 3,250,000 $ 3,250,000
INITIAL NUMBER OF UNITS(d)...... 5,000 3,250 3,250
FRACTIONAL UNDIVIDED INTEREST IN
TRUST REPRESENTED BY EACH
UNIT.......................... 1/5,000th 1/3,250th 1/3,250th
MONTHLY INCOME DISTRIBUTIONS
First distribution to be paid
on the 25th day of February
1995 to Holders of record on
the 10th day of February
1995........................$ 3.62 $ 3.60 $ 3.85
Calculation of second and
following distributions:
Estimated net annual interest
rate per Unit times
$1,000....................$ 57.84 $ 63.48 $ 60.36
Divided by 12.................$ 4.82 $ 5.29 $ 5.03
SPONSORS' REPURCHASE PRICE AND
REDEMPTION PRICE PER UNIT(e)
(based on bid side
evaluation)...................$ 871.48(c)$ 956.03(c)$ 897.94(c)
REDEMPTION PRICE PER UNIT LESS
THAN:
Public Offering Price by....$ 45.25 $ 49.24 $ 46.50
Sponsors' Initial Repurchase
Price by....................$ 4.00 $ 4.00 $ 4.00
CALCULATION OF PUBLIC OFFERING
PRICE
Aggregate offer side
evaluation of Debt
Obligations $ 4,377,398.90 $ 3,120,112.50 $ 2,931,295.00
-------------- -------------- --------------
Divided by Number of
Units.....................$ 875.48 $ 960.03 $ 901.94
Plus sales charge of 4.50%
of Public Offering Price
(4.712% of net amount
invested)(f).............. 41.25 45.24 42.50
-------------- -------------- --------------
Public Offering Price per
Unit........................$ 916.73 $ 1,005.27 $ 944.44
Plus accrued interest(g).... 1.12 1.23 1.17
-------------- -------------- --------------
Total.....................$ 917.85 $ 1,006.50 $ 945.61
-------------- -------------- --------------
-------------- -------------- --------------
CALCULATION OF ESTIMATED NET
ANNUAL INTEREST RATE PER UNIT
(based on face amount of
$1,000 per Unit)
Annual interest rate per
Unit........................ 5.972% 6.576% 6.265%
Less estimated annual
expenses per Unit
expressed as a
percentage................ .188% .228% .229%
-------------- -------------- --------------
Estimated net annual
interest rate per
Unit.................... 5.784% 6.348% 6.036%
-------------- -------------- --------------
-------------- -------------- --------------
DAILY RATE AT WHICH ESTIMATED
NET INTEREST ACCRUES PER
UNIT.......................... .0160% .0176% .0167%
SPONSORS' PROFIT (LOSS) ON
DEPOSIT.......................$ 26,477.70 $ 24,057.50 $ 32,750.00
TRUSTEE'S ANNUAL FEE AND
EXPENSES........................$ 1.88(h)$ 2.28(i)$ 2.29(h)
Per Unit commencing November
1994.
- ------------------
(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
maximum applicable 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 How To Sell.)
(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 Appendix B). 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 How To Buy--Accrued Interest).
(h) 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 Income and
Distributions--Income).
(i) During the first year this amount will be reduced by $0.06 for the Ohio
Trust. Estimated annual interest income per Unit (estimated annual interest rate
per Unit times $1,000) during the first year will be $65.70 and estimated
expenses per Unit will be $2.22 for the Ohio Trust. Estimated net annual
interest income per Unit for the Trust will remain the same (see Income and
Distributions--Income).

A-5

<PAGE>

INVESTMENT SUMMARY AS OF NOVEMBER 15, 1994 (CONTINUED)

NEW YORK OHIO PENNSYLVANIA
TRUST TRUST TRUST
------------- ------------- -------------
NUMBER OF ISSUES IN PORTFOLIO-- 9 7 7
NUMBER OF ISSUES BY
SOURCE OF REVENUE(a):
Airports/Ports/Highways-- 1 -- --
Industrial Development Revenue-- 1 -- 1
Municipal Water/Sewer Utilities-- 2 2 2
State/Local Municipal Electric
Utilities-- -- 1 1
Universities/Colleges-- -- 1 1
Lease Rental-- 2 -- --
General Obligation-- 1 3 --
Hospitals/Healthcare Facilities-- -- -- 2
Housing-- 1 -- --
Transit Authority-- 1 -- --
NUMBER OF ISSUES RATED BY
STANDARD &
POOR'S/RATING: -- AAA-- 9(b) 7(b) 7(b)
RANGE OF FIXED FINAL MATURITY DATES
OF DEBT
OBLIGATIONS...................... 2012-2034 2015-2024 2018-2026
TYPE OF ISSUE EXPRESSED AS A
PERCENTAGE OF THE AGGREGATE FACE
AMOUNT OF PORTFOLIO
General Obligation Issues........ 10% 46% --
Issues Payable from Income of
Specific Project or
Authority..................... 90% 54% 100%
Debt Obligations Issued at an
'Original Issue
Discount'(c).................. 51% 69% 87%
Obligations Insured by certain
Insurance Companies:(d)
AMBAC......................... 15% 15% 15%
CAPMAC........................ 10% -- 15%
Financial Guaranty............ 31% 39% 15%
MBIA.......................... 44% 46% 55%
CONCENTRATIONS(a) EXPRESSED AS A
PERCENTAGE OF THE AGGREGATE FACE
AMOUNT OF PORTFOLIO(e)
General Obligation............ -- 46% --
Hospitals/Health Care
Facilities.................... -- -- 31%
Municipal Water/Sewer
Utilities..................... -- 31% 31%
PREMIUM AND DISCOUNT ISSUES IN
PORTFOLIO
Face amount of Debt
Obligations
with offer side
evaluation: over par-- -- 15% --
at a discount from par-- 100% 85% 100%
PERCENTAGE OF PORTFOLIO ACQUIRED
FROM
UNDERWRITING SYNDICATE IN WHICH
CERTAIN SPONSORS PARTICIPATED AS
SOLE UNDERWRITER, MANAGING
UNDERWRITER OR MEMBER............ -- -- --
PERCENTAGE OF PORTFOLIOS SUBJECT TO
OPTIONAL
REDEMPTIONS BUT NOT PRIOR TO 2002
(AT PRICES INITIALLY AT LEAST
100% OF PAR)(f).................. 92% 100% 100%

A-6

<PAGE>
Defined
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
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

TAXABLE INCOME 1994*

SINGLE RETURN 6.5% 7%

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

FOR FLORIDA RESIDENTS

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 15.00 3.53 4.12 4.71 5.29 5.88 6.47 7.06
- ------------------------------------------------------------------------------------------------------------------------------
$0-22,100 15.00 3.53 4.12 4.71 5.29 5.88 6.47 7.06
- ------------------------------------------------------------------------------------------------------------------------------
$36,900-89,150 28.00 4.17 4.86 5.56 6.25 6.94 7.64 8.33
- ------------------------------------------------------------------------------------------------------------------------------
$22,100-53,500 28.00 4.17 4.86 5.56 6.25 6.94 7.64 8.33
- ------------------------------------------------------------------------------------------------------------------------------
$89,150-140,000 31.00 4.35 5.07 5.80 6.52 7.25 7.97 8.70
- ------------------------------------------------------------------------------------------------------------------------------
$53,500-115,000 31.00 4.35 5.07 5.80 6.52 7.25 7.97 8.70
- ------------------------------------------------------------------------------------------------------------------------------
$140,000-250,000 36.00 4.69 5.47 6.25 7.03 7.81 8.59 9.38
- ------------------------------------------------------------------------------------------------------------------------------
$115,000-250,000 36.00 4.69 5.47 6.25 7.03 7.81 8.59 9.38
- ------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 39.60 4.97 5.79 6.62 7.45 8.28 9.11 9.93
- ------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 39.60 4.97 5.79 6.62 7.45 8.28 9.11 9.93
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

TAXABLE INCOME 1994*

SINGLE RETURN 6.5% 7%

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

FOR NEW JERSEY RESIDENTS

COMBINED
TAXABLE INCOME 1994* EFFECTIVE
TAX RATE
TAX-FREE YIELD OF
%
SINGLE RETURN JOINT RETURN 3% 3.5% 4% 4.5% 5% 5.5% 6%
IS EQUIVALENT TO A TAXABLE YIELD OF
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-36,900 17.02 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
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

TAXABLE INCOME 1994*

SINGLE RETURN 6.5% 7%

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

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-7
<PAGE>

TAX-FREE VS. TAXABLE INCOME
A COMPARISON OF TAXABLE AND TAX-FREE YIELDS

<TABLE><CAPTION>
FOR NEW YORK CITY RESIDENTS

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

TAXABLE INCOME 1994*

SINGLE RETURN 6.5% 7%

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

FOR NEW YORK STATE RESIDENTS

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

TAXABLE INCOME 1994*

SINGLE RETURN 6.5% 7%

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

FOR OHIO RESIDENTS

COMBINED
TAXABLE INCOME 1994* EFFECTIVE
TAX RATE
TAX-FREE YIELD OF
%
SINGLE RETURN JOINT RETURN 3% 3.5% 4% 4.5% 5% 5.5% 6%
IS EQUIVALENT TO A TAXABLE YIELD OF
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-36,900 18.79 3.69 4.31 4.93 5.54 6.16 6.77 7.39
- ------------------------------------------------------------------------------------------------------------------------------
$0-22,100 18.79 3.69 4.31 4.93 5.54 6.16 6.77 7.39
- ------------------------------------------------------------------------------------------------------------------------------
$36,900-89,150 32.28 4.43 5.17 5.91 6.64 7.38 8.12 8.86
- ------------------------------------------------------------------------------------------------------------------------------
$22,100-53,500 31.74 4.40 5.13 5.86 6.59 7.33 8.06 8.79
- ------------------------------------------------------------------------------------------------------------------------------
$89,150-140,000 35.76 4.67 5.45 6.23 7.01 7.78 8.56 9.34
- ------------------------------------------------------------------------------------------------------------------------------
$53,500-115,000 35.76 4.67 5.45 6.23 7.01 7.78 8.56 9.34
- ------------------------------------------------------------------------------------------------------------------------------
$140,000-250,000 40.80 5.07 5.91 6.76 7.60 8.45 9.29 10.14
- ------------------------------------------------------------------------------------------------------------------------------
$115,000-250,000 40.80 5.07 5.91 6.76 7.60 8.45 9.29 10.14
- ------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 44.13 5.37 6.26 7.16 8.05 8.95 9.84 10.74
- ------------------------------------------------------------------------------------------------------------------------------
OVER $250,000 44.13 5.37 6.26 7.16 8.05 8.95 9.84 10.74
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

TAXABLE INCOME 1994*

SINGLE RETURN 6.5% 7%

- ----------------
8.00 8.62
- ----------------
$0-22,100 8.00 8.62
- ----------------
9.60 10.34
- ----------------
$22,100-53,500 9.52 10.26
- ----------------
10.12 10.90
- ----------------
$53,500-115,000 10.12 10.90
- ----------------
10.98 11.82
- ----------------
$115,000-250,000 10.98 11.82
- ----------------
11.63 12.53
- ----------------
OVER $250,000 11.63 12.53
- ----------------

<TABLE><CAPTION>
FOR PENNSYLVANIA RESIDENTS

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

TAXABLE INCOME 1994*

SINGLE RETURN 6.5% 7%

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

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

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

A-8
<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. 1313 NEW YORK, NY NECESSARY
IF MAILED
POSTAGE WILL BE PAID BY ADDRESSEE IN THE
THE BANK OF NEW YORK UNITED STATES
UNIT INVESTMENT TRUST DEPARTMENT
P.O. BOX 974
WALL STREET STATION
NEW YORK, NY 10268-0974

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

- --------------------------------------------------------------------------------
(Fold along this line.)
<PAGE>

INVESTMENT SUMMARY FOR EACH TRUST AS OF NOVEMBER 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
Income and Distributions--Fund Expenses)
EVALUATOR'S FEE FOR EACH PORTFOLIO
Minimum of $5.00 (see Income and Distributions--Fund Expenses)
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 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 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 the
applicable sales charge (as set forth on page A-3.)(b) For secondary market
sales charges see Appendix B. 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 Prices set forth on pages A-3 and A-5. (See How To Buy; How To
Sell.)

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 (as set forth on page
A-3) 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) and estimated expenses. The net
annual interest rate per Unit and the net annual long-term 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 Income and Distributions--Returns).

- ---------------
(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 Appendix B).

A-9

<PAGE>

INVESTMENT SUMMARY FOR EACH TRUST AS OF NOVEMBER 15, 1994 (CONTINUED)

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 Income 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 Income and
Distributions--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. 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. 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.
(See How To Buy; How To Sell.)

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 66.51%
Smith Barney Inc. Two World Trade Center--101st Floor, New York, N.Y.
10048 5.35
PaineWebber Incorporated 1285 Avenue of the Americas, New York, N.Y. 10019 15.11
Prudential Securities Incorporated 1 Seaport Plaza, 199 Water Street, New York, N.Y. 10292 6.05
Dean Witter Reynolds Inc. Two World Trade Center--59th Floor, New York, N.Y.
10048 6.98
----------
100.00%
----------
----------
</TABLE>

A-10

<PAGE>

INVESTMENT SUMMARY AS OF NOVEMBER 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
HOW TO BUY AND INCOME AND DISTRIBUTIONS--FUND EXPENSES. ALTHOUGH A TRUST 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>

ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS1)
CALIFORNIA FLORIDA NEW JERSEY NEW YORK OHIO
TRUST TRUST TRUST TRUST TRUST
------------ ----------- -------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Trustee's Fee.................................... .081% .077% .076% .080% .073%
Portfolio Supervision, Bookkeeping and
Administrative Fees........................... .052% .049% .048% .051% .047%
Other Operating Expenses......................... .124% .113% .120% .084% .118%
------------ ----------- -------------- ------------- ---------
Total......................................... .257% .239% .244% .215% .238%
------------ ----------- -------------- ------------- ---------
------------ ----------- -------------- ------------- ---------
</TABLE>

ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS1)
PENNSYLVANIA
TRUST
---------------
Trustee's Fee.................................... .078%
Portfolio Supervision, Bookkeeping and
Administrative Fees........................... .050%
Other Operating Expenses......................... .126%
---------------
Total......................................... .254%
---------------
---------------

- ------------------
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.

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
----------- ------------- -------------
<S> <C> <C> <C>
California Trust (.257%)................................................ $ 48 $ 53 $ 59
Florida Trust (.239%)................................................... 47 52 58
New Jersey Trust (.244%)................................................ 47 53 58
New York Trust (.215%).................................................. 47 52 57
Ohio Trust (.238%)...................................................... 47 52 58
Pennsylvania Trust (.254%).............................................. 47 53 59

</TABLE>

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
return on the investment throughout the periods:

10 YEARS
-------------
<S> <C>
California Trust (.257%)................................................ $ 76
Florida Trust (.239%)................................................... 74
New Jersey Trust (.244%)................................................ 75
New York Trust (.215%).................................................. 71
Ohio Trust (.238%)...................................................... 74
Pennsylvania Trust (.254%).............................................. 76
</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
Income and Distributions--Investment Accumulation Program) and utilizes a 5%
annual rate of return as mandated by Securities and Exchange Commission
regulations applicable to mutual funds. Cumulative expenses above reflect both
sales charges and operating expenses on an increasing investment (because the
net annual return is reinvested). In addition to the charges described above, a
Holder selling or redeeming his Units in the secondary market (before a Trust
terminates) will receive a price based on the then-current bid side evaluation
of the underlying securities. The difference between this bid side evaluation
and the offer side evaluation (the basis for the Public Offering Price), as of
the day before the Initial Date of Deposit, is $4.00 per Unit for each 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-11

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

The Sponsors, Trustee and Holders of Municipal Investment Trust Fund,
Multistate Series - 75, Defined Asset Funds (California, Florida, New Jersey,
New York, Ohio and Pennsylvania Trusts):

We have audited the accompanying statements of condition, including the
portfolios, of Municipal Investment Trust Fund, Multistate Series - 75, Defined
Asset Funds (California, Florida, New Jersey, New York, Ohio and Pennsylvania
Trusts) as of November 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 November
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
The Bank of New York, 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 - 75, Defined Asset Funds (California, Florida, New
Jersey, New York, Ohio and Pennsylvania Trusts) at November 16, 1994 in
conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP
New York, N.Y.
November 16, 1994

A-12
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES - 75
DEFINED ASSET FUNDS

STATEMENTS OF CONDITION AS OF INITIAL DATE OF DEPOSIT, NOVEMBER 16, 1994

CALIFORNIA FLORIDA NEW JERSEY
TRUST TRUST TRUST
-------------- -------------- --------------
FUND PROPERTY
Investment in Debt
Obligations(1)
Contracts to purchase
Debt Obligations.........$ 2,796,494.00 $ 3,205,628.50 $ 3,021,585.00
Accrued interest to Initial Date
of Deposit on underlying Debt
Obligations................... 44,159.73 40,786.99 57,104.86
-------------- -------------- --------------
Total...............$ 2,840,653.73 $ 3,246,415.49 $ 3,078,689.86
-------------- -------------- --------------
-------------- -------------- --------------
LIABILITY AND INTEREST OF
HOLDERS
Liability--Accrued interest to
Initial Date of Deposit on
underlying Debt
Obligations(2)................$ 44,159.73 $ 40,786.99 $ 57,104.86
-------------- -------------- --------------
Interest of Holders--
Units of fractional undivided
interest outstanding
(California Trust--3,250;
Florida Trust--3,500;
New Jersey Trust--3,250)
Cost to investors(3).......$ 2,928,249.00 $ 3,356,688.50 $ 3,163,967.50
Gross underwriting
commissions(4)............. (131,755.00) (151,060.00) (142,382.50)
-------------- -------------- --------------
Net amount applicable to
investors.................. 2,796,494.00 3,205,628.50 3,021,585.00
-------------- -------------- --------------
Total...............$ 2,840,653.73 $ 3,246,415.49 $ 3,078,689.86
-------------- -------------- --------------
-------------- -------------- --------------
- ------------------
(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 How To
Buy. 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 $19,630,108.12 has been deposited with the Trustee. The amount of
such letter or letters of credit includes $19,300,910.45 (equal to the
aggregate purchase price to the Sponsors) for the purchase of $21,500,000
face amount of Debt Obligations in connection with contracts to purchase
Debt Obligations, plus $329,197.67 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 San Paolo Bank, New York Branch.

A-13
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES - 75
DEFINED ASSET FUNDS

STATEMENTS OF CONDITION AS OF INITIAL DATE OF DEPOSIT, NOVEMBER 16, 1994

NEW YORK OHIO PENNSYLVANIA
TRUST TRUST TRUST
-------------- -------------- --------------
FUND PROPERTY
Investment in Debt
Obligations(1)
Contracts to purchase
Debt Obligations.........$ 4,377,398.90 $ 3,120,112.50 $ 2,931,295.00
Accrued interest to Initial Date
of Deposit on underlying Debt
Obligations................... 74,412.91 44,656.25 51,407.28
-------------- -------------- --------------
Total...............$ 4,451,811.81 $ 3,164,768.75 $ 2,982,702.28
-------------- -------------- --------------
-------------- -------------- --------------
LIABILITY AND INTEREST OF
HOLDERS
Liability--Accrued interest to
Initial Date of Deposit on
underlying Debt
Obligations(2)................$ 74,412.91 $ 44,656.25 $ 51,407.28
-------------- -------------- --------------
Interest of Holders--
Units of fractional undivided
interest outstanding
(New York Trust--5,000;
Ohio Trust--3,250;
Pennsylvania Trust--3,250)
Cost to investors(3).......$ 4,583,648.90 $ 3,267,142.50 $ 3,069,420.00
Gross underwriting
commissions(4)............. (206,250.00) (147,030.00) (138,125.00)
-------------- -------------- --------------
Net amount applicable to
investors.................. 4,377,398.90 3,120,112.50 2,931,295.00
-------------- -------------- --------------
Total...............$ 4,451,811.81 $ 3,164,768.75 $ 2,982,702.28
-------------- -------------- --------------
-------------- -------------- --------------
- ------------------

(2) Representing, as set forth under How To Buy--Accrued Interest, 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 How To Buy.

A-14
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND, MULTISTATE SERIES - 75
ON THE INITIAL DATE OF DEPOSIT,
DEFINED ASSET FUNDS
NOVEMBER 16, 1994
PORTFOLIO OF THE CALIFORNIA 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>
1. California Hsg. Fin. Agy., Hsg. Rev. Bonds, AAA $ 500,000 5.70% 8/1/16 2/1/04 @ 102
Series 1994 B (MBIA Ins.)
2. California Statewide Comm. Dev. Auth., Cert. AAA 500,000 6.00 8/15/24 8/15/04 @ 102
of Part. (Sharp Healthcare Oblig. Group)
(MBIA Ins.)
3. California Statewide Comm. Dev. Auth., Cert. AAA 200,000 5.50 8/15/23 8/15/03 @ 102
of Part. (Sutter Hlth. Oblig. Group) (MBIA
Ins.)
4. Anaheim Pub. Fin. Auth., CA, Rev. Bonds (City AAA 500,000 5.75 10/1/22 4/1/03 @ 102
of Anaheim Elec. Util., San Juan Unit 4
Proj.), Second Series 1993 (Financial
Guaranty Ins.)
5. Chino Basin, CA, Regl. Fin. Auth., Rev. Bonds AAA 500,000 6.00 8/1/16 8/1/04 @ 102
(Chino Basin Muni. Wtr. Dist. Swr. Sys.
Proj.), Series 1994 (AMBAC Ins.)
6. Ontario Redev. Fin. Auth., San Bernardino AAA 550,000 5.50 8/1/18 8/1/03 @ 102
Cnty., CA (Ontario Redev. Proj. No. 1), 1993
Rev. Bonds (MBIA Ins.)
7. Cnty. of Sacramento, CA, 1994 Pub. Fac. Proj. AAA 500,000 6.40 10/1/19 10/1/04 @ 102
(Coroner/Crime Lab and Data Ctr.), Cert. of
Part. (AMBAC Ins.)
-------------
$ 3,250,000
-------------
-------------
</TABLE>

SINKING COST OF YIELD TO MATURITY
FUND DEBT OBLIGATIONS ON INITIAL DATE OF
REDEMPTIONS (2) TO TRUST (3) DEPOSIT (3)
--------------- ----------------- -------------------
1. 8/1/04 $ 423,020.00 7.100%

2. 8/15/21 432,185.00 7.100

3. 8/15/14 160,968.00 7.100

4. 10/1/10 418,475.00 7.100

5. 8/1/12 444,545.00 7.000

6. 8/1/16 449,691.00 7.100

7. 10/1/15 467,610.00 6.950

-----------------
$ 2,796,494.00
-----------------
-----------------

A-15
<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 Appendix A.)

(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 How To Sell). 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 $2,783,494.00,
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.
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
Income and Distributions--Returns 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 November 15,
1994. All contracts are expected to be settled by the initial settlement
date for purchase of Units.

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

+ See Footnote (3).

A-16
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND, MULTISTATE SERIES - 75
ON THE INITIAL DATE OF DEPOSIT,
DEFINED ASSET FUNDS
NOVEMBER 16, 1994
PORTFOLIO OF THE FLORIDA TRUST (INSURED)

<TABLE><CAPTION>
OPTIONAL
PORTFOLIO NO. AND TITLE OF RATINGS OF FACE REFUNDING
DEBT OBLIGATIONS CONTRACTED FOR ISSUES (1) AMOUNT COUPON MATURITIES REDEMPTIONS (2)
---------------------------------------------- ----------- ------------- ----------- ----------- -------------------
<S> <C> <C> <C> <C> <C>
1. The Sch. Bd. of Bay Cnty., FL, Cert. of Part. AAA $ 500,000 6.75% 7/1/14 7/1/04 @ 102
(Bay Cnty. Educl. Fac. Fin. Corp.), Series
1994 (AMBAC Ins.)
2. Citrus Cnty., FL, Poll. Ctl. Rfdg. Rev. Bonds AAA 225,000 6.35 2/1/22 8/1/02 @ 102
(Florida Pwr. Corp.-Crystal River Pwr. Plant
Proj.), Series 1992 B (MBIA Ins.)
3. Dade Cnty., FL, Pub. Fac. Rev. Bonds (Jackson AAA 500,000 5.625 6/1/18 6/1/03 @ 102
Mem. Hosp.), Series 1993 (MBIA Ins.)
4. City of Jacksonville, FL, Cap. Imp. Rev. Bonds AAA 475,000 6.00 10/1/25 10/1/04 @ 101
(Gator Bowl Proj.), Series 1994 (AMBAC Ins.)
5. Orange Cnty., FL, Tourist Dev. Tax Rfdg. Rev. AAA 300,000 6.00 10/1/24 10/1/04 @ 102
Bonds, Series 1994 B (MBIA Ins.)
6. The Sch. Bd. of Seminole Cnty., FL, Cert. of AAA 500,000 6.50 7/1/21 7/1/04 @ 101
Part. (Seminole Sch. Bd. Leasing Corp.),
Series 1994 B (MBIA Ins.)
7. City of Tallahassee, FL, Hlth. Fac. Rev. Bonds AAA 500,000 6.00 12/1/15 12/1/02 @ 102
(Tallahassee Mem. Regl. Med. Ctr., Inc.
Proj.), Series 1992 A (MBIA Ins.)
8. City of West Melbourne, FL, Wtr. and Swr. Rev. AAA 500,000 6.75 10/1/17 10/1/04 @ 101
Rfdg. and Imp. Bonds, Series 1994 (Financial
Guaranty Ins.)
-------------
$ 3,500,000
-------------
-------------
</TABLE>

SINKING COST OF YIELD TO MATURITY
FUND DEBT OBLIGATIONS ON INITIAL DATE OF
REDEMPTIONS (2) TO TRUST (3) DEPOSIT (3)
--------------- ----------------- -------------------
1. 7/1/13 $ 491,945.00 6.900%

2. -- 209,866.50 6.900

3. 6/1/14 416,200.00 7.100

4. 10/1/20 420,622.00 6.900

5. 10/1/20 265,995.00 6.900

6. 7/1/15 464,280.00 7.100

7. 12/1/10 445,340.00 7.000

8. 10/1/15 491,380.00 6.900

-----------------
$ 3,205,628.50
-----------------
-----------------

A-17
<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 How To Sell). 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 $3,191,628.50,
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
Income and Distributions--Returns for a description of the computation of
yield price.)

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

All Debt Obligations are represented entirely by contracts to purchase such
Debt Obligations, which were entered into by the Sponsors during the period
November 9, 1994 to November 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 1, 6 and 8 (approximately 43% of the
aggregate face amount of the Portfolio) which have been purchased on a when,
as and if issued basis, or have a delayed delivery, and are expected to be
settled 7 to 14 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-18
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND, MULTISTATE SERIES - 75
ON THE INITIAL DATE OF DEPOSIT,
DEFINED ASSET FUNDS
NOVEMBER 16, 1994
PORTFOLIO OF THE NEW JERSEY 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>
1. New Jersey Econ. Dev. Auth., Gas Fac. Rfdg. AAA $ 500,000 6.35% 10/1/22 10/1/04 @ 102
Rev. Bonds (NUI Corp. Proj.), Series 1994 A
(AMBAC Ins.)
2. New Jersey Hlth. Care Fac. Fin. Auth., Rev. AAA 250,000 6.25 7/1/24 7/1/04 @102
Bonds (Monmouth Med. Ctr. Iss.), Series C
(CGIC Ins.)
3. New Jersey Hsg. and Mtge. Fin. Agy., Home AAA 500,000 6.70 4/1/16 10/1/04 @ 102
Buyer Rev. Bonds, Series 1994 L (MBIA Ins.)
4. Essex Cnty. Imp. Auth., NJ, G.O. Lse. Rev. AAA 500,000 7.00 12/1/24 12/1/04 @ 102
Bonds (Cnty. Jail and Youth House Proj.),
Series 1994 (AMBAC Ins.)
5. Gloucester Cnty. Util. Auth., NJ, Swr. Rev. AAA 500,000 6.25 1/1/24 1/1/04 @ 102
Bonds, Series 1994 (MBIA Ins.)
6. The Cnty. of Middlesex, NJ, Cert. of AAA 500,000 6.125 2/15/19 2/15/04 @ 101
Participation (PBCF New Jersey, Inc.) (MBIA
Ins.)
7. The Poll. Ctl. Fin. Auth. of Salem Cnty., NJ, AAA 500,000 6.25 6/1/31 6/1/04 @ 102
Poll. Ctl. Rev. Rfdg. Bonds (Public Service
Elec. and Gas Co. Proj.) (MBIA Ins.)
-------------
$ 3,250,000
-------------
-------------
</TABLE>

SINKING COST OF YIELD TO MATURITY
FUND DEBT OBLIGATIONS ON INITIAL DATE OF
REDEMPTIONS (2) TO TRUST (3) DEPOSIT (3)
--------------- ----------------- -------------------
1. -- $ 460,340.00 7.000%

2. 7/1/17 225,245.00 7.050

3. 4/1/15 480,765.00 7.050

4. 12/1/15 501,990.00 6.950+

5. 1/1/15 453,595.00 7.000

6. 2/15/15 451,900.00 6.950

7. -- 447,750.00 7.050

-----------------
$ 3,021,585.00
-----------------
-----------------

A-19
<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 How To Sell). 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 $3,008,585.00,
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.
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
Income and Distributions--Returns for a description of the computation of
yield price.)

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

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-20
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND, MULTISTATE SERIES - 75
ON THE INITIAL DATE OF DEPOSIT,
DEFINED ASSET FUNDS
NOVEMBER 16, 1994
PORTFOLIO OF THE NEW YORK 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>
1. Dormitory Auth. of the State of New York, City AAA $ 750,000 6.30% 7/1/24 7/1/04 @ 102
Univ. Sys. Consol. Third Gen. Resolution
Rev. Bonds, 1994 Ser. 1 (AMBAC Ins.)
2. Dormitory Auth. of the State of New York, AAA 410,000 5.25 5/15/13 --
State Univ. Educl. Facs. Rev. Bonds, Ser.
1993 B (Financial Guaranty Ins.)
3. New York State Energy Research and Dev. Auth., AAA 750,000 6.05 4/1/34 4/1/04 @ 102
Poll. Ctl. Rfdg. Rev. Bonds, 1994 Ser. A
(MBIA Ins.)
4. Metro. Trans. Auth., NY, Transit Facs. Rev. AAA 500,000 6.00 7/1/14 7/1/03 @ 101.5
Bonds, Ser. M (CAPMAC Ins.)
5. State of New York Mtge. Agy., Homeowner Mtge. AAA 500,000 6.45 10/1/14 6/1/04 @ 102
Rev. Bonds (MBIA Ins.)
6. New York State Thruway Auth., Gen. Rev. Bonds, AAA 750,000 5.50 1/1/23 1/1/02 @ 100
Ser. A (Financial Guaranty Ins.)
7. Albany Muni. Wtr. Fin. Auth., NY, Wtr. and AAA 390,000 5.50 12/1/22 12/1/03 @ 102
Swr. Sys. Rev. Bonds, Ser. 1993 A (Financial
Guaranty Ins.)
8. The City of New York, NY, G.O. Bonds, Fiscal AAA 500,000 6.95 8/15/12 8/15/04 @ 101
1995 Ser. B (MBIA Ins.)
9. New York City, NY, Muni. Wtr. Fin. Auth., Ser. AAA 450,000 5.50 6/15/15 6/15/04 @ 101
F (MBIA Ins.)
-------------
$ 5,000,000
-------------
-------------
</TABLE>

SINKING COST OF YIELD TO MATURITY
FUND DEBT OBLIGATIONS ON INITIAL DATE OF
REDEMPTIONS (2) TO TRUST (3) DEPOSIT (3)
--------------- ----------------- -------------------
1. 7/1/21 $ 684,682.50 7.000%

2. 5/15/12 334,371.40 7.050

3. -- 650,490.00 7.050

4. 7/1/11 444,595.00 7.050

5. 4/1/08 468,130.00 7.050

6. 1/1/20 608,520.00 7.050

7. 12/1/13 316,524.00 7.050

8. -- 497,405.00 7.000

9. 6/15/12 372,681.00 7.100

-----------------
$ 4,377,398.90
-----------------
-----------------

A-21
<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 How To Sell). 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 $4,357,398.90,
which is $20,000.00 (.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
Income and Distributions--Returns for a description of the computation of
yield price.)

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

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-22
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND, MULTISTATE SERIES - 75
ON THE INITIAL DATE OF DEPOSIT,
DEFINED ASSET FUNDS
NOVEMBER 16, 1994
PORTFOLIO OF THE OHIO 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>
1. State of Ohio, Higher Educl. Fac. Mtge. Rev. AAA $ 500,000 6.60% 12/1/17 12/1/03 @ 102
Bonds (Univ. of Dayton 1992 Proj.)
(Financial Guaranty Ins.)
2. City of Cleveland, OH, Pub. Pwr. Sys. First AAA 500,000 7.00 11/15/24 11/15/04 @ 102
Mtge. Rev. Bonds, Ser. 1994 A (MBIA Ins.)
3. City of Cleveland, OH, Var. Pur. G.O. Bonds, AAA 500,000 6.70 11/15/18 11/15/04 @ 102
Ser. 1994 (MBIA Ins.)
4. City of Hamilton, OH, Elec. Sys. Mtge. Rev. AAA 250,000 6.00 10/15/23 10/15/02 @ 102
Rfdg. Bonds, 1992 Ser. A (Financial Guaranty
Ins.)
5. Lakewood City School Dist., OH, School Imp. AAA 500,000 6.95 12/1/15 12/1/04 @ 102
Bonds, Ser. 1994 (Gen. Oblig. Unlimited Tax)
(MBIA Ins.)
6. City of Mason, OH, Swr. Sys. Mtge. Rev. Bonds, AAA 500,000 6.00 12/1/19 12/1/04 @ 101
Ser. 1994 (Financial Guaranty Ins.)
7. Wooster City School Dist., Wayne Cnty., OH, AAA 500,000 6.50 12/1/17 12/1/02 @ 102
G.O. Bonds (Unlimited Tax) (AMBAC Ins.)
-------------
$ 3,250,000
-------------
-------------
</TABLE>

SINKING COST OF YIELD TO MATURITY
FUND DEBT OBLIGATIONS ON INITIAL DATE OF
REDEMPTIONS (2) TO TRUST (3) DEPOSIT (3)
--------------- ----------------- -------------------
1. 12/1/08 $ 485,590.00 6.850%

2. 11/15/17 490,785.00 7.150

3. 11/15/15 491,225.00 6.850

4. 10/15/13 221,957.50 6.900

5. -- 504,030.00 6.850+

6. 12/1/15 446,685.00 6.900

7. 12/1/08 479,840.00 6.850

-----------------
$ 3,120,112.50
-----------------
-----------------

A-23
<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 How To Sell). 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 $3,107,112.50,
which is $13,000.00 (.40% of the aggregate face amount) lower than the
aggregate Cost of Debt Obligations to Trust based on the offer side
evaluation.
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
Income and Distributions--Returns for a description of the computation of
yield price.)

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

All Debt Obligations are represented entirely by contracts to purchase such
Debt Obligations, which were entered into by the Sponsors during the period
November 9, 1994 to November 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 Number 2 (approximately 15% 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 2
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-24
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND, MULTISTATE SERIES - 75
ON THE INITIAL DATE OF DEPOSIT,
DEFINED ASSET FUNDS
NOVEMBER 16, 1994
PORTFOLIO OF THE PENNSYLVANIA TRUST (INSURED)

OPTIONAL
PORTFOLIO NO. AND TITLE OF RATINGS OF FACE REFUNDING
DEBT OBLIGATIONS CONTRACTED FOR ISSUES (1) AMOUNT COUPON MATURITIES REDEMPTIONS (2)
---------------------------------------------- ----------- ------------- ----------- ----------- -------------------
<S> <C> <C> <C> <C> <C>
1. The Hosp. Auth. of the Cnty. of Beaver, Hosp. AAA $ 500,000 6.25% 7/1/22 7/1/02 @ 102
Rev. Bonds, PA, Ser. 1992 A (AMBAC Ins.)
2. Exeter Twp. Auth., Berks Cnty., PA, Gtd. Swr. AAA 500,000 6.20 7/15/22 7/15/02 @ 100
Rev. Bonds, Ser. of 1993 (MBIA Ins.)
3. Erie Cnty. Hosp. Auth. (Commonwealth of PA), AAA 500,000 6.375 7/1/22 7/1/02 @ 102
Hosp. Rev. Bonds, Ser. A of 1992 (MBIA Ins.)
4. North Penn Water Auth. (Montgomery Cnty., PA), AAA 500,000 6.20 11/1/22 11/1/02 @ 101
Wtr. Rev. Bonds, Ser. 1992 (Financial
Guaranty Ins.)
5. Northampton Cnty., PA, Higher Education Auth., AAA 250,000 5.75 11/15/18 11/15/02 @ 102
Univ. Rev. Bonds (Lehigh Univ.), 1993 Ser. A
(MBIA Ins.)
6. York Cnty. Indl. Dev. Auth., PA, Poll. Ctl. AAA 500,000 6.45 10/1/19 10/1/04 @ 102
Rev. Rfdg. Bonds, Ser. 1994 A (MBIA Ins.)
7. City of Philadelphia, PA, Gas Works Rev. AAA 500,000 6.375 7/1/26 7/1/03 @ 102
Bonds, Fourteenth Ser. (CAPMAC Ins.)
-------------
$ 3,250,000
-------------
-------------
</TABLE>

SINKING COST OF YIELD TO MATURITY
FUND DEBT OBLIGATIONS ON INITIAL DATE OF
REDEMPTIONS (2) TO TRUST (3) DEPOSIT (3)
--------------- ----------------- -------------------
1. 7/1/12 $ 448,795.00 7.100%

2. 7/15/14 445,755.00 7.100

3. 7/1/14 456,315.00 7.100

4. 11/1/13 451,180.00 7.000

5. 11/15/12 212,640.00 7.050

6. -- 464,985.00 7.050

7. 7/1/15 451,625.00 7.150

-----------------
$ 2,931,295.00
-----------------
-----------------

A-25
<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 How To Sell). 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 $2,918,295.00,
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.
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
Income and Distributions--Returns for a description of the computation of
yield price.)

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

All Debt Obligations are represented entirely by contracts to purchase such
Debt Obligations, which were entered into by the Sponsors during the period
November 11, 1994 to November 15, 1994. All contracts are expected to be
settled by the initial 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-26
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND
DEFINED ASSET FUNDS
PROSPECTUS PART B
AMT SERIES
INSURED SERIES
INTERMEDIATE TERM SERIES
MONTHLY PAYMENT SERIES
STATE SERIES

DESCRIPTION OF FUND INVESTMENTS

PORTFOLIO SELECTION

Experienced professional buyers and research analysts for Defined Asset
Funds, with information on the markets for suitable securities and on
thousands of issues, selected securities for the Fund's portfolio (the
'Portfolio'), considering its investment objective and other factors
including: (1) the quality of the Debt Obligations, as evidenced by a rating
in the category A or better by at least one recognized rating organization
(see Appendix A) or comparable credit enhancement or (in the opinion of
Defined Asset Funds research) credit characteristics; (2) yield and price
relative to comparable securities; (3) diversification as to purpose and
location of issuer, subject to availability of suitable debt obligations; and
(4) maturities (including call protection). There is no leverage or borrowing
to increase the risk to the Fund, nor does the Portfolio contain other kinds
of securities to enhance yield.

Composition of the Portfolio is summarized under Investment Summary and
the names and certain characteristics of the debt obligations in the Portfolio
(the 'Debt Obligations' or the 'Securities') are listed in the financial
statements.

Yields on debt obligations depend on factors including general conditions
of the municipal bond market and the general bond markets, size of a
particular offering, and the maturity and rating of the particular issue.
Ratings represent opinions of the rating organizations as to the quality of
securities rated, but these are general (not absolute) standards of quality.
Yields can vary among obligations with similar maturities, coupons and
ratings.

Neither the Sponsors nor the Trustee are liable for any default, failure
or defect in a Security. If a contract to purchase any Debt Obligation fails
(a 'Failed Debt Obligation'), the Sponsors are authorized to deposit
Replacement Securities which (i) are tax-exempt bonds issued by a state or
political subdivision or a U.S. territory or possession; (ii) have a fixed
maturity or disposition date substantially similar to the Failed Debt
Obligation; (iii) are rated A or better by at least one recognized rating
organization or have comparable credit characteristics; and (iv) are not when,
as and if issued. Replacement Securities must be deposited within 110 days
after deposit of the failed contract, at a cost not exceeding funds reserved
for purchasing the Failed Debt Obligation and at a yield to maturity and
current return, as of the date the failed contract was deposited,
substantially equivalent (considering then current market conditions and
relative creditworthiness) to those of the Failed Debt Obligation.

Because each Defined Fund is a portfolio of preselected securities,
purchasers know in advance what they are investing in. The Portfolio is listed
in the prospectus so that generally the securities, maturities, call dates and
ratings are known when they buy. Of course, the Portfolio changes somewhat
over time as additional Securities are deposited, as Securities are called or
redeemed, or as they are sold to meet redemptions and in the limited
circumstances described below.

PORTFOLIO SUPERVISION

The Fund is a unit investment trust which follows a buy and hold
investment strategy. Traditional methods of investment management for mutual
funds typically involve frequent changes in fund holdings based on economic,
financial and market analyses. Because the Fund is not actively managed, it
may retain an issuer's securities despite adverse financial developments.
However, Defined Asset Funds' experienced financial analysts regularly review
the Portfolio, and the Sponsors may instruct the Trustee to sell securities in
the following

1
<PAGE>

circumstances: (i) default in payment of amounts due on the security; (ii)
institution of certain legal proceedings; (iii) other legal questions or
impediments affecting the security or payments thereon; (iv) default under
certain documents adversely affecting debt service or in payments on other
securities of the same issuer or guarantor; (v) decline in projected income
pledged for debt service on a revenue bond; (vi) if a security becomes taxable
or otherwise inconsistent with the Fund's investment objectives; (vii) a right
to sell or redeem the security pursuant to a guarantee or other credit
support; or (viii) decline in security price or other market or credit factors
(including advance refunding) that, in the opinion of Defined Asset Funds
research, makes retention of the security detrimental to the interests of
Holders. If there is a payment default on any Security and the Agent for the
Sponsors fails to instruct the Trustee within 30 days after notice of the
default, the Trustee will sell the Security.

The Trustee must reject any offer by an issuer of a Debt Obligation to
exchange another security pursuant to a refunding or refinancing plan unless
(a) the Debt Obligation is in default or (b) in the written opinion of Defined
Asset Funds research analysts, a default is probable in the reasonably
foreseeable future, and the Sponsors instruct the Trustee to accept the offer
or take any other action with respect to the offer as the Sponsors consider
appropriate.

RISK FACTORS

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

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

Certain of the Securities in the Fund may have been deposited 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 the Fund may have been deposited at a market
premium. Securities trade at a premium because the interest rates on the
Securities are higher than interest on comparable debt securities being issued
at currently prevailing interest rates. The current returns of securities
trading at a market premium are higher than the current returns of comparably
rated debt securities of a similar type issued at currently prevailing
interest rates because premium securities tend to decrease in market value as
they approach maturity when the face amount becomes payable. Because part of
the purchase price is thus returned not at maturity but through current income
payments, an early redemption of a premium security at par will result in a
reduction in yield to the Fund. 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

2
<PAGE>

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.

Holders of Units will be 'at risk' with respect to Securities purchased
on a when, as and if issued basis or for delayed delivery (i.e., either a gain
or loss may result from fluctuations in the offering side evaluation of the
Securities) from the date they commit for Units.

As set forth under Investment Summary and Portfolio, the Fund may contain
or be concentrated in one or more of the types of Debt Obligations discussed
below. An investment in the Fund should be made with an understanding of the
risks that these securities may entail, certain of which are described below.
In addition, investment in a single State Trust, as opposed to a Fund 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 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 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 recession's adverse impact upon both revenue and
expenditures, as well as other factors, many state and local governments have
confronted deficits which were 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 issue
additional debt to finance deficits or cash flow needs.

In addition, certain of the Debt Obligations in the Fund 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 condition of school districts
and local governments in California. It is not possible at this time to
predict the final impact of such measures, or of similar future legislative or
constitutional measures, on school districts and local governments or on their
abilities to make future payments on their outstanding debt obligations.

MORAL OBLIGATION BONDS

The Fund 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, however, bonds which were thought to be escrowed
to maturity have been called for redemption prior to maturity.

3
<PAGE>

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
manufacturing facilities. These projects are usually operated by corporations.
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
from receipts or revenues under arrangements between the issuer and the
corporate operator of the 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 to the issuer
by the corporate operator of the 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 an affiliated company. Regardless of the structure, payment
of IDRs is solely dependent upon the creditworthiness of the corporate
operator of the project, corporate guarantor and credit enhancer. Corporate
operators or guarantors that are industrial companies may be affected by many
factors which may have an adverse impact on the credit quality of the
particular company or industry. These include cyclicality of revenues and
earnings, regulatory and environmental restrictions, litigation resulting from
accidents or environmentally-caused illnesses, extensive competition
(including that of low-cost foreign companies), unfunded pension fund
liabilities or off-balance sheet items, and financial deterioration resulting
from leveraged buy-outs or takeovers. However, as discussed below, certain of
the IDRs in the Portfolio 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.

STATE AND LOCAL MUNICIPAL UTILITY OBLIGATIONS

The ability of utilities to meet their obligations under revenue bonds
issued on their behalf is dependent on various factors, including the rates
they may charge their customers, the demand for their 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 and disallowances 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 and the impact of deregulation.

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 affected by its cost of capital, the
availability and cost of fuel and other factors. There can be no assurance
that a utility will be able to pass on these increased costs to customers
through increased rates. Utilities incur substantial capital expenditures for
plant and equipment. In the future they will also incur increasing capital and
operating expenses to comply with environmental legislation such as the Clean
Air Act of 1990, and other energy, licensing and other laws and regulations
relating to, among other things, air emissions, the quality of drinking water,
waste water discharge, solid and hazardous substance handling and disposal,
and siting and licensing of facilities. Environmental legislation and
regulations are changing rapidly and are the subject of current public policy
debate and legislative proposals. It is increasingly likely that 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

4
<PAGE>

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
and additional factors including (a) the effects of inflation upon the costs
of operation and construction, (b) uncertainties in predicting future load
requirements, (c) increased financing requirements coupled with limited
availability of capital, (d) exposure to cancellation and penalty charges on
new generating units under construction, (e) problems of cost and availability
of fuel, (f) litigation and proposed legislation designed to delay or prevent
construction of generating and other facilities, (g) the uncertain effects of
conservation on the use of electric energy and (h) increased competition as a
result of the availability of other energy sources and state deregulation
efforts. 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 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. California, Michigan, New Mexico and Ohio
have instituted investigations into the possible introduction of retail
wheeling within their respective states, which could foster competition among
the utilities. Retail wheeling might result in the issue of stranded
investment (investment in assets not being recovered in base rates), thus
hampering a utility's ability to meet its obligations.

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

The 1990 Amendments also provide for possible further regulation of toxic
air emissions from electric generating units pending the results of several
federal government studies to be presented to Congress by the end of 1995 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

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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. Since there have been very few nuclear plants
decommissioned to date, these estimates may be unrealistic.

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,
Oregon and Idaho have held that certain agreements between the Washington
Public Power Supply System ('WPPSS') and the WPPSS participants are
unenforceable because the participants did not have the authority to enter
into the agreements. While these decisions are not specifically applicable to
agreements entered into by public entities in other states, they may cause a
reexamination of the legal structure and economic viability of certain
projects financed by joint action power agencies, which might exacerbate some
of the problems referred to above and possibly lead to legal proceedings
questioning the enforceability of agreements upon which payment of these bonds
may depend.

LEASE RENTAL OBLIGATIONS

Lease rental obligations are issued for the most part by governmental
authorities that have no taxing power or other means of directly raising
revenues. Rather, the authorities are financing vehicles created solely for
the construction of buildings (administrative offices, convention centers and
prisons, for example) or the purchase of equipment (police cars and computer
systems, for example) that will be used by a state or local government (the
'lessee'). Thus, the obligations are subject to the ability and willingness of
the lessee government to meet its lease rental payments which include debt
service on the obligations. Willingness to pay may be subject to changes in
the views of citizens and 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 reletting 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. 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

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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). 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 these 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.
Furthermore, any failure to meet these ongoing requirements might not
constitute an event of default under the applicable mortgage or permit the
holder to accelerate payment of the bond or require the issuer to redeem the
bond. In any event, where the mortgage is insured by the Federal Housing
Administration, its consent may be required before insurance proceeds would
become payable to redeem the mortgage bonds.

HOSPITAL AND HEALTH CARE FACILITY OBLIGATIONS

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

A significant portion of the revenues of hospitals and other health care
facilities is derived from private third-party payors and government programs,
including the Medicare and Medicaid programs. Both private third-party payors
and government programs have undertaken cost containment measures designed to
limit payments made to health care facilities. Furthermore, government
programs are subject to statutory and regulatory changes, retroactive rate
adjustments, administrative rulings and government funding restrictions, all
of which may materially decrease the rate of program payments for health care
facilities. Certain special revenue obligations (i.e., Medicare or Medicaid
revenues) may be payable subject to appropriations by state legislatures.
There can be no assurance that payments under governmental programs will
remain at levels comparable to present levels or will, in the future, be
sufficient to cover the costs allocable to patients participating in such
programs. In addition, there can be no assurance that a particular hospital or
other health care facility will continue to meet the requirements for
participation in such programs.

The costs of providing health care services are subject to increase as a
result of, among other factors, changes in medical technology and increased
labor costs. In addition, health care facility construction and operation is
subject to federal, state and local regulation relating to the adequacy of
medical care, equipment, personnel, operating policies and procedures,
rate-setting, and compliance with building codes and environmental laws.
Facilities are subject to periodic inspection by governmental and other
authorities to assure continued compliance with the various standards
necessary for licensing and accreditation. These regulatory requirements are
subject to 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

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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 revenues unless replacement patients
were found.

Certain hospital bonds may provide for redemption at par at any time upon
the sale by the issuer of the hospital facilities to a non-affiliated entity,
if the hospital becomes subject to ad valorem taxation, or in various other
circumstances. For example, certain hospitals may have the right to call bonds
at par if the hospital may be legally required because of the bonds to perform
procedures against specified religious principles or to disclose information
that is considered 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 severely reduce
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), bridges,
marine terminals, 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
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 Midway Airlines, Inc., Eastern
Airlines, Inc. and Pan American Corporation have been liquidated. However,
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,
proposed legislation 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.

Similarly, payment on bonds related to other facilities is dependent on
revenues from the projects, such as use fees from ports, tolls on turnpikes
and bridges and rents from buildings. Therefore, payment may be adversely
affected by reduction in revenues due to such factors 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.

SOLID WASTE DISPOSAL BONDS

Bonds issued for solid waste disposal facilities are generally payable
from dumping 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

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

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.

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.

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.

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

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

In a plebiscite held in November, 1993, the Puerto Rican electorate chose
to continue Puerto Rico's Commonwealth status. Previously proposed
legislation, which was not enacted, would have preserved the federal tax
exempt status of the outstanding debts of Puerto Rico and its public
corporations regardless of the outcome of the referendum, to the extent that
similar obligations issued by 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 of 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 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 savings banks, savings and loan associations and similar
institutions ('thrifts') or are 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, if an issuer fails to
pay amounts due on the Debt Obligation or defaults under its reimbursement
agreement with the issuer of the letter of credit or, in certain cases, if the
interest on the Debt Obligation is 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 (and therefore their ability
to honor letters of credit or guarantees) 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. In the late 1980's
and early 1990's the credit ratings of U.S. banks and bank holding companies
were 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
construction and commercial real estate loans. These problem loans have been
largely addressed. During the early 1990's the credit ratings of many foreign
banks have also been subject to

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significant downgrades due to a deterioration in asset quality which has
negatively impacted earnings and capital adequacy. The decline in asset
quality of major foreign banks has been brought about largely by recessionary
conditions in their local economies. The Federal Deposit Insurance Corporation
('FDIC') indicated that in 1990, 168 federally insured banks with an aggregate
total of $45.7 billion in assets failed and that in 1991, 124 federally
insured banks with an aggregate total of $64.3 billion in assets failed.
During 1992, the FDIC resolved 120 failed banks with combined assets of $44.2
billion. In 1993, a total of 41 banks with combined assets of $3.5 billion
were closed. The 1993 total was the lowest level in twelve years. Bank holding
companies and other financial institutions may not be as highly regulated as
banks, and may be more able to expand into other non-financial and
non-traditional businesses.

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.

Recent legislation, including the Financial Institutions Reform, Recovery
and Enforcement Act of 1989, the Federal Deposit Insurance Corporation
Improvement Act of 1991 ('FDICIA') and the Resolution Trust Corporation
Refinancing, Restructuring, and Improvement Act of 1991 have significantly
altered the legal rules and regulations governing banks and thrifts and
mandated early and aggressive regulatory intervention for unhealthy
institutions. For those thrifts that have failed, either the FDIC or the
Resolution Trust Corporation ('RTC') will be appointed as receiver or
conservator. Periodic efforts by recent Administrations to introduce
legislation broadening the ability of banks and thrifts to compete with new
products generally 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. Legislation to
liberalize interstate branching for banks has been stalled in Congress, but
may be more successful this year. 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 these and similar rules may result in increased volatility
in the reported health of the industry and mandated regulatory intervention to
correct such problems.

Investors should realize that should the FDIC or the RTC make payment
under a letter of credit prior to the scheduled maturity or disposition dates
of the related Debt Obligation their investment will be returned sooner than
originally anticipated. The possibility of such early payment has been
increased significantly by the enactment of FDICIA, which requires federal
regulators of insured banks, savings banks, and thrifts to act more quickly to
address the problems of undercapitalized institutions than previously, and
specifies in more detail the actions they must take. One such requirement
virtually compels the appointment of a receiver or conservator for any
institution when its ratio of tangible equity to total assets declines to two
percent. Others force aggressive intervention in the business of an
institution at even earlier stages of deterioration.

Certain letters of credit or guarantees backing Debt Obligations may have
been issued by a foreign bank or corporation or similar entity (a 'Foreign
Guarantee'). On the basis of information available to the Sponsors at the
present time no Foreign Guarantee is subject to exchange control restrictions
under existing law which would materially interfere with payments to the Fund
under the Foreign Guarantee. However, there can be no assurance that exchange
control regulations might not be adopted in the future which might affect
adversely the payment to the Fund. Nor are there any withholding taxes under
existing law applicable to payments made on any Foreign Guarantee. While there
can be no assurance that withholding taxes might not be imposed in the future,
provision is made in the instruments governing any Foreign Guarantee that, in
substance, to the extent permitted by applicable law, additional payments will
be made by the guarantor so that the total amount paid, after deduction of any
applicable tax, will not be less than the amount then due and payable on the
Foreign Guarantee. The adoption of exchange control regulations and other
legal restrictions could have an adverse impact on the marketability of any
Debt Obligations backed by a Foreign Guarantee and on the ability of the Fund
to satisfy its obligation to redeem Units tendered to the Trustee for
redemption (see How to Sell).

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OBLIGATIONS BACKED BY INSURANCE

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

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 Fund 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 Fund being reduced, the Sponsors are authorized to direct the
Trustee to obtain other insurance.

The following are brief descriptions of certain Insurance Companies. The
financial information presented for each company has been determined on a
statutory basis and 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 $1,988,000,000 and
policyholders' surplus of approximately $749,000,000 as of March 31, 1994.
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. After an initial
public offering completed in February 1992 and the sale by Merrill Lynch & Co.
of its stake, EFSG is 49.8%-owned by the public, 29.9% by US West Financial
Services, 14.1% by Manufacturers Life Insurance Co. and 6.2% by senior
management. Both ERC and Asset Guaranty are rated 'AAA' for claims paying
ability by Duff & Phelps, ERC is rated triple-A for claims-paying-ability for
both S&P and Moody's. Asset Guaranty received a 'AA' claims-paying-ability
rating from S&P during August 1993, but remains unrated by Moody's. As of
March 31, 1994 Asset Guaranty had admitted assets of approximately
$142,000,000 and policyholders' surplus of approximately $73,000,000.

CGIC, a monoline bond insurer 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

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<PAGE>

company in the U.S. as measured by net premiums written, and CGC management.
As of March 31, 1994, CGIC had total admitted assets of approximately
$288,000,000 and policyholders' surplus of approximately $171,000,000.

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., an acquisition fund; Caprock Management,
Inc., representing Rockefeller family interests; Citigrowth Fund, a Citicorp
venture capital group; and CAPMAC senior management and staff. These groups
control approximately 70% of the stock of CHI. CAPMAC had traditionally
specialized in guaranteeing consumer loan and trade receivable asset-backed
securities. Under the new ownership group CAPMAC intends to become involved in
the municipal bond insurance business, as well as their traditional
non-municipal business. As of March 31, 1994 CAPMAC's admitted assets were
approximately $188,000,000 and its policyholders' surplus was approximately
$145,000,000.

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 March 31, 1994, its total admitted
assets were approximately $185,000,000 and policyholders' surplus was
approximately $104,000,000.

Continental is a wholly-owned subsidiary of CNA Financial Corp. and was
incorporated under the laws of Illinois in 1948. As of March 31, 1994,
Continental had policyholders' surplus of approximately $3,410,000,000 and
admitted assets of approximately $19,140,000,000. 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 March 31, 1994, its total
admitted assets were approximately $1,995,000,000 and its policyholders'
surplus was approximately $805,000,000.

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
March 31, 1994, FSA had policyholders' surplus of approximately $368,000,000
and total admitted assets of approximately $759,000,000.

Firemen's, which was incorporated in New Jersey in 1855, is a
wholly-owned subsidiary of The Continental Corporation and a member of The
Continental Insurance Companies, a group of property and casualty insurance
companies the claims paying ability of which is rated AA-by Standard & Poor's.
It provides unconditional and non-cancellable insurance on industrial
development revenue bonds. As of March 31, 1994, the total admitted assets of
Firemen's were approximately $2,206,000,000 and its policyholders' surplus was
approximately $422,000,000.

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<PAGE>

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 March
31, 1994, MBIA had admitted assets of approximately $3,152,000,000 and
policyholders' surplus of approximately $998,000,000.

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 March
31, 1994, the total admitted assets and policyholders' surplus of National
Union were approximately $8,517,000,000 and approximately $1,422,000,000,
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 that are
otherwise uninsurable. A significant portion of the assets of insurance
companies is required by law to be held in reserve against potential claims on
policies and is not available to general creditors.

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

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

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 Fund. At any
time after the Initial Date of Deposit, litigation may be initiated on a
variety of grounds, or legislation may be enacted, with respect to Debt
Obligations in the Fund. Litigation, for example, challenging the

14
<PAGE>

issuance of pollution control revenue bonds under environmental protection
statutes may affect the validity of Debt Obligations or the tax-free nature of
their interest. While the outcome of litigation of this nature can never be
entirely predicted, opinions of bond counsel are delivered on the date of
issuance of each Debt Obligation to the effect that the Debt Obligation has
been validly issued and that the interest thereon is exempt from Federal
income tax. In addition, other factors may arise from time to time which
potentially may impair the ability of issuers to make payments due on Debt
Obligations.

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

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 nondiscriminatory 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 the
Fund will retain for any length of time its present size and composition. 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 (see Portfolio in Part A). 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 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
Portfolio may be subject to sinking fund provisions early in the life of the
Fund. 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. 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 How to
Sell--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, 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 Trust Indenture).

LIQUIDITY

Certain of the Debt Obligations may have been guaranteed or similarly
secured by insurance companies or other corporations or entities. The
guarantee or similar commitment may constitute a security (a 'Restricted
Security') that cannot, in the opinion of counsel, be sold publicly by the
Trustee without registration under the Securities Act of 1933, as amended, or
similar provisions of law subsequently enacted. The Sponsors nevertheless
believe that, should a sale of these Debt Obligations be necessary in order to
meet redemption, the Trustee should be able to consummate a sale with
institutional investors. Up to 40% of the Portfolio may consist of Debt
Obligations purchased from various banks and thrifts and other Debt
Obligations with guarantees which may constitute Restricted Securities.

The Portfolio may contain certain Debt Obligations purchased directly
from issuers. These Debt Obligations are generally issued under bond
resolutions or trust indentures providing for the issuance of bonds in
publicly saleable denominations (usually $100,000), may be sold free of the
registration requirements of the Securities Act of 1933 and are otherwise
structured in contemplation of ready marketability. In addition, the Sponsors
generally obtain letters of intention to repurchase or to use best efforts to
remarket these Debt Obligations from the issuers, the placement agents acting
in connection with their sale or the entities providing the additional credit
support, if

15
<PAGE>

any. These letters do not express legal obligations; however, in the opinion
of the Sponsors, these Debt Obligations should be readily marketable.

TAX EXEMPTION

In the opinion of bond counsel rendered on the date of issuance of each
Debt Obligation, the interest on each Debt Obligation is excludable from gross
income under existing law for regular Federal income tax purposes (except in
certain circumstances depending on the Holder) but may be subject to state and
local taxes and may be a preference item for purposes of the Alternative
Minimum Tax (see Portfolio in Part A; Taxes below). 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 has announced an expansion of 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.

HOW TO BUY

Units are available from any of the Underwriters and other broker-dealers
at the Public Offering Price (including the applicable sales charge) plus a
proportionate share of any cash held by the Fund in the Capital Account
(unless allocated to the purchase of specific securities) and net accrued and
undistributed interest. Because both the value of Securities and accrued
interest change, the Public Offering Price varies each Business Day.

PUBLIC OFFERING PRICE

In the initial offering period, the Public Offering Price is based on the
next offer side evaluation of the Securities, and includes a sales charge
based on the number of Units of a single Fund or Trust purchased on the same
or any preceding day by a single purchaser. See Initial Offering Sales Charge
Schedule in Appendix B. The purchaser or his dealer must notify the Sponsors
at the time of purchase of any previous purchase to be aggregated and supply
sufficient information to permit confirmation of eligibility; acceptance of
the purchase order is subject to such confirmation. Purchases of Fund Units
may not be aggregated with purchases of any other unit trust. This procedure
may be amended or terminated at any time without notice.

In the secondary market (after the initial offering period), the Public
Offering Price is based on the next bid side evaluation of the Securities, and
includes a sales charge based (a) on the number of Units of the Fund and any
other Series of Municipal Investment Trust Fund purchased in the secondary
market on the same day by a single purchaser (see Secondary Market Sales
Charge Schedule in Appendix B) and (b) the maturities of the underlying
Securities (see Effective Sales Charge in Appendix B). To qualify for a
reduced sales charge, the dealer must confirm that the sale is to a single
purchaser or is purchased for its own account and not for distribution. For
these purposes, Units held in the name of the purchaser's spouse or child
under 21 years of age are deemed to be purchased by a single purchaser. A
trustee or other fiduciary purchasing securities for a single trust estate or
single fiduciary account is also considered a single purchaser.

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<PAGE>

In the secondary market, the Public Offering Price is further reduced
depending on the maturities of the various bonds in the Portfolio, by
determining a sales charge percentage for each bond, as stated in Effective
Sales Charge in Appendix B. The sales charges so determined, multiplied by the
bid side evaluation of the Securities, are aggregated and the total divided by
the number of Units outstanding to determine the Effective Sales Charge. On
any purchase, the Effective Sales Charge is multiplied by the applicable
secondary market sales charge percentage (depending on the number of Units
purchased) in order to determine the sales charge component of the Public
Offering Price.

Employees of certain Sponsors and Sponsor affiliates and non-employee
directors of Merrill Lynch & Co. Inc. may purchase Units at any time at prices
including a sales charge of not less than $5 per Unit.

SECURITIES EVALUATIONS

The Public Offering Price is based on the evaluation of Securities in the
Fund, at the offer or bid side as described above, at the Evaluation Time next
following receipt of the order. Evaluations are determined by the Evaluator as
described under Redemption on each Business Day (this excludes 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).

ACCRUED INTEREST

Net accrued interest is added to the Public Offering Price, the Sponsors'
Repurchase Price and the Redemption Price per Unit. This represents the
interest accrued on the Securities, net of Fund expenses, from the Initial
Date of Deposit to, but not including, the settlement date for Units (less any
prior distributions of interest income to Holders). Securities deposited also
carry 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 advances and distributes this amount to
the Sponsors; it recovers this advance from interest received on the Debt
Obligations. Because of varying interest payment dates on the Securities,
accrued interest at any time will exceed the interest actually received by the
Fund.

CERTIFICATES

Certificates for Units are issued upon request, and are transferable upon
payment of any taxes or governmental charges and compliance with the
requirements for redeeming Certificates (see Redemption). Certain Sponsors
collect additional charges for registering and shipping Certificates to
purchasers. Lost or mutilated Certificates can be replaced upon delivery of
satisfactory indemnity and payment of costs.

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 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 Sponsors' Repurchase Price
and the Redemption Price per Unit (each based on the bid side evaluation
thereof--see How to Sell--Redemption) by the amounts set forth under the
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 difference on the day before
the date of this Prospectus is stated in a note to the Portfolio.

HOW TO SELL

SPONSORS' MARKET FOR UNITS

Holders can cash in Units at any time without a fee. The Sponsors
(although not obligated to do so) normally repurchase any Units offered for
sale, at the repurchase price next computed after receipt of the order.
Because of the sales charge and fluctuations in the market value of the
Securities (among other reasons) the repurchase price may be less than the
investor's cost for the Units. Holders disposing of Units should consult their
financial

17
<PAGE>

professional as to current market prices to determine if other broker-dealers
or banks offer higher prices for those Units.

The Sponsors may discontinue this market without prior notice if the
supply of Units exceeds demand or for other business reasons; in that event,
the Sponsors may still purchase Units at the redemption price as a service to
Holders. Although the Sponsors may reoffer Units repurchased, alternatively
they may redeem those Units; see Redemption for a description of certain
consequences of redemptions to remaining Holders.

REDEMPTION

Holders may redeem Units by tendering to the Trustee Certificates (if
issued) or a request for redemption. Certificates must be properly endorsed or
accompanied by a written transfer instrument. Each Holder must sign the
Certificate, transfer instrument or request exactly as the name appears on the
face of the Certificate; signatures must be guaranteed by an eligible
guarantor institution or in another manner acceptable to the Trustee. In
certain instances, additional documents may be required such as a certificate
of death, trust instrument, certificate of corporate authority or appointment
as executor, administrator or guardian. If the Sponsors are maintaining a
market for Units, they will purchase any Units tendered at the price described
in the preceding section. If the Sponsors do not purchase Units tendered, the
Trustee is authorized in its discretion to sell Units in the over-the-counter
market if it believes it will obtain for the redeeming Holder a higher net
price.

Redemptions may be suspended or payment postponed in limited
circumstances: (1) if the New York Stock Exchange is closed other than for
customary weekend and holiday closings; (2) if the SEC determines that trading
on that Exchange is restricted or an emergency exists making disposal or
evaluation of the Securities not reasonably practicable; or (3) for any other
period which the SEC by order permits.

On the seventh calendar day after tender (the preceding Business Day if
the seventh day is not a Business Day), the Holder will be mailed an amount
per Unit equal to the Redemption Price Per Unit at the Evaluation Time next
following receipt of the tender. As noted above, this price may be more or
less than the cost of those Units.

Redemption Price per Unit is computed each Business Day by adding (a) the
aggregate bid side evaluation of the Securities, (b) cash in the Fund
(excluding cash held to pay contracts to purchase Securities or in a reserve
account), (c) accrued but unpaid interest on the Securities up to but not
including the payment date and (d) the aggregate value of any other Fund
assets; deducting (v) unpaid taxes or other governmental charges, (w) accrued
but unpaid Fund expenses, (x) unreimbursed Trustee advances, (y) cash held to
redeem Units or for distribution to Holders and (z) the aggregate value of any
other Fund liabilities; and dividing the result by the Units outstanding as of
the computation. Evaluations of Securities are determined by the Evaluator as
follows: During the initial syndicate offering period for any Debt Obligation,
its evaluation will be at the syndicate offer price unless the Evaluator
determines that this price does not accurately reflect the market value. For
Securities traded over-the-counter, the evaluation is generally based on the
closing sales prices on that market (unless the Evaluator deems these prices
inappropriate for valuation). If closing sales prices are not available, the
evaluation is generally determined on the basis of current bid or offer prices
for the Securities or (if not available) for comparable securities or by
appraising the value or any combination of these methods.

The value of any insurance is reflected in the market value of any
Insured Debt Obligation. The Sponsors believe that this is a fair method of
valuing the Insured Debt Obligations and the insurance.

If cash is not available in the Fund's Income and Capital Accounts to pay
redemptions, the Trustee is authorized to sell Securities. Securities to be
sold will be selected by the Agent for the Sponsors in accordance with
procedures specified in the Indenture, based on market and credit factors that
they determine are in the best interests of the Fund. The Sponsors are
authorized to specify minimum face amounts in which Securities are sold, to
obtain a better price for the Fund. When Securities are sold (or mature or are
called), the size and diversity of the Fund is reduced. Sales to meet
redemptions are often made at times when Securities would not otherwise be
sold, and may result in lower prices than might be realized otherwise.

INCOME AND DISTRIBUTIONS

INCOME

Income is received by the Fund upon semi-annual payments of interest on
the Debt Obligations held in the Portfolio. Some of the Debt Obligations may
be purchased on a when, as and if issued basis or may have a

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delayed delivery (see Portfolio). Since interest on these Debt Obligations
does not begin to accrue until the date of delivery to the Fund, in order to
provide tax-exempt income to the Holders for this non-accrual period, the
Trustee's Annual Fee and Expenses is reduced by the interest that would have
accrued on these Debt Obligations between the initial settlement date for
Units and the delivery dates of the Debt Obligations. This eliminates
reduction in Monthly Income Distributions. Should when-issued Debt Obligations
be issued later than expected, the fee reduction will be increased
correspondingly. If the amount of the Trustee's Annual Fee and Expenses is
insufficient to cover the additional accrued interest, the Sponsors will treat
the contracts as Failed Debt Obligations. As the Trustee is authorized to draw
on the letter of credit deposited by the Sponsors before the settlement date
for these Debt Obligations and deposit the proceeds in an account for the Fund
on which it pays no interest, its use of these funds compensates the Trustee
for the reduction described above.

RETURNS

Estimated Current Return represents annual cash to be received from
interest-bearing Debt Obligations in the Portfolio (net of estimated annual
expenses) divided by the Public Offering Price (including sales charge).

Estimated Long-Term Return is a measure of the estimated return earned
over the estimated life of the Fund. This represents an average of the yields
to maturity (or earliest call date for obligations trading at a premium over
the call price) of the Debt Obligations in the Portfolio, calculated in
accordance with accepted bond practice and adjusted to reflect expenses and
sales charges. Bonds are customarily offered on a 'yield price' basis, which
reflects computation of yield to maturity (or call date) and not only the
interest payable but amortization or accretion to a specified date of any
premium over or discount from 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 its market
value and the time remaining to the call or maturity date depending on how the
Debt Obligation is priced. The average Portfolio yield is then adjusted to
reflect estimated expenses and the maximum sales charge. This calculation does
not reflect certain delays in distributing income nor the timing of other
receipts and distributions on Units; depending on maturities, it may therefore
overstate or understate the impact of sales charges. Both of these factors may
result in a lower figure.

Both Estimated Current Return and Estimated Long Term Return can
fluctuate with changes in Portfolio composition, in market value of the Debt
Obligations, in Fund expenses and sales charges; these returns therefore can
vary materially from the figures at the time of purchase. Any difference
between Estimated Current Return and Estimated Long Term Return will probably
fluctuate at least as frequently. No return estimate can be predictive of an
investor's actual return because an investor's actual return will depend on
many factors, including the value of the underlying Debt Obligations when the
investor purchases and sells Units of the Fund and the period of time the
investor holds the Units. Therefore, Estimated Current Return and Estimated
Long Term Return are designed to be comparative rather than predictive. A
yield calculation which is more comparable to an individual bond may be higher
or lower than Estimated Current Return or Estimated Long Term Return which are
more comparable to return calculations used by other investment products.

FUND ACCOUNTS

Interest received is credited to an Income Account and other receipts to
a Capital Account. A Reserve Account may be created by withdrawing from the
Income or Capital Accounts amounts considered appropriate by the Trustee to
reserve for any material amount that may be payable out of the Fund. Monies
held by the Trustee in the various accounts for the Fund do not bear interest.

DISTRIBUTIONS

The initial estimated net annual interest rate per Unit is stated in
Investment Summary. This is based on $1,000 face amount per Unit, after
deducting estimated annual Fund expenses. The rate will change as Securities
mature, are called or sold or otherwise disposed of, as Replacement Securities
are deposited and as Fund expenses change. Because the Portfolio is not
actively managed, income distributions may not be affected by changes in
interest rates. Subject to the financial conditions of the issuers of the
Securities, the amount of income should 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.

Each Unit receives an equal share of monthly distributions of interest
income and any principal distributed, substantially equal to the proportionate
income during the month preceding the Record Day less estimated

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<PAGE>

expenses. Interest on the Debt Obligations is received by the Fund on a
semi-annual or annual basis. Therefore, it takes 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 first and following Monthly Income Distributions.
When a Security is sold, redeemed or otherwise disposed of, accrued interest
is received by the Fund. Further, because interest on the Securities is not
received by the Fund at a constant rate throughout the year, any Monthly
Income Distribution may be more or less than the interest actually received.
To eliminate fluctuations in the Monthly Income Distribution, the Trustee will
advance amounts necessary to provide approximately equal distributions; it
will be reimbursed, without interest, from interest received on the
Securities. However, the amount of Monthly Income Distributions will change
over time as described above.

Along with the Monthly Income Distributions, the Trustee will distribute
the Holder's pro rata share of the distributable cash balance of the Capital
Account, computed as of the close of business on the preceding Record Day (if
at least equal to the Minimum Capital Distribution stated in Investment
Summary). Principal proceeds received from disposition of any Security after a
Record Day and prior to the related Distribution Day will be held in the
Capital Account subject to distribution on the second following Distribution
Day. The first distribution for a purchaser of Units between a Record Day and
the related Distribution Day will be made on the second following Distribution
Day.

Any funds held to acquire Replacement Securities which have not been used
to purchase Securities within 90 days after the initial deposit, unless
promptly used to purchase Replacement Securities, will be distributed to
Holders together with the attributable sales charge and interest attributable
to those funds. This interest will not be exempt from tax.

INVESTMENT ACCUMULATION PROGRAM

Distributions of interest and any principal or premium received by the
Fund will be paid in cash unless the Holder elects to have these distributions
reinvested without sales charge in the Municipal Fund Accumulation Program,
Inc. (the 'Program'). The Program is an open-end management investment company
whose investment objective is to obtain income that is exempt from regular
Federal income taxes through investment in a diversified portfolio consisting
primarily of state, municipal and public authority debt obligations rated A or
better or with comparable credit characteristics. Reinvesting compounds
earnings free from Federal tax. Holders participating in the Program will be
subject to State and local income taxes to the same extent as if the
distributions had been received in cash, and most of the income on the Program
is subject to State and local income taxes. 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.

FUND EXPENSES

See Trustee's Annual Fee and Expenses under Investment Summary for
estimated annual Fund expenses; if actual expenses exceed the estimate, the
excess will be borne by the Fund. The annual fee solely for the Trustee's
services is $0.70 per $1,000 face amount of Debt Obligations, payable in
monthly installments. The Trustee also benefits when it holds cash for the
Fund in non-interest bearing accounts. Possible additional charges include
Trustee fees and expenses for extraordinary services, costs of indemnifying
the Trustee and the Sponsors to the extent permitted by law and the Indenture,
costs of action taken to protect the Fund and other legal fees and expenses,
Fund termination expenses and any governmental charges. The Trustee has a lien
on Fund assets to secure reimbursement of these amounts, and may sell
Securities for this purpose. The Sponsors receive an annual fee for Portfolio
supervisory services at the maximum stated under Investment Summary, based on
the initial face amount in any calendar year. While this may exceed their
costs of providing these services to the Fund, the total supervision fees from
all Municipal Investment Trust Fund Series will not exceed their costs for
these services to all of those Series during any calendar year. The Sponsors
may also be reimbursed for their costs of providing bookkeeping and
administrative services to the Fund. The Trustees's, Sponsors' and Evaluators
fees may be adjusted for inflation without Holders' approval.

LOW COSTS

All expenses in establishing the Fund, including the cost of the initial
preparation and printing of documents relating to the Fund, cost of the
initial evaluation, the initial fees and expenses of the Trustee, legal
expenses,

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<PAGE>

advertising and selling expenses and any other out-of-pocket expenses, will be
paid from the Underwriting Account at no charge to the Fund.

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. Defined Asset
Funds have no 12b-1 or back-end load fees. These 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% a year. When compounded annually, small
differences in expense ratios can make a big difference in expenses.

FUND PERFORMANCE

Information on the performance of the Fund for various periods, on the
basis of changes in Unit price plus the amount of income and principal
distributions reinvested, may be included from time to time in advertisements,
sales literature, reports and other information furnished to current or
prospective investors. Total return figures are not averaged, and may not
reflect deduction of the sales charge, which would decrease the return.
Average annualized return figures reflect deduction of the maximum sales
charge. No provision is made for any income taxes payable. Past performance
may not be indicative of future results. The Fund is not actively managed.
Unit price and return fluctuate with the value of the Bonds in the Portfolio,
so there may be a gain or loss when Units are sold.

Fund performance may be compared to performance on the same basis (with
distributions reinvested) of Moody's Municipal Bond Averages or performance
data from publications such as Lipper Analytical Services, Inc., Morningstar
Publications, Inc., Money Magazine, The New York Times, U.S. News and World
Report, Barron's Business Week, CDA Investment Technology, Inc., Forbes
Magazine or Fortune Magazine. As with other performance data, performance
comparisons should not be considered representative of the Fund's relative
performance for any future period.

EXCHANGE OPTION

Holders may exchange Units (except of Short Intermediate Series) at a
reduced sales charge for units of one or more series of the types listed in
Appendix C ('Exchange Funds'). This includes the current maximum sales charge
and exchange fee for each type of Exchange Fund. (If units held less than five
months are exchanged for a series with a higher regular sales charge, the
Holder will pay the difference between the sales charges paid on the units
exchanged and the regular sales charge for the units acquired, if greater than
the exchange fee.)

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. Appendix C lists certain
characteristics of each type of Exchange Fund which a Holder should consider
in determining whether it would be an appropriate investment and therefore an
appropriate exchange for Units of the Fund.

Holders of Exchange Funds can similarly exchange units of those funds for
Units of the Fund. However, units of series offered at a maximum applicable
sales charge below 3.50% of the public offering price (including certain
series of Exchange Funds listed in Appendix C) are not eligible for exchange
except that Holders may exchange Units of the Fund for Freddie Mac or Select
Ten Series during their initial offering periods. Holders of other registered
unit investment trusts originally offered at a maximum applicable sales charge
of at least 3.0% ('Conversion Trusts') may similarly acquire Units at the
exchange fee.

To make an exchange, a Holder should contact his financial professional
to find out what suitable Exchange Funds are available and to obtain a
prospectus. The Holder may only acquire units of an Exchange Fund in which the
Sponsors maintain a secondary market and which are lawfully available for sale
in the state where the Holder resides. Except for the sales charge, an
exchange is like any other purchase and sale of units in the secondary market.
An exchange is a taxable event normally requiring recognition of any gain or
loss on the units exchanged. However, the Internal Revenue Service may seek to
disallow a loss if the portfolio of the units acquired is not materially
different from the portfolio of the units exchanged; Holders should consult
their own tax advisers. If the proceeds of units exchanged is insufficient to
acquire a whole number of Exchange Fund units, the Holder may pay the
difference in cash (not exceeding the price of a single unit acquired).

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<PAGE>

As the Sponsors are not obligated to maintain a secondary market in any
series, there can be no assurance that units of a desired series will be
available for exchange. The Exchange Option may be amended or terminated by
the Sponsors at any time, without notice to Holders.

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 Fund is not an association taxable as a corporation for Federal
income tax purposes, and income received by the Fund will be treated as
the income of the Holders in the manner set forth below.

Each Holder will be considered the owner of a pro rata portion of each
Debt Obligation in the Fund 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 Fund under Portfolio.

Each Holder will be considered to have received the interest on his
pro rata portion of each Debt Obligation when interest on the Debt
Obligation is received by the Fund. In the opinion of bond counsel
(delivered on the date of issuance of the 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 the Fund pursuant to a bank letter of credit,
guarantee or insurance policy with respect to payments of principal,
premium or interest on a Debt Obligation 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 Fund 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 amortization of any such acquisition premium.

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

A Holder will recognize taxable gain or loss when all or part of his
pro rata portion of a Debt Obligation is disposed of by the Fund for an
amount greater or less than his adjusted tax basis. Any such taxable gain
or

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<PAGE>

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 the Fund, 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 the Fund, interest on this
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.

Under the income tax laws of the State and City of New York, the Fund
is not an association taxable as a corporation and income received by the
Fund will be treated as the income of the Holders in the same manner as
for Federal income tax purposes, but will not necessarily be tax-exempt.

Holders will be taxed in the manner described above regardless of
whether the distributions from the Fund 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 the Debt Obligations may be proposed and eventually enacted at the
Federal or state level.

The foregoing discussion relates only to Federal and certain aspects
of New York State and City income taxes. Depending on their state of
residence, Holders may be subject to state and local taxation and should
consult their own tax advisers in this regard.

* * *

The Fund may include Debt Obligations issued after August 7, 1986 (see
Investment Summary--Taxation and Portfolio in Part A). Interest (including any
original issue discount) on certain of these Debt Obligations will be a
preference item for purposes of the alternative minimum tax ('AMT'). In
addition, a corporate Holder should be aware 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, an opinion relating to
the validity of the Debt Obligation and to the exemption of interest thereon
from regular Federal income taxes was or will be rendered by bond counsel.
Neither the Sponsors nor Davis Polk & Wardwell 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 Debt Obligations, the opinions of bond counsel
indicate that interest on these Debt Obligations received by a 'substantial
user' of the facilities being financed with the proceeds of such Debt

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<PAGE>

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 these facilities, or who occupies more than 5% of the usable area of
these facilities or for whom these 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.

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 Fund on the Debt Obligations, the gross proceeds received by
the Fund from the disposition of any Debt Obligation (resulting from
redemption or payment at maturity of any Debt Obligation or the sale by the
Fund of any Debt Obligation), and the fees and expenses paid by the Fund. 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.

ADMINISTRATION OF THE FUND

RECORDS

The Trustee keeps a register of the names, addresses and holdings of all
Holders. The Trustee also keeps records of the transactions of the Fund,
including a current list of the Securities and a copy of the Indenture, which
may be inspected by Holders at reasonable times during business hours.

REPORTS TO HOLDERS

With each distribution, the Trustee includes a statement of the interest
and any other receipts being distributed. Within five days after deposit of
Debt Obligations in exchange or substitution for Debt Obligations (or
contracts) previously deposited, the Trustee will send a notice to each
Holder, identifying both the Debt Obligations removed and the Replacement
Securities deposited. The Trustee sends each record Holder an annual report
summarizing transactions in the Fund's accounts and amounts distributed during
the year and Securities held, number of Units outstanding and Redemption Price
at year end, among other matters. Holders may obtain copies of Securities
evaluations from the Trustee to enable them to comply with Federal and state
tax reporting requirements. Fund accounts are audited annually by independent
accountants selected by the Sponsors; audited financial statements are
available on request.

TRUST INDENTURE

The Fund is a 'unit investment trust' created under New York law by a
Trust Indenture (the 'Indenture') among the Sponsors, the Trustee and the
Evaluator. This Prospectus summarizes various provisions of the Indenture, but
each statement herein is qualified in its entirety by reference to the
Indenture.

The Indenture may be amended by the Sponsors and the Trustee, without
consent by Holders: (a) to cure ambiguities or to correct or supplement any
defective or inconsistent provision, (b) to make any amendment required by the
SEC or other governmental agency, or (c) to make any other change not
materially adverse to the interest of Holders (as determined in good faith by
the Sponsors). The Indenture may also be amended upon consent of Holders of
51% of the Units. No amendment may reduce the interest of any Holder in the
Fund without the Holder's consent or reduce the percentage of Units required
to consent to any amendment without unanimous consent of Holders. Holders will
be notified on the substance of any amendment.

The Fund will be terminated, and any remaining Securities sold, no later
than the mandatory termination date specified in Investment Summary. It will
terminate earlier upon the disposition of the last Security, upon direction of
the Sponsors if total assets are below the minimum value specified in
Investment Summary or upon consent of Holders of 51% of the Units. The Trustee
will notify each Holder in writing within a reasonable time before
termination, specifying when Certificates should be surrendered. After
termination, the Trustee will sell any remaining Securities and distribute (by
check mailed to the Holder) each Holder's pro rata interest in the Fund, net
of any unpaid fees, taxes, governmental and other charges and subject to
surrender of any outstanding Certificate by the Holder.

Merrill Lynch, Pierce, Fenner & Smith Incorporated has been appointed as
Agent for the Sponsors by the other Sponsors.

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<PAGE>

The Trustee may resign upon notice to the Sponsors; it may be removed by
direction of Holders of 51% of the Units at any time or by the Sponsors
without consent of Holders if it becomes incapable of acting or bankrupt, its
affairs are taken over by public authorities, or if for any reason the
Sponsors determine in good faith that its replacement is in the best interest
of the Holders. The Evaluator may resign or be removed by the Sponsors and the
Trustee without consent of Holders. The resignation or removal of either
becomes effective upon acceptance of appointment by a successor; in this case,
the Sponsors (and the Trustee in the case of a successor Evaluator) will use
their best efforts to appoint a successor promptly; however, if upon
resignation no successor has accepted appointment within 30 days after
notification, the resigning Trustee or Evaluator may apply to a court of
competent jurisdiction to appoint a successor.

Any Sponsor may resign if one remaining Sponsor maintains a net worth of
$2,000,000 and is agreeable to the resignation. 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 bankrupt or its affairs are taken
over by public authorities, the Trustee may (a) appoint a successor Sponsor at
rates of compensation deemed by the Trustee to be reasonable and not exceeding
amounts prescribed by the SEC, or (b) terminate the Indenture and liquidate
the Fund or (c) continue to act as Trustee without terminating the Indenture.

The Sponsors, the Trustee and the Evaluator are not liable to any other
party (including Holders) for any act or omission in the conduct of their
responsibilities absent bad faith, willful misfeasance, negligence (gross
negligence in the case of a Sponsor) or reckless disregard of duty. The
Trustee will not be personally liable for taxes or other governmental charges
with respect to the Securities or interest thereon. The Indenture contains
other customary provisions limiting liability of the Trustee.

MISCELLANEOUS

TRUSTEE

The Trustee is named on the back cover of the Prospectus and is either
Bankers Trust Company, a New York banking corporation with its corporate trust
office at 4 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 ('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); Bank of New York, a New York banking corporation with its
Unit Investment Trust Department at 101 Barclay Street, New York, New York
10286 (which is subject to regulation by the New York Superintendent of Banks,
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). Unless otherwise indicated, when Investors Bank & Trust and The
First National Bank of Chicago act as Co-Trustees, the term 'Trustee' in this
Prospectus refers to these banks as co-trustee.

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. Emmet Marvin & Martin, 120 Broadway, New York, New York 10271, act
as counsel for the Bank of New York, as Trustee. 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 Statement of Condition in Part A was audited by Deloitte & Touche
LLP, independent accountants, as stated in their opinion. It is included in
reliance upon that opinion given on the authority of that firm as experts in
accounting and auditing.

25
<PAGE>

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, a subsidiary of Merrill
Lynch & Co., Inc., is 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 indirectly wholly-owned subsidiary of the Prudential Insurance Company
of America, is engaged in the investment advisory business. Dean Witter
Reynolds Inc., a principal operating subsidiary of Dean Witter, Discover &
Co., 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. Each Sponsor, or one of its predecessor
corporations, has acted as Sponsor of a number of series of unit investment
trusts. 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.

PUBLIC DISTRIBUTION

On the Initial Date of Deposit, the Sponsors, acting as managers for the
underwriters ('Underwriters') named under Underwriting Account, deposited the
Debt Obligations listed under Portfolio (or purchase contracts for these
Securities together with a letter of credit to complete the purchase), in
exchange for Units representing the entire ownership of the Fund.

During the initial offering period Units will be distributed to the
public at the Public Offering Price through the Underwriting Account and
dealers. The initial offering period is 30 days or less if all Units are sold.
If some 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 were repurchased may be offered by this Prospectus at the secondary
market Public Offering Price.

The Sponsors intend to qualify Units for sale in all states in which
qualification is deemed necessary through the Underwriting Account and by
dealers who are members of the National Association of Securities Dealers,
Inc.; however, Units of a State Trust will be offered for sale only in the
State for which the Trust is named, except that Units of a New Jersey Trust
will also be offered in Connecticut, and Units of a New York Trust will also
be offered in Connecticut, Florida and Puerto Rico. 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 Appendix B, but the 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 up to the concession to dealers.

UNDERWRITERS' AND SPONSORS' PROFITS

Upon sale of the Units, the Underwriters will receive sales charges at
the rates listed in Appendix B. The Sponsors also realized the profit or loss
on deposit of the Securities stated in Investment Summary. This is the
difference between the cost of the Securities to the Fund (based on the offer
side evaluation of the Securities on the Initial Date of Deposit) and the
Sponsors' cost of the Securities. The amount of any additional fees received
in connection with the direct placement of certain Debt Obligations deposited
in the Portfolio is also stated in Investment Summary. In addition, a Sponsor
or Underwriter may realize profits or sustain losses on Debt Obligations it
deposits in the Fund which were acquired from underwriting syndicates of which
it was a member. During the initial 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). In maintaining a secondary market for 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 and the
prices at which they resell these Units (which include the sales charge) or
the prices at which they redeem the Units. 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 to the extent permitted by Rule
15c3-3 under the Securities Exchange Act of 1934 and may be of benefit to the
Sponsors.

26
<PAGE>

DEFINED ASSET FUNDS

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

27
<PAGE>

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 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 14 16 18 20%

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 reduces risk, but does not
eliminate it. While the portfolio of managed funds, such as mutual funds,
continually changes, defined bond funds offer a defined portfolio and a
schedule of income distributions defined 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 the limited
other circumstances. Investors buy bonds for dependability--they know what
they can expect to earn and that principal 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 for
municipal bonds, which makes them attractive to high-bracket taxpayers, is
offered by Defined Municipal Investment Trust Funds. Defined Municipal
Investment Trust Funds have provided investors with tax-free income for more
than 30 years. Municipal Defined Funds offer a simple and convenient way for
investors to earn monthly income free from regular Federal income tax. 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 investors a simple and convenient way to
earn 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 a 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.

28
<PAGE>
APPENDIX A

DESCRIPTION OF RATINGS (AS DESCRIBED BY THE RATING COMPANIES THEMSELVES)

STANDARD & POOR'S RATINGS GROUP, A DIVISION OF MCGRAW-HILL, INC.

AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
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 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.

NR--Indicates that no rating has been requested, that there is
insufficient information on which to base a rating or that Standard & Poor's
does not rate a particular type of obligation as a matter of policy.

MOODY'S INVESTORS SERVICE, INC.

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

a-1
<PAGE>

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

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

Rating symbols may include numerical modifiers 1, 2 or 3. The numerical
modifier 1 indicates that the security ranks at the high end, 2 in the
mid-range, and 3 nearer the low end, of the generic category. These modifiers
of rating symbols 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 INVESTORS SERVICE, INC.

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 'J' sign after a rating symbol indicates relative standing in
its rating.

DUFF & PHELPS CREDIT RATING CO.

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 condtions.

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

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

a-2
<PAGE>

<TABLE><CAPTION>
APPENDIX B
INITIAL OFFERING SALES CHARGE SCHEDULE

SALES CHARGE
(GROSS UNDERWRITING PROFIT)
AS PERCENT OF AS PERCENT OF DEALER CONCESSION AS PRIMARY MARKET
OFFER SIDE PUBLIC NET AMOUNT PERCENT OF PUBLIC CONCESSION TO
NUMBER OF UNITS OFFERING PRICE INVESTED OFFERING PRICE INTRODUCING DEALERS

MONTHLY PAYMENT SERIES, MULTISTATE SERIES, INSURED SERIES
<S> <C> <C> <C> <C>
Less than 250...................... 4.50% 4.712% 2.925% $ 32.40
250 - 499.......................... 3.50 3.627 2.275 25.20
500 - 749.......................... 3.00 3.093 1.950 21.60
750 - 999.......................... 2.50 2.564 1.625 18.00
1,000 or more...................... 2.00 2.041 1.300 14.40

INTERMEDIATE SERIES (TEN YEAR MATURITIES)

Less than 250...................... 4.00% 4.167% 2.600% $ 28.80
250 - 499.......................... 3.00 3.093 1.950 21.60
500 - 749.......................... 2.50 2.564 1.625 18.00
750 - 999.......................... 2.00 2.040 1.300 14.40
1,000 or more...................... 1.50 1.523 0.975 10.00

INTERMEDIATE SERIES (SHORT INTERMEDIATE MATURITIES)

Less than 250...................... 2.75% 2.828% 1.788% $ 19.80
250 - 499.......................... 2.25 2.302 1.463 16.20
500 - 749.......................... 1.75 1.781 1.138 12.60
750 - 999.......................... 1.25 1.266 0.813 9.00
1,000 or more...................... 1.00 1.010 0.650 7.20

</TABLE>

SECONDARY MARKET SALES CHARGE SCHEDULE

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

EFFECTIVE 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%

For this purpose, a Security will be considered to mature on its stated
maturity date unless it has been called for redemption or funds or securities
have been placed in escrow to redeem it on an earlier date, or is subject to a
mandatory tender, in which case the earlier date will be considered the
maturity date.

b-1
<PAGE>

APPENDIX C
EXCHANGE FUNDS

REDUCED
MAXIMUM SALES CHARGE
NAME OF APPLICABLE FOR SECONDARY
EXCHANGE FUND SALES CHARGE(A) MARKET(B)
DEFINED ASSET FUNDS-- MUNICIPAL
INVESTMENT TRUST FUND
Monthly Payment, State and 5.50%(c) $15 per unit
Multistate Series
Intermediate Term Series 4.50%(c) $15 per unit
Insured Series 5.50%(c) $15 per unit
AMT Monthly Payment Series 5.50%(c) $15 per unit
DEFINED ASSET FUNDS-- MUNICIPAL INCOME
FUND
Insured Discount Series 5.50%(c) $15 per unit
DEFINED ASSET FUNDS-- INTERNATIONAL
BOND FUND
Multi-Currency Series 3.75% $15 per unit
Australian and New Zealand Dollar 3.75% $15 per unit
Bond Series
Australian Dollar Bonds Series 3.75% $15 per unit
Canadian Dollar Bonds Series 3.75% $15 per unit

DEFINED ASSET FUNDS-- CORPORATE INCOME
FUND
Monthly Payment Series 5.50% $15 per unit
Intermediate Term Series 4.75% $15 per unit
Cash or Accretion Bond Series and 3.50% $15 per 1,000 units
SELECT Series
Insured Series 5.50% $15 per unit
DEFINED ASSET FUNDS-- GOVERNMENT
SECURITIES INCOME FUND
GNMA Series (other than those 4.25% $15 per unit
below)
GNMA Series E or other GNMA Series 4.25% $15 per 1,000 units
having units with an initial face
value of $1.00
Freddie Mac Series 3.75% $15 per 1,000 units

NAME OF INVESTMENT
EXCHANGE FUND CHARACTERISTICS
DEFINED ASSET FUNDS-- MUNICIPAL
INVESTMENT TRUST FUND

<TABLE>
<S> <C>
Monthly Payment, State and long-term, fixed rate, tax-exempt income
Multistate Series
Intermediate Term Series intermediate-term, fixed rate, tax-exempt income
Insured Series long-term, fixed rate, tax-exempt income,
underlying securities insured by insurance
companies
AMT Monthly Payment Series long-term, fixed rate, income exempt from regular
federal income tax but partially subject to AMT
DEFINED ASSET FUNDS-- MUNICIPAL INCOME
FUND
Insured Discount Series long-term, fixed rate, insured, tax-exempt current
income, taxable capital gains
DEFINED ASSET FUNDS-- INTERNATIONAL
BOND FUND
Multi-Currency Series intermediate-term, fixed rate, payable in foreign
currencies, taxable income
Australian and New Zealand Dollar intermediate-term, fixed rate, payable in
Bond Series Australian and New Zealand dollars, taxable income
Australian Dollar Bonds Series intermediate-term, fixed rate, payable in
Australian dollars, taxable income
Canadian Dollar Bonds Series short intermediate-term, fixed rate, payable in
Canadian dollars, taxable income
DEFINED ASSET FUNDS-- CORPORATE INCOME
FUND
Monthly Payment Series long-term, fixed rate, taxable income
Intermediate Term Series intermediate-term, fixed rate, taxable income
Cash or Accretion Bond Series and intermediate-term, fixed rate, underlying
SELECT Series securities are collateralized compound interest
obligations, taxable income, appropriate for IRA's
or tax-deferred retirement plans
Insured Series long-term, fixed rate, taxable income, underlying
securities are insured
DEFINED ASSET FUNDS-- GOVERNMENT
SECURITIES INCOME FUND
GNMA Series (other than those long-term, fixed rate, taxable income, underlying
below) securities backed by the full faith and credit of
the United States
GNMA Series E or other GNMA Series long-term, fixed rate, taxable income, underlying
having units with an initial face securities backed by the full faith and credit of
value of $1.00 the United States, appropriate for IRA's or
tax-deferred retirement plans
Freddie Mac Series intermediate term, fixed rate, taxable income,
underlying securities are backed by Federal Home
Loan Mortgage Corporation but not by U.S.
Government.

</TABLE>

(a) 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.

(b) 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 (above) 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 unit.

(d) The reduced sales charge for the Sixth Utility Common Stock Series of
Equity Income Fund is $15 per 2,000 units and for prior Utility Common
Stock Series is $7.50 per unit.

c-1
<PAGE>

REDUCED
MAXIMUM SALES CHARGE
NAME OF APPLICABLE FOR SECONDARY
EXCHANGE FUND SALES CHARGE(A) MARKET(B)
DEFINED ASSET FUNDS--EQUITY INCOME FUND
Utility Common Stock Series 4.50% $15 per 1,000 units(d)
Concept Series 4.00% $15 per 100 units
Select Ten Portfolios (domestic and 2.75% $17.50 per 1,000 units
international)

NAME OF INVESTMENT
EXCHANGE FUND CHARACTERISTICS
DEFINED ASSET FUNDS--EQUITY INCOME FUND

<TABLE>
<S> <C>
Utility Common Stock Series dividends, taxable income, underlying securities
are common stocks of public utilities
Concept Series underlying securities constitute a professionally
selected portfolio of common stocks consistent
with an investment idea or concept
Select Ten Portfolios (domestic and 10 highest dividend yielding stocks in a
international) designated stock index; seeks higher total return
than that stock index; terminates after one year

c-2
</TABLE>

<PAGE>
APPENDIX D

THE CALIFORNIA TRUST

The Portfolio of the California Trust contains different issues of 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. 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, projected the State would have an accumulated deficit of about $2.75
billion by June 30, 1993 essentially unchanged from the prior year. The Governor
proposed to eliminate this deficit over an 18-month period. 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 efforts;
and relief in areas such as county welfare department self-evaluations,
noise guidelines and recycling requirements.

2. The 1993-94 Budget Act projected 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.

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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 and $400
million in support for higher education (partly offset by fee increases at
all three units of higher education) and various miscellaneous cuts
(totalling approximately $150 million) in State government services in many
agencies, up to 15 percent. The 1993-94 Budget Act suspended the 4 percent
automatic budget reduction 'trigger', as was done in 1992-93, so cuts could
be focused.

5. A 2-year suspension of the renters' tax credit ($390 million
expenditure reduction in 1993-94).

6. 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 1993-94 Budget Act
suspended the 4 percent automatic budget reduction trigger, as was done in
1992-93 so cuts could be focused.

Administration reports during the course of the 1993-94 Fiscal Year have
indicated that while economic recovery appears to have started in the second
half of the fiscal year, recessionary conditions continued longer than had been
anticipated when the 1993-94 Budget Act was adopted. Overall, revenues for the
1993-94 Fiscal Year were about $800 million lower than original projections, and
expenditures were about $780 million higher, primarily because of higher health
and welfare caseloads, lower property taxes which require greater State support
for K-14 education to make up the shortfall, and lower than anticipated federal
government payments for immigration-related costs. The reports, in May and June,
1994, indicated that revenues in the second half of the 1993-94 Fiscal Year have
been very close to the projections made on the Governor's Budget of January 10,
1994, which is consistent with a slow turnaround in the economy.

The Department of Finance's July 1994 Bulletin, including the final June
receipts, reported that June revenues were $114 million (2.5 percent) above
projection, with final end-of-year results at $377 million (about 1 percent)
above the May Revision projections. Part of this results was due to end-of-year
adjustments and reconcilitations. Personal income tax and sales tax continued to
track projections very well. The largest factor in the higher than anticipated
revenues was from bank and corporation taxes, which were $140 million (18.4
percent) above projection in June. While the higher June receipts are reflected
in the actual 1993-94 Fiscal Year cash flow results, and help the starting cash
balance for the 1994-95 Fiscal Year, the Department of Finance has not adjusted
any of its revenue projections for the 1994-95 or 1995-96 Fiscal Years.

During the 1993-94 Fiscal Year, the State implemented the deficit
retirement plan, which was part of the 1993-94 Budget Act, by issuing $1.2
billion of revenue anticipation warrants in February 1994 maturing December 21,
1994. This borrowing reduced the cash deficit at the end of the 1993-94 Fiscal
Year. Nevertheless, because of the $1.5 billion variance from the original
1993-94 Budget Act assumptions. the General Fund ended the fiscal year at June
30, 1994 carrying forward an accumulated deficit of approximately $2 billion.

Because of the revenue shortfall and the State's reduced internal
borrowable cash resources, in addition to the $1.2 billion of revenue
anticipation warrants issued as part of the deficit retirement plan, the State
issued an additional $2.0 billion of revenue anticipation warrants, maturing
July 26, 1994, which were needed to fund the State's obligations and expenses
through the end of the 1993-94 Fiscal Year.

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. Current
estimates of total property damage (private and public) are in the range of $20
billion but these estimates are still subject to change.

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.

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State-owned facilities including transportation corridors and facilities
such as Interstate Highways 5 and 10 and State Highways 14, 118 and 210
sustained some damage. Most of the major highways (Interstate 5 and 10) have now
been reopened.

The campus of California State University at Northridge (very near the
epicenter) suffered an estimated $350 million damage, resulting in temporary
closure of the campus. It has reopened using borrowed facilities elsewhere in
the area and many temporary structures. There was also some damage to the
University of California at Los Angeles and to an office building in Van Nuys
(now open after a temporary closure). Overalll, except for the temporary road
and bridge closures, and CSU-Northridge, the earthquake did not and is not
expected to significantly State government operations.

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 originally proposed 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
proposed to cover $1.05 billion of these costs from a general obligation bond
issue which was on the June, 1994 ballot, but it was not approved by the voters.
The Governor subsequently announced that the State's share for transportation
projects would come from existing Department of Transportation funds (thereby
delaying other, non-earthquake related projects), that the State's share for
certain other costs (including local school building repairs) would come from
reallocating existing bond funds, and that a proposed program for homeowner and
small business aid supplemental to federal aid would have to be abandoned. Some
other costs will be borrowed from the federal government in a manner similar to
that used by the State of Florida after Hurricane Andrew; pursuant to Senate
Bill 2383, repayment will have to be addressed in 1995-96 or beyond.

The 1994-95 Fiscal Year represents 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 proposal, as
updated in May and June, 1994, recognized that the accumulated deficit could not
be repaid in one year, and proposed a two-year solution. The budget proposal
sets forth revenue and expenditure forecasts and revenue and expenditure
proposals which result in operating surpluses for the budget for both 1994-95
and 1995-96, and lead to the elimination of the accumulated budget deficit,
estimated at about $2.0 billion at June 30, 1994, by June 30, 1996.

The 1994-95 Budget Act, signed by the Govennor on July 8, 1994, projects
revenues and transfers of $41.9 billion, $2.1 billion higher than revenues in
1993-94. This reflects the Administration's forecast of an improving economy.
Also included in this figure is a projected receipt of about $360 million from
the Federal Government to reimburse the State's cost of incarcerating
undocumented immigrants. The State will not know how much the Federal Government
will actually provide until the Federal FY 1995 Budget is completed. Completion
of the Federal Budget is expected by October 1994. The Legislature took no
action on a proposal in the January Governor's Budget to undertake an expansion
of the transfer of certain programs to counties, which would also have
transferred to counties 0.5% of the State's current sales tax.

The Budget act projects Special Fund revenues of $12.1 billion, a decrease
of 2.4% from 1993-94 estimated revenues.

The 1994-95 Budget Act projects General Fund expenditures of $40.9 billion,
an increase of $1.6 billion over 1993-94. The Budget Act also projects Special
Fund expenditures of $13.7 billion, a 5.4% increase over 1993-94 estimated
expenditures. The principal features of the Budget Act were the following:

1. Receipt of additional federal aid in 1994-95 of about $400 million
for costs of refugee assistance and medical care for undocumented
immigrants, thereby offsetting a similar General Fund cost. The State will
not know how much of these funds it will receive until the Federal FY 1995
Budget is passed.

2. Reductions of approximately $1.1 billion in health and welfare costs.

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3. A General Fund increase of approximately $38 million in support for
the University of California and $65 million for California State
University. It is anticipated that student fees for both the U.C. and
C.S.U. will increase up to 10%.

4. Proposition 98 funding for K-14 schools is increased by $526 million
from 1993-94 levels, representing an increase for enrollment growth and
inflation. Consistent with previous budget agreements, Proposition 98
funding provides approximately $4,217 per student for K-12 schools, equal
to the level in the past three years.

5. Legislation enacted with the Budget clarifies laws passed in 1992 and
1993 which require counties and other local agencies to transfer funds to
local school districts, thereby reducing State aid. Some counties had
implemented a method of making such transfers which provided less money for
schools if there were redevelopment agency projects. The new legislation
bans this method of transfer. If all counties had implemented this method,
General Fund aid to K-12 schools would have been $300 million higher in
each of the 1994-95 and 1995-96 Fiscal Years.

6. The 1994-95 Budget Act provides funding for anticipated growth in the
State's prison inmate population, including provisions for implementing
recent legislation (the so-called 'Three Strikes' law) which requires
mandatory life prison terms for certain third-time felony offenders.

7. Additional miscellaneous cuts ($500 million) and fund transfers ($255
milliion) totalling in the aggregate approximately $755 million.

The 1994-95 Budget Act contains no tax increases. Under legislation enacted
for the 1993-94 Budget, the renters' tax credit was suspended for two years
(1993 and 1994). A ballot proposition to permanently restore the renters' tax
credit after this year failed at the June, 1994 election. The Legislature
enacted a further one-year suspension of the renters' tax credit, for 1995,
saving about $390 million in the 1995-96 Fiscal Year.

The 1994-95 Budget assumes that the State will use a cash flow borrowing
program in 1994-95 which combines one-year notes and two-year warrants, which
have now been issued. Issuance of warrants allows the State to defer repayment
of approximately $1.0 billion of its accumulated budget deficit into the 1995-96
Fiscal Year.

The State's cash flow management plan for the 1994-95 fiscal year included
the issuance of $4.0 billion of revenue anticipation warrants on July 26, 1994,
to mature on April 25, 1996, as part of a two-year plan to retire the
accumulated State budget deficit.

Because preparation of cash flow estimates for the 1995-96 Fiscal Year is
necessarily more imprecise than for the current fiscal year and entails greater
risks of variance from assumptions, and because the Governor's two-year budget
plan assumes receipt of a large amount of federal aid in the 1995-96 Fiscal Year
for immigration-related costs which is uncertain, the Legislature enacted a
backup budget adjustment mechanism to mitigate possible deviations from
projected revenues, expenditures or internal borrowable resources which might
reduce available cash resources during the two-year plan, so as to assure
repayment of the warrants.

Pursuant to Section 12467 of the California Government Code, enacted by
Chapter 135, Statutes of 1994 (the 'Budget Adjustment Law'), the State
Controller will, on November 15, 1994, in conjunction with the Legislative
Analyst's Office, review the cash flow projections for the General Fund on June
30, 1995 and compare them to the projections for the 1994-95 Fiscal Year
included in the Official Statement dated July 20, 1994 for the 1994 Revenue
Anticipation Warrants, Series C and D. If the State Controller's report
identifies a decrease in the unused borrowable resources on June 30, 1995 of
more than $430,000,000, then the '1995 cash shortfall' shall be the amount of
the difference that exceeds $430,000,000. On or before February 15, 1995,
legislation must be enacted providing for sufficient General Fund expenditure
reductions, revenue increases, or both, to offset said 1995 cash shortfall. If
such legislation is not enacted, within five days thereafter the Director of
Finance must reduce all General Fund appropriations for the 1994-95 Fiscal Year,
except certain appropriations required by the State Constitution and federal law
(the 'Required Appropriations'), by the percentage equal to the ratio of said
1995 cash shortfall to total remaining General Fund appropriations for the
1994-95 Fiscal Year, excluding the Required Appropriations.

The Director of Finance is required to include updated cash-flow statements
for the 1994-95 and 1995-96 Fiscal Years in the May revision to the 1995-96
Fiscal Year budget proposal. By June 1, 1995, the State Controller must concur
with these updated statements or provide a revised estimate of the cash
condition of the General Fund for the 1994-95 and the 1995-96 Fiscal Years. For
the 1995-96 Fiscal Year, Chapter 135 prohibits

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any external borrowing as of June 30, 1996, thereby requiring the State to rely
solely on internal borrowable resources, expenditure reductions or revenue
increases to eliminate any projected cash flow shortfall.

Commencing on October 15, 1995, the State Controller will, in conjunction
with the Legislative Analyst's Office, review the estimated cash condition of
the General Fund for the 1995-96 Fiscal Year. The '1996 cash shortfall' shall be
the amount necessary to bring the balance of unused borrowable resources on June
30, 1996 to zero. On or before December 1, 1995, legislation must be enacted
providing for sufficient General Fund expenditure reductions, revenue increases,
or both, to offset any such 1996 cash shortfall identified by the State
Controller. If such legislation is not enacted, within five days thereafter the
Director of Finance must reduce all General Fund appropriations for the 1995-96
Fiscal Year, except the Required Appropriations, by the percentage equal to the
ratio of said 1996 cash shortfall to total remaining General Fund appropriations
for the 1995-96 Fiscal Year, excluding the Required Appropriations.

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.

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.

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.

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.

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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.

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.

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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 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

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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.

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.

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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 a 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 FLORIDA TRUST

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

RISK FACTORS--The State Economy. In 1980 Florida ranked seventh among the
fifty states with a population of 9.7 million people. The State has grown
dramatically since then and, as of April 1, 1993, ranked fourth with an
estimated population of 13.6 million, an increase of approximately 44.7% since
1980. Since the beginning of the eighties, Florida has surpassed Ohio, Illinois
and Pennsylvania in total population. Florida's attraction, as both a growth and
retirement state, has kept net migration fairly steady with an average of
292,988 new residents each year, from 1983 through 1993. Since 1983 the prime
working age population (18-44) has grown at an average annual rate of 2.6%. The
share of Florida's total working age population (18-59) to total State
population is approximately 54%. Non-farm employment has grown by approximately
64.4% since 1980. The service sector is Florida's largest employment sector,
presently accounting for 32.1% of total non-farm employment. Manufacturing jobs
in Florida are concentrated in the area of high-tech and value-added sectors,
such as electrical and electronic equipment, as well as printing and publishing.
Job gains in Florida's manufacturing sector have exceeded national averages
increasing by 11.7% between 1980 and 1993. Foreign Trade has contributed
significantly to Florida's employment growth. Florida's dependence on highly
cyclical construction and construction related manufacturing has declined. Total
contract construction employment as a share of total non-farm employment has
fallen from 10% in 1973, to 7% in 1980 to 5% in 1993. Although the

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job creation rate for the State of Florida since 1980 is over two times the rate
for the nation as a whole, since 1989 the unemployment rate for the State has
risen faster than the national average. The average rate of unemployment for
Florida since 1980 is 6.5%, while the national average is 7.1%. Because Florida
has a proportionately greater retirement age population, property income
(dividends, interest and rent) and transfer payments (Social Security and
pension benefits) are a relatively more important source of income. In 1993,
Florida employment income represented 62% of total personal income while
nationally, employment income represented 72% of total personal income.

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

The State Budget. The State operates under a biennial budget which is
formulated in even numbered years and presented for approval to the Legislature
in odd numbered years. A supplemental budget request process is utilized in the
even numbered years for refining and modifying the primary budget. Under the
State Constitution and applicable statutes, the State budget as a whole, and
each separate fund within the State budget, must be kept in balance from
currently available revenues during each State fiscal year. (The State's fiscal
year runs from July 1 through June 30). The Governor and the Comptroller of the
State are charged with the responsibility of ensuring that sufficient revenues
are collected to meet appropriations and that no deficit occurs in any State
fund.

The financial operations of the State covering all receipts and
expenditures are maintained through the use of three types of funds: the General
Revenue Fund, Trust Funds and Working Capital Fund. The majority of the State's
tax revenues are deposited in the General Revenue Fund and moneys in the General
Revenue Fund are expended pursuant to appropriations acts. In fiscal year
1992-93, expenditures for education, health and welfare and public safety
represented approximately 49%, 30% and 11%, respectively, of expenditures from
the General Revenue Fund. The Trust Funds consist of moneys received by the
State which under law or trust agreement are segregated for a purpose authorized
by law. Revenues in the General Revenue Fund which are in excess of the amount
needed to meet appropriations may be transferred to the Working Capital Fund.

State Revenues. Estimated General Revenue and Working Capital Fund
revenues of $13,582.7 million for 1993-94 (excluding Hurricane Andrew related
revenues and expenses) represent an increase of 8.4% over revenues for 1992-93.
This amount reflects a transfer of $190 million, out of an estimated $220
million in non-recurring revenue due to Hurricane Andrew, to a hurricane relief
trust fund. Estimated Revenue for 1994-95 of $14,573.8 million (excluding
Hurricane Andrew impacts) represent an increase of 7.3% over 1993-1994. This
amount reflects a transfer of $159 million in non-recurring revenue due to
Hurricane Andrew, to a hurricane relief trust fund.

In fiscal year 1992-1993, the State derived approximately 62% of its total
direct revenues for deposit in the General Revenue Fund, Trust Funds and Working
Capital Fund from State taxes. Federal funds and other special revenues
accounted for the remaining revenues. The greatest single source of tax receipts
in the State is the 6% sales and use tax. For the fiscal year ended June 30,
1993, receipts from the sales and use tax totalled $9,426 million, an increase
of approximately 12.5% over fiscal year 1991-92. This amount includes
non-recurring increases attributable to the rebuilding and reconstruction
following the hurricane. The second largest source of State tax receipts is the
tax on motor fuels including the tax receipts distributed to local governments.
Receipts from the taxes on motor fuels are almost entirely dedicated to trust
funds for specific purposes or transferred to local governments and are not
included in the General Revenue Fund. For the fiscal year ended June 30, 1992,
collections of this tax totalled $1,475.5 million.

The State currently does not impose a personal income tax. However, the
State does impose a corporate income tax on the net income of corporations,
organizations, associations and other artificial entities for the privilege of
conducting business, deriving income or existing within the State. For the
fiscal year ended June 30, 1993, receipts from the corporate income tax totalled
$846.6 million, an increase of approximately 5.6% from fiscal year 1991-92. The
Documentary Stamp Tax collections totalled $639 million during fiscal year
1992-93, or

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approximately 27% over fiscal year 1991-92. The Alcoholic Beverage Tax, an
excise tax on beer, wine and liquor totalled $442.2 million in 1992-93, an
increase of 1.6% from fiscal year 1991-92. The Florida lottery produced sales of
$2.13 billion of which $810.4 million was used for education in fiscal year
1992-93.

While the State does not levy ad valorem taxes on real property or tangible
personal property, counties, municipalities and school districts are authorized
by law, and special districts may be authorized by law, to levy ad valorem
taxes. Under the State Constitution, ad valorem taxes may not be levied by
counties, municipalities, school districts and water management districts in
excess of the following respective millages upon the assessed value of real
estate and tangible personal property; for all county purposes, ten mills; for
all municipal purposes, ten mills; for all school purposes, ten mills; and for
water management purposes, either 0.05 mill or 1.0 mill, depending upon
geographic location. These millage limitations do not apply to taxes levied for
payment of bonds and taxes levied for periods not longer than two years when
authorized by a vote of the electors. (Note: one mill equals one-tenth of one
cent).

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

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

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

At the November 1994 general election, voters approved an amendment to the
State Constitution that will limit the amount of taxes, fees, licenses and
charges imposed by the Legislature and collected during any fiscal year to the
amount of revenues allowed for the prior fiscal year, plus an adjustment for
growth. Growth is defined as the amount equal to the average annual rate of
growth in Florida personal income over the most recent twenty quarters times the
state revenues allowed for the prior fiscal year. The revenues allowed for any
fiscal year can be increased by a two-thirds vote of the Legislature, The limit
will be effective starting with fiscal year 1995-1996. Any excess revenues
generated will be deposited in the budget stabilization fund until it is fully
funded and then refunded to taxpayers. Included among the categories of revenues
which are exempt from the proposed revenue limitation, however, are revenues
pledged to state bonds.

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

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

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

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

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

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

A. In a suit, plaintiff has sought title to Hugh Taylor Birch State
Recreation Area by virtue of a reverter clause in the deed from Hugh Taylor
Birch to the State. A final judgment at trial was entered in favor of the
State. The case has been appealed to the Fourth District Court of Appeal.
The Department of Natural Resources anticipates the area will remain in
State lands; however, in the event the court should rule in favor of the
plaintiff, the State is subject to a loss of real property valued at
approximately $400 million.

B. In a suit, the Florida Supreme Court prospectively invalidated a tax
preference methodology under former Sections 554.06 and 565.12 of the
Florida Statutes (1985). This ruling was appealed to the United States
Supreme Court which reversed the State Supreme Court and remanded the
matter back to the State court. The Supreme Court's opinion suggested that
one of the State's options for correcting the constitutional problems would
be to assess and collect back taxes at the higher rates applicable to those
who were ineligible for the tax preference from all taxpayers who had
benefitted from the tax preference during the contested tax period. The
State chose to seek a recovery of taxes from those who benefitted from the
tax preference by requiring them to pay taxes at the higher rate that
applied to out-of-state manufacturers and distributors. The Florida Supreme
Court remanded the matter to the Circuit Court for the 2nd Judicial Circuit
to hear arguments on the method chosen by the State to provide a clear and
certain remedy. The trial court's decision against the State is on appeal
at the First District Court of Appeal. With the exception of two parties,
all parties have settled their claims with the State. Should an unfavorable
outcome result in this case, approximately $33 million may be refunded.

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

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

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refund application yet to be denied is approximately $150 million. However,
the State hopes that refund exposure will be reduced as these refund
requests begin to be denied based upon the Florida Supreme Court decision
in the instant case.

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

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

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

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

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

J. In 1990, the Florida Legislature passed an act imposing a $295 impact
fee on cars purchased or titled in other states that are then registered in
the State by persons having or establishing permanent residency in the
State. Two separate groups filed suit challenging the fee. The circuit
court consolidated the various cases and entered final summary judgment
finding the fee unconstitutional under the Commerce Clause of the United
States Constitution and ordered an immediate refund to all persons having
paid the fee since the statute came into existence. The State noticed an
appeal of the circuit court ruling which entitled the State to a stay of
the effectiveness of such ruling, thus, the fee continued to be collected
during the period of the pending appeal. On September 29, 1994, the Supreme
Court of Florida reaffirmed the circuit court's decision by concluding that
the statute results in discrimination against out of state economic
interests in contravention of the Commerce Clause and that the proper
remedy for such violation is a full refund to all persons who have paid the
illegal fee. The State's refund exposure may be in excess of $100 million.

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

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

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

Summary. Many factors including national, economic, social and
environmental policies and conditions, most of which are not within the control
of the State or its local units of government, could affect or could have an
adverse impact on the financial condition of the State. Additionally, the
limitations placed by the State

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Constitution on the State and its local units of government with respect to
income taxation, ad valorem taxation, bond indebtedness and other matters
discussed above, as well as other applicable statutory limitations, may
constrain the revenue-generating capacity of the State and its local units of
government and, therefore, the ability of the issuers of the Debt Obligations to
satisfy their obligations thereunder.

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

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

FLORIDA TAXES

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

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

2. Because Florida does not impose a personal income tax, non-corporate
Holders of Units of the Florida Trust will not be subject to any Florida
income taxes with respect to (i) amounts received by the Florida Trust on
the Debt Obligations it holds; (ii) amounts which are distributed by the
Florida Trust to non-corporate Holders of Units of the Florida Trust; or
(iii) any gain realized on the sale or redemption of Debt Obligations by
the Florida Trust or of a Unit of the Florida Trust by a non-corporate
Holder. However, corporations as defined in Chapter 220, Florida Statutes
(1991), which are otherwise subject to Florida income taxation will be
subject to tax on their respective share of any income and gain realized by
the Florida Trust and on any gain realized by a corporate Holder on the
sale or redemption of Units of the Florida Trust by the corporate Holder.

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

4. Bonds issued by the State of Florida or its political subdivisions
are exempt from Florida intangible personal property taxation under Chapter
199, Florida Statutes (1991), as amended. Bonds issued by the Government of
Puerto Rico or by the Government of Guam, or by their authority, are exempt
by Federal statute from taxes such as the Florida intangible personal
property tax. Thus, the Florida Trust will not be subject to Florida
intangible personal property tax on any Debt Obligations in the Florida
Trust issued by the State of Florida or its political subdivisions, by the
Government of Puerto Rico or by its authority or by the Government of Guam
or by its authority. In addition, the Units of the Florida Trust will not
be subject to the Florida intangible personal property tax if the Florida
Trust invests solely in such Florida, Puerto Rico or Guam debt obligations.

THE NEW 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.

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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 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.

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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,
$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 State 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 State
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 State 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 State 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 State 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 State Department of Law and Public
Safety and the State Department of Corrections. Among the programs funded by
this appropriation are 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 State Department of Transportation for
the various programs it administers, such as the maintenance and improvement of
the State highway system.

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$156.4 million is appropriated to the State 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 and if provided, redemption
premium 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 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.

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 January 18, 1994, Christine Todd-Whitman replaced James Florio as
Governor of the State. As a matter of public record, Governor Whitman, during
her campaign, publicized her intention to reduce taxes in the State. Effective
January 1, 1994, the State's personal income tax rates were reduced by 5% for
all taxpayers. Effective January 1, 1995, the State's personal income tax rates
will be reduced. The effect of the tax reductions 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, which called for revaluation of several
public employee pension funds, authorized an adjustment to the assumed rate of
return on the investment of pension fund assets, and refunds $773 million in
public employer contributions to the State from various pension funds, reflected
as a revenue source for Fiscal Year 1992. It is estimated that savings of $226
million will be effected 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. On May 5, 1994, the Appellate Division
affirmed the decision of the trial court, dismissing the complaint. An adverse
determination in this matter would have a significant impact on fiscal year 1993
and subsequent fiscal year fund balances.

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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. 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. 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.

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.

THE NEW YORK TRUST

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

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

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

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Approximately $5.4 billion of State general obligation debt was outstanding
at March 31, 1994. The State's net tax-supported debt (restated to reflect
LGAC's assumption of certain obligations previously funded through issuance of
short-term debt) was $27.5 billion at March 31, 1994, up from $11.7 billion in
1984. A proposed constitutional amendment passed by the Legislature would limit
additional lease-purchase and contractual obligation financing for State
facilities, but would authorize the State without voter referendum to issue
revenue bonds within a formula-based cap, secured solely by a pledge of certain
State tax receipts. It would also restrict State debt to capital projects
included in a multi-year capital financing plan. The proposal is subject to
approval by the next legislature and by voters. Standard & Poor's reduced its
rating of the State's general obligation bonds on January 13, 1992 to A-(its
lowest rating for any state). Moody's reduced its ratings of State general
obligation bonds from A1 to A on June 6, 1990 and to Baa1, its rating of $14.2
billion of appropriation-backed debt of the State and State agencies (over
two-thirds of the total debt) on January 6, 1992.

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

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

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

The budget for the fiscal year that began April 1, 1994 increases spending
by 3.8% (greater than inflation for the first time in six years). Tax revenue
projections are based on assumed modest growth in the State economy. It provides
a tax credit for low income families and increases aid to education, especially
in the poorer districts. The litigation fund will be increased and then paid out
during the year. The State is reducing coverage and placing additional
restrictions on certain health care services. Over $1 billion results from
further postponement of scheduled reductions in personal income taxes and in
taxes on hospital income; another $1 billion comes from rolling over the
projected surplus from the previous fiscal year. Other non-recurring measures
would be reduced to $78 million. The State Legislature passed legislation to
implement a budget agreement more than two months after the beginning of the
year. Taxes (principally business taxes) would be reduced by $475 million in the
current fiscal year and by $1.6 billion annually after fully phased in. In
November 1993 the State's Court of Appeals ruled unconstitutional 1990
legislation which postponed employee pension contributions by the State and
localities (other than New York City). The amounts to be made up, estimated to
aggregate $4 billion (half from the State), would be repaid in increasing
amounts over 12-20 years under a plan proposed by the State Comptroller, trustee
of the State pension system, and previous contribution levels will not be
exceeded until 1999. State and other estimates are subject to uncertainties
including the effects of Federal tax legislation and economic developments.

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The State normally adjusts its cash basis balance by deferring until the
first quarter of the succeeding fiscal year substantial amounts of tax refunds
and other disbursements. For many years, it also paid in that quarter more than
40% of its annual assistance to local governments. Payment of these annual
deferred obligations and the State's accumulated deficit was substantially
financed by issuance of short-term tax and revenue anticipation notes shortly
after the beginning of each fiscal year. The New York Local Government
Assistance Corporation ('LGAC') was established in 1990 to issue long-term bonds
over several years, payable from a portion of the State sales tax, to fund
certain payments to local governments traditionally funded through the State's
annual seasonal borrowing. The legislation will normally limit the State's
short-term borrowing, together with net proceeds of LGAC bonds ($3.9 billion to
date), to a total of $4.7 billion. The State's last seasonal borrowing, in May
1993, was $850 million.

Generally accepted accounting principles ('GAAP') for municipal entities
apply modified accrual accounting and give no effect to payment deferrals. On an
audited GAAP basis, the State's government funds group recorded operating
deficits of $1.2 billion and $1.4 billion for the 1990 and 1991 fiscal years.
For the same periods the general fund recorded deficits (net of transfers from
other funds) of $0.7 billion and $1.0 billion. Reflecting $1.6 billion, $881
million and $875 million of payments by LGAC to local governments out of
proceeds from bond sales, the general fund realized surpluses of $1.7 billion,
$2.1 billion and $0.9 billion for the 1992, 1993 and 1994 fiscal years,
respectively, leaving an accumulated deficit of $2.551 billion.

For decades, the State's economy has grown more slowly than that of the
rest of the nation as a whole. Part of the reason for this decline has been
attributed to the combined State and local tax burden, which is the second
highest in the nation (over 60% above the national average). The State's
dependence on Federal funds and sensitivity to changes in economic cycles, as
well as the high level of taxes, may continue to make it difficult to balance
State and local budgets in the future. The total employment growth rate in the
State has been below the national average since 1984. The State lost 524,000
jobs in 1990-1992. It regained approximately 134,000 jobs between November 1992
and August 1994, but continues to have higher unemployment than the national
average.

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

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

The City projects that it is emerging from four years of economic
recession. From 1989 through 1993, the gross city product declined by 10.1% and
employment, by almost 11%, while the public assistance caseload grew by over
25%. Unemployment averaged 10.8% in 1992 and 10.1% in 1993, peaking at 13.4% in
January 1993, the highest level in 25 years. It dropped to 8.2% in October,
1994. The number of persons on welfare exceeds 1.1 million, the highest level
since 1972, and one in seven residents is currently receiving some form of
public assistance.

While the City, as required by State law, has balanced its budgets in
accordance with GAAP since 1981, this has required exceptional measures in
recent years. The FCB has commented that City expenditures have grown faster
than revenues each year since 1986, masked in part by a large number of
non-recurring gap closing actions. To eliminate potential budget gaps of $1-$3
billion each year since 1988 the City has taken a wide variety of measures. In
addition to increased taxes and productivity increases, these have included
hiring freezes and layoffs, reductions in services, reduced pension
contributions, and a number of nonrecurring measures such as bond

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refundings, transfers of surplus funds from MAC, sales of City property and tax
receivables. The FCB concluded that the City has neither the economy nor the
revenues to do everything its citizens have been accustomed to expect.

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

The Financial Plan for the City's 1994 fiscal year relied on increases in
State and Federal aid, as well as the 1993 $280 million surplus and a partial
hiring freeze, to close a gap resulting primarily from labor settlements and
decline in property tax revenues. The Plan contained over $1.3 billion of
one-time revenue measures including bond refundings, sale of various City assets
and borrowing against future property tax receipts. On July 2, 1993, the
previous Mayor ordered spending reductions of about $130 million for the 1994
fiscal year and $400 million for the 1995 fiscal year. A new Mayor and City
Comptroller assumed office in January 1994. Various fiscal monitors criticized
reliance on non-recurring revenues, with attendant increases in the gaps for
future years. The new Mayor initiated a program to reduce non-personnel costs by
up to $150 million. The FCB reported that although a $98 million surplus was
projected for the year (the surplus was actually $81 million ), a $312 million
shortfall in budgeted revenues and $904 million of unanticipated expenses
(including an unbudgeted increase of over 3,300 employees and a record level of
overtime), net of certain increased revenues and other savings, resulted in
depleting prior years' surpluses by $326 million. The new City Comptroller
critized retention of a proposal to sell delinquent property tax receivables.

The City's Financial Plan for the current fiscal year (that began July 1,
1994) proposes both to eliminate a projected $2.3 billion budget gap and to
stabilize overall spending while beginning to reduce some business and other
taxes. It calls for a reduction of 15,000 in the City work-force by June 1995
unless equivalent productivity savings are negotiated with unions; with the aid
of $200 million from MAC, the City induced 6,100 workers to accept voluntary
severance, and union leaders accepted transfer of remaining employees between
agencies. The Plan projects about $560 million of increased State and Federal
aid, some of which has not yet been approved. Non-recurring measures include
$225 million from refinancing outstanding bonds (which the FCB estimates will
cancel almost 10% of the debt service savings anticipated from the recent
capital plan reduction), extension of the repayment schedule of a debt to City
pension funds and revision of actuarial assumptions to reduce contribution
levels, and sale of a City-owned hotel. A proposal for City employees to bear
$200 million of their health care costs must be negotiated with the unions,
which have announced their opposition. In early July, the private members of the
FCB issued a statement concluding that further budget cuts will be required to
balance the current year's budget.

Since the current year's Financial Plan was adopted, the City has
experienced lower than anticipated tax collections, higher than budgeted costs
(particularly overtime) and liability claims and increased likelihood that
various revenue measures including certain anticipated Federal and State aid,
and sale of certain city assets will not occur, at least during the current
fiscal year. In July 1994 the Mayor ordered expenditure reductions of $250
million during the next six months and a contingency plan for another $200
million. In late October, the Mayor proposed an additional $800 million of
spending cuts to address a projected $1.1 billion remaining budget gap for the
current fiscal year. He reached an agreement with City unions for an additional
severance offer, to avert layoffs. Another $190 million represents proposed
transfers of excess reserves in employee health care plans, a non-recurring
measure, and he would reduce the City's subsidy to the TA by the $113 million
surplus it expects to realize this year. Expenditure reductions would aggregate
about 6%, and critics contend they would require reduction or elimination of
numerous essential services. Also, maintenance of City infrastructure would be
reduced, which could lead to higher expenses in future years. These amendments
to the City's Financial Plan are subject to approval by the City Council;
certain proposals (including State assumption of $140 million in student
transportation subsidies) will also require action by the State Legislature. The
City Comptroller has projected that an additional $300 million of gap-closing
measures will be required for the current fiscal year. Meanwhile, a Federal
District Court enjoined the Mayor's proposed transfer of welfare center
supervisors to other positions, pending submission of a plan specifying how the
City will continue to comply with Federal and state mandates.

The Mayor is exploring the possibility of privatizing some of the City's
services. The City Council passed legislation which would authorize the Council
to hold hearings on any significant privatization and would require submission
of a cost-benefit analysis. The Mayor has also been seeking greater control over
spending by

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independent authorities and agencies such as the Board of Education, the Health
and Hospital Corporation and the TA. The Mayor's efforts to reduce expenditures
by the Board of Education, including appointment of another fiscal monitor,
reduction in City funding of capital projects and rejection of a tentative labor
contract, have strained relations with the Schools Chancellor at a time of
rising enrollments. In March 1994 the Mayor reduced cash incentives to landlords
renting apartments to the homeless. In October, he announced a proposal to
require able-bodied welfare recipients to render commumity service. It has been
reported that he is considering proposals including eliminating City financing
of a program that creates housing for single homeless people, charging shelter
occupants who refuse offers of treatment or training a modest rent for use of
the shelter, and replacing some of the subsidies to day care centers with a
voucher system. The Mayor is considering a plan to fingerprint welfare
recipients in the City; this could be subject to legal challenge. Budget gaps of
$1.5 billion, $2.0 billion and $2.4 billion have been projected for the 1996
through 1998 fiscal years, respectively. The State Comptroller suggested the
gaps could exceed these estimates by about $1.2 billion annually, while the FCB
estimated risks of over $2 billion, $3 billion and $3 billion respectively. Even
after recent capital plan reductions, debt service is expected to consume 18.4%
of tax revenue by the 1998 fiscal year. The FCB commented that, in spite of the
Mayor's measures, spending (principally debt service, Medicaid costs and health
and pension benefits) would continue to increase faster than revenues.

A major uncertainty is the City's labor costs, which represent about 50% of
its total expenditures. The City's workforce grew by 34% during the 1980s. A
January 1993 agreement covering approximately 44% of City workers followed
negotiations lasting nearly two years. Workers will receive wage and benefit
raises totalling 8.25% over 39 months ending March 1995. An agreement announced
in August 1993 provides wage increases for City teachers averaging 9% over the
48 1/2 months ending October 1995. The City is seeking to negotiate workforce
productivity initiatives, savings from which would be shared with the workers
involved. Under a tentative contract reached in September 1994, while sanitation
workers would receive an overall increase of 8.25% in wages and benefits over 39
months, routes would be lengthened by an average of 20%. The Financial Plan
assumes no further wage increases after the 1995 fiscal year. Also, costs of
some previous wage increases were offset by reduced contributions to pension
funds; if fund performance is less than the 9% annual earnings projected (as is
expected in the current fiscal year), the City could incur increased expenses in
future years. Pension fund earnings assumptions are currently being reviewed,
and future City pension contributions could be increased by a substantial
amount.

Budget balance may also be adversely affected by the effect of the economy
on economically sensitive taxes. Reflecting the downturn in real estate prices
and increasing defaults, estimates of property tax revenues have been reduced.
Other uncertainties include additional expenditures to combat deterioration in
the City's infrastructure (such as bridges, schools and water supply), costs of
developing alternatives to ocean dumping of sewage sludge (which the City
expects to defray through increased water and sewer charges), cost of the AIDS
epidemic, problems of drug addiction and homelessness and the impact of any
future State assistance payment reductions. For example, the City may be ordered
to spend up to $8 billion to construct water filtration facilities if it is not
successful in implementing measures to prevent pollution of its watershed
upstate. In late September the City was held in contempt and fined for failure
to provide shelter on a timely basis for homeless families. Several similar
decisions had been rendered against the previous administration. Elimination of
any additional budget gaps will require various actions, including by the State,
a number of which are beyond the City's control. Staten Island voters in 1993
approved a proposed charter under which Staten Island would secede from the
City. Secession will require enabling legislation by the State Legislature; it
would also be subject to legal challenge by the City. The effects of secession
on the City cannot be determined at this time, but questions include
responsibility for outstanding debt, a diminished tax base, and continued use of
the Fresh Kills landfill, the City's only remaining garbage dump. A similar
measure with respect to Queens was approved by the New York State Senate.

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

The City sold $1.4 billion, $1.8 billion and $2.2 billion of short-term
notes, respectively, during the 1993, 1994 and current fiscal years. The FCB
recently recommended development of a cash budgeting system to reduce short-term
borrowing resulting from timing imbalances. At June 30, 1994, there were
outstanding $21.7 billion of City bonds (not including City debt held by MAC),
$4.2 billion of MAC bonds and $0.8 billion of City-related public benefit
corporation indebtedness, each net of assets held for debt service. Standard &
Poor's and Moody's

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during the 1975-80 period either withdrew or reduced their ratings of the City's
bonds. Standard & Poor's currently rates the City's debt A-with a negative
outlook while Moody's rates City bonds Baa1. City-related debt almost doubled
since 1987, although total debt declined as a percentage of estimated full value
of real property. The City's financing program projects long-term financing
during fiscal years 1995-1998 to aggregate $17.8 billion. The City's latest Ten
Year Capital Strategy plans capital expenditures of $45.6 billion during
1994-2003 (93% to be City funded). The State Comptroller has criticized some
City bond refinancings for producing short-term savings at the expense of
greater overall costs, especially in future years. Annual debt service is
projected to increase.

Other New York Localities. In 1992, other localities had an aggregate of
approximately $15.7 billion of indebtedness outstanding. In recent years,
several experienced financial difficulties. A March 1993 report by Moody's
Investors Service concluded that the decline in ratings of most of the State's
largest cities in recent years resulted from the decline in the State's
manufacturing economy. Seventeen localities had outstanding indebtedness for
deficit financing at the close of their respective 1992 fiscal years. Any
reductions in State aid to localities may cause additional localities to
experience difficulty in achieving balanced budgets. If special local assistance
were needed from the State in the future, this could adversely affect the
State's as well as the localities' financial condition. Most localities depend
on substantial annual State appropriations. Legal actions by utilities to reduce
the valuation of their municipal franchises, if successful, could result in
localities becoming liable for substantial tax refunds.

State Public Authorities. In 1975, after the Urban Development Corporation
('UDC'), with $1 billion of outstanding debt, defaulted on certain short-term
notes, it and several other State authorities became unable to market their
securities. Since 1975 the State has provided substantial direct and indirect
financial assistance to UDC, the Housing Finance Agency ('HFA'), the
Environmental Facilities Corporation and other authorities. Practical and legal
limitations on these agencies' ability to pass on rising costs through rents and
fees could require further State appropriations. 18 State authorities had an
aggregate of $63.5 billion of debt outstanding at September 30, 1993. At March
31, 1994, approximately $0.4 billion of State public authority obligations was
State-guaranteed, $7.3 billion was moral obligation debt (including $4.8 billion
of MAC debt) and $16.6 billion was financed under lease-purchase or contractual
obligation financing arrangements with the State. Various authorities continue
to depend on State appropriations or special legislation to meet their budgets.

The Metropolitan Transportation Authority ('MTA'), which oversees operation
of the City's subway and bus system by the City Transit Authority (the 'TA') and
operates certain commuter rail lines, has required substantial State and City
subsidies, as well as assistance from several special State taxes. Measures to
balance the TA's 1993 budget included increased funding by the City, increased
bridge and tunnel tolls and allocation of part of the revenues from the
Petroleum Business Tax. While the TA projects a surplus for 1994, cash basis
gaps of $300-600 million are projected for each of the 1995 through 1998 years.
Measures proposed to close these gaps include various additional State aid and
possible fare increases. However, it was projected in May 1994 that the effect
of the improving economy on transportation-dedicated taxes and on ridership, as
well as implementation of cost savings, would permit deferral of fare increases
until at least July 1995. A tentative agreement with TA workers reached in July
1994, which provides 10.4% wage increases over 39 months, would cost the MTA
$337 million. The MTA Chairman stated that this cost would be partly offset by
savings from work rule changes and that money for the settlement is available in
the TA's budget. An earlier settlement with Long Island Railroad workers is
expected to cost the MTA $14 million over 26 months.

The MTA's Chairman proposed a 5 year financial strategy, including a
variety of fare changes; however, even if these are approved, an estimated $700
million in additional funds will be needed from State and City financial
assistance. Substantial claims have been made against the TA and the City for
damages from a 1990 subway fire and a 1991 derailment. The MTA infrastructure,
especially in the City, needs substantial rehabilitation. In December 1993, a
$9.5 billion MTA Capital Plan was finally approved for 1992-1996, although $500
million is contingent on increased contributions from the City; the City has
until late 1994 to decide if it will make these contributions. The MTA's
Chairman has threatened to raise subway fares and borrow more if the City fails
to make up this amount. The City is seeking State and MAC approval to defer $245
million of capital contributions to the TA from the current fiscal year until
1998. It is anticipated that the MTA and the TA will continue to require
significant State and City support. Moody's reduced its rating of certain MTA
obligations to Baa on April 14, 1992.

A Federal District Court ruled in February 1993 that State surcharges of up
to 24% on hospital bills paid by commercial insurance companies and health
maintenance organizations, much of which is used to subsidize care

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of uninsured patients, violate Federal law; however, the Court permitted
continuance of the system pending appeal of the ruling.

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

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

NEW YORK TAXES

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

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

THE OHIO TRUST

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

RISK FACTORS--The following summary is based on publicly available
information which has not been independently verified by the Sponsors or their
legal counsel.

Employment and Economy. Economic activity in Ohio, as in many other
industrially developed states, tends to be more cyclical than in some other
states and in the nation as a whole. Ohio ranked third in the nation in 1991
personal income derived from manufacturing. Although manufacturing (including
auto-related manufacturing) remains an important part of Ohio's economy, the
greatest growth in employment in Ohio in recent years, consistent with national
trends, has been in the non-manufacturing area. Payroll employment in Ohio
showed a steady upward trend until 1979, then decreased until 1982. It peaked in
the summer of 1993 after a slight decrease in 1992, and then decreased slightly
but, as of May 1994, it has approached a new high. Growth in recent years has
been concentrated among non-manufacturing industries, with manufacturing
tapering off since its 1969 peak. Over three-fourths of the payroll workers in
Ohio are employed by non-manufacturing industries.

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The average monthly unemployment rate in Ohio was 4.9% in September, 1994.

With 15.7 million acres in farm land, agriculture is a very important
segment of the economy in Ohio, providing an estimated 750,000 jobs or
approximately 15% of total Ohio employment. By many measures, agriculture is
Ohio's leading industry contributing nearly $4.1 billion to the state's economy
each year.

Ohio continues to be a major 'headquarters' state. Of the top 500
industrial corporations (based on 1993 sales) as reported in 1994 by Fortune
magazine, 42 had headquarters in Ohio, placing Ohio fourth as a 'headquarters'
state for industrial corporations. Ohio places sixth as a 'headquarters' state
for service corporations (24 of the top 500).

The State Budget, Revenues and Expenditures and Cash Flow. Ohio law
effectively precludes the State from ending a fiscal year or a biennium with a
deficit. The State Constitution provides that no appropriation may be made for
more than two years and consistent with that provision the State operates on a
fiscal biennium basis. The current fiscal biennium runs from July 1, 1993
through June 30, 1995.

Under Ohio law, if the Governor ascertains that the available revenue
receipts and balances for the general revenue fund or other funds for the then
current fiscal year will probably be less than the appropriations for the year,
he must issue orders to the State agencies to prevent their expenditures and
obligations from exceeding the anticipated receipts and balances. The Governor
implemented this directive in some prior years, including fiscal years 1992 and
1993.

Consistent with national economic conditions, in the 1990-91 biennium, Ohio
experienced an economic slowdown producing some significant changes in certain
general revenue fund revenue and expenditure levels for the fiscal year 1991.
Examples on the revenue side included lower than previously forecasted revenues
from sales and use taxes (including auto) and corporate franchise and personal
income taxes. Increased human services expenditure requirements developed, such
as for Medicaid, Aid to Dependent Children and general assistance. Several
executive and legislative measures were taken to address the anticipated
shortfall in revenues and increase in expenditures. As a result, the Ohio Office
of Budget and Management (the 'OBM') reported a positive general revenue fund
balance of approximately $135.4 million at the end of fiscal year 1991.

State and national fiscal uncertainties during the 1992-93 biennium
required several actions to achieve the ultimate positive general revenue fund
ending balances. OBM projected a fiscal year 1992 imbalance--a receipts
shortfall resulting primarily from lower collection of certain taxes,
particularly sales, use and personal income taxing and higher expenditure levels
in certain areas, particularly human services including Medicaid. As an initial
action, the Governor ordered most state agencies to reduce general revenue fund
appropriation spending in the final six months of fiscal year 1992 by a total of
approximately $184 million. Debt service obligations were not affected by this
order. The General Assembly authorized, and the OBM made in June 1992, a $100.4
million transfer to the general revenue fund from the budget stabilization fund
and certain other funds. Other revenue and spending actions, legislative and
administrative, resolved the remaining general revenue fund imbalance for fiscal
year 1992.

As a first step toward addressing a $520 million general revenue fund
shortfall for fiscal year 1993 then estimated by OBM, the Governor ordered,
effective July 1, 1992, selected general revenue fund appropriations reductions
totalling $300 million (but such reductions did not include debt service).
Subsequent executive and legislative actions provided for positive
biennium-ending general revenue fund balances for the current biennium. The
general revenue fund ended the 1992-93 biennium with a fund balance of
approximately $111 million and a cash balance of approximately $394 million. The
general revenue fund appropriations bill for the current biennium was passed on
June 30, 1993. The first year of the current biennium, fiscal year 1994, ended
with a general revenue fund of over $560,000,000.

Because the schedule of general revenue fund cash receipts and
disbursements do not precisely coincide, temporary general revenue fund cash
flow deficiencies often occur in some months of a fiscal year, particularly in
the middle months. Statutory provisions provide for effective management of
these temporary cash flow deficiencies by permitting adjustment of payment
schedules and the use of total operating funds. A general revenue fund cash flow
deficiency occurred in two months of fiscal year 1990, with the highest being
approximately $252.4 million. In fiscal year 1991, there were general revenue
fund cash flow deficiencies in nine months, with the highest being $582.5
million; in fiscal year 1992 there were general revenue fund cash flow
deficiencies in ten months, with the highest being approximately $743.1 million.
In fiscal year 1993, general revenue fund cash flow deficiencies occurred in
August 1992 through May 1993, with the highest being approximately $768.6
million in December. General revenue fund cash flow deficiencies occurred in six
months

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of fiscal year 1994, with the highest being approximately $500.6 million. OBM
currently projects cash flow deficiencies in nine months of the current fiscal
year.

State and State Agency Debt. The Ohio Constitution prohibits the
incurrence or assumption of debt by the State without a popular vote except for
the incurrence of debt to cover causal deficits or failures in revenue or to
meet expenses not otherwise provided for which are limited to $750,000 and to
repel invasions, suppress insurrection or defend the State in war. Under
interpretations by Ohio courts, revenue bonds of the State and State agencies
that are payable from net revenues of or related to revenue producing facilities
or categories of such facilities are not considered 'debt' within the meaning of
these constitutional provisions.

At various times since 1921, Ohio voters, by thirteen specific
constitutional amendments (the last adopted in 1993), authorized the incurrence
of up to $4.864 billion in State debt to which taxes or excises were pledged for
payment. Of that amount, $715 million was for veterans' bonuses. As of November
1, 1994, of the total amount authorized by the voters, excluding highway
obligations and general obligation park bonds discussed below, approximately
$3.255 billion has been issued, of which approximately $2.581 billion has been
retired and approximately $674.4 million remains outstanding. The only such
State debt still authorized to be incurred are portions of the Highway
Obligation Bonds, the Coal Development Bonds, and the State general obligation
bonds for local government infrastructure projects and parks.

No more than $500 million in highway obligations may be outstanding at any
time. As of November 1, 1994, approximately $446.3 million of highway
obligations were outstanding. No more than $100 million in State obligations for
coal development may be outstanding at any one time. As of November 1, 1994,
approximately $38.9 million of such bonds were outstanding. Not more than $1.2
billion of State general obligation bonds to finance local capital
infrastructure improvements may be issued at any one time, and no more than $120
million can be issued in a calendar year. As of November 1, 1994, approximately
$608.3 million of those bonds were outstanding.

The Ohio Constitution authorizes State bonds for certain housing purposes,
but tax moneys may not be obligated or pledged to those bonds. In addition, the
Ohio Constitution authorizes the issuance of obligations of the State for
certain purposes, the owners or holders of which are not given the right to have
excises or taxes levied by the State legislature to pay principal and interest.
Such debt obligations include the bonds and notes issued by the Ohio Public
Facilities Commission and the Ohio Building Authority.

Under recent legislation, the State has been authorized to issue bonds to
finance approximately $140 million of capital improvements for local elementary
and secondary public school facilities, and the State building authority has
been authorized to issue $100 million of bonds to provide computer technology
and security systems for local school districts. Debt service on the obligations
is payable from State resources.

A statewide economic development program assists with loans and loan
guarantees, the financing of facilities for industry, commerce, research and
distribution. The law authorizes the issuance of State bonds and loan guarantees
secured by a pledge of portions of the State profits from liquor sales. The
General Assembly has authorized the issuance of these bonds by the State
Treasurer, with a maximum amount of $300 million, subject to certain
adjustments, currently authorized to be outstanding at any one time. Of an
approximate $148.0 million issue in 1989, approximately $83.2 million was
outstanding as of November 1, 1994. The highest future year annual debt service
on those 1989 bonds, which are payable through 2000, is approximately $18.3
million.

An amendment to the Ohio Constitution authorizes revenue bond financing for
certain single and multifamily housing. No State resources are to be used for
the financing. As of November 8, 1994, the Ohio Housing Financing Agency,
pursuant to that constitutional amendment and implementing legislation, had sold
revenue bonds in the aggregate principal amount of approximately $234.32 million
for multifamily housing and approximately $3.926 billion for single family
housing.

A constitutional amendment adopted in 1990 authorizes greater State and
political subdivision participation in the provision of housing for individuals
and families in order to supplement existing State housing assistance programs.
The General Assembly could authorize State borrowing for the new programs and
the issuance of State obligations secured by a pledge of all or a portion of
State revenues or receipts, although the obligations may not be supported by the
State's full faith and credit.

A 1986 act, amended in 1994 (the 'Rail Act'), authorizes the Ohio Rail
Development Commission (the 'Rail Commission') to issue obligations to finance
the costs of rail service projects within the State either directly or by loans
to other entities. The Rail Commission has considered financing plan options and
the possibility of

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issuing bonds or notes. The Rail Act prohibits, without express approval by
joint resolution of the General Assembly, the collapse of any escrow of
financing proceeds for any purpose other than payment of the original financing,
the substitution of any other security, and the application of any proceeds to
loans or grants. The Rail Act authorizes the Rail Commission, but only with
subsequent General Assembly action, to pledge the faith and credit of the State
but not the State's power to levy and collect taxes (except ad valorem property
taxes if subsequently authorized by the General Assembly) to secure debt service
on any post-escrow obligations and, provided it obtains the annual consent of
the State Controlling Board, to pledge to and use for the payment of debt
service on any such obligations, all excises, fees, fines and forfeitures and
other revenues (except highway receipts) of the State after provision for the
payment of certain other obligations of the State.

Schools and Municipalities. The 612 public school districts and 49 joint
vocational school districts in the State receive a major portion (approximately
46%) of their operating funds from State subsidy appropriations, the primary
portion known as the Foundation Program. They must also rely heavily upon
receipts from locally-voted taxes. Some school districts in recent years have
experienced varying degrees of difficulty in meeting mandatory and discretionary
increased costs. Current law prohibits school closings for financial reasons.

Original State appropriations for the 1992-93 biennium provided for an
increase in school funding over funding for the preceding biennium. The
reduction in appropriations spending for fiscal year 1992 included a 2.5%
overall reduction in the annual Foundation Program appropriations and a 6%
reduction in other primary and secondary education programs. The reductions were
in varying amounts, and had varying effects, with respect to individual school
districts. State appropriations for the current biennium provide for an increase
in State school funding appropriations over those in the preceding biennium. The
$8.9 billion appropriated for primary and secondary education is intended to
provide for 2.4% and 4.6% increases in basic aid for the two fiscal years of the
biennium.

In previous years school districts facing deficits at year end had to apply
to the State for a loan from the Emergency School Advancement Fund. This Fund
met all the needs of the school districts with potential deficits in fiscal
years 1979 through 1989. New legislation replaced the Fund with enhanced
provisions for individual district local borrowing, including direct application
of Foundation Program distributions to repayment if needed. As of fiscal year
1993, there were 27 loans made for an approximate aggregate amount of $94.5
million. Twenty-eight school districts have received approval for loans
totalling approximately $15.6 million in fiscal year 1994.

Litigation contesting the Ohio system of school funding is pending, with
defendants being the State and several State agencies and officials. The
complaints essentially request a declaratory judgment that the State's statutory
system of funding public elementary and secondary education violates various
provisions of the Ohio Constitution and request the State to devise a
constitutionally acceptable system of school funding. On July 1, 1994, the trial
court concluded that certain provisions of current law violated provisions of
the Ohio constitution. The trial court directed the State to provide for and
fund a system of funding public elementary and secondary education in compliance
with the Ohio Constitution. Defendants have appealed this ruling, and have
applied for a stay until the case is resolved on appeal. It is not possible at
this time to state whether the suit will be successful or, if plaintiffs should
prevail, the effect on the State's present school funding system, including the
amount of and criteria for State basic aid allocations to school districts.

Various Ohio municipalities have experienced fiscal difficulties. Due to
these difficulties, the State established an act in 1979 to identify and assist
cities and villages experiencing defined 'fiscal emergencies'. A commission
appointed by the Governor monitors the fiscal affairs of municipalities facing
substantial financial problems. To date, this act has been applied to eleven
cities and twelve villages. The situations in nine of the cities and nine of the
villages have been resolved and their commissions terminated.

State Employees and Retirement Systems. The State has established five
public retirement systems, three of which cover both State and local government
employees, one covers State government employees only, and one covers local
government employees only. Those systems provide retirement, disability
retirement and survivor benefits. Federal law requires newly-hired State
employees to participate in the federal Medicare program, requiring matching
employer and employee contributions, each now 1.45% of the wage base. Otherwise,
State employees covered by a State retirement system are not currently covered
under the federal Social Security Act. The actuarial evaluations reported by
these five systems showed aggregate unfunded accrued liabilities of
approximately $17,143 billion covering both State and local employees.

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The State engages in employee collective bargaining and currently operates
under staggered two-year agreements with all of its 21 bargaining units. The
bargaining unit agreements with the State expire at various times in 1997.

Health Care Facilities Debt. Revenue bonds are issued by Ohio counties and
other agencies to finance hospitals and other health care facilities. The
revenues of such facilities consist, in varying but typically material amounts,
of payment from insurers and third-party reimbursement programs, such as
Medicaid, Medicare and Blue Cross. Consistent with the national trend,
third-party reimbursement programs in Ohio have begun new programs, and modified
benefits, with a goal of reducing usage of health care facilities. In addition,
the number of alternative health care delivery systems in Ohio has increased
over the past several years. For example, the number of health maintenance
organizations licensed by the Ohio Department of Insurance increased from 12 on
February 14, 1983 to 31 as of November, 1994. Due in part to changes in the
third-party reimbursement programs and an increase in alternative delivery
systems, the health care industry in Ohio has become more competitive. This
increased competition may adversely affect the ability of health care facilities
in Ohio to make timely payments of interest and principal on the indebtedness.

OHIO TAXES

In the opinion of Vorys, Sater, Seymour and Pease, Columbus, Ohio, special
counsel on Ohio tax matters, under existing Ohio law:

The Ohio Trust is not an association subject to the Ohio corporation
franchise tax or the Ohio tax on dealers in intangibles and the Trustees
will not be subject to the Ohio personal income tax.

In calculating a Holder's Ohio personal income tax or the Ohio
corporation franchise tax, a Holder will not be required to include in the
Holder's 'adjusted gross income' or 'net income,' as the case may be, the
Holder's share of interest received by or distributed from the Ohio Trust
on any Debt Obligation in the Ohio Trust, the interest on which is exempt
from Ohio personal income or corporation franchise taxes, as the case may
be.

In calculating a Holder's Ohio personal income tax or the Ohio
corporation franchise tax, a Holder will be required to include in the
Holder's 'adjusted gross income' or 'net income,' as the case may be,
capital gains and losses which the Holder must recognize for Federal income
tax purposes (upon the sale or other disposition of Units by the Holder or
upon the sale or other disposition of Debt Obligations by the Ohio Trust),
except gains and losses attributable to Debt Obligations specifically
exempted from such taxation by the Ohio law authorizing their issuance. A
Holder subject to the Ohio corporation franchise tax may, in the
alternative if it results in a larger amount of tax payable, be taxed upon
its net worth and, for this purpose, is required to include in its net
worth the full value, as shown on the books of the corporation, of all
Units which it owns.

For purposes of Ohio municipal income taxation, the Holder's share of
interest received by or distributed from the Ohio Trust on Debt Obligations
or gains realized by the Holder from the sale, exchange or other
disposition of Units by the Holder or from the sale, exchange or other
disposition of Debt Obligations by the Ohio Trust, as a result of the
repeal of the Ohio tax on intangible personal property, might be required
to be included in a Holder's taxable income if (1) such interest or gain is
not exempt from Ohio municipal income taxes by virtue of a specific
statutory or constitutional exemption from such taxes (regarding which no
blanket opinion is being given), and (2) the Ohio municipality in which the
Holder resides was taxing such income on or before April 1, 1986 and such
tax was submitted to and approved by the voters of such municipality in an
election held on November 8, 1988.

Assuming that the Ohio Trust will not hold any tangible personal
property nor any real property, neither Debt Obligations held by the Ohio
Trust nor Units of the Ohio Trust held by individuals are subject to any
property tax levied by the State of Ohio or any political subdivision
thereof.

THE PENNSYLVANIA TRUST

The Portfolio of the Pennsylvania Trust contains different issues of debt
obligations issued by or on behalf of the State of Pennsylvania (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

d-28
<PAGE>
Investment Summary). Investment in the Pennsylvania Trust should be made with an
understanding that the value of the underlying Portfolio may decline with
increases in interest rates.

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

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

Non-agricultural employment in the Commonwealth has increased steadily from
1984 to its 1992 level of 81.3 percent of the State's employment force. The
growth in employment experienced in Pennsylvania is comparable to the nationwide
growth in employment which has occurred during this period. In 1993,
manufacturing employment represented 18.4 percent of all non-agricultural
employment in the Commonwealth while the services sector accounted for 29.9
percent and the trade sector accounted for 22.4 percent.

The Commonwealth recently experienced a slowdown in its economy. Moreover,
economic strengths and weaknesses vary in different parts of the Commonwealth.
In general, heavy industry and manufacturing have recently been facing
increasing competition from foreign producers. During 1993, the annual average
unemployment rate in Pennsylvania was 7.0 percent compared to 6.8 percent for
the United States. For August 1994 the unadjusted unemployment rate was 6.2
percent in Pennsylvania and 5.9 percent in the United States, while the
seasonally adjusted unemployment rate for the Commonwealth was 6.3 percent and
for the United States was 6.1 percent.

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

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

Pennsylvania uses the 'Fund' method of accounting for receipts and
disbursements. For purposes of government accounting, a 'fund' is an independent
fiscal and accounting entity with a self-balancing set of accounts, recording
cash and/or other resources together with all related liabilities and equities
that are segregated

d-29
<PAGE>
for the purpose of carrying on specific activities or attaining certain
objectives in accordance with the fund's special regulations, restrictions or
limitations. In the Commonwealth, over 150 funds have been established by
legislative enactment or in certain cases by administrative action for the
purpose of recording the receipt and disbursement of moneys received by the
Commonwealth. Annual budgets are adopted each fiscal year for the principal
operating funds of the Commonwealth and several other special revenue funds.
Expenditures and encumbrances against these funds may only be made pursuant to
appropriation measures enacted by the General Assembly and approved by the
Governor. The General Fund, the Commonwealth's largest fund, receives all tax
revenues, non-tax revenues and federal grants and entitlements that are not
specified by law to be deposited elsewhere. The majority of the Commonwealth's
operating and administrative expenses are payable from the General Fund. Debt
service on all bond indebtedness of the Commonwealth, except that issued for
highway purposes or for the benefit of other special revenue funds, is payable
from the General Fund.

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

Recent Financial Results. From fiscal 1984, when the Commonwealth first
prepared its financial statements on a GAAP basis, through fiscal 1989, the
Commonwealth reported a positive unreserved-undesignated fund balance for its
government fund types (General Fund, Special Revenue Fund and Capital Projects
Fund) at the fiscal year end. Slowing economic growth during 1990, leading to a
national economic recession beginning in fiscal 1991, reduced revenue growth and
increased expenditures and contributed to negative unreserved-undesignated fund
balances at the end of the 1990 and 1991 fiscal years. The negative
unreserved-undesignated fund balance was due largely to operating deficits in
the General Fund and the State Lottery Fund during those fiscal years. Actions
taken during fiscal 1992 to bring the General Fund back into balance, including
tax increases and expenditure restraints, resulted in a $1.1 billion reduction
to the unreserved-undesignated fund deficit for combined governmental fund types
at June 30, 1993, as a result of a $420.4 million increase in the balance. These
gains were produced by continued efforts to control expenditure growth. The
Combined Balance Sheet as of June 30, 1993, showed total fund balance and other
credits for the total governmental fund types of $1,959.9 million, a $732.1
million increase from the balance at June 30, 1992. During fiscal 1993, total
assets increased by $1,296.7 million to $7,096.4 million, while liabilities
increased $564.6 million to $5,136.5 million.

Fiscal 1991 Financial Results. The Commonwealth experienced a $453.6
million general fund deficit as of the end of its 1991 fiscal year. The deficit
reflected higher than budgeted expenditures, below-estimate economic activity
and growth rates of economic indicators and total tax revenue shortfalls below
those assumed in the enacted budget. Rising demands on state programs caused by
the economic recession, particularly for medical assistance and cash assistance
programs, and the increased costs of special education programs and correction
facilities and programs, contributed to increased expenditures in fiscal 1991,
while tax revenues for the 1991 fiscal year were severely affected by the
economic recession. Total corporation tax receipts and sales and use tax
receipts during fiscal 1991 were, respectively, 7.3 percent and 0.9 percent
below amounts collected during fiscal 1990. Personal income tax receipts also
were affected by the recession but not to the extent of the other major General
Fund taxes, increasing only 2.0 percent over fiscal 1990 collections. A number
of actions were taken throughout the fiscal year by the Commonwealth to mitigate
the effects of the recession on budget revenues and expenditures. The
Commonwealth initiated a number of cost-saving measures, including the firing of
2,000 state employees, deferral of paychecks and reduction of funds to state
universities, which resulted in approximately $871 million cost savings.

Fiscal 1992 Financial Results. Actions taken during fiscal 1992 to bring
the General Fund budget back into balance, including tax increases and
expenditure restraints resulted in a $1.1 billion reduction for the unreserved-
undesignated fund deficit for combined governmental fund types and a return to a
positive fund balance. Total General Fund revenues for fiscal 1992 were
$14,516.8 million which is approximately 22 percent higher than fiscal 1991
revenues of $11,877.3 million due in large part to tax increases. The increased
revenues funded substantial increases in education, social services and
corrections programs. As a result of the tax increases and certain appropriation
lapses, fiscal 1992 ended with an $8.8 million surplus after having started the
year with an unappropriated general fund balance deficit of $453.6 million.

Fiscal 1993 Financial Results. Fiscal 1993 closed with revenues higher
than anticipated and expenditures approximately as projected, resulting in an
ending unappropriated balance surplus of $242.3 million. A deduction

d-30
<PAGE>
in the personal income tax rate in July 1992 and the one-time receipt of
revenues from retroactive corporate tax increases in fiscal 1992 were
responsible, in part, for the low growth in fiscal 1993.

Fiscal 1994 Financial Results. Commonwealth revenues during the 1994
fiscal year totaled $15,210.7 million, $38.6 million above the fiscal year
estimate, and 3.9 percent over commonwealth revenues during the 1993 fiscal
year. The sales tax was an important contributor to the higher than estimated
revenues. The strength of collections from the sales tax offset the lower than
budgeted performance of the personal income tax that ended the 1994 fiscal year
$74.4 million below estimate. The shortfall in the personal income tax was
largely due to shortfalls in income not subject to withholding such as interest,
dividends and other income. Expenditures, excluding pooled financing
expenditures and net of all fiscal 1994 appropriation lapses, totaled $14,934.4
million representing a 7.2 percent increase over fiscal 1993 expenditures.
Medical assistance and prisons spending contributed to the rate of spending
growth for the 1994 fiscal year. The Commonwealth maintained an operating
balance on a budgetary basis for fiscal 1994 producing a fiscal year ending
unappropriated surplus of $335.8 million.

Fiscal 1995 Budget. On June 16, 1994, the Governor signed a $15.7 billion
general fund budget, an increase of over 3.9 percent from the fiscal 1994
budget. A substantial amount of the increase is targeted for medical assistance
expenditures, reform of the state-funded public assistance program and education
subsidies to local school districts. The budget also includes tax reductions
totaling an estimated $166.4 million benefiting principally low income families
and corporations. The fiscal 1995 budget projects a $4 million fiscal year-end
unappropriated surplus.

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

Under the Pennsylvania Fiscal Code, the Auditor General is required
annually to certify to the Governor and the General Assembly certain information
regarding the Commonwealth's indebtedness. According to the most recent Auditor
General certificate, the average annual tax revenues deposited in all funds in
the five fiscal years ended June 30, 1993 was $15.5 billion, and, therefore, the
net debt limitation for the 1994 fiscal year is $27.1 billion. Outstanding net
debt totalled $5.1 billion at June 30, 1994, an increase of $37.0 million from
June 30, 1993. At February 28, 1994, the amount of debt authorized by law to be
issued, but not yet incurred was $15.0 billion.

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

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

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

At this time, the City is operating under a five-year fiscal plan approved
by PICA on April 6, 1992. Full implementation of the five-year plan was delayed
due to labor negotiations that were not completed until October 1992, three
months after the expiration of the old labor contracts. The terms of the new
labor contracts are estimated to cost approximately $144.4 million more than
what was budgeted in the original five-year plan. An amended five-year plan was
approved by PICA in May 1993. The Mayor's latest update of the five-year
financial plan was approved by PICA on May 2, 1994.

On June 5, 1992, PICA sold approximately $480 million in bonds at yields
ranging from 5.25 percent to 6.88 percent. The proceeds of the bonds were used
to cover shortfalls accumulated over fiscal years 1988 through 1991, projected
deficits for fiscal years 1992 and 1993, construction projects and other capital
expenditures. In

d-31
<PAGE>
accordance with the enabling legislation, PICA was guaranteed a percentage of
the wage tax revenue expected to be collected from Philadelphia residents to
permit repayment of the bonds. In July 1993 and August 1993, PICA issued $643.4
million and $178.7 million, respectively, of Special Tax Revenue Bonds to refund
certain general obligation bonds of the City and to fund additional capital
projects.

In January 1993, Philadelphia anticipated a cumulative general fund budget
deficit of $57 million for fiscal year 1993. In response to the anticipated
deficit, the Mayor unveiled a financial plan eliminating the budget deficit for
fiscal year 1993 through significant service cuts that included a plan to
privatize certain city-provided services. Due to an upsurge in tax receipts,
cost-cutting and additional PICA borrowings, Philadelphia completed fiscal year
1993 with a balanced general fund budget. The audit findings for fiscal year
1993 show a surplus of approximately $3 million for the fiscal year ended June
30, 1993.

In January 1994, the Mayor proposed a $2.3 billion city general fund budget
that included no tax increases, no significant service cuts and a series of
modest health and welfare program increases. At that time, the Mayor also
unveiled a $2.2 billion program (the 'Philadelphia Economic Stimulus Program')
designed to stimulate Philadelphia's economy and stop the loss of 1,000 jobs a
month. However, the success of the Philadelphia Economic Stimulus Program has
been predicated upon several contingencies including, among others, $250 million
in revenues from riverboat gambling over the next three years, which first must
be approved by the state legislature, and $100 million in federal 'empowerment
zone' subsidies, which Philadelphia may or may not receive. As of January 1994,
the 1994 Philadelphia general fund budget was running at a deficit of
approximately $10 million. The Mayor has predicted that the general fund will be
balanced at the end of fiscal year 1994. The fiscal 1994 budget projects no
deficit and a balanced budget for the fiscal year ended June 30, 1994.

S&P's rating on Philadelphia's general obligations is 'BB'; Moody's rating
is currently 'Ba'.

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

PENNSYLVANIA TAXES

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

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

2. Units of the Pennsylvania Trust are not subject to any of the
personal property taxes presently in effect in Pennsylvania to the extent
of that proportion of the Trust represented by Debt Obligations issued by
the Commonwealth of Pennsylvania, its agencies and instrumentalities, or by
any county, city, borough, town, township, school district, municipality or
local housing or parking authority in the Commonwealth of Pennsylvania
('Pennsylvania Obligations'). The taxes referred to above include the
County Personal Property Tax, the additional personal property taxes
imposed on Pittsburgh residents by the School District of Pittsburgh and by
the City of Pittsburgh. The City of Pittsburgh, the School District of
Pittsburgh and Allegheny County cannot impose personal property taxes as of
January 1, 1995. Fund Units may be taxable under the Pennsylvania
inheritance and estate taxes.

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

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

d-32
<PAGE>
Income Tax and, accordingly, insurance proceeds paid to replace defaulted
payments under any Debt Obligations will not be subject to this tax.

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

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

d-33

<PAGE>

Defined
Asset FundsSM

SPONSORS: MUNICIPAL INVESTMENT
Merrill Lynch, TRUST FUND
Pierce, Fenner & Smith Incorporated Multistate Series - 75
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 LLP
Two World Financial Center
9th Floor
New York, N.Y. 10281-1414
TRUSTEE:
The Bank of New York
Unit Investment Trust Department
P.O. Box 974
Wall Street Station
New York, N.Y. 10268-0974
1-800-221-7771
15012--11/94

<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

The Bank of New York, Trustee................... 13-4941102

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
NOVEMBER, 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 Board of Directors of Smith Barney the following 1933 Act File
Inc.: Numbers: 33-56722 and 33-51999

STEVEN D. BLACK
JAMES BOSHART III
ROBERT A. CASE
JAMES DIMON
ROBERT DRUSKIN
ROBERT F. GREENHILL
JEFFREY LANE
ROBERT H. LESSIN
JACK L. RIVKIN

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 the following 1933 Act File
of Directors Number: 33-55073
of PaineWebber Incorporated:

LEE FENSTERSTOCK
JOSEPH J. GRANO, JR.
PAUL B. GUENTHER
DONALD B. MARRON
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
RICHARD R. HOFFMANN
(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 - 75,
Defined Asset Funds (California, Florida, New Jersey, New York, Ohio and
Pennsylvania Trusts):

We hereby consent to the use in this Registration Statement No. 33-55781 of our
opinion dated November 16, 1994, relating to the Statements of Condition of
Municipal Investment Trust Fund, Multistate Series - 75, Defined Asset Funds
(California, Florida, New Jersey, New York, Ohio and Pennsylvania Trusts) and to
the reference to us under the heading 'Auditors' in the Prospectus which is a
part of this Registration Statement.

DELOITTE & TOUCHE LLP
New York, N.Y.
November 16, 1994

R-8

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> CALIFORNIA TRUST
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> NOV-16-1994
<INVESTMENTS-AT-COST> 2,796,494
<INVESTMENTS-AT-VALUE> 2,796,494
<RECEIVABLES> 44,160
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,840,654
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<OTHER-ITEMS-LIABILITIES> 44,160
<TOTAL-LIABILITIES> 44,160
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,796,494
<SHARES-COMMON-STOCK> 3,250
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<ACCUMULATED-NET-GAINS> 0
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<NET-ASSETS> 2,796,494
<DIVIDEND-INCOME> 0
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<NET-INVESTMENT-INCOME> 0
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<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,250
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
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<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> FLORIDA TRUST
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> NOV-16-1994
<INVESTMENTS-AT-COST> 3,205,629
<INVESTMENTS-AT-VALUE> 3,205,629
<RECEIVABLES> 40,787
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,246,415
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 40,787
<TOTAL-LIABILITIES> 40,787
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,205,629
<SHARES-COMMON-STOCK> 3,500
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,205,629
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,500
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> NEW JERSEY TRUST
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> NOV-16-1994
<INVESTMENTS-AT-COST> 3,021,585
<INVESTMENTS-AT-VALUE> 3,021,585
<RECEIVABLES> 57,105
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,078,690
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57,105
<TOTAL-LIABILITIES> 57,105
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,021,585
<SHARES-COMMON-STOCK> 3,250
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,021,585
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,250
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> NEW YORK SERIES
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> NOV-16-1994
<INVESTMENTS-AT-COST> 4,377,399
<INVESTMENTS-AT-VALUE> 4,377,399
<RECEIVABLES> 74,413
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,451,812
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 74,413
<TOTAL-LIABILITIES> 74,413
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,377,399
<SHARES-COMMON-STOCK> 5,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,377,399
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> OHIO SERIES
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> NOV-16-1994
<INVESTMENTS-AT-COST> 3,120,112
<INVESTMENTS-AT-VALUE> 3,120,112
<RECEIVABLES> 44,656
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,164,769
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 44,656
<TOTAL-LIABILITIES> 44,656
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,120,112
<SHARES-COMMON-STOCK> 3,250
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,120,112
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,250
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> PENNSYLVANIA SERIES
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> NOV-16-1994
<INVESTMENTS-AT-COST> 2,931,295
<INVESTMENTS-AT-VALUE> 2,931,295
<RECEIVABLES> 51,407
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,982,702
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51,407
<TOTAL-LIABILITIES> 51,407
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,931,295
<SHARES-COMMON-STOCK> 3,250
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,931,295
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,250
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

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

Municipal Investment Trust Fund,
Multistate Series - 75
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 - 75 of Municipal Investment Trust Fund, Defined Asset Funds
(the 'Fund'), in connection with the issuance of units of fractional undivided
interest in the Fund (the 'Units') in accordance with the Trust Indentures
relating to the Fund (the 'Indentures').

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

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

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

Very truly yours,

DAVIS POLK & WARDWELL

EXHIBIT 4.1.1

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

November 16, 1994

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

The Bank of New York
Unit Investment Trust Department
P.O. Box 974
Wall Street Station
New York, N.Y. 10268-0974

Re: Municipal Investment Trust Fund, Multistate Series - 75, Defined Asset Funds

Gentlemen:

We have examined the Registration Statement File No. 33-55781 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
November 16, 1994

Merrill Lynch Pierce The Bank of New York
Fenner & Smith Incorporated Unit Investment Trust Department
Unit Investment Trusts P.O. Box 974
P.O. Box 9051 Wall Street Station
Princeton, NJ 08543-9051 New York, NY 10268-0974

Re: Municipal Investment Trust Fund, Multistate Series - 75
Defined Asset Funds (California, Florida, New Jersey, New York, Ohio and
Pennsylvania Trusts)

Gentlemen:

Pursuant to your request for a Standard & Poor's rating on the units of the
above-captioned trusts, SEC No. 33-55781, 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.

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