INSURED MUN SEC TR SE 33 NY NAV INS SE 17 NJ INS SE 13 MUN, 487, 1995-04-06

INSURED MUN SEC TR SE 33 NY NAV INS SE 17 NJ INS SE 13 MUN
487, 1995-04-06

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 6, 1995

REGISTRATION NO. 33-58167

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------

AMENDMENT NO. 1
TO
FORM S-6

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

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

A. EXACT NAME OF TRUST:

Insured Municipal Securities Trust, Series 33, New York Navigator
Insured Series 17 and New Jersey Navigator Insured Series 13; and
Municipal Securities Trust, Multi-State Series 46

B. NAME OF DEPOSITORS:

<TABLE>
<S> <C>
Bear, Stearns & Co. Inc. Gruntal & Co., Incorporated
</TABLE>

C. COMPLETE ADDRESS OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:

<TABLE>
<S> <C>
Bear, Stearns & Co. Inc. Gruntal & Co., Incorporated
245 Park Avenue 14 Wall Street
New York, New York 10167 New York, New York 10005
</TABLE>

D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:

COPY OF COMMENTS TO:
PETER J. DEMARCO ROBERT SABLOWSKY MICHAEL R. ROSELLA, ESQ.
Managing Director Executive Vice-President Battle Fowler LLP
Bear, Stearns & Co. Inc. Gruntal & Co., Incorporated 75 East 55th Street
245 Park Avenue 14 Wall Street New York, New York 10022
New York, New York 10167 New York, New York 10005 (212) 856-6858
</TABLE>

E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:

An indefinite number of Units of Insured Municipal Securities Trust,
Series 33, New York Navigator Insured Series 17 and New Jersey Navigator
Insured Series 13; and Municipal Securities Trust, and Multi-State Series
46 is being registered under the Securities Act of 1933 pursuant to
Section 24(f) of the Investment Company Act of 1940, as amended, and Rule
24f-2 thereunder.

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

Indefinite

G. AMOUNT OF FILING FEE:

$500*

H. APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:

As soon as practicable after the effective date of the Registration
Statement.

/X/ Check if it is proposed that this filing will become effective
immediately upon filing pursuant to Rule 487.
- ------------------

* Previously Paid.

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

<PAGE>
INSURED MUNICIPAL SECURITIES TRUST

SERIES 33
NEW YORK NAVIGATOR INSURED SERIES 17 AND NEW JERSEY NAVIGATOR INSURED SERIES 13
AND MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 46

CROSS-REFERENCE SHEET

PURSUANT TO RULE 404 OF REGULATION C
UNDER THE SECURITIES ACT OF 1933

(FORM N-8B-2 ITEMS REQUIRED BY INSTRUCTION AS
TO THE PROSPECTUS IN FORM S-6)
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------------- ------------------------------------------------------
I. ORGANIZATION AND GENERAL INFORMATION
<S> <C> <C> <C>
1. (a) Name of trust.................................... )
) Front cover of Prospectus
(b) Title of securities issued....................... )

2. Name and address of each depositor................... The Sponsors

3. Name and address of trustee.......................... The Trustee

4. Name and address of principal underwriters........... The Sponsors

5. State of organization of trust....................... Organization

6. Execution and termination of trust agreement......... Trust Agreement, Amendment and Termination

7. Changes of name...................................... )
) Not Applicable
8. Fiscal year.......................................... )

9. Litigation........................................... None

<CAPTION>
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
<S> <C> <C> <C>
10. (a) Registered or bearer securities.................. Certificates

(b) Cumulative or distributive securities............ Interest and Principal Distributions

(d) Conversion, transfer, etc........................ Certificates, Sponsors Repurchase, Trustee Redemption,
Exchange Privilege and Conversion Offer

(e) Periodic payment plan............................ Not Applicable

(f) Voting rights.................................... Trust Agreement, Amendment and Termination

(g) Notice to certificateholders..................... Records, Portfolio, Trust Agreement, Amendment and
Termination, The Sponsors, The Trustee

(h) Consents required................................ Trust Agreement, Amendment and Termination

(i) Other provisions................................. Tax Status

11. Type of securities comprising units.................. Objectives, Portfolio, Description of Portfolio

12. Certain information regarding periodic payment
certificates....................................... Not Applicable

13. (a) Load, fees, expenses, etc........................ Summary of Essential Information, Offering Price,
Volume and Other Discounts, Sponsors' and
Underwriters' Profits, Total Reinvestment Plan,
Trust Expenses and Charges
</TABLE>

i
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------------- ------------------------------------------------------
<S> <C> <C> <C>
(b) Certain information regarding periodic payment
certificates.................................... Not Applicable

(c) Certain percentages.............................. Summary of Essential Information, Offering Price,
Total Reinvestment Plan

(d) Price differences................................ Volume and Other Discounts

(e) Other loads, fees, expenses...................... Certificates

(f) Certain profits receivable by depositors,
principal underwriters, trustees or affiliated
persons......................................... Sponsors' and Underwriters' Profits

(g) Ratio of annual charges to income................ Not Applicable

14. Issuance of trust's securities....................... Organization, Certificates

15. Receipt and handling of payments from purchasers..... Organization

16. Acquisition and disposition of underlying
securities......................................... Organization, Objectives, Portfolio, Portfolio
Supervision

17. Withdrawal or redemption............................. Comparison of Public Offering Price, Sponsors'
Repurchase Price and Redemption Price, Sponsors
Repurchase, Trustee Redemption

18. (a) Receipt, custody and disposition of income....... Distribution Elections, Interest and Principal
Distributions, Records, Total Reinvestment Plan

(b) Reinvestment of distributions.................... Total Reinvestment Plan

(d) Schedule of distributions........................ Not Applicable

19. Records, accounts and reports........................ Records, Total Reinvestment Plan

20. Certain miscellaneous provisions of trust agreement
(a) Amendment........................................ ) Trust Agreement, Amendment and
(b) Termination...................................... ) Termination

(e) and (f) Depositor, removal and successor......... The Sponsors

21. Loan to security holders............................. Not Applicable

22. Limitations on liability............................. The Sponsors, The Trustee, The Evaluator

23. Bonding arrangements................................. Part II--Item A

24. Other material provisions of trust agreement......... Not Applicable

<CAPTION>
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
<S> <C> <C> <C>
25. Organization of depositor............................ The Sponsors

26. Fees received by depositor........................... Not Applicable

27. Business of depositor................................ The Sponsors

28. Certain information as to officials and affiliated
persons of depositor............................... Not Applicable
</TABLE>

ii
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------------- ------------------------------------------------------
<S> <C> <C> <C>
29. Voting securities of depositor....................... )
)

30. Persons controlling depositor........................ )
)
31. Payments by depositor for certain services rendered )
to trust........................................... )
)
32. Payments by depositor for certain other services ) Not Applicable
rendered to trust.................................. )
)
33. Remuneration of employees of depositor for certain )
services rendered to trust......................... )
)
34. Remuneration of other persons for certain services )
rendered to trust.................................. )

<CAPTION>
IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
<S> <C> <C> <C>
35. Distribution of trust's securities by states......... Distribution of Units

36. Suspension of sales of trust's securities............ )
) Not Applicable
37. Revocation of authority to distribute................ )

38. (a) Method of distribution........................... )
(b) Underwriting agreements.......................... ) Distribution of Units, Total Reinvestment Plan
(c) Selling agreements............................... )

39. (a) Organization of principal underwriters........... )
) The Sponsors
(b) N.A.S.D. membership of principal underwriters.... )

40. Certain fees received by principal underwriters...... Not Applicable

41. (a) Business of principal underwriters............... The Sponsors

(b) Branch offices of principal underwriters......... )
(c) Salesmen of principal underwriters............... )
42. Ownership of trust's securities by certain persons... ) Not Applicable
43. Certain brokerage commissions received by principal )
underwriters....................................... )

44. (a) Method of valuation.............................. Summary of Essential Information, Offering Price,
Accrued Interest, Volume and Other Discounts, Total
Reinvestment Plan, Distribution of Units

(b) Schedule as to offering price.................... Not Applicable

(c) Variation in offering price to certain persons... Distribution of Units, Total Reinvestment Plan, Volume
and Other Discounts

45. Suspension of redemption rights...................... Trustee Redemption

46. (a) Redemption valuation............................. Comparison of Public Offering Price, Sponsors'
Repurchase Price and Redemption Price, and Trustee

Redemption

(b) Schedule as to redemption price.................. Not Applicable

47. Maintenance of position in underlying securities..... Comparison of Public Offering Price, Sponsors'
Repurchase Price and Redemption Price, Sponsors
Repurchase, Trustee Redemption
</TABLE>

iii
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------------- ------------------------------------------------------
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
<S> <C> <C> <C>
48. Organization and regulation of trustee............... The Trustee
49. Fees and expenses of trustee......................... )
) Trust Expenses and Charges
50. Trustee's lien....................................... )

<CAPTION>
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
<S> <C> <C> <C>
51. Insurance of holders of trust's securities........... Not Applicable

<CAPTION>
VII. POLICY OF REGISTRANT
<S> <C> <C> <C>
52. (a) Provisions of trust agreement with respect to
selection or elimination of underlying
securities...................................... Objectives, Portfolio, Portfolio Supervision

(b) Transactions involving elimination of underlying
securities...................................... Not Applicable

(c) Policy regarding substitution or elimination of
underlying securities........................... Objectives, Portfolio, Portfolio Supervision,
Substitution of Bonds

(d) Fundamental policy not otherwise covered......... Not Applicable

53. Tax status of trust.................................. Tax Status

<CAPTION>
VIII. FINANCIAL AND STATISTICAL INFORMATION
<S> <C> <C> <C>
54. Trust's securities during last ten years............. )
)
55. Hypothetical account for issuers of periodic payment )
plans.............................................. )
)

56. Certain information regarding periodic payment ) Not Applicable
certificates....................................... )
)
57. Certain information regarding periodic payment )
plans.............................................. )
)
58. Certain other information regarding periodic payment )
plans.............................................. )

59. Financial statements (Instruction 1(c) to
Form S-6).......................................... Statement of Financial Condition
</TABLE>

<PAGE>

[LOGO]MST

INSURED MUNICIPAL SECURITIES TRUST
SERIES 33, NEW YORK NAVIGATOR
INSURED SERIES 17
AND
NEW JERSEY NAVIGATOR INSURED SERIES 13
STANDARD & POOR'S CORPORATION RATING: AAA
AND

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46

The Trust consists of six separate unit investment trusts designated Series 33
('Insured Trust'), New York Navigator Insured Series 17 ('New York Navigator
Trust') and New Jersey Navigator Insured Series 13 ('New Jersey Navigator
Trust') (the New York Navigator Trust and the New Jersey Navigator Trust are
collectively known as the 'Navigator Trusts' and together with the Insured Trust
are collectively known as the 'Insured Trusts'), and Multi-State Series 46,
(California, Florida and Virginia Trust) (the 'California Trust', 'Florida
Trust' and 'Virginia Trust' or 'State Trusts') (the Insured Trusts and the State
Trusts are collectively known as the 'Trusts'). The Sponsors for the Navigator
Trusts are Bear, Stearns & Co. Inc. and Gruntal & Co., Incorporated. The Sponsor
for the Insured Trust and the State Trusts is Bear, Stearns & Co. Inc. only.
Each Trust was formed to preserve capital and to provide interest income
(including earned original issue discount) through investment in (a) for the
Insured Trust and the Navigator Trusts, an underlying portfolio of long-term
insured tax-exempt bonds and (b) for the State Trusts, an underlying portfolio
of intermediate or long-term tax-exempt bonds issued by or on behalf of states,
municipalities and public authorities (the 'Bonds') which interest income in the
opinion of bond counsel to the respective issuers, is, with certain exceptions,
currently exempt from regular federal income taxes under existing law and is
exempt from state and local taxes to the extent indicated when received by
residents of the state in which the issuer of any Bond is located. Units of the
Insured Trust will be offered to residents of all 50 states and the District of
Columbia. Units of the New York Navigator Trust will be offered to residents of
Connecticut, Colorado, the District of Columbia, Florida, Hawaii, New Jersey,
New York and Wyoming. Units of the New Jersey Navigator Trust will be offered to
residents of Delaware, Pennsylvania, Colorado, the District of Columbia,
Florida, Hawaii, New Jersey, New York and Wyoming. Units of the California Trust
will be offered to California, New York, Florida, the District of Columbia, New
Jersey, Wyoming, Colorado and Hawaii. Units of the Florida Trust will be offered
to New York, Florida, the District of Columbia, New Jersey, Wyoming, Colorado
and Hawaii. Units of the Virginia Trust will be offered to residents of
Virginia, Maryland, Colorado, the District of Columbia, Florida, Hawaii, New
Jersey, New York and Wyoming. Except for these states, Units of each of the
Navigator Trusts and the State Trusts will not be offered to residents of any
other state. On the Date of Deposit, all of the Bonds in each of the Insured
Trusts are irrevocably insured and therefore the Units of each of the Insured

Trusts are rated 'AAA' by Standard & Poor's Corporation and all of the Bonds in
the State Trusts were rated 'A' or better by Standard & Poor's Corporation or
Moody's Investors Service, Inc. None of the Bonds in the State Trusts are
insured. The value of the Units of the Trusts will fluctuate with the value of
the underlying Bonds. Minimum purchase: 1 Unit.

This Prospectus consists of two parts. Part A contains the Summary of Essential
Information including descriptive material relating to the Trusts, the Statement
of Condition of the Trusts and the Portfolios. Part B contains general
information about the Trusts. Part A may not be distributed unless accompanied
by Part B.

Please read and retain both parts of this Prospectus for future reference.
- --------------------------------------------------------------------------------

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

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

PROSPECTUS PART A DATED APRIL 6, 1995

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST
SERIES 33
SUMMARY OF ESSENTIAL INFORMATION AS OF APRIL 5, 1995*

<TABLE>
<S> <C>
DATE OF DEPOSIT: April 6, 1995
PRINCIPAL AMOUNT OF BONDS................. $2,000,000
NUMBER OF UNITS........................... 2,000
FRACTIONAL UNDIVIDED INTEREST IN TRUST
PER UNIT................................ 1/2,000
PRINCIPAL AMOUNT OF BONDS PER UNIT........ $1,000
PUBLIC OFFERING PRICE**+
Aggregate Offering Price of Bonds in
Trust................................. $1,932,158
Divided by 2,000 Units.................. $966.08
Plus Sales Charge of 4.9% of Public
Offering Price........................ $49.77
Public Offering Price per Unit.......... $1,015.85
REDEMPTION PRICE PER UNIT+++.............. $961.12
SPONSOR'S INITIAL REPURCHASE PRICE PER
UNIT+o.................................. $966.08

EXCESS OF PUBLIC OFFERING PRICE OVER
REDEMPTION PRICE PER UNIT............... $54.73
EXCESS OF SPONSOR'S INITIAL REPURCHASE
PRICE OVER REDEMPTION PRICE PER UNIT o.. $4.96
EVALUATION TIME: 4:00 p.m. New York Time
MINIMUM PRINCIPAL DISTRIBUTION:
$1.00 per Unit

WEIGHTED AVERAGE LIFE TO MATURITY:
25.5 Years
MINIMUM VALUE OF TRUST: Trust may be
terminated if the value of Trust is less
than $800,000 in principal amount of
Bonds.
MANDATORY TERMINATION DATE: The earlier
of December 31, 2044 or the disposition
of the last Bond in the Trust.
TRUSTEE: United States Trust Company of
New York.
TRUSTEE'S ANNUAL FEE: Monthly plan $1.46
per $1,000 and semi-annual plan $1.01
per $1,000.
EVALUATOR: Kenny S&P Evaluation Services.
EVALUATOR'S FEE FOR EACH EVALUATION:
Minimum of $2.83 plus $.25 per each
issue of Bonds in excess of 50 issues
(treating separate maturities as
separate issues).
SPONSOR: Bear, Stearns & Co. Inc.
SPONSOR'S ANNUAL FEE: Maximum of $.25 per
$1,000 principal amount of bonds (see
'Trust Expenses and Charges' in Part B).
</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

<TABLE>
<CAPTION>
MONTHLY SEMI-ANNUAL
OPTION OPTION
------------------ -----------
<S> <C> <C>
Gross annual interest income (cash)oo................................ $59.44 $ 59.44
Less estimated annual fees and expenses.............................. 2.59 2.26
------ -----------
Estimated net annual interest income (cash)++++oo.................... 56.85 57.18
Estimated daily interest accrual oo.................................. .1579 .1588
Estimated current return based on Public Offering Price++oo(1)....... 5.60% 5.63%
Estimated long term return++oo(1).................................... 5.60% 5.64%
First record date.................................................... 5/1/95 5/1/95
First interest distribution date..................................... 5/15/95 5/15/95
Subsequent record dates.............................................. 1st of each month June 1 and

Dec. 1
Subsequent interest distribution dates............................... 15th of each month June 15 and
Dec. 15
</TABLE>

- ------------
* The business day prior to the Date of Deposit. The Date of Deposit is
the date on which the Trust Agreement was signed and the deposit of bonds with
the Trustee made.
** For information regarding offering price per unit and applicable sales
charge under the Total Reinvestment Plan, see 'Total Reinvestment Plan' in Part
B.

+ No accrued interest will be added for any person contracting to purchase
Units on the Date of Deposit. Anyone ordering Units after such Date will pay
accrued interest from April 13, 1995 to the date of settlement (five business
days after order) less distributions from the Interest Account subsequent to
April 13, 1995.

++ The estimated current return and estimated long-term return are
increased for transactions entitled to a discount (see 'Volume and Other
Discounts' in Part B), and are higher under the semiannual and annual options
due to lower Trustee's fees and expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds. Upon
tender for redemption, the price to be paid will be calculated as described
under 'Trustee Redemption' in Part B.

++++ The first interest distribution of $2.84 per Unit will be made on May
15, 1995 (the 'First Payment Date') to all Certificateholders of record on May
1, 1995 (the 'First Record Date'). The regular monthly payment will be $4.73 on
June 15, 1995. The first semi-annual payment will be $4.76 on June 15, 1995 and
$28.59 thereafter.

o See 'Comparison of Public Offering Price, Sponsors' Repurchase Price and
Redemption Price' in Part B.

oo Does not include income accrual from original issue discount bonds.

(1) Estimated long term return is calculated by computing the average of the
yields to maturity (or earlier call date) of the Bonds in the portfolio of the
Trust in accordance with accepted bond practices (taking into account the
amortization of premiums, accretion of discounts, market value, and estimated
retirement of each Bond) and subtracting from the average yield so calculated
the fees, expenses and sales charge of the Trust. Estimated current return is
calculated by dividing the estimated net annual interest income by the Public
Offering Price per Unit. In contrast to the estimated long term return, the
estimated current return does not take into account the amortization of premium
or accretion of discount on the underlying Bonds, if any. These returns do not
include the effects of any delay in payments to Unitholders and a calculation
which includes those effects would be lower. See 'Estimated Long Term Return and

Estimated Current Return' in Part B.

A-2

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST
NEW YORK NAVIGATOR INSURED SERIES 17
SUMMARY OF ESSENTIAL INFORMATION AS OF APRIL 5, 1995*

<TABLE>
<S> <C>
DATE OF DEPOSIT: April 6, 1995
PRINCIPAL AMOUNT OF BONDS................. $3,000,000
NUMBER OF UNITS........................... 3,000
FRACTIONAL UNDIVIDED INTEREST IN TRUST
PER UNIT................................ 1/3,000
PRINCIPAL AMOUNT OF BONDS PER UNIT........ $1,000
PUBLIC OFFERING PRICE**+
Aggregate Offering Price of Bonds in
Trust................................. $2,881,066
Divided by 3,000 Units.................. $960.36
Plus Sales Charge of 4.9% of Public
Offering Price........................ $49.48
Public Offering Price per Unit.......... $1,009.84
REDEMPTION PRICE PER UNIT+++.............. $956.36
SPONSORS' INITIAL REPURCHASE PRICE PER
UNIT+o.................................. $960.36
EXCESS OF PUBLIC OFFERING PRICE OVER
REDEMPTION PRICE PER UNIT............... $53.48
EXCESS OF SPONSORS' INITIAL REPURCHASE
PRICE OVER REDEMPTION PRICE PER UNIT o.. $4.00
EVALUATION TIME: 4:00 p.m. New York Time..
MINIMUM PRINCIPAL DISTRIBUTION:
$1.00 per Unit

WEIGHTED AVERAGE LIFE TO MATURITY:
24.6 Years
MINIMUM VALUE OF TRUST: Trust may be
terminated if the value of Trust is less
than $1,200,000 in principal amount of
Bonds.
MANDATORY TERMINATION DATE: The earlier
of December 31, 2044 or the disposition
of the last Bond in the Trust.
TRUSTEE: United States Trust Company of
New York.
TRUSTEE'S ANNUAL FEE: Monthly plan $1.49
per $1,000 and semi-annual plan $1.04
per $1,000.
EVALUATOR: Kenny S&P Evaluation Services.

EVALUATOR'S FEE FOR EACH EVALUATION:
Minimum of $2.83 plus $.25 per each
issue of Bonds in excess of 50 issues
(treating separate maturities as
separate issues).
SPONSORS: Bear, Stearns & Co. Inc.
Gruntal & Co., Incorporated
SPONSORS' ANNUAL FEE: Maximum of $.25 per
$1,000 principal amount of bonds (see
'Trust Expenses and Charges' in Part B).
</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

<TABLE>
<CAPTION>
MONTHLY SEMI-ANNUAL
OPTION OPTION
------------------ -----------
<S> <C> <C>
Gross annual interest income (cash)oo................................ $58.89 $ 58.89
Less estimated annual fees and expenses.............................. 2.50 1.98
------ -----------
Estimated net annual interest income (cash)++++oo.................... 56.39 56.91
Estimated daily interest accrualoo................................... .1566 .1581
Estimated current return based on Public Offering Price++oo(1)....... 5.58% 5.64%
Estimated long term return++oo(1).................................... 5.53% 5.58%
First record date.................................................... 5/1/95 5/1/95
First interest distribution date..................................... 5/15/95 5/15/95
Subsequent record dates.............................................. 1st of each month June 1 and
Dec. 1
Subsequent interest distribution dates............................... 15th of each month June 15 and
Dec. 15
</TABLE>

++ The estimated current return and estimated long-term return are
increased for transactions entitled to a discount (see 'Volume and Other

Discounts' in Part B), and are higher under the semiannual and annual options
due to lower Trustee's fees and expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds. Upon
tender for redemption, the price to be paid will be calculated as described
under 'Trustee Redemption' in Part B.

++++ The first interest distribution of $2.81 per Unit will be made on May
15, 1995 (the 'First Payment Date') to all Certificateholders of record on May
1, 1995 (the 'First Record Date'). The regular monthly payment will be $4.69 on
June 15, 1995. The first semi-annual payment will be $4.74 on June 15, 1995 and
$28.45 thereafter.

o See 'Comparison of Public Offering Price, Sponsors' Repurchase Price and
Redemption Price' in Part B.
oo Does not include income accrual from original issue discount bonds.
(1) Estimated long term return is calculated by computing the average of the
yields to maturity (or earlier call date) of the Bonds in the portfolio of the
Trust in accordance with accepted bond practices (taking into account the
amortization of premiums, accretion of discounts, market value, and estimated
retirement of each Bond) and subtracting from the average yield so calculated
the fees, expenses and sales charge of the Trust. Estimated current return is
calculated by dividing the estimated net annual interest income by the Public
Offering Price per Unit. In contrast to the estimated long term return, the
estimated current return does not take into account the amortization of premium
or accretion of discount on the underlying Bonds, if any. These returns do not
include the effects of any delay in payments to Unitholders and a calculation
which includes those effects would be lower. See 'Estimated Long Term Return and
Estimated Current Return' in Part B.

A-3

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST
NEW JERSEY NAVIGATOR INSURED SERIES 13
SUMMARY OF ESSENTIAL INFORMATION AS OF APRIL 5, 1995*

<TABLE>
<S> <C>
DATE OF DEPOSIT: April 6, 1995
PRINCIPAL AMOUNT OF BONDS................. $2,200,000
NUMBER OF UNITS........................... 2,200
FRACTIONAL UNDIVIDED INTEREST IN TRUST
PER UNIT................................ 1/2,200
PRINCIPAL AMOUNT OF BONDS PER UNIT........ $1,000
PUBLIC OFFERING PRICE**+
Aggregate Offering Price of Bonds in
Trust................................. $2,132,422
Divided by 2,200 Units.................. $969.28
Plus Sales Charge of 4.9% of Public
Offering Price........................ $49.94
Public Offering Price per Unit.......... $1,019.22

REDEMPTION PRICE PER UNIT+++.............. $965.28
SPONSORS' INITIAL REPURCHASE PRICE PER
UNIT+o $969.28
EXCESS OF PUBLIC OFFERING PRICE OVER
REDEMPTION PRICE PER UNIT............... $53.94
EXCESS OF SPONSORS' INITIAL REPURCHASE
PRICE OVER REDEMPTION PRICE PER UNIT o.. $4.00
EVALUATION TIME: 4:00 p.m. New York Time..
MINIMUM PRINCIPAL DISTRIBUTION:
$1.00 per Unit

WEIGHTED AVERAGE LIFE TO MATURITY:
28.1 Years
MINIMUM VALUE OF TRUST: Trust may be
terminated if the value of Trust is less
than $880,000 in principal amount of
Bonds.
MANDATORY TERMINATION DATE: The earlier
of December 31, 2044 or the disposition
of the last Bond in the Trust.
TRUSTEE: United States Trust Company of
New York.
TRUSTEE'S ANNUAL FEE: Monthly plan $1.49
per $1,000 and semi-annual plan $1.04
per $1,000.
EVALUATOR: Kenny S&P Evaluation Services.
EVALUATOR'S FEE FOR EACH EVALUATION:
Minimum of $2.83 plus $.25 per each
issue of Bonds in excess of 50 issues
(treating separate maturities as
separate issues).
SPONSORS: Bear, Stearns & Co. Inc.
Gruntal & Co., Incorporated
SPONSORS' ANNUAL FEE: Maximum of $.25 per
$1,000 principal amount of bonds (see
'Trust Expenses and Charges' in Part B).
</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

<TABLE>
<CAPTION>
MONTHLY SEMI-ANNUAL
OPTION OPTION
------------------- ------------
<S> <C> <C>
Gross annual interest income (cash)oo................................ $ 58.52 $ 58.52
Less estimated annual fees and expenses.............................. 2.50 2.21
-------- ------------
Estimated net annual interest income (cash)++++oo.................... 56.02 56.31
Estimated daily interest accrual oo.................................. .1556 .1564
Estimated current return based on Public Offering Price++oo(1)....... 5.50% 5.52%

Estimated long term return++oo(1).................................... 5.48% 5.51%
First record date.................................................... 5/1/95 5/1/95
First interest distribution date..................................... 5/15/95 5/15/95
Subsequent record dates.............................................. 1st of each month June 1 and
Dec. 1
Subsequent interest distribution dates............................... 15th of each month June 15 and
Dec. 15
</TABLE>

++++ The first interest distribution of $2.80 per Unit will be made on May
15, 1995 (the 'First Payment Date') to all Certificateholders of record on May
1, 1995 (the 'First Record Date'). The regular monthly payment will be $4.66 on
June 15, 1995. The first semi-annual payment will be $4.69 on June 15, 1995 and
$28.15 thereafter.

Estimated Current Return' in Part B.

A-4

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46
CALIFORNIA TRUST
SUMMARY OF ESSENTIAL INFORMATION AS OF APRIL 5, 1995*

<TABLE>
<S> <C>
DATE OF DEPOSIT: April 6, 1995
PRINCIPAL AMOUNT OF BONDS................. $2,000,000
NUMBER OF UNITS........................... 2,000
FRACTIONAL UNDIVIDED INTEREST IN TRUST
PER UNIT................................ 1/2,000
PRINCIPAL AMOUNT OF BONDS PER UNIT........ $1,000
PUBLIC OFFERING PRICE**
Aggregate Offering Price of Bonds in
Trust................................. $1,883,374
Divided by 2,000 Units.................. $941.69
Plus Sales Charge of 4.9% of Public
Offering Price........................ $48.52
Public Offering Price per Unit+......... $990.21
REDEMPTION PRICE PER UNIT+++.............. $937.69
SPONSOR'S INITIAL REPURCHASE PRICE PER
UNIT+o $941.69
EXCESS OF PUBLIC OFFERING PRICE OVER
REDEMPTION PRICE PER UNIT o............. $52.52
EXCESS OF SPONSOR'S INITIAL REPURCHASE
PRICE OVER REDEMPTION PRICE PER UNIT.... $4.00
EVALUATION TIME: 4:00 p.m. New York
time....................................
MINIMUM PRINCIPAL DISTRIBUTION:
$1.00 per Unit

WEIGHTED AVERAGE LIFE TO MATURITY:
22.8 years
MINIMUM VALUE OF TRUST: Trust may be
terminated if value of Trust is less
than $800,000 in principal amount of
Bonds.
MANDATORY TERMINATION DATE: The earlier
of December 31, 2044 or the disposition
of the last Bond in the Trust.
TRUSTEE: United States Trust Company of
New York.
TRUSTEE'S ANNUAL FEE: Monthly plan $1.46
per $1,000 and semi-annual plan $1.01
per $1,000.

EVALUATOR: Kenny S&P Evaluation Services.
EVALUATOR'S FEE FOR EACH EVALUATION:
Minimum of $2.83 plus $.25 per each
issue of Bonds in excess of 50 issues
(treating separate maturities as
separate issues).
SPONSOR: Bear, Stearns & Co. Inc.
SPONSOR'S ANNUAL FEE: Maximum of $.25 per
$1,000 principal amount of Bonds (see
'Trust Expenses and Charges' in Part B).
</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

<TABLE>
<CAPTION>
MONTHLY SEMI-ANNUAL
OPTION OPTION
------------------- -----------------
<S> <C> <C>
Gross annual interest income (cash)oo.......................... $ 58.18 $ 58.18
Less estimated annual fees and expenses........................ 2.77 2.26
------ ------
Estimated net annual interest income (cash)++++oo.............. 55.41 55.92
Estimated daily interest accrual oo............................ .1539 .1553
Estimated current return based on Public Offering
Price++oo(1)................................................... 5.60% 5.65%
Estimated long term return++oo(1).............................. 5.71% 5.76%
First record date.............................................. 5/1/95 5/1/95
First interest distribution date............................... 5/15/95 5/15/95
Subsequent record dates........................................ 1st of each month June 1 & Dec. 1
Subsequent interest distribution dates......................... 15th of each month June 15 & Dec. 15
</TABLE>

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

* The business day prior to the Date of Deposit. The Date of Deposit is the
date on which the Trust Agreement was signed and the Bonds were deposited with
the Trustee.

** For information regarding offering price per Unit and applicable sales
charge under the Total Reinvestment Plan, see 'Total Reinvestment Plan' in Part
B.

days after order) less distributions from the Interest Account subsequent to
April 13, 1995.

+++ Based solely upon the bid side evaluation of the underlying Bonds. Upon
tender for redemption, the price to be paid will be calculated as described
under 'Trustee Redemption' in Part B.

++++ The first interest distribution of $2.77 per Unit will be made on May 15,
1995 (the 'First Payment Date') to all Certificateholders of record on May 1,
1995 (the 'First Record Date'). The first regular monthly payment will be $4.61
on June 15, 1995. The first semi-annual payment will be $4.66 on June 15, 1995
and $27.96 thereafter.

o See 'Comparison of Public Offering Price, Sponsors' Repurchase Price and
Redemption Price' in Part B.

oo Does not include income accrual from original issue discount Bonds.

(1) Estimated long term return is calculated by computing the average of the
yields to maturity (or earlier call date) of the Bonds in the portfolio of the
State Trust in accordance with accepted bond practices (taking into account the
amortization of premiums, accretion of discounts, market value, and estimated
retirement of each Bond) and subtracting from the average yield so calculated
the fees, expenses and sale charge of the State Trust. Estimated current return
is calculated by dividing the estimated net annual interest income by the Public
Offering Price per Unit. In contrast to the estimated long term return, the
estimated current return does not take into account the amortization of premium
or accretion of discount on the underlying Bonds, if any. These returns do not
include the effects of any delay in payments to Unitholders and a calculation
which includes those effects would be lower. See 'Estimated Long Term Return and
Estimated Current Return' in Part B.

A-5

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46
FLORIDA TRUST
SUMMARY OF ESSENTIAL INFORMATION AS OF APRIL 5, 1995*

<TABLE>
<S> <C>
DATE OF DEPOSIT: April 6, 1995
PRINCIPAL AMOUNT OF BONDS................. $2,000,000
NUMBER OF UNITS........................... 2,000
FRACTIONAL UNDIVIDED INTEREST IN TRUST
PER UNIT................................ 1/2,000
PRINCIPAL AMOUNT OF BONDS PER UNIT........ $1,000
PUBLIC OFFERING PRICE**
Aggregate Offering Price of Bonds in
Trust................................. $1,921,562
Divided by 2,000 Units.................. $960.78
Plus Sales Charge of 4.9% of Public
Offering Price........................ $49.50
Public Offering Price per Unit+......... $1,010.28
REDEMPTION PRICE PER UNIT+++.............. $956.78
SPONSOR'S INITIAL REPURCHASE PRICE PER
UNIT+o $960.78
EXCESS OF PUBLIC OFFERING PRICE OVER
REDEMPTION PRICE PER UNIT o............. $53.50
EXCESS OF SPONSOR'S INITIAL REPURCHASE
PRICE OVER REDEMPTION PRICE PER UNIT.... $4.00
EVALUATION TIME: 4:00 p.m. New York
time

MINIMUM PRINCIPAL DISTRIBUTION:
$1.00 per Unit

WEIGHTED AVERAGE LIFE TO MATURITY:
27.5 years
MINIMUM VALUE OF TRUST: Trust may be
terminated if value of Trust is less
than $800,000 in principal amount of
Bonds.
MANDATORY TERMINATION DATE: The earlier
of December 31, 2044 or the disposition
of the last Bond in the Trust.
TRUSTEE: United States Trust Company of
New York.
TRUSTEE'S ANNUAL FEE: Monthly plan $1.47
per $1,000 and semi-annual plan $1.02
per $1,000.
EVALUATOR: Kenny S&P Evaluation Services.
EVALUATOR'S FEE FOR EACH EVALUATION:
Minimum of $2.83 plus $.25 per each
issue of Bonds in excess of 50 issues
(treating separate maturities as
separate issues).
SPONSOR: Bear, Stearns & Co. Inc.
SPONSOR'S ANNUAL FEE: Maximum of $.25 per
$1,000 principal amount of Bonds (see
'Trust Expenses and Charges' in Part B).
</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

<TABLE>
<CAPTION>
MONTHLY SEMI-ANNUAL
OPTION OPTION
------------------- -----------------
<S> <C> <C>
Gross annual interest income (cash)oo.......................... $ 59.91 $ 59.91
Less estimated annual fees and expenses........................ 2.58 2.27
------ ------
Estimated net annual interest income (cash)++++oo.............. 57.33 57.64
Estimated daily interest accrual oo............................ .1592 .1601
Estimated current return based on Public Offering
Price++oo(1)................................................... 5.67% 5.71%
Estimated long term return++oo(1).............................. 5.69% 5.72%
First record date.............................................. 5/1/95 5/1/95
First interest distribution date............................... 5/15/95 5/15/95
Subsequent record dates........................................ 1st of each month June 1 & Dec. 1
Subsequent interest distribution dates......................... 15th of each month June 15 & Dec. 15
</TABLE>

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

* The business day prior to the Date of Deposit. The Date of Deposit is the
date on which the Trust Agreement was signed and the Bonds were deposited with
the Trustee.

** For information regarding offering price per Unit and applicable sales
charge under the Total Reinvestment Plan, see 'Total Reinvestment Plan' in Part
B.

+++ Based solely upon the bid side evaluation of the underlying Bonds. Upon
tender for redemption, the price to be paid will be calculated as described

under 'Trustee Redemption' in Part B.

++++ The first interest distribution of $2.86 per Unit will be made on May 15,
1995 (the 'First Payment Date') to all Certificateholders of record on May 1,
1995 (the 'First Record Date'). The first regular monthly payment will be $4.77
on June 15, 1995. The first semi-annual payment will be $4.80 on June 15, 1995
and $28.82 thereafter.

o See 'Comparison of Public Offering Price, Sponsors' Repurchase Price and
Redemption Price' in Part B.

oo Does not include income accrual from original issue discount Bonds.

A-6

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46
VIRGINIA TRUST
SUMMARY OF ESSENTIAL INFORMATION AS OF APRIL 5, 1995*

Trust................................. $1,945,684
Divided by 2,000 Units.................. $972.84
Plus Sales Charge of 4.9% of Public
Offering Price........................ $50.12
Public Offering Price per Unit+......... $1,022.96
REDEMPTION PRICE PER UNIT+++.............. $968.84
SPONSOR'S INITIAL REPURCHASE PRICE PER
UNIT+o $972.84
EXCESS OF PUBLIC OFFERING PRICE OVER
REDEMPTION PRICE PER UNIT o............. $54.12
EXCESS OF SPONSOR'S INITIAL REPURCHASE
PRICE OVER REDEMPTION PRICE PER UNIT.... $4.00
EVALUATION TIME: 4:00 p.m. New York
time
MINIMUM PRINCIPAL DISTRIBUTION:
$1.00 per Unit

WEIGHTED AVERAGE LIFE TO MATURITY:
25.7 years
MINIMUM VALUE OF TRUST: Trust may be
terminated if value of Trust is less
than $800,000 in principal amount of
Bonds.
MANDATORY TERMINATION DATE: The earlier
of December 31, 2044 or the disposition
of the last Bond in the Trust.
TRUSTEE: United States Trust Company of
New York.
TRUSTEE'S ANNUAL FEE: Monthly plan $1.45
per $1,000 and semi-annual plan $1.00
per $1,000.
EVALUATOR: Kenny S&P Evaluation Services.
EVALUATOR'S FEE FOR EACH EVALUATION:
Minimum of $2.83 plus $.25 per each
issue of Bonds in excess of 50 issues
(treating separate maturities as
separate issues).
SPONSOR: Bear, Stearns & Co. Inc.
SPONSOR'S ANNUAL FEE: Maximum of $.25 per
$1,000 principal amount of Bonds (see
'Trust Expenses and Charges' in Part B).
</TABLE>

PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED

<TABLE>
<CAPTION>
MONTHLY SEMI-ANNUAL
OPTION OPTION
------------------- -----------------
<S> <C> <C>
Gross annual interest income (cash)oo.......................... $ 60.95 $ 60.95

Less estimated annual fees and expenses........................ 2.81 2.25
------ ------
Estimated net annual interest income (cash)++++oo.............. 58.14 58.70
Estimated daily interest accrual oo............................ .1615 .1630
Estimated current return based on Public Offering
Price++oo(1)................................................... 5.68% 5.74%
Estimated long term return++oo(1).............................. 5.61% 5.67%
First record date.............................................. 5/1/95 5/1/95
First interest distribution date............................... 5/15/95 5/15/95
Subsequent record dates........................................ 1st of each month June 1 & Dec. 1
Subsequent interest distribution dates......................... 15th of each month June 15 & Dec. 15
</TABLE>

- ------------
* The business day prior to the Date of Deposit. The Date of Deposit is the
date on which the Trust Agreement was signed and the Bonds were deposited with
the Trustee.
** For information regarding offering price per Unit and applicable sales
charge under the Total Reinvestment Plan, see 'Total Reinvestment Plan' in Part
B.

++ The estimated current return and estimated long term return are increased
for transactions entitled to a sales charge discount (see 'Volume and Other
Discounts' in Part B), and are higher under the semi-annual and annual options
due to lower Trustee's fees and expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds. Upon
tender for redemption, the price to be paid will be calculated as described
under 'Trustee Redemption' in Part B.

++++ The first interest distribution of $2.90 per Unit will be made on May 15,
1995 (the 'First Payment Date') to all Certificateholders of record on May 1,
1995 (the 'First Record Date'). The first regular monthly payment will be $4.84
on June 15, 1995. The first semi-annual payment will be $4.89 on June 15, 1995
and $29.35 thereafter.

o See 'Comparison of Public Offering Price, Sponsors' Repurchase Price and
Redemption Price' in Part B.
oo Does not include income accrual from original issue discount Bonds.
(1) Estimated long term return is calculated by computing the average of the
yields to maturity (or earlier call date) of the Bonds in the portfolio of the
State Trust in accordance with accepted bond practices (taking into account the
amortization of premiums, accretion of discounts, market value, and estimated
retirement of each Bond) and subtracting from the average yield so calculated
the fees, expenses and sale charge of the State Trust. Estimated current return
is calculated by dividing the estimated net annual interest income by the Public
Offering Price per Unit. In contrast to the estimated long term return, the
estimated current return does not take into account the amortization of premium

or accretion of discount on the underlying Bonds, if any. These returns do not
include the effects of any delay in payments to Unitholders and a calculation
which includes those effects would be lower. See 'Estimated Long Term Return and
Estimated Current Return' in Part B.

A-7

<PAGE>
THE TRUSTS

Each Trust is a unit investment trust and was formed to preserve capital and to
provide interest income (including earned original issue discount) which, in the
opinions of bond counsel to the respective issuers, is, with certain exceptions,
currently exempt from regular federal income tax under existing law and from
state and local taxes to the extent indicated herein when received by persons
subject to state and local income taxation in a state in which the issuers of
the Bonds are located. Each of the Insured Trusts seeks to achieve its
investment objectives through investment in a fixed, diversified portfolio of
long-term insured bonds issued by or on behalf of states, municipalities and
public authorities which, because of irrevocable insurance, are rated 'AAA' by
Standard & Poor's Corporation. The State Trusts each seeks to achieve its
investment objective through investment in a fixed, diversified portfolio of
intermediate or long-term bonds issued by or on behalf of states, municipalities
and public authorities. None of the Bonds in the State Trusts are insured.
Although the Supreme Court has determined that Congress has the authority to
subject the interest on bonds such as the Bonds in the Trusts to regular federal
income taxation, existing law excludes such interest from regular federal income
tax. Such interest income may, however, be a specific preference item for
purposes of the federal individual and/or corporate alternative minimum tax.
(See 'Description of Portfolios' in this Part A for a list of these Bonds which
pay interest income subject to the federal individual alternative minimum tax.
See also 'Tax Status' in Part B.) Some of the aggregate principal amount of the
Bonds in the Trusts may be 'Zero Coupon Bonds,' which are original issue
discount bonds that provide for payment at maturity at par value, but do not
provide for the payment of current interest (for the amount of Zero Coupon Bonds
in each Trust, and the cost of such Bonds to that Trust, see 'Description of
Portfolios' in this Part A). All of the Bonds in the Insured Trust and each
Navigator Trust were rated 'AAA' by Standard & Poor's Corporation on the Date of
Deposit (see 'Portfolio'). This rating results from insurance relating only to
the Bonds in the Insured Trusts and not to Units of the Insured Trusts. The
Units of the Insured Trusts are not insured. The insurance does not therefore
remove market risk, as it does not guarantee the market value of the Units. All
of the Bonds in the State Trusts were rated 'A' or better by Standard & Poor's
Corporation or Moody's Investors Service, Inc. on the Date of Deposit (see
'Portfolio'). For a discussion of the significance of such ratings, see
'Description of Bond Ratings' in Part B. The payment of interest and
preservation of capital are, of course, dependent upon the continuing ability of
the issuers of the Bonds or the insurer thereof to meet their obligations. There
can be no assurance that the Trusts' investment objectives will be achieved.
Investment in the Trusts should be made with an understanding of the risks which
an investment in intermediate or long-term fixed rate debt obligations as the
case may be, may entail, including the risk that the value of the underlying
portfolio will decline with increases in interest rates, and that the value of

Zero Coupon Bonds is subject to greater fluctuation in response to such changes
in interest rates. The Sponsors have a limited right to substitute other bonds
in the Trusts' portfolios in the event of a failed contract. (See 'Portfolio' in
Part B.) Each Unit in the Trusts represents an undivided interest in the
principal and net income of that Trust in the ratio of one Unit for each $1,000
principal amount of Bonds initially deposited in that Trust. (See 'Organization'
in Part B.) (For the specific number of Units in each Trust, see the 'Summary of
Essential Information' for the relevant Trust, in this Part A).

INSURANCE FOR THE INSURED TRUST AND NAVIGATOR TRUSTS

Each of the Bonds in the Insured Trust are insured by a municipal bond guaranty
insurance policy obtained by either the Sponsors ('Sponsor-Insured Bonds') or by
issuers, underwriters or prior owners of the Bonds ('Pre-Insured Bonds') and
issued by one of the insurance companies described under 'Insurance on the
Bonds' in Part B (the 'Insurance Companies'). Such insurance covers the
scheduled payment of principal thereof and interest thereon when such amounts
shall become due for payment but shall not have been paid by the issuer or any
other insurer thereof. The insurance, unless

A-8
<PAGE>

obtained by MBIA Insurance Corporation ('MBIA Corp.'), will also cover any
accelerated payments of principal and any increase in interest payments or
premiums, if any, payable upon mandatory redemption of the Bonds if interest on
any such Bond is ultimately deemed to be subject to federal income tax.
Insurance obtained from MBIA Corp. only guarantees the accelerated payments
required to be made by or on behalf of an issuer of small industrial revenue
bonds and pollution control revenue bonds if there occurs an event which results
in the loss of tax-exempt status of the interest on such Bonds, including
principal, interest or premium payments, if any, as and when required. To the
extent, therefore, that Bonds are only covered by insurance obtained from MBIA
Corp., such Bonds will be not be covered for the accelerated payments required
to be made by or on behalf of an issuer of other than small industrial revenue
bonds or pollution control revenue bonds if there occurs an event which results
in the loss of tax-exempt status of the interest on such Bonds. None of the
insurance will cover accelerated payments of principal or penalty interest or
premiums unrelated to taxability of interest on the Bonds (although the
insurance, including insurance obtained by MBIA Corp., does guarantee payment of
principal and interest in such amounts and at such times as such amounts would
have been due absent such acceleration). The insurance relates only to the
prompt payment of principal of and interest on the securities in the portfolios,
and does not remove market risks nor does it guarantee the market value of Units
in the Insured Trust. The terms of the insurance are more fully described
herein. For a discussion of the effect of an occurrence of nonpayment of
principal or interest on any Bonds in the Insured Trust, see 'Portfolio
Supervision' in Part B. No representation is made herein as to any Bond
insurer's ability to meet its obligations under a policy of insurance relating
to any of the Bonds. In addition, investors should be aware that subsequent to
the Date of Deposit the rating of the claims-paying ability of the insurer of an
underlying Bond may be downgraded, which may result in a downgrading of the
rating of the Units in the Insured Trust. The approximate percentage of the

aggregate principal amount of the Portfolio of the Insured Trust that is insured
by each Insurance Company is as follows: AMBAC Indemnity Corp. ('AMBAC'), 34.5%;
Connie Lee Insurance Company ('Connie Lee'), 20%; Financial Guaranty Insurance
Company ('Financial Guaranty'), 18.3%; and MBIA Corp. 27.2%.

Each of the Bonds in the Navigator Trusts are insured by a financial guaranty
insurance policy obtained by the Sponsors (the 'Navigator Sponsor-Insured
Bonds') from MBIA Corp. covering regularly scheduled payments of principal
thereof and interest thereon when such amounts become due for payment but shall
not have been paid. Such amounts shall be reduced by any amounts received by the
holders or the owners of the Bonds from any trustee for the Bonds issuers, any
other Bond insurers or any other source other than MBIA Corp. MBIA Corp. has
issued such policy or policies covering each of the Bonds in the Navigator
Trusts and each such policy will remain in force until the payment in full of
such Bonds, whether or not such Bonds continue to be held in the Navigator
Trusts. The insurer's policies relating to small industrial development bonds
and pollution control revenue bonds also guarantee the accelerated payments
required to be made by or on behalf of an issuer of Bonds pursuant to the terms
of the Bonds if there occurs an event which results in the loss of the
tax-exempt status of the interest on such Bonds, including principal, interest
or premium payments, if any, as and when thereby required. The insurance does
not cover for any accelerated payments required to be made by or on behalf of an
issuer of other than small industrial revenue bonds or pollution control revenue
bonds if there occurs an event which results in the loss of the tax-exempt
status of interest on such bonds nor will the insurance cover accelerated
payments of principal or penalty interest or premiums unrelated to taxability of
interest on any of the Bonds, including pollution control revenue bonds and
small industrial development bonds. In the event of such an acceleration, the
payments guaranteed by MBIA Corp. shall be made in such amounts and at such
times as such payments would have been made absent such an acceleration. The
insurance will not cover accelerated payments of principal or penalty interest
or premiums unrelated to taxability of interest on any of the Bonds, including
pollution control revenue bonds or small industrial development bonds. The
insurance relates only to the prompt payment of principal of and interest on the
securities in the Navigator Portfolios and does not remove market risk nor does
it guarantee the market value of Units in the Navigator Trusts. The terms of the
insurance are more fully described herein. For discussion of the effect of an
occurrence of non-payment of principal or interest on any

A-9
<PAGE>
Bonds in the Navigator Trusts see 'Portfolio Supervision' in Part B. No
representation is made herein as to any bond insurer's ability meet its
obligations under a policy of insurance relating to any of the Bonds in the
Navigator Trusts. In addition, investors should be aware that subsequent to the
Date of Deposit the rating of the claims-paying ability of MBIA Corp. may be
downgraded, which may result in a downgrading of the rating of the Units in the
Navigator Trusts. The premiums for the Navigator Sponsor-Insured Bonds are
obligations of the Sponsors. Additionally, some of the Bonds in the Navigator
Trusts may be Pre-Insured Bonds. The premium for the Pre-Insured Bonds is an
obligation of the issuers, underwriters or prior owners of those Bonds. The
insurance policy or policies relating to the Navigator Sponsor-Insured Bonds
provides that, to the extent that Bonds are both Pre-Insured Bonds and Navigator

Sponsor-Insured Bonds, coverage is effective after a claim has been made upon
the insurer of the Pre-Insured Bonds.

Upon notification from the trustee for any bond issuer or any holder or owner of
the Bonds that such trustee or paying agent has insufficient funds to pay any
principal or interest in full when due, MBIA Corp. will be obligated to deposit
funds promptly with Citibank, N.A., New York, New York, as fiscal agent for MBIA
Corp., sufficient to fully cover the deficit. If notice of nonpayment is
received on or after the due date, MBIA Corp. will provide for payment within
one business day following receipt of the notice. Upon payment by MBIA Corp. of
any Bonds, coupons, or interest payments, MBIA Corp. shall succeed to the rights
of the owner of such Bonds, coupons or interest payments with respect thereto.

All of the Bonds in the Navigator Trusts are covered by insurance obtained by
the Sponsors from MBIA Corp. 31.3% of the Bonds in the New York Navigator Trust
and 45.5% in the New Jersey Navigator Trust are Pre-Insured Bonds. The
approximate percentage of the aggregate principal amount of the Portfolio of
each of the Navigator Trusts that is insured by an Insurance Company with
respect to Pre-Insured Bonds is as follows: New York Navigator Trust; AMBAC,
8.3%; Financial Security Assurance Inc. ('Financial Security'), 5.2%; and MBIA
Corp., 17.8% and for the New Jersey Navigator Trust; AMBAC, 10.9%; Financial
Guaranty, 7.3%; and MBIA Corp., 27.3%.

PUBLIC OFFERING PRICE

The Public Offering Price of each Unit of each Trust is equal to the aggregate
offering price of the Bonds in such Trust divided by the number of Units
outstanding, plus a sales charge of 4.9% of the Public Offering Price (5.152% of
the net amount invested in Bonds per Unit). In addition, for Units ordered after
the date hereof, accrued interest will be payable from the first settlement date
for Units of the Trust (five business days from the date hereof) to the expected
date of settlement (five business days after order). For additional information
regarding the Public Offering Price, the descriptions of interest and principal
distributions, repurchase and redemption of Units and other essential
information regarding the Trusts, see the Summary of Essential Information for
that Trust. During the initial offering period orders involving at least 100
Units will be entitled to a volume discount from the Public Offering Price. The
Public Offering Price per Unit may vary on a daily basis in accordance with
fluctuations in the aggregate offering price of the Bonds. (See 'Public
Offering' in Part B.)

DISTRIBUTIONS

Distributions of interest income, less expenses, will be made by each Trust
either monthly or semi-annually depending upon the plan chosen by the
Certificateholder. Certificateholders purchasing Units in the secondary market
will initially receive distributions in accordance with the elections of the
prior owner. The first interest distributions will be made on the First Payment
Date to all Certificateholders of record on the First Record Date and thereafter
distributions will be made in accordance with the distribution plan chosen by
the Certificateholder. Distributions of principal, if any, will be made
semi-annually on December 15 and June 15 of each year. (See 'Rights of

Certificateholders--Interest and Principal Distributions' in Part B. For
estimated monthly and semi-

A-10
<PAGE>
annual interest distributions, the amount of the first interest distributions
and the specific dates representing the First Payment Date and the First Record
Date see 'Summary of Essential Information.')
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN

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

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

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

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

A schedule of cash flow projections is available from the Sponsors upon request.
MARKET FOR UNITS

The Sponsors, although not obligated to do so, intend to maintain a secondary
market for the Units of each Trust after the initial public offering has been
completed. The secondary market repurchase price will be based on the aggregate
bid price of the Bonds in the Trust portfolio; and the reoffer price will be
based on the aggregate bid price of the Bonds plus a sales charge of 4.9%
(5.152% of the net amount invested) plus net accrued interest. If a market is
not maintained a Certificateholder will be able to

A-11
<PAGE>
redeem his Units with the Trustee at a price based on the aggregate bid price of
the Bonds. (See 'Sponsor Repurchase' in Part B.)

TOTAL REINVESTMENT PLAN

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

DESCRIPTION OF PORTFOLIOS

At least 80% of the assets of the New York Navigator Trust and the New Jersey
Navigator Trust are invested in obligations of issuers located in New York and
New Jersey, respectively. For the specific number of issues located in New York
and New Jersey, see the summaries of the New York and New Jersey Portfolios,
below. On the Date of Deposit, the Sponsors deposited with the Trustee an
aggregate of $13,200,000 principal amount of intermediate or long-term bonds,
including delivery statements relating to contracts for the purchase of certain
such bonds (the 'Bonds') and cash or an irrevocable letter of credit issued by a
major commercial bank in the amount required for such purchases. Of such
principal amount of Bonds, $2,000,000 was deposited in the Insured Trust,
$3,000,000 was deposited in the New York Navigator Trust, $2,200,000 was
deposited in the New Jersey Navigator Trust, $2,000,000 was deposited in the
California Trust, $2,000,000 was deposited in the Florida Trust and $2,000,000
was deposited in the Virginia Trust. Thereafter, the Trustee, in exchange for
the Bonds so deposited, delivered to the Sponsors the certificates evidencing
the ownership of all Units of the Trusts. The Sponsors have not participated as
a sole underwriter or manager, co-manager or member of underwriting syndicates
from which any of the Bonds were acquired for the Insured Trust, New York
Navigator Trust, New Jersey Navigator Trust, California Trust, Florida Trust and
Virginia Trust.

INSURED TRUST

The portfolio of the Insured Trust consists of 10 issues representing
obligations of 10 issuers located in 6 states. Approximately 24.5% of the Bonds
are obligations of state and local housing authorities; approximately 15% are
hospital revenue bonds and 8.5% of the Bonds are issued in connection with the
financing of nuclear generating facilities. None of the issues comprising the
aggregate principal amount of the Trust are mortgage revenue bonds. There are no
'when, as and if' issued bonds in the Portfolio. One issue representing $200,000
of the aggregate principal amount of the Bonds is a general obligation bond.
Nine issues representing $1,800,000 of the aggregate principal amount of Bonds
are payable from the income of a specific project or authority and are not
supported by the issuer's power to levy taxes. The portfolio is divided for
purpose of issue as follows: College, 1; Electric, 1; Exposition Center, 1;
Hospital, 1; Multi-Family Housing, 2; Nuclear, 1; Sewer Revenue, 1 and
Transportation, 1. For an explanation of the significance of these factors see
'Portfolios' in Part B.

Approximately 20.8% of the aggregate principal amount of the Bonds in the
Insured Trust are original issue discount bonds, of which 3.3% of the aggregate
principal amount of Bonds in such Trust (although only .7% of the aggregate cost
of all Bonds acquired for such Trust) are Zero Coupon Bonds. Zero Coupon Bonds
do not provide for the payment of any current interest and provide for payment
at maturity at face value unless sooner sold or redeemed. The market value of
Zero Coupon Bonds is subject to greater fluctuations than coupon bonds in
response to changes in interest rates. See 'Discount and Zero Coupon Bonds' in
Part B. Approximately 12% of the Bonds in this Trust were purchased at a
'market' discount from par value at maturity. All of the Bonds are subject to
redemption prior to maturity pursuant to sinking fund or optional call
provisions except for Portfolio No. 10.

On the Date of Deposit, based on the offering side evaluation, approximately
32.8% of the aggregate principal amount of Bonds in the portfolio were acquired
at a discount from par, approximately 44.7%

A-12
<PAGE>

were at a premium over par and approximately 22.5% were at par. A
Certificateholder may receive more or less than his original purchase price upon
disposition of his Units because the value of Units fluctuates with the value of
the underlying Bonds, which vary inversely with interest rates. On the Date of
Deposit, the bid side evaluation was lower than the offering side evaluation by
.5% of the aggregate offering price for this Trust. (See 'Public Offering' in
Part B.)

None of the Bonds in the Trust are subject to the federal individual alternative
minimum tax under the Tax Reform Act of 1986.

No issues have been deposited in the Insured Trust and 10 issues are represented
by the Sponsors' contracts to purchase, which are expected to be settled on or
about April 12, 1995.

NEW YORK NAVIGATOR TRUST

The portfolio of the New York Navigator Trust consists of 12 issues representing
obligations of 8 issuers located in the State of New York and 2 in Puerto Rico.
Approximately 21.7% of the Bonds are obligations of state and local housing
authorities; approximately 11.7% are hospital revenue bonds and none are issued
in connection with the financing of nuclear generating facilities. None of the
issues comprising the aggregate principal amount of the Trust are mortgage
revenue bonds. There are no 'when, as and if' issued bonds in the portfolio.
Four issues representing $755,000 of the aggregate principal amount of the Bonds
are general obligation bonds. Eight issues representing $2,245,000 of the
aggregate principal amount of Bonds are payable from the income of a specific
project or authority and are not supported by the issuer's power to levy taxes.
The portfolio is divided for purpose of issue as follows: Correctional Facility,
1; Hospital, 2; Multi-Family Housing, 2; Public Building, 1; Transit Facility, 1
and Water, 1. For an explanation of the significance of these factors see
'Portfolios' in Part B.

Approximately 34.7% of the aggregate principal amount of the Bonds in the New
York Navigator Trust are original issue discount Bonds, of which 5.2% of the
aggregate principal amount of Bonds in such Trust (although only 1.2% of the
aggregate cost of all Bonds acquired for such Trust) are Zero Coupon Bonds. Zero
Coupon Bonds do not provide for the payment of any current interest and provide
for payment at maturity at face value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations then coupon bonds
in response to changes in interest rates. See 'Discount and Zero Coupon Bonds'
in Part B. Approximately 8.3% of the Bonds in this Trust were purchased at a
'market' discount from par value at maturity. All of the Bonds are subject to
redemption prior to maturity pursuant to sinking fund or optional call
provisions except for Portfolio No. 12.

On the Date of Deposit, based on the offering side evaluation, approximately 43%
of the aggregate principal amount of Bonds in the Trust were acquired at a
discount from par, approximately 57% were at a premium over par and none were at
par. A Certificateholder may receive more or less than his original purchase
price upon disposition of his Units because the value of Units fluctuates with
the value of the underlying Bonds, which varies inversely with interest rates.
On the Date of Deposit, the bid side evaluation was lower than the offering side

evaluation by .4% of the aggregate offering price of this Trust. (See 'Public
Offering' in Part B.)

None of the Bonds in the Trust are subject to the Federal individual alternative
minimum tax under the Tax Reform Act of 1986.

No issues have been deposited in the New York Navigator Trust and 12 issues are
represented by the Sponsors' contracts to purchase, which are expected to be
settled on or about April 10, 1995.

NEW JERSEY NAVIGATOR TRUST

The portfolio of the New Jersey Navigator Trust consists of 9 issues
representing obligations of 8 issuers located in the State of New Jersey and 1
in Puerto Rico. None of the Bonds are obligations of state and local housing
authorities; approximately 24.5% are hospital revenue bonds and none are issued
in connection with the financing of nuclear generating facilities. One issue
comprising 13.6% of

A-13
<PAGE>

the aggregate principal amount of the Trust is a mortgage revenue bond. There
are no 'when, as and if' issued bonds in the portfolio. One issue representing
$300,000 of the aggregate principal amount of the Bonds is a general obligation
bond. Eight issues representing $1,900,000 of the principal amount of the Bonds
are payable from the income of a specific project or authority and are not
supported by the issuer's power to levy taxes. The portfolio is divided for
purpose of issue as follows: Electric and Gas, 1; Hospital, 2; Port Authority,
1; Sewer Revenue, 2; Single Family Mortgage Revenue, 1 and Solid Waste, 1. For
an explanation of the significance of these factors see 'Portfolios' in Part B.

Approximately 18.2% of the aggregate principal amount of the Bonds in the New
Jersey Navigator Trust are original issue discount bonds, of which 4.5% of the
aggregate principal amount of Bonds in such Trust (although only 1.1% of the
aggregate cost of all Bonds acquired for such Trust) are Zero Coupon Bonds. Zero
Coupon Bonds do not provide for the payment of any current interest and provide
for payment at maturity at face value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. See 'Discount and Zero Coupon Bonds'
in Part B. Approximately 13.6% of the Bonds in this Trust were purchased at a
'market' discount from par value at maturity. All of the Bonds are subject to
redemption prior to maturity pursuant to sinking fund or optional call
provisions except for Portfolio No. 9.

On the Date of Deposit, based on the offering side evaluation, approximately
18.2% of the aggregate principal amount of the Bonds in the Trust were acquired
at a discount from par, approximately 81.8% were at a premium over par and none
were at par. A Certificateholder may receive more or less than his original
purchase price upon disposition of his Units because the value of Units
fluctuates with the value of the underlying Bonds, which vary inversely with
interest rates. On the Date of Deposit, the bid side evaluation was lower than
the offering side evaluation by .4% of the aggregate offering price of this
Trust. (See 'Public Offering' in Part B.)

Portfolio Nos. 3, 4 and 6 in the principal amount of $660,000, which represents
30% of the aggregate principal amount of the Bonds in the Trust (which also
represents 30.2% of the annual interest income), will pay interest income which
is includable as a preference item in computing the Federal individual and
corporate alternative minimum taxes. This may result in an increase in the
overall Federal tax liability of certain corporations and individuals. Investors
will realize taxable capital gain upon maturity or earlier redemption of any
market discount Bonds in the Trust. In addition, interest income on the Bonds in
the Trust may be subject to the Federal corporate alternative minimum tax. See
'Tax Status' in Part B.

No issues have been deposited in the New Jersey Navigator Trust and 9 issues are
represented by the Sponsors' contracts to purchase, which are expected to be
settled on or about April 11, 1995.

CALIFORNIA TRUST

The portfolio of the California Trust consists of 8 issues representing
obligations of 7 issuers located in the State of California and 1 in Puerto
Rico. None of the Bonds are obligations of state and local housing authorities;
approximately 15% are hospital revenue bonds and 15% of the Bonds are issued in
connection with the financing of nuclear generating facilities. One issue
comprising 5.8% of the aggregate principal amount of the Trust is a mortgage
revenue bond. There are no 'when, as and if' issued bonds in the portfolio. All
of the Bonds are subject to redemption prior to their stated maturity dates
pursuant to a sinking fund or optional call provision. One issue representing
$300,000 of the aggregate principal amount of the Bonds is a general obligation
bonds. Seven issues representing $1,700,000 of the principal amount of Bonds are
payable from the income of a specific project or authority and are not supported
by the issuer's power to levy taxes. The portfolio is divided for purpose of
issue as follows: Hospital, 1; Lease Revenue, 1; Nuclear, 1; Sales Tax, 1;
Single Family Mortgage Revenue, 1; Solid Waste, 1 and Transit, 1. For an
explanation of the significance of these factors see 'The Portfolios' in Part B.

A-14
<PAGE>

Approximately 73.5% of the aggregate principal amount of the Bonds in the
California Trust are original issue discount bond. Based on the offering side
evaluation, None of the Bonds in the California Trust were purchased at a
'market' discount from par value at maturity.

Based on the offering side evaluation on the Date of Deposit, approximately
73.5% of the aggregate principal amount of Bonds in the portfolio were acquired
at a discount from par, approximately 26.5% were at a premium over par and none
were at par. A Certificateholder may receive more or less than his original
purchase price upon disposition of his Units because the value of Units
fluctuates with the value of the underlying Bonds, which varies inversely with
interest rates, including fluctuations in the offering prices and bid prices. On
the Date of Deposit, the bid side evaluation was lower than the offering side
evaluation by .4% of the aggregate offering price of the California Trust. See
'Public Offering' in Part B.

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

No issues have been deposited in the California Trust and 8 issues are
represented by the Sponsors' contracts to purchase, which are expected to be
settled on or about April 11, 1995.

FLORIDA TRUST

The portfolio of the Florida Trust consists of 10 issues representing
obligations of 9 issuers located in the State of Florida and 1 in Puerto Rico.
None of the Bonds are obligations of state and local housing authorities;
approximately 23% are hospital revenue bonds and none of the Bonds are issued in
connection with the financing of nuclear generating facilities. Two issues
comprising 30% of the aggregate principal amount of the Trust are mortgage
revenue bonds. Portfolio No. 6, which represents 15% of the aggregate principal
amount of the bonds in the Trust has been purchased on a 'when as and if' issued
basis with delivery expected to take place on or about the settlement date for
the purchase of units. All of the Bonds are subject to redemption prior to their
stated maturity dates pursuant to a sinking fund or call provision except for
Portfolio No. 10. One issue representing $200,000 of the aggregate principal
amount of the Bonds is a general obligation bond. Nine issues representing
$1,800,000 of the principal amount of Bonds are payable from the income of a
specific project or authority and are not supported by the issuer's power to
levy taxes. The portfolio is divided for purpose of issue as follows: Airport,

1; Education, 1; Hospital, 2; Public Facility, 1; Single Family Mortgage
Revenue, 2; Solid Waste, 1 and University, 1. For an explanation of the
significance of these factors see 'The Portfolios' in Part B.

Approximately 39.5% of the aggregate principal amount of the Bonds in the
Florida Trust are original issue discount bonds, of which 5% of the aggregate
principal amount of Bonds in such Trust (although only 1.2% of the aggregate
cost of all Bonds acquired for such Trust) are Zero Coupon Bonds. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at face value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. See 'Discount and Zero Coupon Bonds'
in Part B. Based on the offering side evaluation, None of the Bonds in the
Florida Trust were purchased at a 'market' discount from par value at maturity.

Based on the offering side evaluation on the Date of Deposit, approximately
39.5% of the aggregate principal amount of Bonds in the portfolio were acquired
at a discount from par, approximately 40% were at a premium over par and
approximately 20.5% were at par. A Certificateholder may receive more or less
than his original purchase price upon disposition of his Units because the value
of Units fluctuates with the value of the underlying Bonds, which varies
inversely with interest rates, including fluctuations in the offering prices and
bid prices. On the Date of Deposit, the bid side evaluation was lower than the
offering side evaluation by .4% of the aggregate offering price of the Florida
Trust. See 'Public Offering' in Part B.

Portfolio Nos. 2, 4 and 7 in the principal amount of $710,000, which represents
35.5% of the aggregate principal amount of the Bonds in the Trust (which also
represents 38.2% of the annual interest income), will pay interest income which
is includable as a preference item in computing the Federal individual

A-15
<PAGE>

and corporate alternative minimum taxes. This may result in an increase in the
overall Federal tax liability of certain corporations and individuals. Investors
will realize taxable capital gain upon maturity or earlier redemption of any
market discount Bonds in the Trust. In addition, interest income on the Bonds in
the Trust may be subject to the Federal corporate alternative minimum tax. See
'Tax Status' in Part B.

No issues have been deposited in the Florida Trust and 10 issues are represented
by the Sponsor's contracts to purchase, which are expected to be settled on or
about April 12, 1995.

VIRGINIA TRUST

The portfolio of the Virginia Trust consists of 10 issues representing
obligations of 8 issuers located in the Commonwealth of Virginia or
municipalities, authorities or other political subdivisions thereof and 1 in
Puerto Rico. None of the Bonds are obligations of state and local housing
authorities; approximately 27.5% are hospital revenue bonds and none of the
Bonds are issued in connection with the financing of nuclear generating
facilities. One issue comprising 15% of the aggregate principal amount of the
Trust is a mortgage revenue bond. There are no 'when, as and if' issued bonds in
the portfolio. All of the Bonds are subject to redemption prior to their stated
maturity dates pursuant to a sinking fund or optional call provision except for
Portfolio No. 10. One issue representing $150,000 of the aggregate principal
amount of the Bonds is a general obligation bond. Ten issues representing
$1,850,000 of the principal amount of Bonds are payable from the income of a
specific project or authority and are not supported by the issuer's power to
levy taxes. The portfolio is divided for purpose of issue as follows: Bridge and
Tunnel, 1; Correctional Facility, 1; Electrical, 1; Hospital, 2; Public
Improvement, 1; Single Family Mortgage Revenue, 1 and Solid Waste, 2. For an
explanation of the significance of these factors see 'The Portfolios' in Part B.

Approximately 22.5% of the aggregate principal amount of the Bonds in the
Virginia Trust are original issue discount bonds, of which 5.3% of the aggregate
principal amount of Bonds in such Trust (although only 1.4% of the aggregate
cost of all Bonds acquired for such Trust) are Zero Coupon Bonds. Zero Coupon
Bonds do not provide for the payment of any current interest and provide for
payment at maturity at face value unless sooner sold or redeemed. The market
value of Zero Coupon Bonds is subject to greater fluctuations than coupon bonds
in response to changes in interest rates. See 'Discount and Zero Coupon Bonds'
in Part B. Based on the offering side evaluation. None of the Bonds in the
Virginia Trust were purchased at a 'market' discount from par value at maturity.

Based on the offering side evaluation on the Date of Deposit, approximately
22.5% of the aggregate principal amount of Bonds in the portfolio were acquired
at a discount from par, approximately 77.5% were at a premium over par and none
were at par. A Certificateholder may receive more or less than his original
purchase price upon disposition of his Units because the value of Units
fluctuates with the value of the underlying Bonds, which varies inversely with
interest rates, including fluctuations in the offering prices and bid prices. On
the Date of Deposit, the bid side evaluation was lower than the offering side
evaluation by .4% of the aggregate offering price of the Virginia Trust. See
'Public Offering' in Part B.

Portfolio Nos. 1, 4 and 6 in the principal amount of $850,000, which represents
42.5% of the aggregate principal amount of the Bonds in the Trust (which also

represents 45.3% of the annual interest income), will pay interest income which
is includable as a preference item in computing the Federal individual and
corporate alternative minimum taxes. This may result in an increase in the
overall Federal tax liability of certain corporations and individuals. Investors
will realize taxable capital gain upon maturity or earlier redemption of any
market discount Bonds in the Trust. In addition, interest income on the Bonds in
the Trust may be subject to the Federal corporate alternative minimum tax. See
'Tax Status' in Part B.

No issues have been deposited in the Virginia Trust and 10 issues are
represented by the Sponsors' contracts to purchase, which are expected to be
settled on or about April 11, 1995.

A-16

<PAGE>
INDEPENDENT AUDITORS' REPORT

The Sponsors, Trustee, and Certificateholders:
Insured Municipal Securities Trust -- Series 33, New York Navigator Insured
Series 17
and New Jersey Navigator Insured Series 13; and
Municipal Securities Trust, Multi-State Series 46 (California Trust, Florida
Trust and Virginia Trust)

We have audited the accompanying Statements of Condition and Portfolios
(the 'financial statements') of the Insured Municipal Securities Trust -- Series
33, New York Navigator Insured Series 17 and New Jersey Navigator Insured Series
13; and Municipal Securities Trust, Multi-State Series 46 (California Trust,
Florida Trust and Virginia Trust) as of April 6, 1995. These financial
statements are the responsibility of the Sponsors. 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. An audit also includes
assessing the accounting principles used and significant estimates made, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion. The irrevocable letters of
credit deposited in connection with the securities owned as of April 6, 1995,
pursuant to contracts to purchase, as shown in the Statements of Condition, were
confirmed to us by United States Trust Company of New York, the Trustee.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Insured Municipal
Securities Trust -- Series 33, New York Navigator Insured Series 17 and New
Jersey Navigator Insured Series 13; and Municipal Securities Trust, Multi-State
Series 46 (California Trust, Florida Trust and Virginia Trust), as of April 6,
1995, in conformity with generally accepted accounting principles.

KPMG PEAT MARWICK LLP

New York, New York
April 6, 1995

A-17

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST, SERIES 33
NEW YORK NAVIGATOR INSURED SERIES 17 AND
NEW JERSEY NAVIGATOR INSURED SERIES 13
AND
MUNICIPAL SECURITIES TRUST,
MULTI-STATE SERIES 46

STATEMENTS OF CONDITION
AS OF DATE OF DEPOSIT, APRIL 6, 1995

TRUST PROPERTY

<TABLE>
<CAPTION>
MULTI-STATE MULTI-STATE MULTI-STATE
NEW YORK NEW JERSEY SERIES 46 SERIES 46 SERIES 46
INSURED NAVIGATOR NAVIGATOR (CALIFORNIA (FLORIDA (VIRGINIA
TRUST TRUST TRUST TRUST) TRUST) TRUST)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment in Securities--Sponsors'
Contracts to Purchase Underlying
Bonds Backed by Letters of
Credit(1)........................... $1,932,158 $2,881,066 $2,132,422 $1,883,374 $1,921,562 $1,945,684
Accrued Interest to Date of Deposit on
Bonds(1)............................ 25,765 33,927 28,142 32,006 15,033 21,407
---------- ---------- ---------- ---------- ---------- ----------
Total........................ $1,957,923 $2,914,993 $2,160,564 $1,915,380 $1,936,595 $1,967,091
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>

LIABILITY AND INTEREST OF CERTIFICATEHOLDERS

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Liability for Accrued Interest to Date
of Deposit on Bonds(1)(4)........... $ 25,765 $ 33,927 $ 28,142 $ 32,006 $ 15,033 $ 21,407
---------- ---------- ---------- ---------- ---------- ----------
Interest of Certificateholders--Units
of Fractional Undivided Interest
Outstanding (Insured Trust: 2,000
Units, New York Navigator Trust:
3,000 Units, New Jersey Navigator
Trust: 2,200 Units, California
Trust: 2,000 Units, Florida Trust:
2,000 Units, and Virginia Trust:

2,000 Units):
Cost to Certificateholders(2)..... 2,031,712 3,029,512 2,242,294 1,980,414 2,020,570 2,045,934
Less-Gross Underwriting
Commissions(3).................. 99,554 148,446 109,872 97,040 99,008 100,250
---------- ---------- ---------- ---------- ---------- ----------
Net Amount Applicable to
Certificateholders.............. 1,932,158 2,881,066 2,132,422 1,883,374 1,921,562 1,945,684
---------- ---------- ---------- ---------- ---------- ----------
Total........................ $1,957,923 $2,914,993 $2,160,564 $1,915,380 $1,936,595 $1,967,091
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>

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

(1) Aggregate cost to each Trust of the Bonds listed in the Portfolio of
such Trust is based on offering prices determined by the Evaluator on the basis
set forth under 'Public Offering--Offering Price' as of 4:00 p.m. on April 5,
1995. Irrevocable letters of credit issued by Morgan Guaranty Trust Company in
an aggregate amount of $13,200,000 have been deposited with the Trustee to cover
the purchase of $13,200,000 principal amount of Bonds pursuant to contracts to
purchase such Bonds and $177,674 accrued interest on such Bonds to the expected
dates of delivery.

(2) Aggregate public offering price (exclusive of interest) computed on
2,000 Units of the Insured Trust, 3,000 Units of New York Navigator Trust, 2,200
Units of New Jersey Navigator Trust, 2,000

(Footnotes continued on next page)

A-18
<PAGE>
(Footnotes continued from previous page)

Units of the California Trust, 2,000 Units of the Florida Trust and 2,000 Units
of the Virginia Trust on the basis set forth under 'Public Offering--Offering
Price' in Part B.

(3) Sales charge of 4.9% computed on 2,000 Units of the Insured Trust,
3,000 Units of New York Navigator Trust, 2,200 Units of New Jersey Navigator
Trust, 2,000 Units of the California Trust, 2,000 Units of the Florida Trust and
2,000 Units of the Virginia Trust on the basis set forth under 'Public
Offering--Offering Price' in Part B.

(4) On the basis set forth under 'Public Offering--Accrued Interest', the

Trustee will advance the amount of accrued interest as of April 13, 1995 (the
'First Settlement Date') and all accrued interest to the First Settlement Date
will be distributed to the Sponsors as the Certificateholders of record as of
the First Settlement Date. Consequently, the amount of accrued interest to be
added to the public offering price of Units will include only accrued interest
from the First Settlement Date to date of settlement, less any distributions
from the Interest Account subsequent to the First Settlement Date.

A-19

<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
PORTFOLIO
------------------------

SERIES 33
------------------------
AS OF APRIL 6, 1995

A MONTHLY PAYMENT SERIES OR
SEMI-ANNUAL PAYMENT SERIES

<TABLE>
<CAPTION>
AGGREGATE NAME OF ISSUER AND COUPON/ REDEMPTION FEATURE
PORTFOLIO PRINCIPAL TITLE OF BONDS MATURITY S.F.--SINKING FUND COST OF BONDS
NO. AMOUNT CONTRACTED FOR(6) RATINGS(1) DATE(2) OPT.--OPTIONAL(2)(3) TO TRUST(5)
- ---------- ---------- -------------------------------- ----------- ----------- -------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 200,000 Reg. Trans. Auth. Cook, DuPage, AAA 6.125% 6/01/16 @ 100 S.F. $ 200,000
Kane, Lake, McHenry and Will 6/01/2022 6/01/02 @ 100 Opt.
Cntys. Il. Gen. Obg. Bonds,
Series 1992 B (AMBAC)

2 250,000 Ma. Hsg. Finc. Agcy. Hsg. Proj. AAA 6.150% 4/01/14 @ 100 S.F. 250,000
Rev. Bonds 1993 Series A Bonds 10/01/2015 4/01/03 @ 102 Opt.
(AMBAC)

3 50,000 Ma. Bay Trans. Auth. Gen. Trans. AAA 5.500% 3/01/17 @ 100 S.F. 45,812
System Bonds 1992 Series B Ref. 3/01/2021 3/01/03 @ 100 Opt.
(MBIA Corp.)

4 240,000 Mi. St. Hsg. Dev. Auth. Rntl. AAA 5.900% 4/01/18 @ 100 S.F. 232,032
Hsg. Rev. Bonds, 1993 Series A 4/01/2023 4/01/03 @ 102 Opt.
(AMBAC)

5 400,000 R.I. Hlth. and Ed. Bldg. Corp. AAA 6.500% 11/15/12 @ 100 S.F. 408,556
Hgr. Ed. Fac. Rev. Bonds (Connie 11/15/2024 11/15/02 @ 102 Opt.
Lee)

6 275,000 Piedmont Muni. Pwr. Agcy. (S.C.) AAA 6.300% 1/01/12 @ 100 S.F. 278,960
Elec. Rev. Bonds, 1992 Ref. 1/01/2014 1/01/03 @ 102 Opt.
Series (MBIA Corp.)

7 300,000 Wa. Hlth. Care Facs. Auth. Rev. AAA 5.750% 8/15/09 @ 100 S.F. 282,294
Bonds, Series 1992 (Multicare 8/15/2022 8/15/02 @ 102 Opt.
Med. Cntr., Tacoma) (Financial
Guaranty)

8 170,000 Wa. Pub. Pwr. Spply. Systm. Nuc. AAA 6.250% 7/01/16 @ 100 S.F. 171,165
Proj. No. 1 Ref. Rev. Bonds, 7/01/2017 7/01/02 @ 102 Opt.

Series 1992 A (MBIA Corp.)

9 50,000 Muni. of Met. Seattle (Seattle, AAA 6.300% 1/01/24 @ 100 S.F. 50,537
Wa.) Swr. Rev. Bonds, Series W 1/01/2033 1/01/03 @ 102 Opt.
(MBIA Corp.)

10 65,000 Metro. Pier and Expo. Auth. AAA 0.000% No Sinking Fund 12,802
(Il.) McCormick Place Expansion 6/15/2021 None
Prjt. Bonds Series 1992 A
(Financial Guaranty)
---------- -------------

$2,000,000 $ 1,932,158
---------- -------------
---------- -------------
</TABLE>

A-20

<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
PORTFOLIO
------------------------

NEW YORK NAVIGATOR INSURED SERIES 17
------------------------
AS OF APRIL 6, 1995

A MONTHLY PAYMENT SERIES OR
SEMI-ANNUAL PAYMENT SERIES

<TABLE>
<CAPTION>
AGGREGATE NAME OF ISSUER AND COUPON/ REDEMPTION FEATURE
PORTFOLIO PRINCIPAL TITLE OF BONDS MATURITY S.F.--SINKING FUND
NO. AMOUNT CONTRACTED FOR(6) RATINGS(1)(7) DATE(2) OPT.--OPTIONAL(2)(3)
- ---------- ---------- ----------------------------------------------- -------------- ----------- --------------------
<S> <C> <C> <C> <C> <C>
1 $ 250,000 N.Y. State Hsg. Finc. Agcy. Ins. Multi-Fam. AAA 6.250% 8/15/07 @ 100 S.F.
Mtg. Hsg. Rev. Bonds 1994 Series B (MBIA Corp.) 8/15/2014 8/15/04 @ 102 Opt.
2 215,000 N.Y. State Med. Care Facs. Finc. Agcy. Mental AAA 6.375% 8/15/10 @ 100 S.F.
Hlth. Servs. Facs. Imprvmnt. Rev. Bonds, 1994 8/15/2014 8/15/04 @ 102 Opt.
Series E (MBIA Corp.)
3 135,000 N.Y. State Med. Care Facs. Finc. Agcy. Mental AAA 6.000% No Sinking Fund
Hlth. Servs. Facs. Imprvmnt. Rev. Bonds, 1995 8/15/2020 2/01/05 @ 102 Opt.
Series C (MBIA Corp.)
4 200,000 N.Y. State U.D.C. Correc. Cap. Facs. Rev. AAA 5.375% 1/01/14 @ 100 S.F.
Bonds, Series 4 (MBIA Corp.) 1/01/2023 1/01/04 @ 102 Opt.
5 400,000 N.Y. City Hsg. Dev. Corp. Multi-Fam. Hsg. Rev. AAA 6.550% 4/01/16 @ 100 S.F.
(FHA Ins. Mtg. Loans) Series 1993A (MBIA Corp.) 4/01/2018 4/01/03 @ 102 Opt.
6 400,000 The City of N.Y. Genl. Oblig. Bonds, Fiscal AAA 7.000% No Sinking Fund
1992 Series H (MBIA Corp.) 2/01/2020 2/01/02 @ 101.5 Opt.
7 395,000 N.Y. City Muni. Wtr. Finc. Auth. Wtr. & Swr. AAA 6.375% 6/15/21 @ 100 S.F.
Sys. Rev. Bonds Fiscal 1993 Series B (MBIA 6/15/2022 6/15/02 @ 101 Opt.
Corp.)
8 400,000 Metro. Trans. Auth. Trans. Facs. Rev. Bonds, AAA 6.000% 7/01/21 @ 100 S.F.
Series O (MBIA Corp.) 7/01/2024 7/01/04 @ 101.5 Opt.
9 150,000 Cmmnwlth. of P.R. Pub. Imprvmnt Ref. Bonds, AAA 5.000% 7/01/19 @ 100 S.F.
Series 1993 (Gen. Obg. Bonds) (MBIA Corp.) 7/01/2021 7/01/03 @ 100 Opt.
10 50,000 Cmmnwlth. of P.R. Pub. Imprvment Ref. Bonds of AAA 6.500% 7/01/18 @ 100 S.F.
1994 (Gen. Obg. Bonds) (MBIA Corp.) 7/01/2023 7/01/04 @ 101.5 Opt.
11 250,000 P.R. Pub. Bldgs. Auth. Pub. Ed. & Hlth. Facs. AAA 5.750% 7/01/11 @ 100 S.F.
Rev. Rfndg. Bonds Gtd. By the Commonwealth of 7/01/2015 7/01/03 @ 101.5 Opt.
P.R. Series L (MBIA Corp.)
12 155,000 The City of N.Y. Genl. Oblig. Bonds, Fiscal AAA 0.000% No Sinking Fund
1991 N.Y. City Savers Series B (MBIA Corp.) 6/01/2020 None
----------
$3,000,000
----------
----------

PORTFOLIO COST OF BONDS
NO. TO TRUST(5)
- ---------- -------------
<S> <C>
1 $ 251,997

2 219,773

3 134,117

4 180,698

5 411,804

6 423,780

7 402,513

8 397,228

9 129,402

10 52,017

11 242,705

12 35,032

-------------
$ 2,881,066
-------------
-------------
</TABLE>

A-21

<PAGE>

INSURED MUNICIPAL SECURITIES TRUST
PORTFOLIO
------------------------
NEW JERSEY NAVIGATOR INSURED SERIES 13
------------------------
AS OF APRIL 6, 1995

A MONTHLY PAYMENT SERIES OR
SEMI-ANNUAL PAYMENT SERIES

<TABLE>
<CAPTION>
AGGREGATE NAME OF ISSUER AND COUPON/ REDEMPTION FEATURE
PORTFOLIO PRINCIPAL TITLE OF BONDS MATURITY S.F.--SINKING FUND COST OF BONDS
NO. AMOUNT CONTRACTED FOR(6) RATINGS(1)(7) DATE(2) OPT.--OPTIONAL(2)(3) TO TRUST(5)
- ---------- ---------- ------------------------ -------------- ----------- ---------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 300,000 N.J. Hlth. Care Fac. AAA 6.000% 7/01/17 @ 100 S.F. $ 301,182
Fincg. Auth. Rev. Bonds 7/01/2024 7/01/04 @ 102 Opt.
Newark Beth Israel Med.
Cntr. Issue Series 1994
(FSA Insrd.) (MBIA
Corp.)

2 240,000 N.J. Hlth. Care Fac. AAA 6.250% 7/01/15 @ 100 S.F. 245,810
Fincg. Auth. Rev. Bonds 7/01/2016 7/01/04 @ 102 Opt.
Jersey Shore Med. Cntr.
Ob. Grp. Issue, Series
1994 (MBIA Corp.)

3 300,000 N.J. Hsg. & Mtg. Finc. AAA 5.500% 4/01/19 @ 100 S.F. 274,935
Agncy. Home Buyer Rev. 10/01/2026 10/01/03 @ 102 Opt.
Bonds 1993 Series H
(AMT) (MBIA Corp.)

4 300,000 The Port Auth. of N.Y. AAA 6.125% 7/15/17 @ 100 S.F. 301,785
and N.J. Consld. 7/15/2022 7/15/04 @ 101 Opt.
Ninety-Fifth Series
(AMT) (MBIA Corp.)

5 300,000 The Hoboken--Union AAA 6.200% 8/01/16 @ 100 S.F. 305,274
City-- Weehawken Swrg. 8/01/2019 8/01/02 @ 102 Opt.
Auth. (N.J.) Swr. Rev.
Bonds (Ref. Series 1992)
(MBIA Corp.)

6 60,000 Mercer Cnty. (N.J.) AAA 6.700% 4/01/08 @ 100 S.F. 62,885
Improvement Auth. Insrd. 4/01/2013 4/01/02 @ 102 Opt.
Solid Waste Rev. Bonds
(Resource Rec. Prjt.)

Rfndg. Series 1992A
(AMT) (MBIA Corp.)

7 300,000 The Poll. Cntrl. Fincg. AAA 6.250% No Sinking Fund 306,006
Auth. of Salem Cnty. 6/01/2031 6/01/04 @ 102 Opt.
(N.J.) Poll. Cntrl. Rev.
Rfndg. Bonds 1994 Series
B (Pub. Serv. Elec. &
Gas Co. Prjt.) (MBIA
Corp.)

8 300,000 Cmmwlth. of P.R. Pub. AAA 6.500% 7/01/18 @ 100 S.F. 312,099
Imprvmnt. Ref. Bonds of 7/01/2023 7/01/04 @ 101.5 Opt.
1994 (Gen. Obg. Bonds)
(MBIA Corp.)

9 100,000 West N.Y., N.J. Muni. AAA 0.000% No Sinking Fund 22,446
Utils. Auth. (Hudson 12/15/2020 None
Cnty. N.J.) Swr. Rev.
Rfndg. Cap. Apprec.
Bonds Series 1991 (MBIA
Corp.)
---------- -------------
$2,200,000 $ 2,132,422
---------- -------------
---------- -------------
</TABLE>

A-22

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46
PORTFOLIO
------------------------
CALIFORNIA TRUST
------------------------
AS OF APRIL 6, 1995

A MONTHLY PAYMENT SERIES OR
SEMI-ANNUAL PAYMENT SERIES

2 300,000 Ins. Hlth. Fac. Ref. Rev. COP (Eskaton Prop. A 5.800% 5/01/06 @ 100 S.F.
Inc.) Series 1993 Ca. Statewide C.D.A. 5/01/2013 5/01/03 @ 102 Opt.

3 270,000 Costa Mesa Pub. Fincg. Auth. Orange Cnty, Ca. A+ 5.250% 10/01/09 @ 100 S.F.
Rfndg. Rev. Bonds, 1993 Series A (Pub. Facs. 10/01/2018 10/01/03 @ 102 Opt.
Prjt.)

4 300,000 Redding JT. Pwrs. Fincg. Auth. Solid Waste and A 5.500% 1/01/06 @ 100 S.F.
Corp. Yard Rev. Bonds, 1993 Series A. 1/01/2013 1/01/04 @ 102 Opt.

5 300,000 San Diego Ca. Muni. Trans. Dstrct. Bd. Auth. 1993 Aa 5.375% 6/01/19 @ 100 S.F.
Lease Rev. Bonds (Old Town Light Rail Trans. 6/01/2023 6/01/03 @ 101 Opt.
Ext.)

6 115,000 Santa Clara Ca. Trans. Dstrct. Sales Tax Rev. AA 6.250% 6/01/14 @ 100 S.F.
Bonds 1991 Series A 6/01/2021 12/01/00 @ 100 Opt.

7 300,000 So. Ca. Pub. Pwr. Auth. Multiple Prjt. Rev. A 6.000% 7/01/14 @ 100 S.F.
Bonds, 1989 Series 7/01/2018 7/01/00 @ 100 Opt.

8 300,000 Cmmnwlth. of P.R. Pub. Imprvmnt. Ref. Bonds of A 6.500% 7/01/18 @ 100 S.F.
1994 (Gen. Obg. Bonds) 7/01/2023 7/01/04 @ 101.5 Opt.
----------
$2,000,000
----------
----------

COST OF
PORTFOLIO BONDS TO
NO. TRUST(5)
- --------- ----------
<S> <C>
1 $ 116,405

2 282,393

3 232,527

4 271,578

5 267,207

6 115,259

7 290,835

8 307,170

----------
$1,883,374
----------
----------
</TABLE>

A-23

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46
PORTFOLIO
--------------------
FLORIDA TRUST
------------------------
AS OF APRIL 6, 1995

A MONTHLY PAYMENT SERIES OR
SEMI-ANNUAL PAYMENT SERIES

2 300,000 Brevard Cnty. Fla. Hsg. Fin. Auth. S.F.M.R. (AMT) Aaa* 6.800% 3/01/22 @ 100 S.F.
3/01/2028 3/01/05 @ 102 Opt.

3 240,000 Brevard Cnty. Fla. Solid Waste Sys. Rev. Bonds, A 5.700% No Sinking Fund
Series 1993 4/01/2009 4/01/03 @ 102 Opt.

4 150,000 Dade Cnty. Fla. Aviation Rev. Bonds Series 1995 B AAA 6.000% 10/01/16 @ 100 S.F.
(AMT) (MBIA) 10/01/2024 10/01/05 @ 102 Opt.

5 100,000 Dade Cnty. Fla. Ed. Facs. Auth. Rev. Rfndg. Aa3* 6.125% 1/01/15 @ 100 S.F.
Bonds, Series 1994 (St. Thomas Univ. Issue) 1/01/2019 1/01/04 @ 102 Opt.

6 300,000 (4) Hsg. Fincg. Auth. of Dade Cnty. (Fla.) S.F.M.R. AAA 6.700% 4/01/27 @ 100 S.F.
Bonds Series 1995 4/01/2028 4/01/05 @ 102 Opt.

7 260,000 Palm Beach Cnty. Hlth. Facs. Auth. Hosp. Rev. A- 6.300% 10/01/12 @ 100 S.F.
Bonds (Good Sam. Hlth. Sys., Inc. Proj.) Series 10/01/2022 10/01/03 @ 102 Opt.
1993 (AMT) (MBIA)

8 200,000 St. Johns Cnty. Ind. Dev. Auth. Hosp. Rev. Bonds A 6.000% 8/01/09 @ 100 S.F.
(Flagler Hosp. Proj.) Series 1992 8/01/2022 8/01/02 @ 102 Opt.

9 200,000 Cmmnwlth. of P.R. Pub. Imprvmnt. Ref. Bonds of A 6.500% 7/01/18 @ 100 S.F.
1994 (Gen. Obg. Bonds) 7/01/2023 7/01/04 @ 101.5 Opt.

10 100,000 City of Sunrise Fla. Pub. Facs. Ref. Rev. Bonds AAA 0.000% No Sinking Fund
Series 1992 B (MBIA) 10/01/2019 None
----------

$2,000,000
----------
----------

<CAPTION>
COST OF
PORTFOLIO BONDS TO
NO. TRUST(5)
- --------- ----------
<S> <C>
1 $ 150,000

2 307,353

3 231,048

4 147,957

5 99,062

6 304,938

7 260,000

8 193,466

9 204,780

10 22,958

----------
$1,921,562
----------
----------
</TABLE>

A-24

<PAGE>

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46
PORTFOLIO
--------------------
VIRGINIA TRUST
--------------------
AS OF APRIL 6, 1995

A MONTHLY PAYMENT SERIES OR
SEMI-ANNUAL PAYMENT SERIES

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

3 250,000 Indus. Dev. Auth. of Covington--Alleghany Cnty., A- 6.875% 4/01/13 @ 100 S.F.
Va. Hosp. Facs. Rev. Bonds (Alleghany Reg. Hosp.) 4/01/2022 4/01/02 @ 102 Opt.
Series 1992

4 250,000 Indus. Dev. Auth. of Danville, Va. Solid Waste A3* 6.500% No Sinking Fund
Disposal Rev. Bonds 1995 Series A (Int'l. Paper 3/01/2019 3/01/05 @ 102 Opt.
Co. Prjts)

5 300,000 Hampton Va. Indus. Dev. Auth. Hosp. Rev., Sentara A* 6.500% 11/01/09 @ 100 S.F.
Genl. Hosp. Series A 11/01/2012 11/01/04 @ 102 Opt.

6 300,000 Indus. Dev. Auth. of the Cnty. of Isle of Wight, A1* 6.550% No Sinking Fund
Va. Solid Waste Disp. Facs. Rev. Bonds (Union 4/01/2024 4/01/04 @ 102 Opt.
Camp Corp. Prjt.) Series 1994

7 45,000 City of Richmond Va. Genl. Oblig. Pub. Imprvmnt. AA 5.500% 1/15/18 @ 100 S.F.
Rfndg. Bonds Series 1993A 1/15/2022 1/15/03 @ 102 Opt.

8 200,000 Riverside Regl. Jail Auth. Jail Fac. Rev. Bonds AAA 6.000% 7/01/15 @ 100 S.F.
Series 1995 7/01/2025 7/01/05 @ 102 Opt.

9 150,000 Cmmnwlth. of P.R. Pub. Imprvmnt. Ref. Bonds of A 6.500% 7/01/18 @ 100 S.F.
1994 (Gen. Obg. Bonds) 7/01/2023 7/01/04 @ 101.5 Opt.

10 105,000 P.R. Elec. Pwr. Auth. Pwr. Rev. Bonds Series O A- 0.000% No Sinking Fund

7/01/2017 None
----------
$2,000,000
----------
----------

<CAPTION>
COST OF
PORTFOLIO BONDS TO
NO. TRUST(5)
- --------- ----------
<S> <C>
1 $ 300,954

2 96,520

3 261,493

4 253,080

5 308,583

6 304,689

7 41,178

8 198,596

9 153,585

10 27,006

----------
$1,945,684
----------
----------
</TABLE>

A-25

<PAGE>
FOOTNOTES
TO
PORTFOLIOS
(l) All ratings are by Standard & Poor's Corporation except for those identified
by an asterisk (*), which are by Moody's Investors Service, Inc. A brief
description of the rating symbols and their meanings is set forth under
'Description of Bond Ratings' in Part B.
(2) This column indicates whether the Bonds are subject to mandatory sinking
fund redemption on or after a specified date and whether such Bonds are
subject to unrestricted optional call by the issuer (for purposes of a
refunding or otherwise) on or after a specified date at prices which may or
may not include a premium. See 'Tax Status' in Part B for a statement of the
federal tax consequences to a certificateholder upon the sale, redemption or
maturity of a Bond and the state and local tax consequences of a sale of a
Bond.
(3) The Bonds may also be subject to other calls, which may be permitted or
required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or
unanticipated revenues).
(4) Bonds were in syndication at the Evaluation Time on the day prior to Date of
Deposit. (See 'Public Offering--Offering Price' in Part B.)
(5) Evaluation of Bonds by the Evaluator was made on the basis of current
offering prices for the Bonds. The offering prices are greater than the
current bid prices of the Bonds which are the basis on which Unit Value is
determined for purposes of redemption of Units. (See 'Comparison of Public
Offering Price, Sponsors' Repurchase Price and Redemption Price' in Part B.)
The aggregate value of Bonds in the Trusts, based on the bid prices on the
Date of Deposit, are as follows:

<TABLE>
<CAPTION>
% DIFFERENCE
VALUE OF BONDS COST OF BONDS BETWEEN BID SIDE
BASED UPON BASED UPON EVALUATION
BID SIDE OFFERING SIDE DIFFERENCE AND OFFERING
EVALUATION EVALUATION IN DOLLARS SIDE EVALUATION
-------------- -------------- ---------- ----------------
<S> <C> <C> <C> <C>
Insured Trust................................. $1,922,238 $1,932,158 $ 9,920 .5%
New York Navigator Trust...................... $2,869,066 $2,881,066 $ 12,000 .4%
New Jersey Navigator Trust.................... $2,123,622 $2,132,422 $ 8,800 .4%
California Trust.............................. $1,875,374 $1,883,374 $ 8,000 .4%
Florida Trust................................. $1,913,562 $1,921,562 $ 8,000 .4%
Virginia Trust................................ $1,937,684 $1,945,684 $ 8,000 .4%
</TABLE>

Additional information regarding the Trusts is as follows:

<TABLE>

<CAPTION>
SPONSORS' PURCHASE
PRICE (INCLUDING
PREMIUM PAID ON
SPONSOR-INSURED
AND NAVIGATOR SPONSORS'
SPONSOR-INSURED PROFIT/LOSS ANNUAL
BONDS) (DATE OF DEPOSIT) INTEREST INCOME
------------------ ----------------- ---------------
<S> <C> <C> <C>
Insured Trust......................................... $1,920,445 $11,713 $ 118,885
New York Navigator Trust.............................. $2,861,462 $19,604 $ 176,688
New Jersey Navigator Trust............................ $2,120,324 $12,098 $ 128,745
California Trust...................................... $1,864,390 $18,984 $ 116,363
Florida Trust......................................... $1,905,589 $15,973 $ 119,835
Virginia Trust........................................ $1,934,783 $10,901 $ 121,913
</TABLE>

(6) Forward contracts to purchase the Bonds were entered into from March 30,
1995 through April 5, 1995. All such contracts are expected to be settled on
or about the First Settlement Date of the Trust which is expected to be
April 13, 1995. The Purchase Cost to Sponsors includes the premium paid, if
any, by the Sponsors for insurance on the Navigator Sponsor-Insured Bonds.
Accordingly, the Sponsors' Profit (or Loss) on Deposit reflects the
deduction of such premiums.

(7) These Bonds are rated 'AAA' by Standard & Poor's Corporation and are insured
or guaranteed by the indicated municipal bond insurance company. (See
'Insurance of the Bonds' in Part B). In the event a bond whose rating is
conditional upon the issuance of insurance does not receive such a rating,
then the Sponsors may purchase Replacement Bonds. See 'Portfolios' in Part
B.

A-26

<PAGE>
UNDERWRITING SYNDICATES

The names and addresses of the Underwriters of the Units and their
participations in the offering of each Trust are as follows:

GRUNTAL & CO., INCORPORATED
14 Wall Street
New York, NY 10005.................................... -- 250 250 -- --
GRAYSON, BURGER & CO.
411 West Putnam Avenue
Greenwich, CT 06830................................... -- 400 -- -- --
JOSEPHTHAL, LYON & ROSS, INC.
45 Broadway
New York, NY 10006.................................... -- 100 100 -- --
OPPENHEIMER & CO., INC.
Oppenheimer Tower
World Financial Center
New York, NY 10281.................................... 100 100 -- -- --
SAMUEL A. RAMIREZ & CO., INC.
61 Broadway, Room 2924
New York, NY 10006.................................... -- 100 100 -- --
RAYMOND JAMES & ASSOCIATES, INC.
The Raymond James Financial Center
880 Carillon Parkway
St. Petersburg, FL 33716.............................. 100 -- -- -- 100
ANDERSON & STRUDWICK, INCORPORATED
1108 East Main Street
Richmond, VA 23212.................................... -- -- -- -- --
BRANCH, CABELL & CO.
919 East Main Street
Richmond, VA 23217.................................... -- -- -- -- --
DAVENPORT & CO. OF VIRGINIA, INC.
One James Center
Richmond, VA 23219.................................... -- -- -- -- --
FIRST MONTAUK SECURITIES CORP.
328 Newman Springs Road
Red Bank, NJ 07701.................................... 100 -- -- -- --
FIRST SOUTHEASTERN SECURITIES GROUP INC.
500 North Westshore Boulevard Suite 820
Tampa, FL 33609....................................... -- -- -- -- 100

UNITS OF
VIRGINIA
UNDERWRITER TRUST
- ------------------------------------------------------ --------
<S> <C>
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, NY 10167.................................... 1,600
GRUNTAL & CO., INCORPORATED
14 Wall Street
New York, NY 10005.................................... --
GRAYSON, BURGER & CO.
411 West Putnam Avenue
Greenwich, CT 06830................................... --
JOSEPHTHAL, LYON & ROSS, INC.

45 Broadway
New York, NY 10006.................................... --
OPPENHEIMER & CO., INC.
Oppenheimer Tower
World Financial Center
New York, NY 10281.................................... --
SAMUEL A. RAMIREZ & CO., INC.
61 Broadway, Room 2924
New York, NY 10006.................................... --
RAYMOND JAMES & ASSOCIATES, INC.
The Raymond James Financial Center
880 Carillon Parkway
St. Petersburg, FL 33716.............................. --
ANDERSON & STRUDWICK, INCORPORATED
1108 East Main Street
Richmond, VA 23212.................................... 100
BRANCH, CABELL & CO.
919 East Main Street
Richmond, VA 23217.................................... 100
DAVENPORT & CO. OF VIRGINIA, INC.
One James Center
Richmond, VA 23219.................................... 100
FIRST MONTAUK SECURITIES CORP.
328 Newman Springs Road
Red Bank, NJ 07701.................................... --
FIRST SOUTHEASTERN SECURITIES GROUP INC.
500 North Westshore Boulevard
Suite 820
Tampa, FL 33607....................................... --
</TABLE>

A-27
<PAGE>
UNDERWRITING SYNDICATES

<TABLE>
<CAPTION>
UNITS UNITS OF UNITS OF UNITS
OF N.Y. N.J. UNITS OF OF
INSURED NAVIGATOR NAVIGATOR CALIFORNIA FLORIDA
UNDERWRITER TRUST TRUST TRUST TRUST TRUST
- ------------------------------------------------------ ------- --------- --------- ---------- -------
<S> <C> <C> <C> <C> <C>
GIBRALTAR SECURITIES CO.
Ten James Street
Florham Park, NJ 07932................................ -- -- 100 -- --
J.B. HANAUER & CO.
Four Gate Hall Drive
Parsippany, NJ 07056.................................. 100 -- -- -- --
JANNEY MONTGOMERY SCOTT INC.
1801 Market Street
Philadelphia, PA 19103................................ -- -- 100 -- --
KIRLIN SECURITIES INC.

6901 Jericho Turnpike
Syosset, NY 11791..................................... -- 100 -- -- --
LEBENTHAL & CO., INC.
120 Broadway, 12th Floor
New York, NY 10005.................................... -- -- 100 -- --
NORI, HENNION, WALSH, INC.
3799 Route 46, Suite 102
Parsippany, NJ 07054.................................. -- -- 100 -- --
PERSHING DIVISION OF DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
One Pershing Plaza
Jersey City, NJ 07399................................. 100 -- -- -- --
RAF FINANCIAL CORPORATION
One Norwest Center
1700 Lincoln Street, 32nd Floor
Denver, CO 80203...................................... -- 100 -- -- --
SOUTHWEST SECURITIES INC.
1201 Elm Street, Suite 4300
Dallas, TX 75270...................................... 100 -- -- -- --
M.L. STERN & CO., INC.
8350 Wilshire Boulevard
Beverly Hills, CA 90211............................... -- -- -- 100 --
STIFEL, NICOLAUS & COMPANY, INCORPORATED
500 North Broadway
St. Louis, MO 63102................................... 100 -- -- -- --
WHEAT FIRST, BUTCHER & SINGER CAPITAL MARKETS
901 East Byrd Street
Richmond, VA 23219.................................... -- -- -- -- --
------- --------- --------- ---------- -------
Totals.................................... 2,000 3,000 2,200 2,000 2,000
------- --------- --------- ---------- -------
------- --------- --------- ---------- -------
<CAPTION>
UNITS OF
VIRGINIA
UNDERWRITER TRUST
- ------------------------------------------------------ --------
<S> <C>
GIBRALTAR SECURITIES CO.
Ten James Street
Florham Park, NJ 07932................................ --
J.B. HANAUER & CO.
Four Gate Hall Drive
Parsippany, NJ 07056.................................. --
JANNEY MONTGOMERY SCOTT INC.
1801 Market Street
Philadelphia, PA 19103................................ --
KIRLIN SECURITIES INC.
6901 Jericho Turnpike
Syosset, NY 11791..................................... --
NORI, HENNION, WALSH, INC.
3799 Route 46, Suite 102
Parsippany, NJ 07054.................................. --
PERSHING DIVISION OF DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

One Pershing Plaza
Jersey City, NJ 07399................................. --
RAF FINANCIAL CORPORATION
One Norwest Center
1700 Lincoln Street, 32nd Floor
Denver, CO 80203...................................... --
SOUTHWEST SECURITIES INC.
1201 Elm Street, Suite 4300
Dallas, TX 75270...................................... --
M.L. STERN & CO., INC.
8350 Wilshire Boulevard
Beverly Hills, CA 90211............................... --
STIFEL, NICOLAUS & COMPANY, INCORPORATED
500 North Broadway
St. Louis, MO 63102................................... --
WHEAT FIRST, BUTCHER & SINGER CAPITAL MARKETS
901 East Byrd Street
Richmond, VA 23219.................................... 100
--------
Totals.................................... 2,000
--------
--------
</TABLE>

A-28

<PAGE>
[LOGO]MST

FEATURES

o INSURANCE FOR THE INSURED TRUSTS

Each Bond in the Navigator Trusts is insured by a non-cancelable insurance
policy, issued by MBIA Corporation, which guarantees that if any bond fails to
pay, the insurer will make the appropriate payments. However, this insurance
does not remove market risk since it does not guarantee the market value of
the units.

o INSURANCE PREMIUM FOR THE INSURED TRUSTS

The Insured Trusts pay the entire insurance premium at inception. There are no
additional insurance fees and investors never pay the policy cost at all.

o HIGHEST RATING AVAILABLE

Each Insured Trust is rated 'AAA' by Standard & Poor's Corporation (S&P),
which is the highest rating attainable by a unit trust. S&P rates the Bonds in
the Trust AAA based on the underlying insurance by MBIA Corporation.

o TAX FREE INCOME

All interest income is free, under current law, from regular Federal income
taxes and exempt from state and local taxes to the extent indicated when
received by persons subject to state and local income taxation in a state in
which the issue of the Bonds is located. Interest income may be subject to the
federal corporate and individual alternative minimum taxes and state and local
taxes (except with respect to bonds in the Navigator Trusts and the
California, Florida and Virginia Trusts and with regard to interest paid to
persons subject to state and local taxation in a state where the issuer of the
bonds is located). Note: Municipal bonds are among the last shelters of
tax-free income.

o DIVERSIFICATION

The Trusts are professionally selected portfolios of tax-free municipal bonds
which are issued to finance the schools, roads, hospitals, etc. which are
vital to our communities. The diversification of the Trusts minimizes
bond-specific risk and gives the investor the opportunity to own a share of a
portfolio of various bond issues.

o NO MANAGEMENT FEE

The Trust is a fixed, unmanaged portfolio with no management fee. You know
exactly what bonds are held in the Trust and what income they produce.

o FIXED MATURITY WITH FLEXIBILITY

Bonds in each Trust will have a fixed maturity, however you may sell your
units at any time, without charge. Own it as long as you wish; the choice is
yours.

o PROFESSIONAL SELECTION

All bonds in each Trust are selected by seasoned municipal bond professionals.
The investor benefits from the experience and knowledge of these
professionals.

o CONVENIENCE

Certificateholders do not have to monitor or evaluate the portfolios for
calls, refundings, or bonds coming to maturity, etc. The bond professionals
supervise these duties for each Trust. Furthermore, the Trustee safekeeps each
Trusts' Bonds, clips coupons and collects interest.

o OPTIONAL PAYMENT PLANS

The unitholder decides when to receive income, by choosing a monthly or
semi-annual option, depending on individual investment needs.

o NO REDEMPTION FEE

Units may be sold on any business day at net asset value, which may be more or
less than the original purchase price. THERE IS NEVER A REDEMPTION FEE.

o VOLUME DISCOUNT

Investors will receive a discount for purchases of 100 Units or more. See the
Prospectus for details.

<PAGE>

[LOGO]MST

TAX-FREE VS. TAXABLE INCOME FOR INDIVIDUALS

These tables show the approximate current returns that taxable securities must
earn in various income brackets in the Insured Trusts and the State Trusts to
produce, after Federal income taxes, (and, for the Navigator Trusts, after New
York State and City personal income taxes or New Jersey personal income taxes
and, for the State Trusts, after state and local taxes), returns equivalent to
tax-exempt bond current returns for the Insured Trusts and the State Trusts. The
table is computed on the theory that the taxpayers' highest tax rate is
applicable to the entire amount of any increase or decrease in his taxable
income that results from a switch from taxable to tax-exempt securities or vice
versa. Under current law, the highest Federal income tax rate for 1995 and
thereafter will be 39.6%, although the effective marginal rate on a portion of a
taxpayer's income could be higher.

TAXABLE EQUIVALENT RETURNS

For example--Unitholders of the Insured Trust filing a joint return with taxable
income in excess of $256,500 in 1995 would have to receive a 9.11% taxable
return on another investment to have the same spendable income++ that a 5.50%
tax-exempt return would provide. Unitholders of the New York Navigator Trust
filing a joint return with taxable income in excess of $256,500 in 1995 would
have to receive a 10.39% taxable return on another investment to have the same
spendable income++ that a 5.5% tax-exempt return would provide. Unitholders of
the New Jersey Navigator Trust filing a joint return with taxable income in
excess of $256,500 in 1995 would have to receive a 9.75% taxable return on
another investment to have the same spendable income++ that a 5.5% tax-exempt
return would provide. Unitholders of the California Trust, Florida Trust and
Virginia Trust filing a joint return with taxable income in excess of $256,500
in 1995 would have to receive a 10.22%, 9.11% and 9.66%, respectively, taxable
return on another investment to have the same spendable income++ that a 5.5%
tax-exempt return would have. These tables do not reflect the taxable return for
individuals who are subject to the federal alternative minimum tax.

1995 FEDERAL TAX FREE RATES

<TABLE>
<CAPTION>
FEDERAL JOINT % FEDERAL
TAXABLE INCOME(1) TAX BRACKET 4.25% 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 39,000 15.0% 5.00 5.29 5.59 5.88 6.18 6.47 6.76 7.06
$ 39,001 - 94,250 28.0% 5.90 6.25 6.60 6.94 7.29 7.64 7.99 8.33

$ 94,251 - 143,600 31.0% 6.16 6.52 6.88 7.25 7.61 7.97 8.33 8.70
$143,601 - 256,500 36.0% 6.64 7.03 7.42 7.81 8.20 8.59 8.98 9.38
$256,500+ 39.6% 7.04 7.45 7.86 8.28 8.69 9.11 9.52 9.93
</TABLE>

(1) After exemptions and deductions other than state and local income tax
deductions.

1995 NEW YORK TRIPLE TAX FREE RATES
(ASSUMES NO FEDERAL OR NEW YORK STATE OR CITY TAXES)

<TABLE>
<CAPTION>
APPROX.
1995
FEDERAL,
FEDERAL JOINT FEDERAL NY STATE AND A TAX-EXEMPT RETURN OF
TAXABLE INCOME(1) TAX BRACKET NY CITY(2) 4.25% 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 39,000 15.0% 25.19 5.69 6.03 6.36 6.70 7.03 7.37 7.70 8.04
$ 39,001 - 94,250 28.0% 36.64 6.73 7.12 7.52 7.92 8.31 8.71 9.10 9.50
$ 94,251 - 143,600 31.0% 39.32 7.03 7.44 7.85 8.27 8.68 9.09 9.51 9.92
$143,601 - 256,500 36.0% 43.71 7.57 8.02 8.47 8.91 9.36 9.80 10.25 10.69
$256,500+ 39.6% 46.88 8.03 8.50 8.97 9.44 9.92 10.39 10.85 11.33
</TABLE>

(1) After exemptions and deductions other than state and local income tax
deductions.

(2) In cases of overlap between federal and state/city brackets, the highest
state/city bracket is generally assumed. Assumes investor is a New York City
resident. The table is based on 1995 tax rates assuming that the 1995
scheduled New York State tax rate decreases take effect.
- ------------------

++ Interest income accrual on original issue discount bonds is not distributed.

<PAGE>

1995 NEW JERSEY TAX FREE RATES
(ASSUMES NO FEDERAL OR NEW JERSEY STATE TAXES)

<TABLE>
<CAPTION>
APPROX.
1995
FEDERAL AND A TAX-EXEMPT RETURN OF
FEDERAL JOINT % FEDERAL NJ TAX

TAXABLE INCOME(1) TAX BRACKET RATE(2) 4.25% 4.50% 4.75% 5.00% 5.25% 5.50% 5.75%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 39,000 15.0% 16.81% 5.11 5.41 5.71 6.01 6.31 6.61 6.91
$ 39,001 - 94,250 28.0% 32.33% 6.28 6.65 7.02 7.39 7.76 8.13 8.50
$ 94,251 - 143,600 31.0% 35.15% 6.55 6.94 7.32 7.71 8.10 8.48 8.87
$143,601 - 256,500 36.0% 40.21% 7.11 7.53 7.94 8.36 8.78 9.20 9.62
$256,500+ 39.6% 43.57% 7.53 7.97 8.42 8.86 9.30 9.75 10.19

<CAPTION>
FEDERAL JOINT
TAXABLE INCOME(1) 6.00%
<S> <C>
$ 0 - 39,000 7.21
$ 39,001 - 94,250 8.87
$ 94,251 - 143,600 9.25
$143,601 - 256,500 10.04
$256,500+ 10.63
</TABLE>

(1) After exemptions and deductions other than state income tax deductions.
(2) These rates may be subject to change.

CALIFORNIA RESIDENTS--1995 (ASSUMES NO FEDERAL OR CALIFORNIA STATE TAXES)

<TABLE>
<CAPTION>
APPROXIMATE
FEDERAL 1995
FEDERAL JOINT TAX FEDERAL AND A TAX-EXEMPT RETURN OF
TAXABLE INCOME(1) BRACKET CALIFORNIA TAXES(2) 4.25% 4.50% 4.75% 5.00% 5.25% 5.50% 5.75%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 39,000 15.0% 20.1% 5.32 5.63 5.94 6.26 6.57 6.88 7.20
$ 39,001 - 94,250 28.0% 34.7% 6.51 6.89 7.27 7.66 8.04 8.42 8.81
$ 94,251 - 143,600 31.0% 37.4% 6.79 7.19 7.59 7.99 8.39 8.79 9.19
$143,601 - 256,500 36.0% 42.4% 7.38 7.81 8.25 8.68 9.11 9.55 9.98
$256,500+ 39.6% 46.2% 7.90 8.36 8.93 9.29 9.76 10.22 10.69

<CAPTION>
FEDERAL JOINT
TAXABLE INCOME(1) 6.00%
<S> <C>
$ 0 - 39,000 7.51
$ 39,001 - 94,250 9.19
$ 94,251 - 143,600 9.58
$143,601 - 256,500 10.42
$256,500+ 11.5
</TABLE>

FLORIDA RESIDENTS--1995 (ASSUMES NO FEDERAL OR FLORIDA STATE TAXES)

<TABLE>
<CAPTION>
APPROXIMATE
FEDERAL 1995
FEDERAL JOINT TAX FEDERAL AND A TAX-EXEMPT RETURN OF
TAXABLE INCOME(1) BRACKET FLORIDA TAXES(2) 4.25% 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 39,000 15.0% 15.0% 5.00 5.29 5.59 5.88 6.18 6.47 6.76 7.06
$ 39,001 - 94,250 28.0% 28.0% 5.90 6.25 6.60 6.94 7.29 7.64 7.99 8.33
$ 94,251 - 143,600 31.0% 31.0% 6.16 6.52 6.88 7.25 7.61 7.97 8.33 8.70
$143,601 - 256,500 36.0% 36.0% 6.64 7.03 7.42 7.81 8.20 8.59 8.98 9.38
$256,501+ 39.6% 39.6% 7.04 7.45 7.86 8.28 8.69 9.11 9.52 9.93
</TABLE>

VIRGINIA RESIDENTS--1995 (ASSUMES NO FEDERAL OR VIRGINIA STATE TAXES)

<TABLE>
<CAPTION>
APPROXIMATE
FEDERAL 1995
FEDERAL JOINT TAX FEDERAL AND A TAX-EXEMPT RETURN OF
TAXABLE INCOME(1) BRACKET VIRGINIA TAXES(2) 4.25% 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 39,000 15.0% 19.89% 5.31 5.62 5.93 6.24 6.55 6.87 7.18 7.49
$ 39,001 - 94,250 28.0% 32.14% 6.26 6.63 7.00 7.37 7.74 8.10 8.47 8.84
$ 94,251 - 143,600 31.0% 34.97% 6.54 6.92 7.30 7.69 8.07 8.46 8.84 9.23
$143,601 - 256,500 36.0% 39.68% 7.05 7.46 7.87 8.29 8.70 9.12 9.53 9.95
$256,500+ 39.6% 43.07% 7.47 7.90 8.34 8.78 9.22 9.66 10.10 10.54
</TABLE>

(1) After exemptions and deductions other than state and local income tax
deductions.
(2) In the case of overlap between federal and state brackets, the highest state
bracket is generally assumed. These rates may be subject to change.

<PAGE>

[LOGO]MST

INSURED MUNICIPAL SECURITIES TRUST
MUNICIPAL SECURITIES TRUST

PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED UNLESS ACCOMPANIED BY
PART A
THE TRUST
ORGANIZATION

The Trust consists of six 'unit investment trusts' designated as set forth
in Part A. Each Trust was created under the laws of the State of New York
pursuant to a Trust Indenture and Agreement (the 'Trust Agreement'), dated the
Date of Deposit, among Bear, Stearns & Co. Inc., and Gruntal & Co., Incorporated
as Sponsors, United States Trust Company of New York, as Trustee, and Kenny S&P
Evaluation Services, a division of J.J. Kenny Co. Inc. as Evaluator. Each Trust
will be administered as a distinct entity with separate certificates, expenses,
books and records.

On the Date of Deposit the Sponsors deposited with the Trustee intermediate
or long-term bonds in the aggregate principal amount set forth in Part A,
including delivery statements relating to contracts for the purchase of certain
such bonds (the 'Bonds') and cash or an irrevocable letter of credit issued by a
major commercial bank in the amount required for such purchases. Thereafter, the
Trustee, in exchange for the Bonds so deposited delivered to the Sponsors the
Certificates evidencing the ownership of all Units of the Trusts. The Sponsors
have a limited right to substitute other bonds in each Trust portfolio in the
event of a failed contract. See 'Portfolios'.

A 'Unit' represents an undivided interest or pro rata share in the
principal and interest of each Trust in the ratio of one Unit for each $1,000
principal amount of Bonds initially deposited in that Trust. To the extent that
any Units are redeemed by the Trustee, the fractional undivided interest or pro
rata share in such Trust represented by each unredeemed Unit will increase,
although the actual interest in such Trust represented by such fraction will
remain unchanged. Units will remain outstanding until redeemed upon tender to
the Trustee by Certificateholders, which may include the Sponsors or the
Underwriters, or until the termination of the Trust Agreements.
OBJECTIVES

Each Trust offers investors the opportunity to participate in a portfolio
of intermediate or long-term tax-exempt bonds with a greater diversification
than they might be able to acquire themselves. The objectives of each Trust are
to preserve capital and to provide interest income (including earned original
issue discount) which, in the opinion of bond counsel given at the time of
original delivery of the Bonds, is currently exempt from regular federal income
tax under existing law and exempt from state and local income tax to the extent

indicated herein when received by persons subject to state and

1
<PAGE>

local taxation in a state in which the issuers of the Bonds are located. Such
interest income may, however, be subject to the federal individual and corporate
alternative minimum taxes. (See 'Description of Portfolio' in Part A for a list
of those Bonds which pay interest income subject to federal individual
alternative minimum tax. See also 'Tax Status'.) Consistent with such
objectives, the Sponsors of the Navigator Trusts have obtained bond insurance
guaranteeing the scheduled payment of principal and interest on the Bonds. Some
of the Bonds may additionally have already been covered by insurance when
purchased by the Navigator Trusts. (See 'Insurance on the Bonds'). Investors
should be aware that there is no assurance the Trusts' objectives will be
achieved as these objectives are dependent on the continuing ability of the
issuers of the Bonds to meet their interest and principal payment requirements,
on the continuing satisfaction of the Bonds of the conditions required for the
exemption of interest thereon from regular federal income tax and from state and
local income taxes, on the market value of the Bonds, which can be affected by
fluctuations in interest rates and other factors and, with respect to the
Navigator Trusts, on the ability of the Insurance Companies to meet their
obligations under the policies of insurance issued on the Bonds.

Since disposition of Units prior to final liquidation of the Trusts may
result in an investor receiving less than the amount paid for such Units (see
'Comparison of Public Offering Price, Sponsors' Repurchase Price and Redemption
Price'), the purchase of a Unit should be looked upon as a long-term investment.
Neither the Trusts nor the Total Reinvestment Plan are designed to be complete
investment programs.
PORTFOLIOS

The portfolios of each Trust consists of the Bonds described in
'Description of Portfolios' in Part A and are represented by the Sponsors'
contracts to purchase, which are expected to be settled by the date set forth in
Part A. The Trusts may contain Bonds which have been purchased on a when, as,
and if issued basis. Accordingly, the delivery of such Bonds may be delayed or
may not occur. (See 'Description of Portfolios' in Part A.) Interest on these
Bonds begins accruing to the benefit of Certificateholders on their respective
dates of delivery. Certificateholders will be 'at risk' with respect to these
Bonds (i.e., may derive either gain or loss from fluctuations in the offering
side evaluation of the Bonds) from the date they commit for Units. (See
'Description of Portfolios' in Part A.) For a discussion of the Sponsors'
obligations in the event of the failure of any contract for the purchase of any
of the Bonds and limited right to substitute other bonds to replace any failed
contract, see 'Substitution of Bonds' in this Part B. On the Date of Deposit,
all of the Bonds in the Navigator Trusts were rated 'AAA' by Standard & Poor's
Corporation because each Bond was insured by a municipal bond guaranty insurance
policy (See 'Insurance on the Bonds') and all of the Bonds in the State Trusts
were rated 'A' or better by Standard & Poor's Corporation or Moody's Investors
Service, Inc.

When selecting Bonds for the Trusts, the following factors, among others,

were considered by the Sponsors: (a) the quality of the Bonds and with respect
to the Navigator Trusts, whether such Bonds, as insured, were rated 'AAA' by
Standard & Poor's Corporation, and with respect to the State Trusts, whether
such Bonds were rated 'A' or better by Standard & Poor's Corporation or Moody's
Investors Service, Inc., (b) the yield and price of the Bonds relative to other
tax-exempt securities of comparable quality and maturity, (c) income to the
Certificateholders of the Trusts, (d) with respect to the Navigator Trusts,
whether a Bond is insured, or insurance is available for the Bonds at a
reasonable cost, and (e) the diversification of each Trust portfolio, as to
purpose of issue and location of issuer, taking into account the availability in
the market of issues which meet such Trust's quality, rating, yield and price
criteria. Subsequent to the Date of Deposit, a Bond may cease to be rated or its
rating may be reduced below that specified above. Neither event requires an
elimination of such Bond from the Trusts but may be considered in the Sponsors'
determination to direct the Trustee to dispose of the Bond. (See 'Portfolio
Supervision'.) For an interpretation of the bond ratings see 'Description of
Bond Ratings'.

Housing Bonds. Some of the aggregate principal amount of Bonds may consist
of obligations of state and local housing authorities whose revenues are
primarily derived from mortgage loans to rental housing projects for low to
moderate income families. Since such obligations are usually not general
obligations of a particular state or municipality and are generally payable
primarily or solely

2
<PAGE>
from rents and other fees, adverse economic developments including failure or
inability to increase rentals, fluctuations of interest rates and increasing
construction and operating costs may reduce revenues available to pay existing
obligations.

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

Hospital Revenue Bonds. Some of the aggregate principal amount of Bonds may
consist of hospital revenue bonds. Ratings of hospital bonds are often based on
feasibility studies which contain projections of occupancy levels, revenues and
expenses. Actual experience may vary considerably from such projections. A
hospital's gross receipts and net income will be affected by future events and

conditions including, among other things, demand for hospital services and the
ability of the hospital to provide them, physicians' confidence in hospital
management capability, economic developments in the service area, competition,
actions by insurers and governmental agencies and the increased cost and
possible unavailability of malpractice insurance. Additionally, a major portion
of hospital revenue typically is derived from federal or state programs such as
Medicare and Medicaid which have been revised substantially in recent years and
which are undergoing further review at the state and federal level.

Proposals for significant changes in the health care system and the present
programs for third party payment of health care costs are under consideration in
Congress and many states. Future legislation or changes in the areas noted
above, among other things, would affect all hospitals to varying degrees and,
accordingly, any adverse change in these areas may affect the ability of such
issuers to make payment of principal and interest on such bonds. See the
'Portfolio Summary' in Part A for the amount of hospital revenue bonds contained
in the Trust.

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

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

3
<PAGE>
Coupon Bonds'). See the 'Portfolio Summary' in Part A for the amount of mortgage
revenue bonds contained in the Trust.

Other Private Activity Bonds. The portfolios of the Trust may contain other
Bonds which are 'private activity bonds' (often called Industrial Revenue Bonds
('IRBs') if issued prior to 1987) which would be primarily of two types: (1)

Bonds for a publicly owned facility which a private entity may have a right to
use or manage to some degree, such as an airport, seaport facility or water
system and (2) facilities deemed owned or beneficially owned by a private entity
but which were financed with tax-exempt bonds of a public issuer, such as a
manufacturing facility or a pollution control facility. In the case of the first
type, bonds are generally payable from a designated source of revenues derived
from the facility and may further receive the benefit of the legal or moral
obligation of one or more political subdivisions or taxing jurisdictions. In
most cases of project financing of the first type, issuers are obligated to pay
the principal of, any premium then due, or interest on the private activity
bonds only to the extent that funds are available from receipts or revenues of
the Issuer derived from the project or the operator or from the unexpended
proceeds of the bonds. Such revenues include user fees, service charges, rental
and lease payments, and mortgage and other loan payments.

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

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

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

To the Sponsors' knowledge, there is no litigation pending as of the Date
of Deposit with respect to any Bonds which might reasonably be expected to have
a material adverse effect on the Trusts. Subsequent to the Date of Deposit,
litigation may be initiated on a variety of grounds with respect to Bonds in the
Trusts. Such litigation, as, for example, suits challenging the issuance of
pollution control revenue bonds under recently enacted environmental protection
statutes, may affect the validity of such Bonds or the tax-free nature of the
interest thereon. The Sponsors are unable to predict whether any such litigation
may be instituted or, if instituted, whether it might have a material adverse
effect on the Trusts.

Other Factors. In 1976 the federal bankruptcy laws were amended so that an
authorized municipal debtor could more easily seek federal court protection to
assist in reorganizing its debts so long as certain requirements were met.
Historically, very few financially troubled municipalities have sought court
assistance for reorganizing their debts; notwithstanding, the Sponsors are
unable to predict to what extent financially troubled municipalities may seek
court assistance in reorganizing their debts in the future and, therefore, what
effect, if any, the applicable federal bankruptcy law provisions will have on
the Trusts.

The Trusts may also include 'moral obligation' bonds. Under statutes
applicable to such bonds, if an issuer is unable to meet its obligations, the
repayment of such bonds becomes a moral commitment but not a legal obligation of
the state or municipality in question.

4
<PAGE>
All the Bonds in the Trusts are subject to redemption prior to their stated
maturity dates pursuant to sinking fund or call provisions. A sinking fund is a
reserve fund appropriated specifically toward the retirement of a debt. A
callable bond is one which is subject to redemption or refunding prior to
maturity at the option of the issuer. A refunding is a method by which a bond is
redeemed at or before maturity from the proceeds of a new issue of bonds. In
general, call provisions are more likely to be exercised when the offering side
evaluation of a bond is at a premium over par than when it is at a discount from
par. A listing of the sinking fund and call provisions, if any, with respect to
each of the Bonds is contained under 'Portfolio' for such Trust.
Certificateholders will realize a gain or loss on the early redemption of such
Bonds, depending upon whether the purchase price of such Bonds is at a discount
from or at a premium over par at the time Certificateholders purchase their
Units.
PUERTO RICO BONDS

Certain of the Bonds in the portfolio may be general obligations and/or
revenue bonds of issuers located in Puerto Rico which will be affected by
general economic conditions in Puerto Rico. The economy of Puerto Rico is
closely integrated with that of the mainland United States. During fiscal year
1993, approximately 86% of Puerto Rico's exports were to the United States
mainland, which was also the source of 69% of Puerto Rico's imports. In fiscal
1993, Puerto Rico experienced a $2.5 billion positive adjusted trade balance.
The economy of Puerto Rico is dominated by the manufacturing and service
sectors. The manufacturing sector has experienced a basic change over the years
as a result of increased emphasis on higher wage, high technology industries
such as pharmaceuticals, electronics, computers, microprocessors, professional
and scientific instruments, and certain high technology machinery and equipment.
The service sector, including finance, insurance and real estate, also plays a
major role in the economy. It ranks second only to manufacturing in contribution
to the gross domestic product and leads all sectors in providing employment. In
recent years, the service sector has experienced significant growth in response
to and paralleling the expansion of the manufacturing sector. Since fiscal 1987,
personal income has increased consistently in each fiscal year. In fiscal 1993,
aggregate personal income was $24.1 billion ($20.6 billion in 1987 prices) and
personal income per capita was $6,760 ($5,767 in 1987 prices). Personal income

includes transfer payments to individuals in Puerto Rico under various social
programs. Total federal payments to Puerto Rico, which include many types in
addition to federal transfer payments, are lower on a per capita basis in Puerto
Rico than in any state. Transfer payments to individuals in fiscal 1993 were
$5.3 billion, of which $3.6 billion, or 67.6%, represent entitlement to
individuals who had previously performed services or made contributions under
programs such as social security, veterans benefits and medicare. The number of
persons employed in Puerto Rico rose to a record level during fiscal 1993.
Unemployment, although at the lowest level since the late 1970s, remains above
the average for the United States. In fiscal 1994, the unemployment rate in
Puerto Rico was 15.9%. Puerto Rico's decade long economic expansion continued
through fiscal 1993. Factors behind this expansion include Commonwealth
sponsored economic development programs, the relatively stable prices of oil
imports, the continued growth of the United States economy, periodic declines in
exchange value of the United States dollar and the relatively low cost borrowing
during the period. Real gross product amounted to approximately $20.07 billion
in fiscal 1993, or 3.1% above the fiscal 1992 level. The economy continued its
growth during fiscal 1991 but at a slower rate. The Puerto Rico Planning Board's
economic activity index, a composite index for thirteen economic indicators,
increased .6% in fiscal 1994, compared to fiscal 1993, which period showed a
decrease of 1.4% over the same period in fiscal 1992. Growth in the Puerto Rico
economy in fiscal 1994 and 1995 depends on several factors, including the state
of the United States economy and the relative stability in the price of oil
imports, the exchange value of the U.S. dollar and the cost of borrowing.

SUBSTITUTION OF BONDS

Neither the Sponsors nor the Trustee shall be liable in any way for any
default, failure or defect in any of the Bonds. In the event of a failure to
deliver any Bond that has been purchased for any of the Trusts under a contract,
including those Bonds purchased on a 'when, as and if' issued basis ('Failed
Bonds'), the Sponsors are authorized under the Trust Agreement to direct the
Trustee to acquire other bonds ('Replacement Bonds') to make up the original
corpus of the affected Trust.

5
<PAGE>

The Replacement Bonds must be purchased within 20 days after delivery of
the notice of the failed contract and the purchase price (exclusive of accrued
interest) may not exceed the purchase price of the Failed Bonds. The Replacement
Bonds (i) must be tax-exempt bonds issued by the same state or political
subdivision as the Failed Bond, (ii) must have a fixed maturity date of at least
10 years but not exceeding the maturity date of the Failed Bonds, (iii) must
bear a fixed interest rate of not less than that of the Failed Bonds and must be
purchased at a price that results in a yield to maturity at least equal to that
of the Failed Bonds as of the Date of Deposit, (iv) shall not be 'when, as and
if' issued bonds, (v) with respect to the Navigator Trusts, must be insured by
an Insurance Company and have the benefit of such insurance under terms
equivalent to the insurance of the Insurance Company with respect to the Failed
Bonds,(vi) with respect to the Navigator Trusts, must not cause the Units of the
particular Trust to cease to be rated AAA by Standard & Poor's, (vii) with
respect to the State Trusts, must be rated 'A' or better by Standard & Poor's
Corporation or Moody's Investors Service, Inc. Whenever a Replacement Bond has

been acquired for a Trust, the Trustee shall, within five days thereafter,
notify all Certificateholders of the Trust of the acquisition of the Replacement
Bond and shall, on the next monthly Payment Date which is more than 30 days
thereafter, make a pro rata distribution of the amount, if any, by which the
cost to the Trust of the Failed Bond exceeded the cost of the Replacement Bond
plus accrued interest. Once the original corpus of a Trust is acquired, the
Trustee will have no power to vary the investment of such Trust, i.e., the
Trustee will have no managerial power to take advantage of market variations to
improve a Certificateholders' investment.

If the right of limited substitution described in the preceding paragraph
shall not be utilized to acquire Replacement Bonds in the event of a failed
contract, the Sponsors will refund the sales charge attributable to such Failed
Bonds to all Certificateholders of the affected Trust, and distribute the
principal and accrued interest attributable to such Failed Bonds on the next
monthly Payment Date. In all cases, accrued interest attributable to Failed
Bonds will be paid to Certificateholders until such time as Replacement Bonds
are acquired. All such interest paid to a Certificateholder which accrued after
the expected date of settlement for purchase of his Units will be paid by the
Sponsors and accordingly will not be treated as tax-exempt income.

Because certain of the Bonds from time to time may be redeemed or will
mature in accordance with their terms or may be sold under certain
circumstances, no assurance can be given that the Trusts will retain their
present size and composition for any length of time. The proceeds from the sale
of a Bond or the exercise of any redemption or call provision will be
distributed to Certificateholders except to the extent such proceeds are applied
to meet redemptions of Units. (See 'Trustee Redemption'.)
DISCOUNT AND ZERO COUPON BONDS

Some of the aggregate principal amount of the Bonds in the Trusts may be
original issue discount bonds. The original issue discount, which is the
difference between the initial purchase price of the Bonds and the face value,
is deemed to accrue on a daily basis and the accrued portion will be treated as
tax-exempt interest income for regular federal income tax purposes. Upon sale or
redemption, any gain realized that is in excess of the earned portion of
original issue discount will be taxable as capital gain. See 'Tax Status'. The
current value of an original issue discount bond reflects the present value of
its face amount at maturity. The market value tends to increase more slowly in
early years and in greater increments as the Bonds approach maturity. Of these
original issue discount bonds, some of the aggregate principal amount of the
Bonds in the Trusts may be Zero Coupon Bonds. (See 'Description of Portfolios'
in Part A.) Zero Coupon Bonds do not provide for the payment of any current
interest and provide for payment at maturity at face value unless sooner sold or
redeemed. The market value of Zero Coupon Bonds is subject to greater
fluctuation in response to changes in interest rates. Zero Coupon Bonds
generally are subject to redemption at compound accreted value based on par
value at maturity. Because the user is not obligated to make current interest
payments, Zero Coupon Bonds may be less likely to be redeemed than coupon bonds
issued at a similar interest rate, although certain zero coupon housing bonds
may be subject to mandatory call provisions.

Some of the aggregate principal amount of Bonds in the Trusts may have been

purchased at a 'market' discount from par value at maturity. The coupon interest
rates on the discount bonds at the

6
<PAGE>
time they were purchased and deposited in the Trusts were lower than the current
market interest rates for newly issued bonds of comparable rating and type. At
the time of issuance the discount bonds were for the most part issued at then
current coupon interest rates. The current yields (coupon interest income as a
percentage of market price) of discount bonds will be lower than the current
yields of comparably rated bonds of similar type newly issued at current
interest rates because discount bonds tend to increase in market value as they
approach maturity and the full principal amount becomes payable. Gain on the
disposition of a Bond purchased at a market discount generally will be treated
as ordinary income, rather than capital gain, to the extent of accrued market
discount. A discount bond held to maturity will have a larger portion of its
total return in the form of capital gain and less in the form of tax-exempt
interest income than a comparable bond newly issued at current yield and a lower
current market value than otherwise comparable bonds with a shorter term of
maturity. If interest rates rise, the value of discount bonds will decrease; and
if interest rates decline, the value of discount bonds will increase. The
discount does not necessarily indicate a lack of market confidence in the
issuer.

INSURANCE ON THE BONDS

The Bonds in the Insured Trusts are insured by a municipal bond guaranty
insurance policy covering scheduled payment of principal and interest on such
Bonds. See 'Insurance' in Part A. This insurance has been obtained either by the
issuer, underwriter or prior owner of the Bond ('Pre-Insured Bonds') or by the
Sponsors with respect to Bonds which were not insured prior to their deposit in
the Trust. The insurance policies are non-cancellable and will continue in force
so long as the Bonds are outstanding and the insurers remain in business. The
insurance policies guarantee the timely payment of principal and interest on the
Bonds but do not guarantee the market value of the Bonds or the value of Units.
No representation is made herein as to any Bond insurer's ability to meet its
obligations under a policy of insurance relating to any of the Bonds. An
insurance company that is required to pay interest and/or principal in respect
of any Bond will succeed and be subrogated to the Trustee's right to collect
such interest and/or principal from the issuer and to other related rights of
the Trustee with respect to any such Bond.

Sponsor-Insured Bonds. For those Bonds in the Insured Trust which are not
covered by an insurance policy obtained by the issuers, underwriters or prior
owners of such Bonds, the Sponsors have obtained bond insurance from certain
Bond Insurers (as hereinafter described) in an effort to protect
Certificateholders against nonpayment of principal and interest in respect of
such Bonds ('Sponsor-Insured Bonds'). The bond insurance on the Sponsor-Insured
Bonds covers the Sponsor-Insured Bonds deposited in the Trust at the time that
they are physically delivered to the Trustee (in the case of bearer bonds) or
registered in the name of the Trustee or its nominee or delivered along with an
assignment (in the case of registered bonds) or registered in the name of the
Trustee or its nominee (in the case of bonds held in book-entry form).
Accordingly, although contracts to purchase Sponsor-Insured Bonds are not

covered by the bond insurance obtained by the Sponsors, such Bonds will be
insured when they are deposited in the Trust. When selecting Bonds for the Trust
prior to obtaining insurance thereon, the Sponsors consider the factors listed
under 'Portfolio', among others. The insurers of the Sponsor-Insured Bonds apply
their own standards in determining whether to insure the Sponsor-Insured Bonds.
To the extent that the standards of such insurers are more restrictive than
those of the Sponsors, the Sponsors' investment criteria have been limited to
the more restrictive standards.

Navigator Sponsor-Insured Bonds. Each of the Bonds in the New York
Navigator Trust is insured by a financial guaranty insurance policy obtained by
the Sponsors (the 'Navigator Sponsor-Insured Bonds') from MBIA Insurance
Corporation ('MBIA Corp.') covering regularly scheduled payments of principal
thereof and interest thereon when such amounts become due for payment but shall
not have been paid. Such amounts shall be reduced by any amount received by the
holders or the owners of the Bonds from any trustee for the Bond issuers, any
other Bond insurers or any other source other than MBIA Corp. MBIA Corp. has
issued, on the Date of Deposit, such policy or policies covering each of the
Bonds in the New York Navigator Trust and each such policy will remain in force
until the payment in full of such Bonds, whether or not such Bonds continue to
be held in the New York

7
<PAGE>
Navigator Trust. MBIA Corp.'s policies relating to small industrial development
bonds and pollution control revenue bonds also guarantee the accelerated
payments required to be made by or on behalf of an issuer of Bonds pursuant to
the terms of the Bonds if there occurs an event which results in the loss of the
tax-exempt status of the interest on such Bonds, including principal, interest
or premium payments, if any, as and when required. The insurance will not cover
accelerated payments of principal or penalty interest or premiums unrelated to
taxability of interest on any of the Bonds, including pollution control revenue
bonds and small industrial development bonds (although the insurance does
guarantee the payment of principal and interest in such amounts and at such
times as such amounts would have been due absent such acceleration). The
insurance relates only to the prompt payment of principal of and interest on the
securities in the New York Navigator Portfolio and does not remove market risk
nor does it guarantee the market value of Units in the New York Navigator Trust.
The MBIA Corp. policy also does not insure against non-payment of principal of
or interest on the Bonds resulting from the insolvency, negligence or any other
act or omission of the trustee or other paying agent for the Bonds. The policy
is not covered by the Property/Casualty Insurance Security Fund specified in
Article 76 of the New York Insurance Law. Upon notification from the trustee for
any bond issuer or any holder or owner of the Bonds or coupons that such trustee
or paying agent has insufficient funds to pay any principal or interest in full
when due, MBIA Corp. will be obligated to deposit funds promptly with Citibank,
N.A., New York, New York, as fiscal agent for MBIA Corp., sufficient to fully
cover the deficit. If notice of nonpayment is received on or after the due date,
MBIA Corp. will provide for payment within one business day following receipt of
the notice. Upon payment by MBIA Corp. of any Bonds, coupons, or interest
payments, MBIA Corp. shall succeed to the rights of the owner of such Bonds,
coupons or interest payments with respect thereto. For discussion of the effect

of an occurrence of non-payment of principal or interest on any Bonds in the New
York Navigator Trust, see 'Portfolio Supervision' in Part B.

No representation is made herein as to any Bond insurer's ability to meet
its obligations under a policy of insurance relating to any of the Bonds in the
New York Navigator Trust. In addition, investors should be aware that subsequent
to the Date of Deposit the rating of the claims-paying ability of MBIA Corp. may
be downgraded, which may result in a downgrading of the rating of the Units in
the New York Navigator Trust. Some of the Bonds in the New York Navigator Trust
may be Pre-Insured Bonds. The insurance policy or policies relating to the
Navigator Sponsor-Insured Bonds provides that, to the extent that Bonds are both
Pre-Insured Bonds and Navigator Sponsor-Insured Bonds, coverage is effective
after a claim has been made upon the insurer of the Pre-Insured Bonds. No
representation is made herein as to any insurer's ability to meet its
obligations under a policy of insurance relating to any of the Pre-Insured Bonds
in the New York Navigator Trust. An insurance company that has paid interest
and/or principal in respect of any Bond in the New York Navigator Trust will
succeed and be subrogated to the Trustee's right to collect such interest and/or
principal from the issuer and to other related rights of the Trustee with
respect to such Bond.

Pre-Insured Bonds. The Bonds in the Insured Trusts which are insured under
policies obtained by the Bond issuers, underwriters or prior owners are insured
by AMBAC Indemnity Corporation ('AMBAC'), Bond Investors Guaranty ('BIG'),
Capital Guaranty Insurance Company ('Capital Guaranty'), Connie Lee Insurance
Company ('Connie Lee'), Financial Guaranty Insurance Company ('Financial
Guaranty'), Firemen's Insurance Co. ('Firemen's'), Municipal Bond Insurance
Association ('MBIA'), or Municipal Bond Investors Assurance Corporation ('MBIA
Corp.') (collectively, the 'Insurance Companies'). The cost of this insurance is
borne by the respective issuers, underwriters or prior owners of the Pre-Insured
Bonds. The percentage of each Portfolio insured by each Insurance Company, if
any, is set forth under 'Insurance' in Part A.

AMBAC Indemnity Corporation ('AMBAC Indemnity') is a Wisconsin-domiciled
stock insurance corporation regulated by the Insurance Department of the State
of Wisconsin and licensed to do business in 50 states, the District of Columbia
and the Commonwealth of Puerto Rico with admitted assets of approximately
$2,145,000 (unaudited) and statutory capital of approximately $1,218,000,000
(unaudited) as of December 31, 1994. Statutory capital consists of AMBAC
Indemnity's policyholders' surplus and statutory contingency reserve. AMBAC is a
wholly owned subsidiary of AMBAC Inc., a 100% publicly-held company.

8
<PAGE>

Capital Guaranty is a monoline stock insurance company incorporated in
Maryland, and is a wholly owned subsidiary of Capital Guaranty Corporation, a
Maryland insurance holding company. Capital Guaranty Corporation is publicly
owned, whose shares are traded on the New York Stock Exchange. Other than their
capital commitment to Capital Guaranty Corporation, the shareholders of Capital

Guaranty Corporation are not obligated to pay the debts of, or the claims
against, Capital Guaranty Insurance Company. Capital Guaranty is authorized to
provide insurance in 50 states, the District of Columbia and three U.S.
territories. As of December 31, 1994, Capital Guaranty had more than $15.7
billion in net exposure outstanding (excluding defeased issues). The total
statutory policyholders' surplus and contingency reserves of Capital Guaranty
Insurance Company was approximately $196,529,000 (unaudited) and total admitted
assets were approximately $303,723,316 (unaudited) as reported to the Insurance
Department of the State of Maryland as of December 31, 1994.

As of the Evaluation Date, the claims-paying ability of Capital Guaranty
has been rated 'AAA' by Standard & Poor's.

Connie Lee, a stock insurance company incorporated in Wisconsin, is a
wholly-owned subsidiary of College Construction Loan Insurance Association, a
stockholder-owned District of Columbia insurance holding company whose creation
was authorized by the 1986 amendments to the Higher Education Act. The United
States Department of Education and Student Loan Marketing Association are
founding shareholders of College Construction Loan Insurance Association. As a
federally authorized company, Connie Lee's structure and operational authorities
are subject to revision by amendments to the Higher Education Act or other
federal enactments. CONNIE LEE IS NOT AN AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES GOVERNMENT, ALTHOUGH THE UNITED STATES GOVERNMENT IS A STOCKHOLDER OF
COLLEGE CONSTRUCTION LOAN INSURANCE ASSOCIATION. THE OBLIGATIONS OF CONNIE LEE
ARE NOT OBLIGATIONS OF THE UNITED STATES GOVERNMENT.

As of December 31, 1994, the total policyholders' surplus of Connie Lee was
$106,496,295 (unaudited) and total admitted assets were $194,152,295
(unaudited), as reported to the Commissioner of Insurance of the State of
Wisconsin.

As of the Evaluation Date, the claims-paying ability of Connie Lee has been
rated 'AAA' by Standard & Poor's.

Financial Guaranty is a wholly-owned subsidiary of FGIC Corporation, a
Delaware holding company. FGIC Corporation is a wholly-owned subsidiary of
General Electric Capital Corp. ('GECC'). Neither FGIC Corporation nor GECC is
obligated to pay the debts of or claims against Financial Guaranty. Financial
Guaranty is authorized to write insurance in 50 states and the District of
Columbia. Financial Guaranty is domiciled in the State of New York and is
subject to regulation by the State of New York Insurance Department. As of
December 31, 1994, its total capital and surplus was approximately $893,700 as
reported to the New York State Insurance Department.

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. It
provides unconditional and non-cancellable insurance on industrial development
revenue bonds. As of December 31, 1993, the total net admitted assets
(unaudited) of Firemen's were $2,226,579,000 and its statutory surplus
(unaudited) was $502,800,000.

As of the Evaluation Date, the claims-paying ability of Firemen's has been
rated AA- by Standard & Poor's.

Financial Security is a wholly owned subsidiary of Financial Security
Assurance Holdings Ltd. ('Holdings'), a New York Stock Exchange listed company.
Holdings is owned approximately 60.5% by US WEST Capital Corporation ('US
WEST'), 7.6% by Fund American Enterprises Holdings, Inc. ('Fund American'), and
7.4% by the Tokio Marine and Fire Insurance Co., Ltd. ('Tokio Marine'). US WEST
is a subsidiary of US WEST, Inc., which operates businesses involved in
communications, data solutions, marketing services and capital assets, including
the provision of telephone services in 14 states in the western and midwestern
United States. Fund American is a financial services holding company whose
principal operating subsidiary is one of the nation's largest mortgage
servicers. Tokio Marine is a major Japanese property and casualty insurance
company. US WEST has announced its intention to dispose of its remaining
interest in Holdings as part of its strategic plan to withdraw from

9
<PAGE>

businesses not directly involved in telecommunications. Fund American has
certain rights to acquire additional shares of Holdings from US WEST and
Holdings. No shareholder of Holdings is obligated to pay any debt of Financial
Security or any claim under any insurance policy issued by Financial Security or
to make any additional contribution to the capital of Financial Security.

Pursuant to an intercompany agreement, liabilities on financial guaranty
insurance written by Financial Security or either of its two subsidiaries are
reinsured among such companies on an agreed upon percentage substantially
proportional to their respective capital surplus and reserves, subject to
applicable statutory risk limitations. In addition, Financial Security reinsures
a portion of its liabilities under certain of its financial guaranty insurance
policies with other reinsurers under various quota-share treaties and on a
transaction-by-transaction basis. Such reinsurance does not alter or limit
Financial Security's obligations under any financial guaranty insurance policy.
As of September 30, 1994, total shareholder equity of Financial Security and its
wholly-owned subsidiaries was (unaudited) $732,413,000 and total unearned

premium reserves was (unaudited) $202,284,000.

As of the Evaluation Date, Financial Security's claims-paying ability has
been rated 'AAA' by Standard & Poor's Corporation.

MBIA is an association of five insurance companies which joined together to
insure severally (and not jointly) new issues of municipal bonds. Each insurance
company comprising Municipal Bond Insurance Association ('MBIA', also known as
the 'Association') will be severally and not jointly obligated under the MBIA
policy in the following respective percentages: The Aetna Casualty and Surety
Company, 33%; Fireman's Fund Insurance Company, 30%; The Travelers Indemnity
Company, 15%; Aetna Insurance Company*, 12%; and The Continental Insurance
Company, 10%. As a several obligor, each such insurance company will be
obligated only to the extent of its percentage of any claim under the MBIA
policy and will not be obligated to pay any unpaid obligation of any other
member of MBIA. Each insurance company's participation is backed by all of its
assets. However, each insurance company is a multiline insurer involved in
several lines of insurance other than municipal bond insurance, and the assets
of each insurance company also secure all of its other insurance policy and
surety bond obligations.

The following table sets forth certain financial information with respect
to the five insurance companies comprising MBIA. The statistics, which have been
furnished by MBIA, are as reported by the insurance companies to the New York
State Insurance Department and are determined in accordance with statutory
accounting principals. No representation is made herein as to the accuracy or
adequacy of such information or as to the absence of material adverse changes in
such information subsequent to the date thereof. In addition, these numbers are
subject to revision by the New York State Insurance Department which, if
revised, could either increase or decrease the amounts.

MUNICIPAL BOND INSURANCE ASSOCIATION ('MBIA')
FIVE MEMBER COMPANIES ASSETS, LIABILITIES
AND POLICYHOLDERS' SURPLUS
AS OF SEPTEMBER 30, 1994
(000'S OMITTED)

<TABLE>
<CAPTION>
NEW YORK NEW YORK NEW YORK
STATUTORY STATUTORY POLICYHOLDER'S
ASSETS LIABILITIES SURPLUS
----------- ----------- --------------
<S> <C> <C> <C>

The Aetna Casualty & Surety Company................................ $10,030,200 $ 8,275,300 $ 1,754,900
Fireman's Fund Insurance Company................................... 6,815,775 4,904,534 1,911,241
The Travelers Indemnity Company.................................... 10,295,359 8,515,392 1,779,967
Cigna Property and Casualty Company
(Formerly Aetna Insurance Company)............................... 5,112,251 4,842,235 270,016
The Continental Insurance Company.................................. 2,794,536 2,449,805 344,731
----------- ----------- --------------
Total......................................................... $35,048,121 $28,987,266 $ 6,060,855
----------- ----------- --------------
----------- ----------- --------------
</TABLE>

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

*Now known as Cigna Property and Casualty Company.

10
<PAGE>

MBIA Insurance Corporation (formerly known as Municipal Bond Investors
Assurance Corporation) ('MBIA Corp.') is the principal operating subsidiary of
MBIA Inc., a New York Stock Exchange listed company. MBIA Corp. commenced
municipal bond insurance operations on January 5, 1987. MBIA Inc. is not
obligated to pay the debts of or claims against the Insurer. MBIA Corp. is a
limited liability corporation rather than a several liability association. MBIA
Corp. is domiciled, in the State of New York and licensed to do business in all
50 states, the District of Columbia and the Commonwealth of Puerto Rico. MBIA
Corp. is a separate and distinct entity from the Association. MBIA Corp. has no
liability to the bondholders for the obligations of the Association under the
Policy.

Effective December 31, 1989, MBIA Inc. acquired Bond Investors Group, Inc.
On January 5, 1990, MBIA acquired all of the outstanding stock of Bond Investors
Group, Inc., the parent corporation of Bond Investors Guaranty Insurance Co.
('BIG'). Through a Reinsurance Agreement, BIG has ceded all of its net insured
risks, as well as its unearned premium and contingency reserves, to MBIA and
MBIA has reinsured BIG's net outstanding exposure. As of September 30, 1994,
MBIA Corp. had admitted assets of $3.3 billion (unaudited), total liabilities of
$2.2 billion (unaudited), and total capital and surplus of $1.1 billion
(unaudited) prepared in accordance with statutory accounting practices
prescribed or permitted by insurance regulatory authorities.

As of the Evaluation Date, the claims-paying ability of MBIA and MBIA Corp.
has been rated 'AAA' by Standard & Poor's.

As of the Date of Deposit, Standard & Poor's has rated the claims-paying

ability of each of the above Insurance Companies 'AAA' and has rated each of the
Bonds in the Portfolio of each Trust AAA because the Insurance Companies have
insured the Bonds. The assignment of such AAA ratings is due to Standard &
Poor's Corporation's assessment of the creditworthiness of the Insurance
Companies and their ability to pay claims on their policies of insurance.
Subsequently, the claims-paying ability of the insurer of an underlying Bond may
cease to be rated or may be downgraded which may result in a downgrading of the
rating of the Units in the Trusts. Moody's Investors Service, Inc. has assigned
a rating of Aaa to all of the Bonds in the New York Navigator Trust, as insured.
The Moody's Investors Service rating of the Bonds should be evaluated
independently of the Standard & Poor's Corporation rating of the Bonds. The
ratings reflect Moody's current assessment of the creditworthiness of MBIA Corp.
and its ability to pay the claims on its policies of insurance. The percentage
of each Trust Portfolio insured by each Insurance Company, if any, is set forth
under 'Insurance' in Part A.

RISK CONSIDERATIONS

The foregoing information relating to the above Insurance Companies is from
published documents and other public sources and/or information provided by such
Insurance Companies. No representation is made herein as to the accuracy or
adequacy of such information or as to the absence of material adverse changes in
such information subsequent to the dates thereof; however the Sponsors are not
aware that the information herein is inaccurate or incomplete.

SPECIAL FACTORS CONCERNING THE TRUSTS

These summaries are introduced for the purpose of providing a general
description of the credit and financial conditions for the State of New York,
the State of New Jersey, and the Commonwealth of Virginia.

NEW YORK NAVIGATOR TRUST

The following summary is introduced for the purpose of providing a general
description of the credit and financial conditions for the State of New York.

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New York Risk Factors

This summary is included for the purpose of providing a general description
of New York State's (the 'State') and New York City's (the 'City') credit and
financial condition. The information set forth below is derived from the
official statements and/or preliminary drafts of official statements prepared in
connection with the issuance of State and City municipal bonds. The Fund has not
independently verified this information.

State Economic Trends. Over the long term, the State and the City face
serious potential economic problems. The City accounts for approximately 41% of
the State's population and personal income, and the City's financial health
affects the State in numerous ways. The State historically has been one of the
wealthiest states in the nation. For decades, however, the State has grown more
slowly than the nation as a whole, gradually eroding its relative economic
affluence. Statewide, urban centers have experienced significant changes
involving migration of the more affluent to the suburbs and an influx of
generally less affluent residents. Regionally, the older Northeast cities have
suffered because of the relative success that the South and the West have had in
attracting people and business. The City has also had to face greater
competition as other major cities have developed financial and business
capabilities which make them less dependent on the specialized services
traditionally available almost exclusively in the City. In recent years the
State's economic position has improved in a manner consistent with that for the
Northeast as a whole. The State has for many years had a very high State and
local tax burden relative to other states. The State and its localities have
used these taxes to develop and maintain their transportation networks, public
schools and colleges, public health systems, other social services and
recreational facilities. Despite these benefits, the burden of State and local
taxation, in combination with the many other causes of regional economic
dislocation, has contributed to the decisions of some businesses and individuals
to relocate outside, or not locate within, the State.

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

New York City. The City, with a population of approximately 7.3 million,
is an international center of business and culture. Its non-manufacturing
economy is broadly based, with the banking and securities, life insurance,
communications, publishing, fashion design, retailing and construction
industries accounting for a significant portion of the City's total employment
earnings. Additionally, the City is the nation's leading tourist destination.
The City's manufacturing activity is conducted primarily in apparel and
publishing.

The national economic downturn which began in July 1990 adversely affected
the local economy, which had been declining since late 1989. As a result, the
City experienced job losses in 1990 and 1991 and real Gross City Product (GCP)
fell in those two years. In order to achieve a balanced budget as required by
the laws of the State for the 1992 fiscal year, the City increased taxes and
reduced services during the 1991 fiscal year to close a then projected gap of
$3.3 billion in the 1992 fiscal year which resulted from, among other things,
lower than projected tax revenue of approximately $1.4 billion, reduced State
aid for the City and greater than projected increases in legally mandated

expenditures, including public assistance and Medicaid expenditures. Beginning
in calendar year 1992, the improvement in the national economy helped stabilize
conditions in the City. Employment losses moderated toward year-end and real GCP
increased, boosted by strong wage gains. The City's current four-year financial
plan assumes that, after noticeable improvements in the City's economy during
calendar year 1994, economic growth will slow in calendars years 1995 and 1996
with local employment increasing modestly. In December 1994, the City
experienced substantial shortfalls in payments of non-property tax revenues from
those forecasted. Through December 1994, collections of non-property taxes were
approximately $200 million lower than projected.

For each of the 1981 through 1994 fiscal years, the City achieved balanced
operating results as reported in accordance with generally accepted accounting
principles ('GAAP'), and the City's 1995 fiscal year results are projected to be
balanced in accordance with GAAP. The City was required to

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close substantial budget gaps in recent years in order to maintain balanced
operating results. For fiscal year 1995, the City has adopted a budget which has
halted the trend in recent years of substantial increases in City spending from
one year to the next. There can be no assurance that the City will continue to
maintain a balanced budget as required by State law without additional tax or
other revenue increases or reductions in City services, which could adversely
affect the City's economic base.

Pursuant to the laws of the State, the City prepares an annual four-year
financial plan, which is reviewed and revised on a quarterly basis and which
includes the City's capital, revenue and expense projections and outlines
proposed gap-closing programs for years with projected budget gaps. The City is
required to submit its financial plans to review bodies, including the New York
State Financial Control Board ('Control Board'). If the City were to experience
certain adverse financial circumstances, including the occurrence or the
substantial likelihood and imminence of the occurrence of an annual operating
deficit of more than $100 million or the loss of access to the public credit
markets to satisfy the City's capital and seasonal financing requirements, the
Control Board would be required by State law to exercise powers, among others,
of prior approval of City financial plans, proposed borrowings and certain
contracts.

The City depends on the State for State aid both to enable the City to
balance its budget and to meet its cash requirements. There can be no assurance
that there will not be reductions in State aid to the City from amounts
currently projected or that State budgets in future fiscal years will be adopted
by the April 1 statutory deadline and that such reductions or delays will not
have adverse effects on the City's cash flow or expenditures.

The Mayor is responsible for preparing the City's four-year financial plan,
including the City's current financial plan for the 1995 through 1998 fiscal
years (the '1995-1998 Financial Plan' or 'Financial Plan'). The City's
projections set forth in the Financial Plan are based on various assumptions and
contingencies which are uncertain and which may not materialize.

Changes in major assumptions could significantly affect the City's ability
to balance its budget as required by State law and to meet its annual cash flow
and financing requirements. Such assumptions and contingencies include the
condition of the regional and local economies, the impact on real estate tax
revenues of the real estate market, wage increases for City employees consistent
with those assumed in the Financial Plan, employment growth, the results of a
pending actuarial audit of the City's pension system which is expected to
significantly increase the City's annual pension costs, the ability to implement
proposed reductions in City personnel and other cost reduction initiatives,
which may require in certain cases the cooperation of the City's municipal
unions, revenue generating transactions and provision of State and Federal aid
and mandate relief.

Implementation of the Financial Plan is also dependent upon the City's
ability to market its securities successfully in the public credit markets. The
City's financing program for fiscal years 1995 through 1998 contemplates the
issuance of $10.7 billion of general obligation bonds primarily to reconstruct
and rehabilitate the City's infrastructure and physical assets and to make other
capital investments. In addition, the City issues revenue and tax anticipation
notes to finance its seasonal working capital requirements. The success of
projected public sales of City bonds and notes will be subject to prevailing
market conditions, and no assurance can be given that such sales will be
completed. If the City were unable to sell its general obligation bonds and
notes, it would be prevented from meeting its planned capital and operating
expenditures.

On October 25, 1994, the City published the Financial Plan for the
1995-1998 fiscal years, which is a proposed modification to a financial plan
submitted to the Control Board on July 8, 1994 (the 'July Financial Plan') and
which relates to the City, the Board of Education ('BOE') and the City
University of New York.

The City's July Financial Plan set forth proposed actions for the 1995
fiscal year to close a previously projected gap of approximately $2.3 billion
for the 1995 fiscal year, which included City actions aggregating $1.9 billion,
a $288 million increase in State actions over the 1994 and 1995 fiscal years,
and a $200 million increase in Federal assistance. The City actions included

proposed agency

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actions aggregating $1.1 billion, including productivity savings; tax and fee
enforcement initiatives; service reductions; and savings for the restructuring
of City services. City actions also included savings of $45 million resulting
from proposed tort reform, the projected transfer to the 1995 fiscal year of
$171 million of the projected 1994 fiscal year surplus, savings of $200 million
for employee health care costs, $51 million in reduced pension costs, savings of
$225 million from refinancing City bonds and $65 million from the proposed sale
of certain City assets.

The 1995-1998 Financial Plan published on October 25, 1994 reflects actual
receipts and expenditures and changes in forecast revenues and expenditures
since the July Financial Plan and projects revenues and expenditures for the
1995 fiscal year balanced in accordance with GAAP. For the 1995 fiscal year, the
Financial Plan includes actions to offset an additional potential $1.1 billion
budget gap, resulting principally from a $104 million decrease in the $171
million projected surplus from the 1994 fiscal year to be transferred to the
1995 fiscal year, due primarily to lower projected tax revenues for the 1994
fiscal year; reductions in projected tax revenues for the 1995 fiscal year
totaling $170 million; $60 million of increased City pension contributions
resulting from lower than expected earnings on pension fund assets for the 1994
fiscal year; a $166 million shortfall in projected increased Federal assistance
due primarily to the failure to enact national health care reform; the failure
of the State Legislature to approve tort reform; the failure to achieve the
projected savings of $200 million for employee health care costs; a $165 million
increase in projected overtime expenditures; and additional agency spending
requirements, primarily for increased costs for foster care and homeless
services, and other decreased projected revenues.

The gap-closing measures for the 1995 fiscal year set forth in the
1995-1998 Financial Plan include additional proposed agency actions aggregating
$851 million, including $342 million of reduced personal services costs
resulting from a reduction in the number of city employees, additional
expenditure reductions and $42 million of greater than forecast miscellaneous
revenues. Additional proposed gap-closing actions include the availability of
$200 million, primarily from reserves held for unreported health insurance
claims. The $851 million of agency actions proposed in the Financial Plan for
the 1995 fiscal year, together with the $1.1 billion of agency actions proposed
in the July Financial Plan, are substantial and difficult to implement. Agency
actions proposed in the Financial Plan for the 1995 fiscal year include reduced
expenditures for the Police Department totaling $67 million, a $107 million
reduction in the City's subsidy to the New York City Health and Hospital
Corporation ('HHC'), reduced allocations to BOE totaling $190 million,
expenditure reductions totaling $102 million for the Human Resources
Administration, expenditure reduction totaling $32 million for the Department of

Corrections, a portion of which is subject to modification of a court consent
decree, and a $113 million reduction in the City's subsidy to the Metropolitan
Transportation Authority (the 'MTA'). The Financial Plan is subject to the
ability of the City to implement proposed reductions in City personnel and other
cost reduction initiatives.

Based on currently available results, the Mayor's Office of Management and
Budget ('OMB') believes that developments since the publication of the Financial
Plan on October 25, 1994 have caused an additional $650 million budget gap in
the 1995 fiscal year due to (i) projected tax revenue shortfalls of $400
million, (ii) failure to renegotiate the terms of certain Port Authority leases
to increase revenues by $75 million, (iii) miscellaneous revenue shortfalls of
$25 million, and (iv) increases in certain agency expenditures of $150 million.
The projected tax revenue shortfalls for the 1995 fiscal year result from lower
capital gains, bonuses and business profits, the timing of certain payments and
discounting by retailers. OMB has also identified gap-closing actions totaling
$650 million in the 1995 fiscal year. Certain of these gap-closing actions will
be subject to the ability of the City to implement expenditure reduction
initiatives and, in the case of the social security refund, final approval by
the Internal Revenue Service. In the event these gap-closing actions cannot be
fully implemented, the City will be required to adopt additional gap-closing
measures for the remainder of the 1995 fiscal year, and there is no assurance
that such measures will enable the City to achieve a balanced budget for the
1995 fiscal year. Current forecasts of revenues and expenditures for the fiscal
year 1995, including the gap-closing actions, could require the City to take
actions within the 1995 fiscal year to meet its cash flow requirements.

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The Financial Plan also sets forth projections to the 1996 through 1998
fiscal years and outlines a proposed gap-closing program to close projected gaps
of $1.0 billion, $1.5 billion and $2.0 billion for the 1996 through 1998 fiscal
years, respectively, after successful implementation of the $1.1 billion gap-
closing program to the 1995 fiscal year.

OMB believes that developments since the publication of the Financial Plan
have caused the $1.0 billion gap projected in the Financial Plan for the 1996
fiscal year to increase to $2.7 billion. The $1.5 billion increase in the
forecast budget gap for fiscal year 1996 is due to (i) a projected tax revenue
shortfall of approximately $400 million, reflecting the impact of the recent
shortfall in collections of non-property taxes described above, (ii) and $80
million shortfall in projected property tax receipts due to a lower than
forecast increase in the tentative assessment role published by the New York
City Department of Finance, (iii) a reduction of $390 million in the forecast
receipts of State and Federal aid, (iv) a reduction of $75 million in forecast
receipts of lease payments for the New York City airports, (v) higher costs of
$260 million for Medicaid and agency spending, (vi) additional pension funding
costs of $300 million resulting from an ongoing actuarial audit of the City

pension systems and (vii) $45 million in additional costs for unachieved tort
reform.

In February the Mayor published a modification (the 'February
Modification') to the Financial Plan for the City's 1995 through 1998 fiscal
years and a preliminary budget for the City's 1996 fiscal year. The February
Modification reflected changes since the Financial Plan including measures to be
taken to assure balance in the 1995 fiscal year described above and the City's
program to address the currently forecast gap of approximately $2.7 billion in
fiscal year 1996 which gap is projected to increase to $3.2 billion and $3.8
billion in 1997 and 1998, respectively. The gap-closing program is subject to
change. However, the major components of the gap-closing program for fiscal year
1996 are (i) a reduction in spending for entitlements of approximately $1.2
billion, primarily affecting public assistance and Medicaid payments by the
City, (ii) $600 million in savings from municipal unions and (iii) $500 million
from the Board of Education. In addition, the City will continue to seek mandate
relief such as tort reform and other changes in City procedures and use of
resources through privatization and efficient utilization of the City's assets.

The proposals contained in the February Modification to close the projected
budget gaps for the 1995 and 1996 fiscal years engendered substantial public
debate, and that the public debate relating to the 1996 fiscal year budget will
most likely continue through the time the budget is scheduled to be adopted in
June 1995. On January 17, 1995, Standard & Poor's placed the City's general
obligation bonds on CreditWatch with negative implications, in light of the
refunding of debt contemplated by this offering to provide $120 million of the
$650 million in gap-closing actions required for the 1995 fiscal year. Standard
& Poor's stated that it will review the February Modification for evidence of
continued progress toward long-term structural balance, and eventual elimination
of certain types of budget devices, as well as the next State budget proposal,
to determine the extent of the City's relief from State mandates in education,
social services, and health care expenditures. Standard & Poor's stated that, by
April 1995, financial plans which continue to incorporate budget devices, such
as refunding, or fail to reflect ongoing budget relief from the State, will
result in a lowering of the rating to the 'BBB' category for New York City's
general obligation bonds.

In January 1993, the City announced a settlement with a coalition of
municipal unions, including Local 237 of the International Brotherhood of
Teamsters, District Council 37 of the American Federation of State, County and
Municipal Employees and other unions covering approximately 44% of the City's
workforce. The settlement, which has been ratified by the unions, includes a
total net expenditure increase of 8.25% over a 39 month period, ending March 31,
1995 for most of these employees. The City is presently bargaining with the
Correction Officers' Benevolent Association and the Sanitation Officers'
Association. In addition, the Transit Police Benevolent Association's delegate
body rejected a tentative settlement with the City. The contract dispute is
currently being arbitrated before the State's Public Employment Relations Board.

Moreover, a contract dispute between the City and the Licensed Practical Nurses
is currently in arbitration before the City's Office of Collective Bargaining.

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The Financial Plan provides no additional wage increases for City employees
after their contracts expire in the 1995-1996 fiscal years. Each 1% wage
increase for all employees commencing in the 1995 and 1996 fiscal years would
cost the City an additional $28 million for the 1995 fiscal year, $140 million
for the 1996 fiscal year and $150 million each year thereafter above the amounts
provided for in the Financial Plan.

Various actions proposed in the Financial Plan, including the proposed
increase in State aid, are subject to approval by the Governor and the State
Legislature, and the proposed increase in Federal aid is subject to approval by
Congress and the President. State and Federal actions are uncertain and no
assurance can be given that such actions will in fact be taken or that the
savings that the City projects will result from these actions will be realized.
The State Legislature failed to approve a substantial portion of the proposed
State assumption of Medicaid costs in the last session. The Financial Plan
assumes that these proposals will be approved by the State Legislature during
the 1995 fiscal year and that the Federal government will increase its share of
funding for the Medicaid program. If these measures cannot be implemented, the
City will be required to take other actions to decrease expenditures or increase
revenues to maintain a balanced financial plan.

Although the City has maintained balanced budgets in each of its last
thirteen fiscal years, and is projected to achieve balanced operating results
for the 1995 fiscal year, there can be no assurance that the gap-closing actions
proposed by the Financial Plan can be successfully implemented or that the City
will maintain a balanced budget in future years without additional State aid,
revenue increases or expenditure reductions. Additional tax increases and
reductions in essential City services could adversely affect the City's economic
base.

The 1995-1998 Financial Plan is based on numerous assumptions, including
the continuing improvement in the City's and the region's economy and a modest
employment recovery during calendar year 1994 and the concomitant receipt of the
economically sensitive tax revenues in the amounts projected. The 1995-1998
Financial Plan is subject to various other uncertainties and contingencies
relating to, among other factors, the extent, if any, to which wage increases
for City employees exceed the annual increases assumed for the 1995 through 1998
fiscal years; continuation of the 9% interest earnings assumptions for pension
fund assets and current assumptions with respect to wages for City employees
affecting the City's required pension fund contributions; the willingness and
ability of the State, in the context of the State's current financial condition,

to provide the aid contemplated by the Financial Plan and to take various other
actions to assist the City, including the proposed State takeover of certain
Medicaid costs and State mandate relief; the ability of the Health and Hospitals
Corporation ('HHC'), BOE and other such agencies to maintain balanced budgets;
the willingness of the Federal government to provide Federal aid; approval of
the proposed continuation of the personal income tax surcharge; adoption of the
City's budgets by the City Council in substantially the forms submitted by the
Mayor; the ability of the City to implement proposed reductions in the City
personnel and other cost reduction initiatives, which may require in certain
cases the cooperation of the City's municipal unions, and the success with which
the City controls expenditures; savings for health care costs for City employees
in the amounts projected in the Financial Plan; additional expenditures that may
be incurred due to the requirements of certain legislation requiring minimum
levels of funding for education, the impact on real estate tax revenues of the
current weakness in the real estate market; the City's ability to market its
securities successfully in the public credit markets; and additional
expenditures that may be incurred as a result of deterioration in the condition
of the City's infrastructure. Certain of these assumptions have been questioned
by the City Comptroller and other public officials.

The projections and assumptions contained in the 1995-1998 Financial Plan
are subject to revision, which may involve substantial change, and no assurance
can be given that these estimates and projections, which include actions which
the City expects will be taken but which are not within the City's control, will
be realized.

From time to time, the Control Board staff, the City Comptroller and others
issue reports and make public statements regarding the City's financial
condition, commenting on, among other matters,

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the City's financial plans, projected revenues and expenditures and actions by
the City to eliminate projected operating deficits. Some of these reports and
statements have warned that the City may have underestimated certain
expenditures and overestimated certain revenues and have suggested that the City
may not have adequately provided for future contingencies. Certain of these
reports have analyzed the City's future economic and social conditions and have
questioned whether the City has the capacity to generate sufficient revenues in
the future to meet the costs of its expenditure increases and to provide
necessary services.

On January 17, 1995, the City Comptroller issued a report which concluded
that the risks for the 1995 fiscal year had increased from $453 million to $658
million, primarily as a result of the lower-than-projected tax revenues totaling
$400 million, partially offset by the anticipated receipt of an additional $100

million of revenues from the refund by the Internal Revenue Service of social
security overpayments by the City in the 1995 fiscal year. The report stated
that the shortfall in tax revenue collections is explained largely by weaknesses
in the banking industry and securities sector, which have been hurt by the tight
monetary policies of the Federal Reserve Board which have resulted in losses
from bond trading operations, layoffs and lower year-end bonuses. The report
stated that this shortfall may increase if total returns in the financial sector
do not improve in the first half of the 1995 calendar year.

On December 27, 1994, the City Comptroller issued a report on the City's
economy which noted that the City's economic recovery had slowed in the third
quarter of the 1994 calendar year and concluded that the City's economy is still
very weak and the local recovery is fragile. The report noted that the
indications of weakness in the City's economy included slower growth in payroll
employment and retail sales in the third quarter, as well as softness in the
Manhattan commercial real estate market. The report also noted that the tight
monetary policies implemented by the Federal Reserve Bank since February to curb
inflationary pressures were particularly harmful to interest rate sensitive and
cyclical sectors, such as retailing, the securities industry, banking and
manufacturing and that the City's service driven economy has not benefited from
the national recovery, which was largely driven by interest rate sensitive
sectors of housing, capital goods and consumer durable goods. The report noted
that the slow-down in economic activity was expected to continue in the fourth
quarter of 1994, with more cutbacks in local governments and additional layoffs
in the financial sector, which will offset new hiring in other areas and result
in a slow growth in the 1995 calendar year.

On November 30, 1994, OSDC issued a report reviewing the Financial Plan.
The report concluded that a projected budget gap of $252 million existed for the
1995 fiscal year, due largely to higher social service costs and uncertainties
concerning the receipt of revenues from increased collection efforts. The report
identified additional substantial risks for the 1995 fiscal year totaling $351
million, including the proposed reduction in the City subsidy to the Transit
Authority, the receipt of revenues by the City as a result of the refund of
social security overpayments, the projected subleasing of certain assets and
possible additional expenditures for the BOE. After taking into account possible
reduced expenditures of $100 million, OSDC concluded that the City faces risks
of approximately $500 million for the remainder of the 1995 fiscal year.

With respect to the 1996 through 1998 fiscal years, the OSDC in its March
21, 1995, report projects gaps of approximately $3 billion, $3.6 billion and
$4.1 billion, respectively. According to the OSDC, the projected gap could be
greater than forecast by the City primarily because the City has not yet secured
$133 million in anticipated health insurance savings and overtime costs from
uniformed agencies are likely to be $80 million higher than projected by the
City. The report also identified a number of additional risks which could raise
the 1996 budget gap by another $400 million (a net gap of $232 million after
accounting for possible savings from overestimating prior year's expenses).

These risks include (i) the expiration of the 14% personal income tax surcharge
which the Financial Plan assumes will be extended by the State, (ii) unfunded
liabilities at the Board of Education and (iii) potentially higher pension
costs. Additionally, the 1996 gap-closing program relies to a very large degree
on cooperation from Federal and State governments and municipal unions. In fact,
the City has direct control of less than $500 million of the total gap-closing
measures. Therefore, no assurance can be given that the 1996 measures will be
successfully implemented.

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On December 8, 1994, the staff of the Control Board issued a report on the
Financial Plan. In its report the staff concluded that the City faced risks of
more than $513 million in the 1995 fiscal year. The staff noted that tax
receipts are stagnant, primarily because of a further contraction in the
property tax and sluggish growth in the non-property taxes, related to erosion
of profits in the securities industry, and that there are substantial risks for
the 1995 fiscal year with respect to possible increased overtime and City
Medicaid payments to HHC, shortfalls in parking fine collections, the projected
refund of social security payments, a proposed asset sale, the renegotiation of
certain Port Authority leases and possible additional expenditures at BOE. In
addition, the staff indicated that there are risks of $2.0 billion, $2.6 billion
and $3.1 billion for the 1996, 1997 and 1998 fiscal years, respectively. Risks
for the 1996 through 1998 fiscal years include the potential for increased
overtime and lower non-property tax revenues, increased spending for City
Medicaid payments to HHC, additional expenditures at BOE, uncertainties
concerning the proposed reduction in City expenditures for health care costs,
the anticipated revenues from renegotiation of the terms of certain Port
Authority leases, savings resulting from the proposed tort reform to limit
damage claims against the City, and increased Federal aid for Medicaid. The
report noted that the City faced additional risks with respect to its
assumptions regarding pension costs, a reduced subsidy to the Transit Authority,
social services savings and the cost of wages. The staff noted that it is
imperative that the City Council and the Mayor work together to ensure that the
actions taken for the 1995 fiscal year are recurring and help reduce the over $2
billion gap for the 1996 fiscal year, and that a cooperative effort is necessary
if the City is to solve its structural budget problems and bring stability to
the delivery of services to its residents.

On March 17, 1995 the Control Board staff issued its report commenting on
the February Modification. The report notes that the February Modification
attempts to address the structural imbalances by dramatically lowering
expenditures in large budget areas while continuing the restructuring of the
City's finances. Their analysis does show a risk of at least $486 million in
fiscal 1996, particularly because more than $2 billion in projected budget
relief is dependent upon the action of others. Both the Control Board and the
OSDC have noted that the City has not yet brought its long term expenditures in
line with recurring revenues; therefore, the City is likely to face future
budget gaps requiring it to reduce expenditures and/or increase revenues.

A substantial portion of the capital improvements in the City are financed
by indebtedness issued by the Municipal Assistance Corporation for the City of
New York ('MAC'). MAC was organized in 1975 to provide financing assistance for
the City and also to exercise certain review functions with respect to the
City's finances. MAC bonds are payable out of certain State sales and
compensating use taxes imposed within the City, State stock transfer taxes and
per capita State aid to the City. Any balance from these sources after meeting
MAC debt service and reserve fund requirements and paying MAC's operating
expenses is remitted to the City or, in the case of the stock transfer taxes,
rebated to the taxpayers. The State is not, however, obligated to continue the
imposition of such taxes or to continue appropriation of the revenues therefrom
to MAC, nor is the State obligated to continue to appropriate the State per
capita aid to the City which would be required to pay the debt service on
certain MAC obligations. MAC has no taxing power and MAC bonds do not create an
enforceable obligation of either the State or the City. As of September 30,
1994, MAC had outstanding an aggregate of approximately $4.885 billion of its
bonds.

The City's general obligation bonds are rated Baa1 by Moody's. Standard &
Poor's has rated the City's general obligation bonds A-. Fitch Investors
Service, Inc. ('Fitch') has rated them A-. Such ratings reflect only the view of
Moody's, Standard & Poor's and Fitch, from which an explanation of the
significance of such ratings may be obtained. There is no assurance that such
ratings will continue for any given period of time or that they will not be
revised downward or withdrawn entirely. Any such downward revision or withdrawal
could have an adverse effect on the market prices of the City's general
obligation bonds.

New York State and its Authorities. The State's current fiscal year
commenced on April 1, 1995, and ends on March 31, 1996, and is referred to
herein as the State's 1995-96 fiscal year. The prior fiscal year, which ended on
March 31, 1995, is referred to herein as the State's 1994-95 fiscal year. The
State's budget for the 1994-95 fiscal year was enacted by the Legislature on
June 7, 1994, more than two

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months after the start of the fiscal year. Prior to adoption of the budget, the
Legislature enacted appropriations for disbursements considered to be necessary
for State operations and other purposes, including all necessary appropriations
for debt service. The State Financial Plan for the 1994-95 fiscal year was
formulated on June 16, 1994 and is based on the State's budget as enacted by the
Legislature and signed into law by then Governor Cuomo. On February 1, Governor
Pataki presented his 1995-96 Executive Budget, containing his recommendations
for the upcoming fiscal year. The Governor's budget is balanced on a cash basis
in the General Fund (described below). However, there can be no assurance that

the Legislature will enact the proposed Executive Budget into law, that the
budget will be adopted in a more timely manner than the prior year's budget, or
that actual results will not differ materially and adversely from the
projections set forth below.

The economic and financial condition of the State may be affected by
various financial, social, economic and political factors. Those factors can be
very complex, may vary from fiscal year to fiscal year, and are frequently the
result of actions taken not only by the State and its agencies and
instrumentalities, but also by entities, such as the Federal government, that
are not under the control of the State.

The State Financial Plan is based upon forecasts of national and State
economic activity. Economic forecasts have frequently failed to predict
accurately the timing and magnitude of changes in the national and the State
economics. Many uncertainties exist in forecasts of both the national and State
economies, including consumer attitudes toward spending, Federal financial and
monetary policies, the availability of credit, and the condition of the world
economy, which could have an adverse effect on the State. There can be no
assurance that the State economy will not experience results in the current
fiscal year that are worse than predicted, with corresponding material and
adverse effects on the State's projections of receipts and disbursements.

The State Division of the Budget ('DOB') believes that its projections of
receipts and disbursements relating to the current State Financial Plan, and the
assumptions on which they are based, are reasonable. Actual results, however,
could differ materially and adversely from the projections set forth below, and
those projections may be changed materially and adversely from time to time.

As noted above, the financial condition of the State is affected by several
factors, including the strength of the State and regional economy and actions of
the Federal government, as well as State actions affecting the level of receipts
and disbursements. Owing to these and other factors, the State may, in future
years, face substantial potential budget gaps resulting from a significant
disparity between tax revenues projected from a lower recurring receipts base
and the future costs of maintaining State programs at current levels. Any such
recurring imbalance would be exacerbated if the State were to use a significant
amount of nonrecurring resources to balance the budget in a particular fiscal
year. To address a potential imbalance for a given fiscal year, the State would
be required to take actions to increase receipts and/or reduce disbursements as
it enacts the budget for that year, and under the State Constitution the
Governor is required to propose a balanced budget each year. To correct
recurring budgetary imbalances, the State would need to take significant actions
to align recurring receipts and disbursements in future fiscal years. There can
be no assurance, however, that the State's actions will be sufficient to
preserve budgetary balance in a given fiscal year or to align recurring receipts

and disbursements in future fiscal years.

The General Fund is the general operating fund of the State and is used to
account for all financial transactions, except those required to be accounted
for in another fund. It is the State's largest fund and receives almost all
State taxes and other resources not dedicated to particular purposes. In the
State's 1994-95 fiscal year, the General Fund is expected to account for
approximately 52 percent of total governmental-fund receipts and 51 percent of
total governmental-fund disbursements. General Fund moneys are also transferred
to other funds, primarily to support certain capital projects and debt service
payments in other fund types.

As a result of the national and regional economic recession, the State's
tax receipts for its 1991 and 1992 fiscal years were substantially lower than
projected, which resulted in reductions in State aid to

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localities for the State's 1992 and 1993 fiscal years from amounts previously
projected. The State completed its 1993 fiscal year with a positive margin of
$671 million in the General Fund, which was deposited into a tax refund reserve
account. The State's economy, as measured by employment, started to recover near
the start of the 1993 calendar year, continued into mid-1994 and then virtually
ceased and the State completed its 1994 fiscal year with a cash-basis balanced
budget in the State's General Fund (the major operating fund of the State),
after depositing $1.5 billion in various reserve funds.

The State's 1994-95 Financial Plan, which is based upon the enacted State
budget, projected a balanced General Fund. The State's 1994-95 Financial Plan
provided the City with savings through various actions, which include increased
State education aid and State assumption of certain costs previously paid by the
City and restoration of certain prior year revenue sharing reductions. However,
the State Legislature failed to enact a substantial portion of the proposed
State assumption of local Medicaid costs, other significant mandate relief
items, and the proposed tort reform legislation, which would have provided the
City with additional savings. On February 1, 1995, as part of his Executive
Budget for the 1995-96 fiscal year, the Governor submitted the third quarterly
update to the State Financial Plan for the 1994-95 fiscal year. This update
reflects changes to receipts and disbursements. The update revises the projected
General Fund receipts and disbursements contained in the 1994-95 State Financial
Plan as revised by the first and second quarterly updates issued on July 29,
1994 and October 28, 1994. The update reflected that estimates of General Fund
receipts for the 1994-95 fiscal year have been reduced by $585 million, from the
mid-year update, and are down $1.058 billion from the budget enacted in June
1994 (of which $227 million results from a post mid-year accounting restatement
of the State Financial Plan). Offsetting this projected loss in receipts,

however, are projected reductions of $312 million in disbursements from the
mid-year update, attributable to lower spending through the first nine months of
the fiscal year, and to the use of greater than anticipated receipts from the
State lottery. The net result of the projected reductions in receipts and
disbursements is a negative margin of $273 million against the mid-year update's
projection of a $14 million surplus, producing a potential deficit of $259
million for the 1994-95 fiscal year. The Governor has proposed to close this
deficit through a hiring freeze, a review of pending contracts, and spending
cuts in certain programs that were started or expanded in the 1994-95 budget.
Governor Pataki submitted a proposed budget for the State's 1995-96 fiscal year
on February 1, 1995. The Governor's budget for 1995-96 fiscal year included
significant savings from Medicaid cost containment measures and welfare reform
and substantial reductions in State aid to localities, including the City.

The 1995-96 Executive Budget is the first to be submitted by the Governor,
who assumed office on January 1. It proposes actual reductions in the
year-over-year dollar levels of State spending from the General Fund for the
first time in over half a century with a proposed cut of 3.4 percent. There are,
however, risks and uncertainties concerning whether or not certain tax and
spending cuts proposed in the Executive Budget will be upheld in the face of
potential legal challenges. For example, there can be no assurance that cuts in
social-welfare entitlement programs will not be challenged in court. Further,
the Comptroller has indicated his intention to challenge in Court the proposed
use of certain pension reserves in the Executive Budget.

According to the Executive Budget, in the 1995-96 fiscal year, the State
Financial Plan would be out of balance by almost $4.7 billion, as a result of
three key factors: (1) the projected structural deficit resulting from the
ongoing disparity between sluggish growth in receipts, the effect of prior-year
tax changes, and the rapid acceleration of spending growth ($2.1 billion); (2)
the impact of unfunded 1994-95 initiatives, including capital projects such as
sports and recreational facilities, an increase in revenue sharing to local
governments, further State takeover of local Medicaid costs, more school aid,
and increased tuition assistance ($1.1 billion); and (3) the use of one-time
solutions to fund recurring spending in the 1994-95 budget ($1.5 billion). Tax
cuts proposed to spur economic growth and provide relief for low and
middle-income tax payers add $240 million to the projected imbalance or budget
gap, bringing the total to approximately $5 billion.

The Executive Budget proposes to close the budget gap for the 1995-96
fiscal year through (1) $1.9 billion from cost containment savings in
social-welfare programs, particularly Medicaid cost-containment recommendations
($1.277 billion), Income-Maintenance restructuring recommendations

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($340 million), and the consolidation of various child-care programs into a
Family Services Block Grant to counties and New York City; (2) $2.5 billion in
savings from State agency restructuring that is expected to reduce spending on
the State workforce, SUNY and CUNY, mental hygiene programs, capital projects,
the prison population, and public authorities; (3) $350 million in savings from
local assistance reforms, by freezing school aid, revenue sharing and county
costs of pre-school special education at current levels, while proposing program
legislation to provide relief from certain mandates that increase local
spending; and (4) $200 million in new revenue measures, primarily a new Quick
Draw Lottery game and changes to tax-payment schedules. The Executive Budget
indicates that for years State revenues have grown at a slower rate than State
spending, producing an increasing structural deficit, and that if the proposals
in the Executive Budget are upheld (particularly the spending cuts described
above) the State will start to eliminate the structural imbalance that has
characterized the State's fiscal record. There can, however, be no assurances
that the tax and spending cuts proposed in the Executive Budget will be upheld
or enacted as proposed, or that if enacted, will eliminate potential imbalances
in future fiscal years.

As expected, the Governor's proposals will engender substantial public
debate which will continue until the enactment of the budget by the State
legislature, which as expected did not occur before April 1, 1995. However, no
assurance can be given as to the amount of savings which the City might realize
from any such cost containment measures or welfare reform or the size of any
such reductions in State aid to the City. Depending upon the amount of such
savings or the size of any such reductions in State aid, the City might be
required to make substantial additional changes in the Financial Plan.

In certain recent fiscal years, the State has failed to enact a budget
prior to the beginning of the State's fiscal year. The delay in the adoption of
the State's budget could delay the projected receipt by the City of State aid,
and there can be no assurance that State budgets in future fiscal years will be
adopted by the April 1 statutory deadline.

As a result of various uncertainties and other factors, including consumer
attitudes toward spending, Federal financial and monetary policies, the
availability of credit and the condition of the world economy, actual results
could differ materially and adversely from the State's current projections and
the State's projections could be materially and adversely changed from time to
time.

On January 13, 1992 Standard & Poor's Corporation ('Standard & Poor's')
reduced its ratings on the State's general obligation bonds from A to A- and, in
addition, reduced its ratings on the State's moral obligation, lease purchase,
guaranteed and contractual obligation debt. Standard & Poor's also continued its
negative rating outlook assessment on State general obligation debt. On April

26, 1993, Standard & Poor's revised the rating outlook assessment to stable. On
February 14, 1994, Standard & Poor's raised its outlook to positive and, on
December 12, 1994, confirmed its A- rating. On January 6, 1992, Moody's
Investors Service, Inc. ('Moody's') reduced its ratings on outstanding
limited-liability State lease purchase and contractual obligations from A to
Baa1. On December 12, 1994, Moody's reconfirmed its A rating on the State's
general obligation long-term indebtedness.

The fiscal stability of the State is related to the fiscal stability of its
authorities, which generally have responsibility for financing, constructing and
operating revenue-producing public benefit facilities. The authorities are not
subject to the constitutional restrictions on the incurrence of debt which apply
to the State itself and may issue bonds and notes within the amounts of, and as
otherwise restricted by, their legislative authorization. As of September 30,
1992, there were 18 authorities that had outstanding debt of $100 million or
more. The aggregate outstanding debt, including refunding bonds, of these 18
authorities was $63.5 billion as of September 30, 1993. As of March 31, 1994,
aggregate public authority debt outstanding as State-supported debt was $21.1
billion and as State-related debt was $29.4 billion.

The authorities are generally supported by revenues generated by the
projects financed or operated, such as fares, user fees on bridges, highway
tolls and rentals for dormitory rooms and housing. In recent years, however, the
State has provided financial assistance through appropriations, in some cases of
a recurring nature, to certain of the 18 authorities for operating and other
expenses

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and, in fulfillment of its commitments on moral obligation indebtedness or
otherwise for debt service. This assistance is expected to continue to be
required in future years.

The MTA, a State agency, oversees the operation of the City's subway and
bus system (the 'Transit Authority' or 'TA') and commuter rail lines serving the
New York metropolitan area. Fare revenues from such operations have been
insufficient to meet expenditures, and the MTA depends heavily upon a system of
State, local, Triborough Bridge and Tunnel Authority ('TBTA') and, to the extent
available, Federal support. Over the past several years, the State has enacted
several taxes, including a surcharge on the profits of banks, insurance
corporations and general business corporations doing business in the 12-county
region served by the MTA and a special one-quarter of 1% regional sales and use
tax, that provide additional revenues for mass transit purposes including
assistance to the MTA. The surcharge, which expires in November 1995, yielded
$507 million in calendar year 1992, of which the MTA was entitled to receive
approximately 90% or approximately $456 million. For the 1994-95 State fiscal

year, total State assistance to the MTA is estimated at approximately $1.3
billion.

In 1993, State legislation authorized the funding of a five-year $9.56
billion MTA capital plan for the five-year period, 1992 through 1996 (the
'1992-1996 Capital Program'). The MTA has received approval of the 1992-96
Capital Program based on this legislation from the 1992-96 Capital Program
Review Board, as State law requires. This is the third five-year plan since the
Legislature authorized procedures for the adoption, approval and amendment of a
five-year plan in 1981 for a capital program designed to upgrade the performance
of the MTA's transportation systems and to supplement, replace and rehabilitate
facilities and equipment. The MTA, the TBTA and the TA are collectively
authorized to issue an aggregate of $3.1 billion of bonds (net of certain
statutory exclusions) to finance a portion of the 1992-96 Capital Program. The
1992-96 Capital Program is expected to be financed in significant part through
the dedication of State petroleum business taxes.

There can be no assurance that all the necessary governmental actions for
the Capital Program will be taken, that funding sources currently identified
will not be decreased or eliminated, or that the 1992-96 Capital Program, or
parts thereof, will not be delayed or reduced. Furthermore, the power of the MTA
to issue certain bonds expected to be supported by the appropriation of State
petroleum business taxes is currently the subject of a court challenge. If the
Capital Program is delayed or reduced, ridership and fare revenues may decline,
which could, among other things, impair the MTA's ability to meet its operating
expenses without additional State assistance.

The State's experience has been that if an Authority suffers serious
financial difficulties, both the ability of the State and the Authorities to
obtain financing in the public credit markets and the market price of the
State's outstanding bonds and notes may be adversely affected. The Housing
Finance Agency ('HFA') and the Urban Development Corporation ('UDC') have in the
past required substantial amounts of assistance from the State to meet debt
service costs or to pay operating expenses. Further assistance, possibly in
increasing amounts, may be required for these, or other Authorities in the
future. In addition, certain statutory arrangements provide for State local
assistance payments otherwise payable to localities to be made under certain
circumstances to certain Authorities. The State has no obligation to provide
additional assistance to localities whose local assistance payments have been
paid to Authorities under these arrangements. However, in the event that such
local assistance payments are so diverted, the affected localities could seek
additional State funds.

Litigation. A number of court actions have been brought involving State
finances. The court actions in which the State is a defendant generally involve
state programs and miscellaneous tort, real property, and contract claims and

the monetary damages sought are substantial. Adverse development in these
proceedings or the initiation of new proceedings could affect the ability of the
State to maintain a balanced State Financial Plan in the current fiscal year or
thereafter.

In addition to the proceedings noted below, the State is party to other
claims and litigation which its legal counsel has advised are not probable of
adverse court decisions. Although the amounts of potential losses, if any, are
not presently determinable, it is the State's opinion that its ultimate
liability

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in these cases is not expected to have a material adverse effect on the State's
financial position in the current fiscal year or thereafter.

On May 31, 1988 the United States Supreme Court took jurisdiction of a
claim of the State of Delaware that certain unclaimed dividends, interest and
other distributions made by issuers of securities and held by New York-based
brokers incorporated in Delaware for beneficial owners who cannot be identified
or located, had been, and were being, wrongfully taken by the State of New York
pursuant to New York's Abandoned Property Law (State of Delaware v. State of New
York, United States Supreme Court). All 50 states and the District of Columbia
moved to intervene, claiming a portion of such distributions and similar
property taken by the State of New York from New York-based banks and
depositories incorporated in Delaware. In a decision dated March 30, 1993, the
Court granted all pending motions of the states and the District of Columbia to
intervene and remanded the case to a Special Master for further proceedings
consistent with the Court's decision. The Court determined that the abandoned
property should be remitted first to the state of the beneficial owner's last
known address, if ascertainable and, if not, then to the states of incorporation
of the intermediary bank, broker or depository. New York and Delaware have
executed a settlement agreement which provides for payment by New York to
Delaware of $35 million in the State's 1993-94 fiscal year and five annual
payments thereafter of $33 million. New York and Massachusetts have executed a
settlement agreement which provided for aggregate payments by New York of $23
million, payable over consecutive years. The claims of the other states and the
District of Columbia remain.

Among the more significant of these claims still pending against the State
at various procedural stages, are those that challenge: (1) the validity of
agreements and treaties by which various Indian tribes transferred title to the
State of certain land in central New York; (2) certain aspects of the State's
Medicaid rates and regulations, including reimbursements to providers of
mandatory and optional Medicaid services; (3) contamination in the Love Canal
area of Niagara Falls; (4) an action against State and New York City officials

alleging that the present level of shelter allowance for public assistance
recipients is inadequate under statutory standards to maintain proper housing;
(5) challenges to the practice of reimbursing certain Office of Mental Health
patients care expenses from the client's Social Security benefits; (6) a
challenge to the methods by which the state reimburses localities for the
administrative costs of food stamp programs; (7) alleged responsibility of State
officials to assist in remedying racial segregation in the City of Yonkers; (8)
an action in which the State is a third party defendant, for injunctive or other
appropriate relief, concerning liability for the maintenance of stone groins
constructed along certain areas of Long Island's shoreline; (9) an action
challenging legislation enacted in 1990 which had the effect of deferring
certain employer contributions to the State Teachers' Retirement System and
reducing State aid to school districts by a like amount; (10) a challenge to the
constitutionality of financing programs of the Thruway Authority authorized by
Chapters 166 and 410 of the Laws of 1991; (11) a challenge to the
constitutionality of financing programs of the MTA and the Thruway Authority
authorized by Chapter 56 of the Laws of 1993; (12) challenges to the delay by
the State Department of Social Services in making two one-week Medicaid payments
to the service providers; (13) challenges to provisions of Section 2807-C of the
Public Health Law, which impose a 13% surcharge on inpatient hospital bills paid
by commercial insurers and employee welfare benefit plans and portions of
Chapter 55 of The Laws of 1992 which require hospitals to impose and remit to
the State an 11% surcharge on hospital bills paid by commercial insurers; (14)
challenges to the promulgation of the State's proposed procedure to determine
the eligibility for and nature of home care services for Medicaid recipients;
(15) a challenge to State implementation of a program which reduces Medicaid
benefits to certain home-relief recipients; (16) challenges to the rationality
and retroactive application of State regulations recalibrating nursing home
Medicaid rates; and (17) challenge by AT&T to New York Tax Law Section 186-a
(2-a) as violative of the Commerce Clause of the U.S. Constitution.

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NEW JERSEY NAVIGATOR TRUST

New Jersey Risk Factors

State Finance. New Jersey is the ninth largest state in population and the
fifth smallest in land area. With an average of 1,050 people per square mile, it
is the most densely populated of all the states. The State's economic base is
diversified, consisting of a variety of manufacturing, construction and service
industries, supplemented by rural areas with selective commercial agriculture.
Historically, New Jersey's average per capita income has been well above the
national average, and in 1992 the State ranked second among the states in per
capital personal income ($26,967).

The Trust is susceptible to political, economic or regulatory factors
affecting issuers of the New Jersey securities. The following information
provides only a brief summary of some of the complex factors affecting the
financial situation in New Jersey (the 'State') and is derived from sources that
are generally available to investors and is believed to be accurate. It is based
in part on information obtained from various State and local agencies in New
Jersey. No independent verification has been made of any of the following
information.

The New Jersey Economic Policy Council, a statutory arm of the New Jersey
Department of Commerce and Economic Development, has reported in New Jersey
Economic Indicators, a monthly publication of the New Jersey Department of
Labor, Division of Labor Market and Demographic Research, that in 1988 and 1989
employment in New Jersey's manufacturing sector failed to benefit from the
export boom experienced by many Midwest states and the State's service sectors,
which had fueled the State's prosperity since 1982, lost momentum. In the
meantime, the prolonged fast growth in the State in the mid 1980s resulted in a
tight labor market situation, which has led to relatively high wages and housing
prices. This means that, while the incomes of New Jersey residents are
relatively high, the State's business sector has become more vulnerable to
competitive pressures.

The onset of the national recession (which officially began in July 1990
according to the National Bureau of Economic Research) caused an acceleration of
New Jersey's job losses in construction and manufacturing. In addition, the
national recession caused an employment downturn in such previously growing
sectors as wholesale trade, retail trade, finance, utilities and trucking and
warehousing. Reflecting the downturn, the rate of unemployment in the State rose
from a low of 3.6% during the first quarter of 1989 to an estimated 6.1% in
December 1994, which is above the national average of 5.4% in December 1994.
Economic recovery is likely to be slow and uneven in New Jersey, with
unemployment receding at a correspondingly slow pace, due to the fact that some
sectors may lag as a result of continued excess capacity. In addition, employers
even in rebounding sectors can be expected to remain cautious about hiring until
they become convinced that improved business will be sustained. Also, certain
firms will continue to merge or downsize to increase profitability.

Debt Service. 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, if any, required to repay the bonds. As
of June 30, 1993, there was a total authorized bond indebtedness of
approximately 9.0 billion, of which $3.6 billion was issued and outstanding, 4.0
billion was retired (including bonds for which provisions for payment has been
made through the sale and issuance of refunding bonds) and 1.4 billion was
unissued. The debt service obligation or such outstanding indebtedness is $103.5
million for Fiscal Year 1994.

New Jersey Budget and Appropriation System. The State operates on a fiscal
year beginning July l and ending June 30. At the end of Fiscal Year 1989, there
was a surplus in the State's general fund (the fund into which all State
revenues not otherwise restricted by statute are deposited and from which
appropriations are made) of $411.2 million. At the end of Fiscal Year 1990,
there was a surplus in the general funds of $1 million. At the end of Fiscal
Year 1991, there was a surplus in the general fund of

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1.4 million. New Jersey closed its Fiscal Year 1992 with a surplus of 760.8
million. It is estimated that New Jersey closed its Fiscal Year 1993 with a
surplus of 937.4 million.

In order to provide additional revenues to balance future budgets, to
redistribute school aid and to contain real property taxes, on June 27, 1990,
and July 12, 1990, Governor Florio signed into law legislation which was
estimated to raise approximately $2.8 billion in additional taxes (consisting of
$1.5 billion in sales and use taxes and $1.3 billion in income taxes), the
biggest tax hike in New Jersey history. There can be no assurance that receipts
and collections of such taxes will meet such estimates.

The first part of the tax hike took effect on July 1, 1990, with the
increase in the State's sales and use tax rate from 6% to 7% and the elimination
of exemptions for certain products and services not previously subject to the
tax, such as telephone calls, paper products (which has since been reinstated),
soaps and detergents, janitorial services, alcoholic beverages and cigarettes.
At the time of enactment, it was projected that these taxes would raise
approximately $1.5 billion in additional revenue. Projections and estimates and
receipts from sales and use taxes, however, have been subject to variance in
recent fiscal years.

The second part of the tax hike took effect on January l, 1991, in the form
of an increased state income tax on individuals. At the time of enactment, it
was projected that this increase would raise approximately $1.3 billion in
additional income taxes to fund a new school aid formula, a new homestead rebate
program and state assumption of welfare and social services costs. Projections
and estimates of receipts from income taxes, however, have also been subject to
variance in recent fiscal years. Under the legislation, income tax rates
increased from their previous range of 2% to 3.5% to a new range of 2% to 7%,
with the higher rates applying to married couples with incomes exceeding $70,000
who file joint returns, and to individuals filing single returns with incomes of
more than $35,000.

The Florio administration had contended that the income tax package would
help reduce local property tax increases by providing more state aid to
municipalities. Under the income tax legislation, the State would assume
approximately $289 million in social services costs that previously were paid by
counties and municipalities and funded by property taxes. In addition, under the
new formula for funding school aid, an extra $1.1 billion was proposed to be
sent by the State to school districts beginning in 1991, thus reducing the need
for property tax increases to support education programs.

Effective July 1, 1992, the State's sales and use tax rate decreased from
7% to 6%. On November 2, 1993, Governor Florio lost his bid for re-election to
Christine Todd Whitman, who was sworn into office on January 18, 1994. Governor
Whitman, a Republican, enjoys the benefit of having a Republican majority in
both the New Jersey Senate and Assembly. Effective January 1, 1994, an
across-the-board 5% reduction in the income tax rates was enacted and effective
January 1, 1995, further reductions ranging from 1% to 10% in income tax rates
will take effect.

On June 30, 1994, Governor Whitman signed the New Jersey Legislature's
$15.7 billion budget for Fiscal Year 1995. The balanced budget, which includes
$455 million in surplus, is $141 million less than the 1994 budget. Whether the
State can achieve a balanced budget depends on its ability to enact and
implement expenditure reductions and to collect estimated tax revenues. The
Fiscal Year 1995 Appropriations Act forecasts sales and use tax collections of
$3.98 billion, a 5.3% increase from receipts estimated in the Revised Revenue
Estimates for Fiscal Year 1994. It also forecasts gross income tax collections
of $4.582 billion, a 1.2% increase from receipts estimated for Fiscal Year 1994,
and corporation business tax collections of $915 million, a 12% decrease from
receipts estimated for Fiscal Year 1994. However, projections and estimates of
receipts from taxes have been subject to variance in recent years as a result of
several factors, most recently a significant slowdown in the national, regional
and State economies, sluqqish employment and uncertainties in taxpayer behavior
as a result of actual and proposed changes in Federal tax laws.

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Debt Ratings. For many years, prior to 1991, both Moody's Investors
Service, Inc., and Standard and Poor's Corporation have rated New Jersey general
obligation bonds 'Aaa' and 'AAA', respectively. Currently, Moody's Investors
Service Inc., rates New Jersey general obligation bonds Aal. On July 3, 1991,
however, Standard and Poor's Corporation downgraded New Jersey general
obligation bonds to 'AA+.' On June 4, 1992 Standard & Poor's Corporation placed
New Jersey general obligation bonds on Credit Watch with negative implications,
citing as its principal reason for its caution the unexpected denial by the
Federal Government of New Jersey's request for $450 million in retroactive

Medicaid payments for psychiatric hospitals. These funds were critical to
closing a $1 billion gap in the State's $15 billion budget for fiscal year 1992
which ended on June 30, 1992. Under New Jersey state law, the gap in the current
budget must be closed before the new budget year begins on July 1, 1992.
Standard and Poor's Corporation suggested the State could close fiscal 1992's
budget gap and help fill fiscal 1993's hole by a reversion of $700 million of
pension contributions to its general fund under a proposal to change the way the
State calculates its pension liability. On July 6, 1992, Standard and Poor's
Corporation reaffirmed its 'AA+' rating for New Jersey general obligation bonds
and removed the debt from its Credit Watch list, although it stated that New
Jersey's long-term financial outlook is negative. Standard and Poor's
Corporation was concerned that the State was entering the 1993 fiscal year that
began July 1, 1992, with a slim $26 million surplus and remained concerned about
whether the sagging State economy would recover quickly enough to meet
lawmakers' revenue projections. It also remained concerned about the recent
federal ruling leaving in doubt how much the State was due in retroactive
Medicaid reimbursements and a ruling by a federal judge, now on appeal, of the
State's method for paying for uninsured hospital patients. However, on July 27,
1994, Standard and Poor's announced that it was changing the State's outlook
from negative to stable due to a brightening of the State's prospects as a
result of Governor Whitman's effort to trim spending and cut taxes, coupled with
an improving economy. Standard and Poor's reaffirmed its 'AA+' rating at the
same time. There can be no assurance that these ratings will continue or that
particular bond issues may not be adversely affected by changes in the State or
local economic and political conditions.

On August 24, 1992, Moody's Investors Service, Inc. downgraded New Jersey
general obligation bonds to 'Aal', stating that the reduction reflected a
developing pattern of reliance on nonrecurring measures to achieve budgetary
balance, four years of financial operations marked by revenue shortfalls and
operating deficits, and the likelihood that serious financial pressures would
persist. On August 5, 1994, Moody's reaffirmed its 'Aal' rating, citing on the
positive side New Jersey's broad-based economy, high income levels, history of
maintaining a positive financial position and moderate (although rising) debt
ratios, and, on the negative side, a continued reliance on one-time revenue and
a dependence on pension-related savings to achieve budgetary balance.

Capital Construction. 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 2.2% of the total Fiscal Year 1993
Budget. In Fiscal Year 1993, the amount is $331.0 million and is for
transportation projects. This appropriation is being credited to the
Transportation Trust Fund Account of the State General Fund.

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.

Lease Financing. The State has entered into a number of leases relating to
the financing of certain real property and equipment. The State leases the State
Tax Processing Building and the Richard J. Hughes Justice Complex in Trenton,
both from the Mercer County Improvement Authority (the 'Authority'). On August
8, 1991 the Authority defeased outstanding bonds originally issued to

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finance construction of the Richard J. Hughes Justice Complex through the
issuance of custody receipts (the 'Custody Receipts') in the aggregate principal
amount of $95,760,000. The rental is sufficient to cover the debt service on the
Authority's Custody Receipts. Maximum annual rental payments on these leases,
including debt service, maintenance and payments in lieu of taxes, will be
approximately $11 million. The State's obligation to pay the rentals is subject
to appropriations being made by the State Legislature. The Custody Receipts will
mature in the years 1992 through 2018.

The State has also entered into a lease agreement, as lessee, with the New
Jersey Economic Development Authority, as lessor (the 'EDA') to lease (i) office
buildings that are presently under construction and when finished, are expected
to house the New Jersey Division of Motor Vehicles, New Jersey Network (the
State's public television station) and a branch of the United States Postal
Service and (ii) a parking facility that is also under construction, all of
which were financed by the EDA's $114,391,434.70 initial aggregate principal
amount of Trenton Office Complex Revenue Bonds, 1980 Series dated December 1,
1989. The State has also entered into a lease agreement, as lessee, with the EDA
to lease approximately 13 acres of real property and certain infrastructure
improvements thereon located in the City of Newark. This property is in a
geographical area generally bounded by McCarter Highway, Mulberry Street and
Saybrook Place and its purchase was financed by $21,510,000 aggregate principal
amount of New Jersey Economic Development Authority Revenue Bonds, New Jersey
Performing Arts Center Site Acquisition Project, 1991 Series, issued on August
20, 1991. The rental payments required to be made by the State under such lease
agreements are sufficient to cover debt service on such bonds and other amounts
payable to the EDA, including certain administrative expenses of the EDA, and
such rental payments are subject to annual appropriation by the State
Legislature. Maximum annual debt service on such bonds is approximately
$12,200,000. All of such bonds are still outstanding and mature in the years
1992 through 2012.

The state has also entered into a sublease with the EDA to lease two
parking lots, certain infrastructure improvements and related elements located
at Liberty State Park in the City of Jersey City. These parking lots and

improvements have been financed by $13,683,767.50 aggregate principal amount of
New Jersey Economic Development Authority Lease Rental Bonds, 1992 Series
(Liberty State Park Project) dated March 15, 1992. The rental payments that will
be required to be made by the State under such sublease agreement will be
sufficient to cover debt service on such bonds and other amounts payable to the
EDA, and such rental payments will be subject to appropriation by the State
Legislature.

In 1981, the Governor signed into law a bill creating the New Jersey
Building Authority (the 'Building Authority') having the power to construct
facilities for leasing to the State (P.L. 1981, c. 120). The law provides for
leasing to the State on a basis similar to that described above. The Building
Authority is authorized to have not more than $250 million of its notes and
bonds outstanding exclusive of refunded bonds and notes, provided that if the
Building Authority issues bonds or notes to finance the total cost of a project
based on estimates prepared by an independent consultant and the consultant
determines later that the costs of the project as initially approved have
increased, the Building Authority may issue additional bonds or notes to finance
the increased cost notwithstanding the $250 million limitation. In 1985 the
Building Authority issued $129,635,000 of 1985 Series Bonds for five office
building projects in the Trenton area. During April 1987 the Building Authority
issued $103,760,000 of 1987 Series Bonds to refund the outstanding term bonds of
the 1985 issue. On April 6, 1989 the Building Authority issued $49,752,390.30 of
1989 Series Bonds for the renovation and historical restoration of portions of
the State Capital Complex in Trenton. On October 9, 1991 the Building Authority
issued $74,999,815.75 of State Building Revenue Bonds, 1991 Series (Garden State
Savings Bonds, l991A), as capital appreciation bonds, under the Garden State
Savings Act of 1991, for the continued renovation and historical restoration of
portions of the State Capital Complex in Trenton and for the construction of a
structured parking facility. As of December 31, 1991 the total amount of
Building Authority Bonds outstanding was $238,687,206.05. Outstanding Building
Authority bonds are

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secured by annual rentals from the State which are subject to annual
appropriations by the State Legislature. The State's combined annual rental
payment for all leases with the Building Authority will be (i) approximately
$17.5 million per year for the years ending June 15, 1992 through 1998, 2012 and
2013 and (ii) approximately $31.0 million per year for the years ending June 15,
1999 through 2011.

Beginning in April 1984, the State, acting through the Director of the
Division of Purchase and Property, entered into a series of lease purchase
agreements which provide for the acquisition of equipment and real property to
be used by various departments and agencies of the State. To date, the State has
completed nine lease purchase agreements which have resulted in issuance of
Certificates of Participation totaling $541,085,000. A Certificate of

Participation evidences a proportionate interest of the owner thereof in the
lease payments to be made by the State under the terms of the agreement. As of
December 31, 1991, $305,400,000 Certificates of Participation remain
outstanding. The agreements relating to these transactions provide for
semiannual rental payments. The State's obligation to pay rentals due under
these leases is subject to annual appropriations being made by the State
Legislature. The final maturity of the outstanding Certificates of Participation
is December 15, 2013. The majority of proceeds from these transactions have been
or will be used to acquire equipment for the State and its agencies. The rentals
payable by the State will be made from monies appropriated by the State
Legislature. The State intends to continue to use this financing technique for a
substantial portion of its future equipment requirements.

'Moral Obligation' Financing. Aside from its general obligation bonds, the
State's 'moral obligation' backs certain obligations issued by the New Jersey
Housing and Mortgage Finance Agency, the South Jersey Port Corporation and the
Higher Education Assistance Authority.

New Jersey Housing and Mortgage Finance Agency. Neither the New Jersey
Housing and Mortgage Finance Agency nor its predecessors, the New Jersey Housing
Finance Agency and the New Jersey Mortgage Finance Agency, have had a deficiency
in a debt service reserve fund which required the State to appropriate funds to
meet its 'moral obligation'. It is anticipated that this agency's revenues will
continue to be sufficient to cover debt service on its bonds.

South Jersey Port Corporation. The State provides the South Jersey Port
Corporation (the 'Corporation') with funds to cover all debt service and
property tax requirements, when earned revenues are anticipated to be
insufficient to cover these obligations.

Higher Education Assistance Authority. The Higher Education Assistance
Authority has issued $24,996,064 aggregate principal amount of revenue bonds,
the interest on which has been capitalized to but not including January 1, 1993.
After the period of capitalized interest has ended, it is anticipated that the
authority's revenues will be sufficient to cover debt service on its bonds.

Below are listed State appropriations made since 1986 which covered
deficiencies in revenues of the Corporation, for debt service and property tax
payments.

APPROPRIATION FOR APPROPRIATION FOR
CALENDAR YEAR DEBT SERVICE PROPERTY TAX
- ----------------------------------------------------------------- ----------------- -----------------
<S> <C> <C>
1986............................................................. $ 0 $1,647,216.00
1987............................................................. 0 1,647,216.00
1988............................................................. 0 1,647,216.00
1989............................................................. 1,281,793.58 1,745,917.00
1990............................................................. 2,362,850.67 1,850,000.00
1991............................................................. 2,770,851.00 1,850,000.00
</TABLE>

On April 2, 1987, the Corporation issued $31,580,000 aggregate principal
amount of Revenue Bonds, 1987 Series C (the 'Series C Bonds'), a portion of the
proceeds of which will be used (i) on January 1, 1995, to refund all of the
Corporation's Marine Terminal Revenue Bonds, 1985 Refunding Series and (ii) to
pay interest on the Series C Bonds until January 1, 1995. Because of the funded

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<PAGE>

escrow, it is expected that there will not be any need for the State to provide
funds to pay debt service on the Series C Bonds through January 1, 1995. Also,
in addition to the bonded indebtedness of the Corporation set forth above, on
April 2, 1987, the Corporation issued $10,295,000 Marine Terminal Revenue Bonds,
1987 Series D to provide funds for financing a portion of the costs of various
capital improvements. On February 10, 1989, the Corporation issued $4,085,000
Marine Terminal Revenue Bonds, 1989 Series E to provide funds for financing a
portion of the costs of various capital improvements and additions to the
Corporation's marine terminal facilities. On November 21, 1989, the Corporation
issued $3,655,000 Marine Terminal Revenue Bonds, 1989 Series F, to provide for
the costs of acquiring land in the City of Camden, for the purpose of expanding
the Corporation's marine terminal facilities.

Municipal Finance. New Jersey's local finance system is regulated by
various statutes designed to assure that all local governments and their issuing
authorities remain on a sound financial basis. Regulatory and remedial statutes
are enforced by the Division of Local Government Services (the 'Division') in
the State Department of Community Affairs.

Counties and Municipalities. The Local Budget Law (N.J.S.A. 40A:4-1 et
seq.) imposes specific budgetary procedures upon counties and municipalities
('local units'). Every local unit must adopt an operating budget which is
balanced on a cash basis, and items of revenue and appropriation must be
examined by the Director of the Division (the 'Director'). The accounts of each
local unit must be independently audited by a registered municipal accountant.
State law provides that budgets must be submitted in a form promul-gated by the

Division and further provides for limitations on estimates of tax collection and
for reserves in the event of any shortfalls in collections by the local unit.
The Division reviews all municipal and county annual budgets prior to adoption
for compliance with the Local Budget Law. The Director is empowered to require
changes for compliance with law as a condition of approval; to disapprove
budgets not in accordance with law; and to prepare the budget of a local unit,
within the limits of the adopted budget of the previous year with suitable
adjustments for legal compliance, if the local unit is unwilling to prepare a
budget in accordance with law. This process insures that every municipality and
county annually adopts a budget balanced on a cash basis, within limitations on
appropriations or tax levies, respectively, and making adequate provision for
principal of and interest on indebtedness falling due in the fiscal year,
deferred charges and other statutory expenditure requirements. The Director also
oversees changes to local budgets after adoption as permitted by law, and
enforces regulations pertaining to execution of adopted budgets and financial
administration. In addition to the exercise of regulatory and oversight
functions, the Division offers expert technical assistance to local units in all
aspects of financial administration, including revenue collection and cash
management procedures, contracting procedures, debt management and
administrative analysis.

The local Government Cap Law (N.J.S.A. 40A:4-45.1 et seq.) (the 'Cap Law')
generally limits the year-to-year increase of the total appropriations of any
municipality and the tax levy of any county to either 5 percent or an index rate
determined annually by the Director, whichever is less. However, where the index
percentage rate exceeds 5 percent, the Cap Law permits the governing body of any
municipality or county to approve the use of a higher percentage rate up to the
index rate. Further, where the index percentage rate is less than 5 percent, the
Cap Law also permits the governing body of any municipality or county to approve
the use of a higher percentage rate up to 5 percent. Regardless of the rate
utilized, certain exceptions exist to the Cap Law's limitation on increases in
appropriations. The principal exceptions to these limitations are municipal and
county appropriations to pay debt service requirements; to comply with certain
other State or federal mandates; amounts approved by referendum; and, in the
case of municipalities only, to fund the preceding year's cash deficit or to
reserve for shortfalls in tax collections. The Cap Law, scheduled to expire on
December 31, 1990, was re-enacted with amendments and made a permanent part of
the Municipal Finance System.

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<PAGE>

State law also regulates the issuance of debt by local units. The Local
Budget Law limits the amount of tax anticipation notes that may be issued by
local units and requires the repayment of such notes within three months of the
end of the fiscal year (six months in the case of the counties) in which issued.
The local Bond Law (N.J.S.A. 40A:2-1 et seq.) governs the issuance of bonds and
notes by the local units. No local unit is permitted to issue bonds for the
payment of current expenses (other than Fiscal Year Adjustment Bonds described
more fully below). Local units may not issue bonds to pay outstanding bonds,
except for refunding purposes, and then only with the approval of the Local

Finance Board. Local units may issue bond anticipation notes for temporary
periods not exceeding in the aggregate approximately ten years from the date of
first issue. The debt that any local unit may authorize is limited to a
percentage of its equalized valuation basis, which is the average of the
equalized value of all taxable real property and improvements within the
geographic boundaries of the local unit, as annually determined by the Director
of the Division of Taxation, for each of the three most recent years. In the
calculation of debt capacity, the local Bond Law and certain other statutes
permit the deduction of certain classes of debt ('statutory deductions') from
all authorized debt of the local unit ('gross capital debt') in computing
whether a local unit has exceeded its statutory debt limit. Statutory deductions
from gross capital debt consist of bonds or notes (i) authorized for school
purposes by a regional school district or by a municipality or a school district
with boundaries coextensive with such municipality to the extent permitted under
certain percentage limitations set forth in the School Bond Law (as hereinafter
defined); (ii) authorized for purposes which are self-liquidating, but only to
the extent permitted by the Local Bond Law; (iii) authorized by a public body
other than local unit the principal of and interest on which is guaranteed by
the local unit, but only to the extent permitted by law; (iv) that are bond
anticipation notes; (v) for which provision for payment has been made or (vi)
authorized for any other purpose for which a deduction is permitted by law.
Authorized net capital debt (gross capital debt minus statutory deductions) is
limited to 3.5 percent of the equalized valuation basis in the case of
municipalities and 2 percent of the equalized valuation basis in the case of
counties. The debt limit of a county or municipality, with certain exemptions,
may be exceeded only with the approval of the Local Finance Board.

Chapter 75 of the Pamphlet Laws of 1991 signed into law on March 28, 1991
requires certain municipalities and permits all other municipalities to adopt
the State fiscal year in place of the existing calendar fiscal year.
Municipalities that change fiscal years must adopt a six month transition budget
for January to June. Since expenditures would be expected to exceed revenues
primarily because state aid for the calendar year would not be received by the
municipality until after the end of the transition year budget, the act
authorizes the issuance of Fiscal Year Adjustment Bonds to fund the one time
deficit for the six month transition budget. The act provides that the deficit
in the six month transition budget may be funded initially with bond
anticipation notes based on the estimated deficit in the six month transition
budget. Notes issued in anticipation of Fiscal Year Adjustment Bonds, including
renewals, can only be issued for up to one year unless the Local Finance Board
permits the municipality to renew them for a further period of time. The Local
Finance Board must confirm the actual deficit experienced by the municipality.
The municipality then may issue Fiscal Year Adjustment Bonds to finance the
deficit on a permanent basis. The purpose of the Act is to assist municipalities
that are heavily dependent on state aid and that have had to issue tax
anticipation notes to fund operating cash flow deficits each year. While the act
does not authorize counties to change their fiscal years, it does provide that
counties with cash flow deficits may issue Fiscal Year Adjustment Bonds as well.

State law authorizes State officials to supervise fiscal administration in

any municipality which is in default on its obligations; which experiences
severe tax collection problems for two successive years; which has a deficit
greater than 4 percent of its tax levy for two successive years; which has
failed to make payments due and owing to the State, county, school district or
special district for two consecutive years; which has an appropriation in its
annual budget for the liquidation of debt which exceeds 25 percent of its total
operating appropriations (except dedicated revenue appropriations) for

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<PAGE>

the previous budget year; or which has been subject to a judicial determination
of gross failure to comply with the Local Bond Law, the Local Budget Law or the
Local Fiscal Affairs Law which substantially jeopardizes its fiscal integrity.
State officials are authorized to continue such supervision for as long as any
of the conditions exist and until the municipality operates for a fiscal year
without incurring a cash deficit.

There are 567 municipalities and 21 counties in New Jersey. During 1987,
1988, and 1989 no county exceeded its statutory debt limitations or incurred a
cash deficit in excess of 4 percent of its tax levy. The number of
municipalities which have a cash deficit greater than 4 percent of their tax
levies was five for 1987, zero for 1988, and six for 1989. The number of
municipalities which exceeded statutory debt limits was six, five, and one as of
December 31, 1987, 1988, and 1989, respectively. No New Jersey municipality or
county has defaulted on the payment of interest or principal on any outstanding
debt obligation since the 1930's.

School Districts. All New Jersey school districts are coterminous with the
boundaries of one or more municipalities. They are characterized by the manner
in which the board of education, the governing body of the school district,
takes office. Type I school districts, most commonly found in cities, have a
board of education appointed by the mayor or the chief executive officer of the
municipality constituting the school district. In a Type II school district, the
board of education is elected by the voters of the district. Nearly all regional
and consolidated school districts are Type II school districts.

School Budgets. In every school district having a board of school
estimate, the board of school estimate examines the budget request and fixes the
appropriation amounts for the next year's operating budget after a public
hearing at which the taxpayers and other interested persons shall have an
opportunity to raise objections and to be heard with respect to the budget. This
board, whose composition is fixed by statute, certifies the budget to the
municipal governing bodies and to the local board of education. If either
disagrees, they must appeal to the State Commissioner of Education (the
'Commissioner') to request changes.

The Quality Education Act of 1990 (N.J.S.A. 18A:7D-l et seq.) limits the
annual increase of a school district's net current expense budget. The
Commissioner certifies the allowable amount of increase for each school district
but may grant a higher level of increase in certain limited instances. A school
district may also submit a proposal to the voters to raise amounts above the
allowable amount of increase. If defeated, such a proposal is subject to further
review or appeal only if the Commissioner determines that additional funds are
required to provide a thorough and efficient education.

In Type I or Type II school districts which have failed monitoring over a
period of time by the State because of continued educational deficiencies, and
are implementing an approved corrective action plan, the Commissioner is
required to determine the cost to the school district of the implement-ation of
those portions of the corrective action plan which are directly responsive to
the district's deficiencies as identified in the monitoring process. Where
appropriate, the Commissioner is required to reallocate funds within the
district's budget to support the corrective action plan. The Commissioner is
also required to determine the amount of additional revenue needed to implement
the corrective action plan, and to recertify the budget for the district.

In State operated school districts the State District Superintendent has
the responsibility for the development of the budget subject to appeal by the
governing body of the municipality to the Commissioner and the Director of the
Division of Local Government Services in the State Department of Community
Affairs. Based upon his review, the Director is required to certify the amount
of revenues which can be raised locally to support the budget of the State
operated district. Any difference between the amount which the Director
certifies, and the total amount of local revenues

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<PAGE>

required by the budget approved by the Commissioner, is to be paid by the State
in the fiscal year in which the expenditures are made subject to the
availability of appropriations.

School District Bonds. School district bonds and temporary notes are
issued in conformity with N.J.S.A 18A:24-1 et seq. (the 'School Bond Law'),
which closely parallels the Local Bond Law. Although school districts are
exempted from the 5 percent down payment provision generally applied to bonds
issued by municipalities and counties, they are subject to debt limits (which
vary depending on the type of school system provided) and to State regulation of
their borrowing. The debt limitation on school district bonds depends upon the
classification of the school district but may be as high as 4 percent of the
average equalized valuation basis of the constituent municipality. In certain

cases involving school districts in cities with populations exceeding 100,000
the debt limit is 8 percent of the average equalized valuation basis of the
constituent municipality, and in cities with population in excess of 80,000 the
debt limit is 6 percent of the aforesaid average equalized valuation.

School bonds are authorized by (i) an ordinance adopted by the governing
body of a municipality within a Type I school district; (ii) adoption of a
proposal by resolution by the board of education of a Type II school district
having a board of school estimate; or (iii) adoption of a proposal by resolution
by the board of education and approval of the proposal by the legal voters of
any other Type II school district. If school bonds will exceed the school
district borrowing capacity, a school district (other than a regional school
district) may use the balance of the municipal borrowing capacity. If the total
amount of debt exceeds the school district's borrowing capacity and any
available remaining municipal borrowing capacity, the Commissioner and the Local
Finance Board must approve the proposed authorization before it is submitted to
the voters. All authorizations of debt in a Type II school district without a
board of school estimate require an approving referendum, except where, after
hearing, the Commissioner and the State Board of Education determine that the
issuance of such debt is necessary to meet the constitutional obligation to
provide a thorough and efficient system of public schools. When such obligations
are issued, they are issued by, and in the name of, the school district.

In Type I and II school districts with a board of school estimate, that
board examines the capital proposal of the board of education and certifies the
amount of bonds to be authorized. When it is necessary to exceed the borrowing
capacity of the municipality, the approval of a majority of the legally
qualified voters of the municipality is required, together with the approval of
the Commissioner and the Local Finance Board. When such bonds are issued for a
Type I school district, they are issued by the municipality and identified as
school bonds. When bonds are issued by a Type II school district having a board
of school estimate, they are issued by, and in the name of, the school district.

All authorizations of debt must be reported to the Division of Local
Government Services by a supplemental debt statement prior to final approval.

School District Lease Purchase Financings. In 1982, school districts were
given an alternative to the traditional method of bond financing capital
improvements pursuant to N.J.S.A. 18A:20-4.2(f) (the 'Lease Purchase Law'). The
Lease Purchase Law permits school districts to acquire a site and school
building through a lease purchase agreement with a private lessor corporation.
For Type II school districts, the lease purchase agreement does not require
voter approval. The rent payments attributable to the lease purchase agreement
are subject to annual appropriation by the school district and are required,
pursuant to N.J.A.C. 6:22A-1.2(h), to be included in the annual current expense
budget of the school district. Furthermore, the rent payments attributable to

the lease purchase agreement do not constitute debt of the school district and
therefore do not impact on the school district's debt limitation. Lease purchase
agreements in excess of five years require the approval of the Commissioner and
the Local Finance Board.

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<PAGE>

Qualified Bonds. In 1976, legislation was enacted (P.L. 1976, c. 38 and c.
39) which provides for the issuance by municipalities and school districts of
'qualified bonds.' Whenever a local board of education or the governing body of
a municipality determines to issue bonds, it may file an application with the
Local Finance Board, and, in the case of a local board of education, the
Commissioner, to qualify bonds pursuant to P.L. 1976, c. 38 or c. 39. Upon
approval of such an application and after receipt of a certificate stating the
name and address of the paying agent for such bonds, the maturity schedule,
interest rates and payment dates, the State Treasurer shall, in the case of
qualified bonds for school districts, withhold from the school aid payable to
such municipality or school district and in the case of qualified bonds for
municipalities, withhold from the amount of business personal property tax
replacement revenues, gross receipts tax revenues, municipal purposes tax
assistance fund distributions, State urban aid, State revenue sharing, and any
other funds appropriated as State aid and not otherwise dedicated to specific
municipal programs, payable to such municipalities, an amount sufficient to
cover debt service on such bonds. These 'qualified bonds' are not direct,
guaranteed or moral obligations of the State, and debt service on such bonds
will be provided by the State only if the above mentioned appropriations are
made by the State. Total outstanding indebtedness for 'qualified bonds'
consisted of $103,720,500 by various school districts as of June 30, 1992 and
$830,037,105 by various municipalities as of June 30, 1992.

New Jersey School Bond Reserve Act. The New Jersey School Bond Reserve Act
(N.J.S.A. 18A:56-17 et seq.) establishes a school bond reserve within the
constitutionally dedicated Fund for the Support of Free Public Schools. Under
this law the reserve is maintained at an amount equal to 1.5 percent of the
aggregate outstanding bonded indebtedness of counties, municipalities or school
districts for school purposes (exclusive of bonds whose debt service is provided
by State appropriations), but not in excess of monies available in such Fund. If
a municipality, county or school district is unable to meet payment of the
principal of or interest on any of its school bonds, the trustee of the school
bond reserve will purchase such bonds at the face amount thereof or pay the
holders thereof the interest due or to become due. On June 30, 1991, the book
value of the Fund's assets aggregated $59,352,429 and the reserve, computed as
of June 30, 1991, amounted to $19,668,349. There has never been an occasion to
call upon this Fund.

Local Financing Authorities. The Local Authorities Fiscal Control Law
(N.J.S.A. 40A:5A-l et seq.) provides for State supervision of the fiscal
operations and debt issuance practices of independent local authorities and

special taxing districts by the State Department of Community Affairs. The Local
Authorities Fiscal Control Law applies to all autonomous public bodies created
by counties or municipalities, which are empowered to issue bonds, to impose
facility or service charges, or to levy taxes in their districts. This
encompasses most autonomous local authorities (sewerage, municipal utilities,
parking, pollution control, improvement, etc.) and special taxing districts
(fire, water, etc.). Authorities which are subject to differing State or federal
financial restrictions are exempted, but only to the extent of that difference.

Financial control responsibilities over local authorities and special
districts are assigned to the Local Finance Board and the Director of the
Division of Local Government Services. The Local Finance Board exercises
approval power over the creation of new authorities and special districts as
well as their dissolution. The Local Finance Board also reviews, conducts public
hearings and issues findings and recommendations on any proposed project
financing of an authority or district, and on any proposed financing agreement
between a municipality or county and an authority or special district. The Local
Finance Board prescribes minimum audit requirements to be followed by
authorities and special districts in the conduct of their annual audits. The
Director reviews and approves annual budgets of authorities and special
districts.

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<PAGE>

Litigation. The State is a party in numerous legal proceedings pertaining
to matters incidental to the performance of routine governmental operations.
Such litigation includes, but is not limited to, claims asserted against the
State arising from alleged torts, alleged breaches of contracts, condemnation
proceedings and other alleged violations of State and Federal laws. Included in
the State's outstanding litigation are cases which challenge the following: the
formula relating to State aid to public schools, the method by which the State
shares with its counties maintenance recoveries and costs for residents in State
institutions, unreasonably low Medicaid payment rates for long-term facilities
in New Jersey, the obligation of counties to maintain Medicaid or Medicare
eligible residents of institutions and facilities for the developmentally
disabled, taxes paid into the Spill Compensation Fund (a fund established to
provide money for use by the State to remediate hazardous waste sites and to
compensate other persons for damages incurred as a result of hazardous waste
discharge) based upon Federal preemption, various provisions, and the
constitutionality of the Fair Automobile Insurance Reform Act of 1990, the
State's role in a consent order concerning the construction of a resource
facility in Passaic County, actions taken by the New Jersey Bureau of Securities
against an individual, the State's actions regarding alleged chromium
contamination of State-owned property in Hudson County, the issuance of
emergency redirection orders and a draft permit by the Department of
Environmental Protection and Energy, the adequacy of Medicaid reimbursement for
services rendered by doctors and dentists to Medicaid eligible children, the
Commissioner of Health's calculation of the hospital assessment required by the
Health Care Cost Reduction Act of 1991, refusal of the State to share with
Camden County Federal funding the State recently received for disproportionate

share hospital payments made to county psychiatric facilities, and the
constitutionality of annual A-901 hazardous and solid waste licensure renewal
fees collected by the Department of Environmental Protection and Energy. Adverse
judgments in these and other matters could have the potential for either a
significant loss of revenue or a significant unanticipated expenditure by the
State.

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 New
Jersey Tort Claims Act. In addition at any given time, there are various numbers
of contract claims against the State and State agencies seeking recovery of
monetary damages. The state is unable to estimate its exposure for these claims.

CALIFORNIA TRUST

California Risk Factors

Because the California Trust invests in California issues, its is
susceptible to political, economic, regulatory or other factors affecting
issuers of California municipal securities. The following information is drawn
from offering documents of California issuers, primary those of the State of
California (the 'State') and constitutes only a brief summary of a number of the
complex factors which may have an impact on issuers of California municipal
securities. It does not purport to be a complete or exhaustive description of
all adverse conditions to which issuers of California municipal securities may
be subject. Additionally, many factors, including national, economic, social and
environmental policies and conditions, which are not within the control of such
issuers, could have an adverse impact on the financial condition of such
issuers. The California Trust cannot predict whether or to what extent such
factors or other factors may affect the issuers of California municipal
securities, the market value or marketability of such securities or the ability
of the respective issuers of such securities acquired by the California Trust to
pay interest on or principal of such securities. Further, the creditworthiness
of obligations issued by local California issuers may be unrelated to the
creditworthiness of obligations issued by the State of California.

Bonds in the California Trust include primarily debt obligations of the
State and its subdivisions issued to obtain funds for various public purposes,
including the construction of a wide range of public facilities such as
airports, bridges, highways, housing, hospitals, mass transportation, schools,
streets and water and sewer works. Other purposes for which said Bonds may be
issued include the refunding of outstanding obligations, the obtaining of funds
for general operating expenses, or the

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obtaining of funds to lend to public or private institutions for the
construction of facilities such as educational, hospital and housing facilities.
In addition, certain types of obligations may be issued by California public
authorities to finance privately operated housing facilities and certain local
facilities for water supply, gas, electricity or sewage or solid waste disposal.

California's economy is the largest among the 50 states and one of the
largest in the world. The State's July 1, 1993 population of almost 32 million
represents more than 12.0 percent of the total United States population. Total
employment is about 14.0 million, the majority of which is in the service, trade
and manufacturing sectors.

Recent California Economic Trends. From mid-1990 to late 1993, the State
suffered a recession with the worst economic, fiscal and budget conditions since
the 1930s. Construction, manufacturing (especially aerospace), and financial
services, among others, were all severely affected. Job losses were the worst of
any post-war recession. Employment levels stabilized by late 1993 and steady
growth occurred in 1994 and is expected to continue in 1995, but pre-recession
job levels are not expected to be reached until late 1996. Economic indicators
show a steady recovery underway in the State since the start of 1994.

The recession seriously affected State tax revenues, which basically mirror
economic conditions. It also caused increased expenditures for health and
welfare programs. The State has also been facing a structural imbalance in its
budget with the largest programs supported by the General Fund--K-12 schools and
community colleges, health and welfare, and corrections--growing at rates higher
than the growth rates for the principal revenue sources of the State General
Fund. As a result, the State experienced recurring budget deficits in the late
1980s and early 1990s. The State Controller reports that expenditures exceeded
revenues for four of the five fiscal years ending with 1991-92; revenues and
expenditures were equal in 1992-93, and the State had an operating surplus of
$1.1 billion in 1993-94. However, at June 30, 1994, according to the Department
of Finance, the State's Special Fund for Economic Uncertainties still had an
accumulated deficit, on a budget basis, of approximately $1.5 billion.

Orange County Bankruptcy. On December 6, 1994, Orange County, California
(the 'County'), together with its pooled investment funds (the 'Funds') filed
for protection under Chapter 9 of the federal Bankruptcy Code, after reports
that the Funds had suffered significant market losses in their investments,
causing a liquidity crisis for the Funds and the County. More than 180 other
public entities, most of which, but not all, are located in the County, were
also depositors in the Funds. As of mid-January, 1995, following a restructuring
of most of the Funds' assets to increase their liquidity and reduce their

exposure to interest rate increases, the County estimated the Funds' loss at
about $1.69 billion, or 22% of their initial deposits of approximately $7.5
billion. Many of the entities which deposited moneys in the Funds are facing
cash flow difficulties because of the bankruptcy filing and may be required to
reduce programs or capital projects. This may also affect the ability of these
entities to meet their outstanding obligations.

The State has no existing obligation with respect to any outstanding
obligations or securities of the County or any of the other participating
entities. However, in the event the County is unable to maintain County
administered State programs because of insufficient resources, it may be
necessary for the State to intervene, but the State cannot presently predict
what, if any, action may occur. At this time, it appears that school districts
may have collectively lost up to $230 million from the amounts they had on
deposit in the Funds. Under existing legal precedent, the State is obligated to
intervene when a school district's fiscal problems would otherwise deny its
students basic educational quality.

National Economic Trends. The U.S. economic expansion gained momentum in
1994, posting growth in real gross domestic product (GDP) of close to 4 percent,
following a gain of 3.1 percent in 1993. Inflation remained subdued at slightly
over 2 percent, as measured by the GDP implicit price deflator, little changed
from 1993's 2.2 percent rate. Fixed investment--both in housing and business
equipment--was the leading growth sector in 1994, posting a double-digit
percentage gain last year.

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Consumer spending increased about 3 1/2 percent in real terms--slightly less
than overall GDP growth--while net exports and government purchases both
declined in the year.

Reflecting the growth in real GDP, the nation's labor markets tightened
considerably over the course of the year. Nonfarm wage and salary employment
increased by 3.3 million or 3 percent between November 1993 and 1994. The U.S.
unemployment rate dropped from 6.7 percent in January to 5.6 percent in November
1994. The unemployment figure is based on a new survey of households and is not
strictly comparable to prior readings. It is believed, however, that the new
unemployment figures are running about one-half percentage point higher than
would have been the case using the old survey. Thus based on historically
comparable data, the current jobless rate is probably in the region of 5
percent.

Concerns over the rapid pace of economic growth, and the possibility of

future inflation, were reflected in the nation's credit markets. Interest rates
rose throughout 1994, as the Federal Reserve Board ('Fed') boosted its target
rate for Federal funds (overnight money traded among banks) from 3 percent in
January 1994 to 5.5 percent at year-end. Longer term interest rates, such as the
U.S. Treasury's 30-year bond, rose in yield from 6.3 percent in January to over
8 percent by early autumn, before falling back to the 7.8 percent area in
December.

Despite these credit market worries, inflation remained a threat rather
than a reality in 1994. The broadest measures of inflation averaged near the 2
percent reading for the implicit price deflator, ranging from a little over
2 1/2 percent for consumer prices to less than 1 percent for finished goods at
the wholesale level. Nor was there any evidence of acceleration in labor costs,
which rose less than 3 1/2 percent including both wages and employee benefits.

California Economy. Revised employment data indicate that California's
recession ended in 1993, and following a period of stability, a recovery is now
underway. The State's unemployment rate fell last year, from 10.1 percent in
January to 7.7 percent in October and November. The gap between the national and
California jobless rates narrowed from 3.4 percentage points at the beginning of
1994 to an average of 2 percentage points in October and November. The number of
uremployed Californians fell by nearly 400,000 during the year, while civilian
employment increased more than 300,000.

Other indicators, including retail sales, homebuilding activity, existing
home sales and bank lending volume all confirm the State's recovery. U.S.
Department of Commerce survey data show retail sales up over 8 percent in
September and October 1994 from year-earlier data. Information from major credit
card companies and the leading check verification service suggest that
holiday-season sales growth in California out-paced the national performance.
Despite rising interest rates, existing home sales were up l8 percent through
the first 10 months of 1994, while permits to build new homes rose 16 percent
over the same period. Nonresidential construction has stabilized, and office
occupancy rates are moving up in most areas. Commercial lending by the State's
major banks is also on the rise after a three-year decline.

Personal income was severely affected by the January 1994 earthquake in
Sourthern California (the 'Northridge Earthquake') which reduced the first
quarter 1994 figure by $22 billion at an annual rate, reflecting the uninsured
damage to residences and unincorporated businesses. As a result, personal income
growth for all of 1994 was about 4.2 percent. However, excluding the Northridge
Earthquake effects, growth would have been in excess of 5 percent.

Only the nonfarm wage and salary employment figures have yet to confirm

this recovery. Federal figures indicate that jobs reached a low in December 1993
and have shown little growth since then (although the November 1994 figure was
up slightly from the year-earlier level). However, State payroll tax data, which
will form the basis for the March 1995 revision in the California Employment
Development Department's ('EDD') wage and salary job figures, paint a different
picture. These tax-based data, reflecting the entire universe of employers,
indicate that employment bottomed in the spring of 1993, and after a period of
stability, began a sustained recovery later that year. Based on

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preliminary second quarter payroll tax data, the Department of Finance estimates
that employment grew by more than 150,000 last year.

Payroll tax data indicate employment growth is concentrated in services,
construction, and wholesale and retail trade. Manufacturing continues to be
affected by Federal defense spending cuts and the weak market for commercial
aircraft. Aerospace (aircraft, missiles and space equipment and search and
navigation instruments) lost 36,000 jobs last year, and employment is now down
by more than half from the 1988 peak. Electronics has stabilized and is showing
some growth particularly in the components industry. Excluding these
high-technology industries, manufacturing is now posting small employment gains.

Many of the new jobs in the service-producing sector are in high-wage
industries, including motion pictures, business services (which includes
computer software and consulting), and engineering and management consulting.
Much of the growth in wholesale trade is related to foreign trade. Dollar
volumes through California ports were up an estimated 16 percent last year,
considerably above the nationwide gain of about 9 percent. Job gains in these
high-wage service industries are helping to cushion the ongoing losses in
aerospace.

Housing, which normally suffers when interest rates rise, may experience a
setback. However, homebuilding in the State has continued to recover despite the
2 1/2 percentage-point rise in fixed rate mortgages since late 1993. Job growth
seems to be the key: in a reversal of traditional roles, the rest of the State's
economy is pulling housing out of the doldrums.

Inflation in California, which has traditionally run slightly above the
national average, is now lagging the U.S. The California consumer price index (a
weighted average of published indexes for the five-county Los Angeles and
ten-county San Francisco Bay regions) averaged only a 1 1/2 percent rise last
year, compared to a 2.7 percent estimate for the nation. In 1995 and 1996, the
California price measure should average 3 percent annual increases, still below

the expected national pace of 3 1/2 percent. Subtracting inflation from the rise
in personal income, real incomes rose 2.7 percent last year, and without the
Northridge Earthquake the gain would have been 3.5 percent. In both 1995 and
1996, real income growth is expected to exceed 3 percent.

Recent Events. The Department of Finance Bulletin for February, 1995
reports that the State's unemployment rate rose slightly to 8.2 percent in
January from 7.7 percent in December, after dropping dramatically over the
course of last year. Heavy rainfall and widespread flooding throughout the State
in mid-January were at least partially responsible for the weakness in the
January report. Despite this slight rise in January unemployment, the pattern of
economic recovery in California that has been evident over the last year appears
to be continuing.

Retail sales continued to gain momentum throughout 1994. Sales in October
and November were up 8.2 and 9.2 percent, respectively--outpacing national sales
gains in both months. Sales in total for 1994 appear destined to show the
largest gain since the recession began in 1990. Motor vehicle registration data
indicate that new car and light truck sales were an important component of the
sales growth--up 6.7 percent in the fourth quarter of 1994. Annual auto sales
growth of 3.7 percent exceeded any year since l986.

New home construction continued to improve despite rising long-term
mortgage rates. Residential building permits for November and December combined
were up 13 percent from the prior-year level. Growth in resales of existing
homes slowed from the strong pace early in the year; however, resales in October
remained at a respectable 470,000 unit annual rate. Nonresidential construction
has also begun to show signs of improvement. The value of nonresidential
construction permits rose three percent during 1994--the first annual increase
since 1988.

The Mexican currency crisis is expected to have some mild dampening effect
on the California economy. The peso's devaluation will make California exports
much more expensive in Mexican markets. Although the economic impact of this is
unknown, an export reduction of 20 percent would reduce trade by approximately
$1.5 billion. This represents less than two percent of all exports through

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California ports. San Diego, however, is likely to be more severely affected due
to substantial reductions in cross-border traffic.

The State. Since 1986, the State has experienced a series of fiscal years
in which revenue came in significantly higher or lower than original estimates.
The 1989-90 Fiscal Year ended with revenues below estimates, so that the State's
budget reserve (the Special Fund for Economic Uncertainties or 'SFEU') was fully
depleted by June 30, 1990. This date essentially coincided with the start of the
current recession, and the State has subsequently accumulated a budget deficit
in the SFEU approaching $2.8 billion at its peak. The State's budget problems in
recent years have also been caused by a structural imbalance which has been
identified by the current and previous Administrations. The largest General Fund
Programs--K-14 education, health, welfare and corrections--were increasing
faster than the revenue base, driven by the State's rapid population increases.
Starting in the 1990-91 Fiscal Year, each budget required multibillion dollar
actions to bring projected revenues and expenditures into balance and to close
large 'budget gaps' which were identified.

1993-94 Fiscal Year. The 1993-94 Budget Act was signed by the Governor on
June 30, 1993, along with implementing legislation.

The 1993-94 Budget Act was predicated on General Fund revenues and
transfers estimated at $40.6 billion, about $400 million below 1992-93 (and the
second consecutive year of actual decline). The principal reasons for declining
revenue were 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 carry forwards, and repeal by initiative of a sales tax on candy
and snack foods.

Administration reports during the course of the 1993-94 Fiscal Year
indicated that while economic recovery appeared 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 required 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 were
very close to the projections made in the Governor's Budget of January 10, 1994,
which was 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 result was due to end-of-year
adjustments and reconciliations. 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.

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 $1.8 billion,
as identified in the State Controller's General Fund Preliminary Annual Report
for Fiscal Year 1993-94.

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.

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Northridge Earthquake 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 occured in a four-county area including
northern Los Angeles County, Ventura County, and parts of Orange and San
Bernardino Counties. These areas 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 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.

Damage to State-owned facilities included transportation corridors and
facilities such as Interstate Highways 5 and 10 and State Highways 14, 118 and
210. Most of the major highways (Interstates 5 and 10) have now been reopened.
The campus at California State University-Northridge (very near the epicenter)
suffered an estimated $350 million damage, resulting in temporary closure of the
campus. The campus has reopened on a reduced operating basis using borrowed
facilities elsewhere in the area and many temporary structures. Overall, except
for the temporary road and bridge closures, and CSU-Northridge, the earthquake

did not and is not expected to significantly affect state government operations.

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 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 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 are being borrowed from the federal government in a manner similar
to that used by the State of Florida after Hurricane Andrew; repayment will be
addressed in 1995-96 and beyond.

1994-95 Budget Act. The 1994-95 Fiscal Year represents the fourth
consecutive year the Governor and Legislature were 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 1994-95, 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 Governor on July 8, 1994, projected
revenues and transfers of $41.9 billion, $2.1 billion higher than revenues in
1993-94. This reflected the Administration's forecast of an improving economy.
Also included in this figure was a projected receipt of about $360 million from
the Federal Government to reimburse the State's cost of incarcerating
undocumented immigrants.

Pursuant to legislation (the 'Budget Adjustment Law'), the State Controller
was required to make a report by November 15, 1994 on whether the projected cash
resources for the State's General Fund as of June 30, 1995 will decrease more
than $430 million from the amount projected by the State in its

<PAGE>

Official Statement in July, 1994 for the sale of $4,000,000,000 of Revenue
Anticipation Warrants. On November 15, 1994, the State Controller issued the
report on the State's cash position required by the Budget Adjustment Law. The
report indicated that the cash position of the General Fund on June 30 1995
would be $581 million better than was estimated in the July, 1994 cash flow
projections and therefore, no budget adjustment procedures will be invoked for
the 1994-95 Fiscal Year.

The State Controller's report identified a number of factors which have led
to the improved cash position of the State. Estimated revenues and transfers for
the 1994-95 Fiscal Year other than federal reimbursement for immigration costs
were up about $650 million. The largest portion of this was in higher bank and
corporation tax receipts, but all major tax sources were above original
projections. However, most of the federal immigration aid revenues projected in
connection with the 1994-95 Budget Act and in the July, 1994 cash flows will not
be received, leaving a net increase in revenues of $322 million.

On the expenditure side, the State Controller reported that estimated
reduced caseload growth in health and welfare programs, reduced school
enrollment growth, and an accounting adjustment reducing a transfer from the
General Fund to the Special Fund for Economic Uncertainties resulted in overall
General Fund expenditure reductions (again before adjusting for federal aid) of
$672 million. However, the July, 1994 cash flows projected that General Fund
health and welfare and education expenditures would be offset by the anticipated
receipt of $407 million in federal aid for illegal immigrant costs. The State
Controller now estimates that none of these funds will be received, so the net
reduction in General Fund expenditures is $265 million.

Finally, the State Controller indicated that a review of balances in
special funds available for internal borrowing resulted in an estimated
reduction of such borrowable resources of $6 million. The combination of these
factors results in the estimated improvement of the General Funds cash position
of $581 million. The State Controller's revised cash flow projections for
1994-95 have allocated this improvement to two line items: an increase from $0
to $427 million in the estimated ending cash balance of the General Fund on June
30, 1995, and an increase in unused borrowable resources of $154 million.

Certain issuers of California Municipal Bonds receive subventions from the
State which are eligible to be used to make payments on said Bonds. No
prediction can be made as to what effect continued decreases in subventions may
have on the ability of some issuers to make such payments.

The 1995-96 Governor's Budget, issued January 10, 1995, contains a
reforecast of revenues and expenditures for the 1994-95 Fiscal Year. See
'Revenue and Expenditure Assumptions,' below. The Department of Finance Bulletin
for February, 1995 reports that General Fund revenues for January were $240
million above the 1995-96 Governor's Budget forecast of $4,025 million. The
largest component of the increase is attributable to cash flow factors in the
sales and use tax, which were $297 million above the month's forecast of $809
million. Additionally, personal income tax receipts were $80 million below the
month's forecast of $2,845 million, and bank and corporation receipts were $18
million below the month's forecast of $211 million. Neither loss is considered
significant at this time. Finally, miscellaneous revenues were $42 million above
the month's forecast of $160 million. Most of the surplus is attributable to
'other revenues,' which are a composite of many minor revenues. At this time,
the gains in miscellaneous revenues appear to be related to cash flow and are
not considered permanent.

Initial analysis of the federal Fiscal Year 1995 budget by the Department
of Finance indicates that about $98 million was appropriated for California to
offset costs of incarceration of undocumented and refugee immigrants, less than
the $356 million which was assumed in the State's 1994-95 Budget Act. Because of
timing considerations in applying for these federal funds, the Department
estimates that about $33 million of these funds will be received during the
State's 1994-95 Fiscal Year, with the balance received in the following fiscal
year. It does not appear that the federal budget contains any of

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the additional $400 million in funding for refugee assistance and health costs
which were also assumed in the 1994-95 Budget Act, but the Department expects
the State to continue its efforts to obtain some or all of these federal funds.

The 1995-96 Budget will be subject to the Budget Adjustment or 'Trigger'
legislation enacted in June, 1994. The Proposed Budget contains a cash flow
projection (based on all the assumptions described above) which shows about $1
billion of unused borrowable resources at June 30, 1996, providing this amount
of 'cushion' before the budget 'trigger' would have to be invoked.

However, a report issued by the Legislative Analyst in February 1995 notes
that the Proposed Budget (and hence the margin of cushion under the 'trigger')
is subject to a number of major risks, including receipt of the expected federal
immigration aid and other federal actions to allow health and welfare cuts, and
the outcome of several lawsuits concerning previous budget actions which the
State has lost at the trial court level, and which are under appeal. This
Analyst's Report also estimates that, despite more favorable revenues, the
two-year budget estimates made in July, 1994 are about $2 billion out of
balance, principally because federal immigration aid appears likely to be much

lower than previously estimated.

Constitutional and Statutory Limitations; Recent Initiatives; Pending
Litigation. Article XIIIA of the California Constitution (which resulted from
the voter-approved Proposition 13 in 1978) limits the taxing powers of
California public agencies. Article XIIIA provides that the maximum ad valorem
tax on real property cannot exceed 1% of the 'full cash value' of the property,
and effectively prohibits the levying of any other ad valorem property tax for
general purposes. However, on May 3, 1986, Proposition 46, an amendment to
Article XIIIA, was approved by the voters of the State of California, creating a
new exemption under Article XIIIA permitting an increase in ad valorem taxes on
real property in excess of 1% for bonded indebtedness approved by two-thirds of
the voters voting on the proposed indebtedness. 'Full cash value' is defined as
'the County Assessor's valuation of real property as shown on the 1975-76 tax
bill under 'full cash value' or, thereafter, the appraised value of real
property when purchased, newly constructed, or a change in ownership has
occurred after the 1975 assessment.' The 'full cash value' is subject to annual
adjustment to reflect increases (not to exceed 2%) or decreases in the consumer
price index or comparable local data, or to reflect reductions in property value
caused by damage, destruction or other factors.

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

In 1986, California voters approved an initiative statute known as
Proposition 62. This initiative (i) required that any tax for general
governmental purposes imposed by local governments be approved by a majority of
the electorate of the government entity, (ii) required that any special tax
(defined as taxes levied for other than general government purposes) imposed by
a local government entity be approved by a two-thirds vote of the voters within
that jurisdiction, (iii) restricted the use of revenues from a special tax to
the purposes or for the service for which the special tax is imposed, (iv)
prohibited the imposition of ad valorem taxes on real property by local
government entities except as permitted by Article XIIIA, (v) prohibited the
imposition of transaction taxes and sales taxes on the sale of real property by
local governments, (vi) required 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) required that, in the event a local government fails to comply with
the provisions of this measure, a reduction in the amount of property tax
revenues allocated to such local government occur in an amount equal to the
revenues received by such entity attributable to the tax levied in violation of

the initiative, and (viii) permitted those provisions to be

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amended exclusively by the voters of the State of California. While several
recent decisions of the California Courts of Appeal have held that all or
portions of Proposition 62 are unconstitutional, the California Supreme Court
has yet to consider the matter.

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

Proposition 187. On November 8, 1994, California voters approved a
state-wide initiative entitled 'Illegal Aliens Ineligibility for Public Services
Verification and Reporting Initiative Statute' ('Proposition 187'). Proposition
187 makes persons with foreign citizenship who have entered California illegally
ineligible for public social services, public health care services (unless an
emergency), and public school education at elementary, secondary and
post-secondary levels. The United States Immigration and Naturalization Service
('INS') estimates that currently there are over 1.5 million illegal immigrants
in California. Further, Proposition 187 requires every school district to verify
the status of every child enrolling for the first time on and after January 1,
1995. By January 1, 1996, every school district will be required to have
verified the legal status of every child enrolled in the school district as well

as the parents and guardians of those students. If a district 'reasonably
suspects' that a student, parent or guardian is not legally in the United
States, such district must report the student to the United States Immigration
and Naturalization Service and certain other parties. The measure also prohibits
a school district from providing education to a student it does not verify as
either a United States citizen or a person legally admitted to the United
States.

The California Legislative Analyst estimates that verification costs could
be in the tens of millions of dollars on a statewide level (including
verification costs incurred by other local governments under Proposition 187)
with first-year costs potentially in excess of $100 million. The California
Legislative Analyst also estimates that approximately 300,000 students in the
California public education system are illegal immigrants.

It is possible that for every student a school district would be forced to
exclude under Proposition 187, it may lose a portion of the State revenues it
receives annually. Additionally, school districts must comply with a variety of
federal laws in order to receive federal funds. Both the exclusion of students
and the verification and reporting requirements of Proposition 187 appear to be
at odds with various federal and State laws. The reporting requirements
specifically may violate the Family Educational Rights and Privacy Act ('FERPA')
which generally prohibits schools that receive federal funds from disclosing
information in student records without parental consent. Compliance with FERPA
is a condition of receiving federal education funds, which total $2.3 billion
annually to

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California school districts. The Secretary of the U.S. Department of Education
has indicated that the reporting requirement in Proposition 187 could jeopardize
the ability of school districts to receive these funds.

The United States Supreme Court in Plyler v. Doe held that access to public
education must be granted to all children. According to the State Legislative
Analyst, the exclusion of illegal immigrant children as set forth in Proposition
187 is in direct conflict with Plyler v. Doe. Unless the Supreme Court alters
the position it took in Plyler v. Doe, the provision of Proposition 187
mandating the exclusion of illegal immigrant children appears likely to be
struck down. Even assuming an effective challenge regarding exclusion of
students, it is possible that school districts might still bear the financial
burden of verifying the legal status of its students and reporting that status
to the INS as well as a loss of federal funds as discussed above.

Opponents of Proposition 187 have filed at least eight lawsuits challenging
the constitutionality and validity of the measure. A United States District
Court judge overseeing four of the lawsuits has granted a preliminary injunction
enjoining the implementation of most of the provisions of Proposition 187.

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

Pending Litigation. In Hayes v. Commission on State Mandates, described on
page B-63 of Appendix B, the Court of Appeal issued its decision on December 31,
1992 remanding the case to the Commission on State Mandates. The court held that
the federal law (Education of the Handicapped Act) constitutes a federal mandate
as to the State, and further that federal and state mandates are not mutually
exclusive. The remaining issue is whether new special education costs were
imposed upon local school districts by federal mandate or by state choice in the
implementation of the federal program. The California Supreme Court has denied
review of the Court of Appeal's decision. The matter has been remanded to the
Commission on State Mandates for findings.

In the Yuba River flood litigation in which the State is a defendant in a
coordinated action, the trial court has found liability in inverse condemnation
and awarded damages of $500,000 to 12 sample plaintiffs. Potential liability to
the remaining 3,000 plaintiffs, from claims filed, ranges from $800 million to
$1.5 billion. An appeal has been filed.

In Parr v. State of California, the federal district court issued an order
on March 1,1995, withdrawing its December 1992 order which found that payment of
wages with registered warrants violated the Fair Labor Standards Act. Further
proceedings are undetermined at this time. The maximum amount of damages could
be approximately $500 million.

In Penny Newman v. J. B. Stringfellow, et al., 17 of the 3,800 plaintiffs
have litigated their claims; in half of these cases plantiffs' verdicts in the
total amount of $159,000 were received and in the remaining cases verdicts were
entered for the State. The other cases, which have not been litigated, are in
the process of settlement. In a separate suit, United States, People of the
State of California v.
J. B. Stringfellow Jr. et al., the State has been found liable by the District
Court on the counterclaim. The amount of liability is still being litigated.

The State recently lost several tax refund cases concerning the method of
determining gross insurance premiums involving health insurance. The loss to the
State will be approximately $200 million.

Several lawsuits have been filed by Malibu Video Systems in State and
Federal court to challenge the transfer of moneys from special fund accounts
within the State Treasury to the State's General Fund pursuant to the Budget
Acts of 1991, 1992 and 1993. Plaintiffs seek to have the transfers reversed and
the moneys, allegedly totaling approximately $800 million, returned to the
special funds.

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A federal Court of Appeals in the case of Deanna Beno, et al. v. Donna
Shalala, et al, reversing a trial court ruling in favor of the State, recently
determined that the Secretary of the United States Department of Health and
Human Services violated the federal Administrative Procedure Act when she
approved California's Assistance Payment Demonstration Project, which, in part,
granted California a waiver from complying with requirements for state
participation in the federal program for medical assistance (Medicaid). The
waiver had allowed California to reduce payments under the Aid to Families with
Dependent Children program (AFDC) below 1988 payment levels without jeopardizing
Medicaid requirements relating to maintenance of AFDC payment levels. The Court
of Appeals remanded the case to the trial court with instructions to remand the
demonstration project to the Secretary for additional consideration of
objections raised by the plaintiffs. The State has submitted a renewed waiver
request to the Secretary, which is currently pending. The effect of the court's
decision on California is uncertain at this time.

One of the features of the 1994-95 Budget Act is a 2.3 percent reduction in
AFDC payments. In Welch v. Anderson, on August 19, 1994, the San Francisco
Superior Court issued a preliminary injunction against the California Director
of Social Services to prevent the 2.3 percent AFDC cuts from becoming effective
September 1, 1994. While September cuts were already in process and could not be
halted, the court ordered the cuts to be restored. The case has been appealed,
and the effect of the court's order cannot be determined until the appellate
process is complete.

The State is a respondent/defendant in two consolidated cases (American
Lung Association of California v. Wilson; Americans for Nonsmokers' Rights v.
State of California) challenging the purposes of specific appropriations of
funds totaling approximately $65 million for Fiscal Year 1994-95 and
approximately $68 million for Fiscal Year 1995-96 from the Cigarette and Tobacco
Products Surtax Fund created by Proposition 99. The petitioners/plaintiffs argue
that the funds can only be used for health education and tobacco-related disease

research programs. The appropriations primarily fund health care services for
low-income persons. On January 23, 1995, the Superior Court issued an interim
order in the consolidated cases prohibiting the State from further encumbering
the specifically appropriated funds and from issuing or negotiating warrants
from the appropriated funds. A final order is expected to be issued after a
further hearing on the remedy to be granted. The effect on the General Fund is
unclear. A third lawsuit challenging the similar appropriations of Proposition
99 funds for Fiscal Years 1989-90 through 1995-96 has been filed and is pending.

In the case of Board of Administration, California Public Employees'
Retirement System, et al. v. Pete Wilson, Governor, et al., plaintiffs
challenged the constitutionality of legislation which deferred payment of the
State's employer contribution to the Public Employees' Retirement System
beginning in fiscal year 1992-93. On January 11,1995, the Sacramento County
Superior Court entered a judgment finding that the legislation
unconstitutionally impaired the vested contract rights of PERS members. The
judgment provides for issuance of a writ of mandate directing State defendants
to disregard the provisions of the legislation, to implement the statute
governing employer contributions that existed before the changes in the
legislation found to be constitutional, and to transfer to PERS the 1993-94 and
1994-95 contributions that are unpaid to date. The State defendants have
appealed.

In Jernigan & Burleson v. State, filed in federal district court, the
prison inmate plaintiffs claim they are entitled to minimum wages while working
for the Prison Industry Authority. The inmates claim the State has violated the
Fair Labor Standards Act. Plaintiffs are seeking back pay for the period from
August 1990 onward, and liquidated damages, for a total of approximately $350
million. Both liability and damages are being contested by the State.

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

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FLORIDA TRUST

Florida Risk Factors

The State Economy. In 1980 the State of Florida (the 'State') 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 1983 migration has been fairly steady with an average
of 292,988 new residents each year. 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% since 1980. The service
sector is Florida's largest employment sector, presently accounting for 32.6% of
total non-farm employment. Manufacturing jobs in Florida are concentrated in the
area of high-tech and value added sectors, such as electrical and electronic
equipment as well as printing and publishing. Job gains in Florida's
manufacturing sector have exceeded national averages, increasing by 11.7%
between 1980 and 1993. Foreign trade has contributed significantly to Florida's
employment growth. Florida's dependence on highly cyclical construction and
construction related manufacturing has declined. Total contract construction
employment as a share of total non-farm employment has fallen from 10% in 1973,
to 7% in 1980, to 5% in 1993. Although the job creation rate for the State of
Florida since 1980 is over two times the rate for the nation as a whole, since
1989 the unemployment rate for the State has risen faster than the national
average. The average rate of unemployment for Florida since 1980 is 6.5%, while
the national average is 7.1%. Because Florida has a proportionately greater
retirement age population, property income (dividends, interest and rent) and
transfer payments (social security and pension benefits) are a relatively more
important source of income. In 1993, Florida employment income represented 62%
of total personal income while nationally, employment income represented 72% of
total personal income.

The ability of the State and its local units of government to satisfy the
Debt Obligations may be affected by numerous factors which impact on the
economic vitality of the State in general and the particular region of the State
in which the issuer of the Debt Obligations 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
1992-94, expenditures for education, health and welfare and public safety
represented approximately 49%, 32% and 12%, respectively, of expenditures from
the General Revenue Fund. The Trust Funds consist of

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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 Revenues and Working Capital Fund and
Budget Stabilization Funds revenue of $14,624.4 million for 1993-94 represent an
increase of 5.7% over revenues for 1993-94. Estimated Revenue for 1994-95 of
$13,858.4 million (excluding Hurricane Andrew impacts) represents an increase of
7.9% over 1993-1994.

In fiscal year 1992-93, the State derived approximately 66% of its total
direct revenues for deposit in the General Revenue Fund, Trust Funds and Working
Capital Fund from State taxes. Federal grants 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,
1994, receipts from the sales and use tax totaled $10,012.5 million, an increase
of approximately 6.9% over fiscal year 1992-93. This amount includes
non-recurring increases attributable to the rebuilding and reconstruction
following the hurricane. 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. Preliminary data for the fiscal year ended June 30, 1994, show collections
of this tax totaling $1,733.4 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, 1994, receipts from the corporate income tax totaled
$1,047.4 million, an increase of approximately 23.7% from fiscal year 1992-1993.
The Documentary Stamp Tax collections totaled $775 million during fiscal year
1993-1994, or approximately 21.3% over fiscal year 1992-93. The Alcoholic
Beverage Tax, an excise tax on beer, wine and liquor totaled $139.8 million in
fiscal year 1993-94. The Florida lottery produced sales of $2.15 billion of
which $816.2 million was used for education in fiscal year 1993-94.

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 miles; for
all municipal purposes, ten miles; for all school purposes, ten miles; and for
water management purposes, either 0.05 mile or 1.0 mile, 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

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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.

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

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

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

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

are permitted to issue bonds payable from special tax sources for a variety of
purposes, and municipalities and special districts may issue special assessment
bonds.

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

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

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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.
This 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
unclear the remaining refund applications 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

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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.

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

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

J. In two cases, plaintiffs have challenged the constitutionality of
the $295 fee imposed on the issuance of certificates of title for vehicles
previously titled outside the State. The circuit court granted summary
judgment to the plaintiff, finding that the fee violated the Commerce
Clause of the U.S. Constitution. The Court enjoined further collection of
the fee and has ordered refunds to all those who have paid since the
statute came into existence in mid-1991. The State has noticed an appeal
and is entitled to a stay of the lower court ruling's effectiveness, thus
the fee continues to be collected during the appeal. The potential refund
exposure may be in excess of $100 million.

K. Santa Rosa County has filed a complaint for declaratory relief
against the State requesting the Circuit Court to: (1) find that Section
206.60(2)(a), F.S., does not allow the Department to deduct administrative
expenses unrelated to the collection, administration, and distribution of
the county gas tax; and (2) order the department to pay Santa Rosa County

all moneys shown to have been unlawfully deducted from the motor fuel tax
revenues plus interest. All hearings in the case have been postponed until
early 1994. This case seeks refunds of approximately $45 million.

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 Appeals ruled against the Agency for Health
Care Administration (AHCA). The AHCA has petitioned the Florida Supreme
Court for review of this decision. An unfavorable outcome to this case
could result in a potential liability of $40 million.

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

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VIRGINIA TRUST

Virginia Risk Factors

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

Bonds in the Virginia Trust may include primarily debt obligations of the
subdivisions of the Commonwealth of Virginia issued to obtain funds for various
public purposes, including the construction of a wide range of public facilities
such as airports, bridges, highways, schools, streets and water and sewer works.
Other purposes for which bonds may be issued include the obtaining of funds to
lend to public or private institutions for the construction of facilities such
as educational, hospital, housing, and solid waste disposal facilities. The

latter are generally payable from private sources which, in varying degrees, may
depend on local economic conditions, but are not necessarily affected by the
ability of the Commonwealth of Virginia and its political subdivisions to pay
their debts. Therefore, the general risk factors as to the credit of the State
or its politicial subdivision discussed herein may not be relevant to the
Virginia Trust.

The Constitution of Virginia limits the ability of the Commonwealth to
create debt. The Constitution requires a balanced budget. The Commonwealth has
maintained a high level of fiscal stability for many years due in large part to
conservative financial operations and diverse sources of revenue. The economy of
the Commonwealth of Virginia is based primarily on manufacturing, the government
sector (including defense), agriculture, mining and tourism. The Federal Base
Closing Commission has ordered that a number of military facilities in Virginia
be closed or reduced. As a result of recessionary conditions, the Commonwealth
has experienced for the past several years severe revenue shortfalls, which have
necessitated cutbacks of expenditures in the budgets for the 1992-1994 biennia.
In the 1994 General Assembly session, the 1992-1994 budget was amended to
reflect $96,000,000 in additional revenues.

In Davis v. Michigan (decided March 28, 1989), the United States Supreme
Court ruled unconstitutional Michigan's statute exempting from state income tax
the retirement benefits paid by the state or local governments and not exempting
retirement benefits paid by the federal government. In Harper v. Virginia
Department of Taxation (decided June 18, 1993), the United States Supreme Court
held, in a suit involving claims for refunds by Federal retirees living in
Virginia that Virginia State income tax Statutes violated the principles of
Davis v. Michigan, but remanded for further relief so long as the relief was
consistent with Federal due process. If the courts ultimately rule that the
Commonwealth must make full refunds of taxes imposed prior to Davis v. Michigan,
the State has estimated that the potential financial impact on the Commonwealth
based on its review of claims for refunds by federal pensioners (including
interest payable calculated as of December 31, 1993) is approximately $700
million. The Governor and General Assembly of Virginia have authorized a
settlement of $340 million, plus interest, payable into a special trust fund in
amounts of $60 million in 1994 and $70 million in each of the years 1995 through
1998. Acceptance of the settlement, which has been recommended by the
Plaintiffs' attorneys in the Harper case, is subject to approval by individual
retirees, which is currently being solicited by the Virginia Department of
Taxation. If the total principal amount of claims of retirees deciding to opt
out of the settlement exceeds $20 million by March 1, 1995, the settlement
agreement becomes null and void, unless re-authorized by the General Assembly.
Although holders of more than $20 million in claims opted out, the General
Assembly reauthorized the settlement at its 1995 session, accepted the
settlement of those who had accepted and established a pro-rata litigation
reserve for those claimants who had opted out.

The Governor proposed a plan to the General Assembly to eliminate or reduce
parole for persons convicted of violent crime. In that connection he proposed
the issuance of bonds to finance part of the cost of additional prisons that
would result from the program. The General Assembly approved part of the plan,

with bonds to be issued by the Virginia Public Building Authority.

The Commonwealth currently has a Standard & Poor's rating of AAA and a
Moody's rating of Aaa on its general obligation bonds. There can be no assurance
that the economic conditions on which these ratings are based will continue or
that particular bond issues may not be adversely affected by

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changes in economic or political conditions. Further, the credit of the
Commonwealth is not material to the ability of political subdivisions and
private entities to make payments on the obligations described below.

General obligations of cities, towns or counties in Virginia are payable
from the general revenues of the entity, including ad valorem tax revenues on
property within the jurisdiction. The obligation to levy taxes could be enforced
by mandamus, but such a remedy may be impracticable and difficult to enforce.
Under section 15.1-227.61 of the Code of Virginia of 1950, as amended, a holder
of any general obligation bond in default may file an affidavit setting forth
such default with the Governor. If, after investigating, the Governor determines
that such default exists, he is directed to order the State Comptroller to
withhold State funds appropriated and payable to the entity and apply the amount
so withheld to unpaid principal and interest. The Commonwealth, however, has no
obligation to provide any additional funds necessary to pay such principal and
interest.

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

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

No Virginia law expressly authorizes Virginia political subdivisions to
file under Chapter 9 of the United States Bankruptcy Code, but some recent case
law suggests that the granting of general powers to such subdivisions may be
sufficient to permit them to file voluntary petitions under Chapter 9. Bonds
payable exclusively by private entities may be subject to the provisions of the
United States Bankruptcy Code other than Chapter 9.

Virginia municipal issuers have generally not been required to provide
ongoing information about their finances and operations to holders of their debt
obligations, although a number of cities, counties and other issuers prepare
annual reports.

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

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

The Sponsors believe that the information summarized above describes some
of the more significant aspects relating to the Trusts. The sources of such
information are the official statements of issuers located in New York, New
Jersey, California, Florida and Virginia as well as other publicly available
documents. While the Sponsors have not independently verified this information,
they have no reason to believe that such information is not correct in all
material respects.

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PUBLIC OFFERING

OFFERING PRICE

The Public Offering Price per Unit of each Trust is computed by adding to
the aggregate offering price of the Bonds in the Trust divided by the number of
Units outstanding an amount equal to 5.152% of the aggregate offering price of
the Bonds per Unit which is equal to 4.9% of the Public Offering Price. A
proportionate share of accrued interest on the Bonds from the First Settlement
Date to the expected date of settlement for the Units is added to the Public
Offering Price. Accrued interest is the accumulated and unpaid interest on a
Bond from the last day on which interest was paid and is accounted for daily by
the Trust at the initial daily rate set forth under 'Summary of Essential
Information' in Part A. The Public Offering Price can vary on a daily basis from
the amount stated on the cover of this Prospectus in accordance with
fluctuations in the prices of the Bonds and the price to be paid by each

investor will be computed as of the date the Units are purchased.

The aggregate offering side evaluation of the Bonds is determined by the
Evaluator (a) on the basis of current offering prices of the Bonds, (b) if an
offering price is not available for any particular Bond, on the basis of current
offering prices for comparable bonds, (c) by determining the value of the Bonds
on the offer side of the market by appraisal, or (d) by any combination of the
above. Insurance does not guarantee the market value of the Bonds or the Units
in the Insured Trusts, and while Bond insurance represents an element of market
value in regard to insured Bonds, its exact effect, if any, on market value
cannot be predicted. This evaluation is made each business day during the
initial public offering as of 4 P.M. New York Time, effective for all orders
received during the preceding 24-hour period. With respect to the initial
evaluation of the offering prices of certain Bonds which at the Date of Deposit
were subject to syndicate offering period pricing restrictions, it is the
practice of the Evaluator to determine such evaluation on the basis of the
syndicate offering price, unless other factors cause the Evaluator to conclude
that such syndicate offering price does not then accurately reflect the free
market value of such Bonds, in which case the Evaluator will also take into
account the other criteria described above for the purpose of making its
determination.

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

ACCRUED INTEREST

Accrued interest is the accumulation of unpaid interest on a bond from the
last day on which interest thereon was paid. Interest on Bonds in each Trust is
actually paid semi-annually to the Trust. However, interest on the Bonds in each
Trust is accounted for daily on an accrual basis. Because of this, each Trust
always has an amount of interest earned but not yet collected by the Trustee
because of non-collected coupons. For this reason, the Public Offering Price of
Units will have added to it the proportionate share of accrued and undistributed
interest to date of settlement.

In an effort to reduce the amount of accrued interest which would otherwise
have to be paid in addition to the Public Offering Price on the sale of Units to
the public, the Trustee will advance the amount of accrued interest as of the
First Settlement Date as set forth in the 'Summary of Essential Information' in
Part A and the same will be distributed to the Sponsors as the Certificateholder
of record as of the First Settlement Date. (See 'Summary of Essential
Information' in Part A.) Consequently, the amount of accrued interest to be
added to the Public Offering Price of Units will include only accrued interest
from the First Settlement Date to date of settlement, less any distributions
from the Interest Account subsequent to the First Settlement Date. Thus, since
the First Settlement Date is the date of settlement for anyone ordering Units on
the Date of Deposit, no accrued interest will be added to the Public Offering
Price of Units ordered on the Date of Deposit.

Except through an advancement of its own funds, the Trustee will have no

cash for distribution to Certificateholders until it receives interest payments
on the Bonds in each Trust. The Interest Account during the initial months of
each Trust will include some cash representing interest which has been collected
but will predominantly consist of uncollected accrued interest which is not
available for distribution. Since the Trusts normally receive the interest on
Bonds twice a year and the interest on the Bonds in the Trusts is accrued on a
daily basis, the Trusts will have an amount of interest accrued but not actually
received. However, due to advances by the Trustee, the Trustee will provide a
first distribution between approximately 30 and 60 days after the Date of
Deposit.

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VOLUME AND OTHER DISCOUNTS

Units of the Trusts are available at a volume discount from the Public
Offering Price during the initial public offering. This volume discount will
result in a reduction of the sales charge applicable to such purchases. The
amount of the volume discount and the approximate sales charge applicable to
such purchases are as follows:

<TABLE>
<CAPTION>
APPROXIMATE REDUCED SALES CHARGE
------------------------------------
INSURED,
DISCOUNT FROM PUBLIC OFFERING NAVIGATOR &
NUMBER OF UNITS PRICE PER UNIT VIRGINIA TRUSTS MUNICIPAL TRUST
- ---------------- ----------------------------- ---------------- ----------------
<S> <C> <C> <C>
100--249 $ 2.50 4.66% 3.66%
250--499 5.00 4.42% 3.42%
500--749 7.50 4.18% 3.18%
750--999 10.00 3.94% 2.94%
1,000 and over 15.00 3.45% 2.46%
</TABLE>

These discounts will apply to all purchases of Units by the same purchaser
during the initial public offering period. Units purchased by the same
purchasers in separate transactions during the initial public offering period
will be aggregated for purposes of determining if such purchaser is entitled to
a discount provided that such purchaser must own at least the required number of
Units at the time such determination is made. Units held in the name of the
spouse of the purchaser or in the name of a child of the purchaser under 21
years of age are deemed for the purposes hereof to be registered in the name of
the purchaser. The discount is also applicable to a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary account.

Employees (and their immediate families) of Bear, Stearns & Co. Inc.,
Gruntal & Co., Incorporated, and of any underwriter of either Trust may,
pursuant to employee benefit arrangements, purchase Units of such Trust at a
price equal to the offering side evaluation of the underlying securities in such
Trust during the initial offering period and at the bid side thereafter, divided
by the number of Units outstanding plus a reduced charge of $10.00 per Unit.

Such arrangements result in less selling effort and selling expenses than sales
to employee groups of other companies. Resales or transfers of Units purchased
under the employee benefit arrangements may only be made through the Sponsors'
secondary market, so long as it is being maintained.

DISTRIBUTION OF UNITS

During the initial offering period Units will be distributed by the
Sponsors, the Underwriters and dealers at the Public Offering Price plus accrued
interest. (See 'Underwriting Syndicate' in Part A.) The initial offering period
is thirty days and, unless all Units are sold prior thereto, the Sponsors may
extend the offering period up to four additional successive thirty day periods.

The Sponsors intend to qualify the Units of the Navigator Trusts for sale
in a limited number of States through the Underwriters and through dealers who
are members of the National Association of Securities Dealers, Inc. Units may be
sold to dealers at prices which represent a concession of up to $33 per Unit,
subject to the Sponsors' right to change the dealers' concession from time to
time. Such Units may then be distributed to the public by the dealers at the
Public Offering Price then in effect. The Sponsors reserve the right to reject,
in whole or in part, any order for the purchase of Units.

Underwriters and broker-dealers of the Trusts, banks and/or others are
eligible to participate in a program in which such firms receive from the
Sponsors a nominal award for each of their registered representatives who have
sold a minimum number of units of unit investment trusts created by the Sponsors
during a specified time period. In addition, at various times the Sponsors may
implement other programs under which the sales forces of underwriters, brokers,
dealers, banks and/or others may be eligible to win other nominal awards for
certain sales efforts, or under which the Sponsors will reallow to any such
underwriters, brokers, dealers, banks and/or others that sponsor sales contests
or recognition programs conforming to criteria established by the Sponsors, or
participate in sales programs sponsored by the Sponsors, an amount not exceeding
the total applicable sales charges on

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<PAGE>
the sales generated by such person at the public offering price during such
programs. Also, the Sponsors in their discretion may from time to time pursuant
to objective criteria established by the Sponsors pay fees to qualifying
underwriters, brokers, dealers, banks and/or others for certain services or
activities which are primarily intended to result in sales of Units of the
Trust. Such payments are made by the Sponsors out of their own assets and not
out of the assets of the Trusts. These programs will not change the price
Unitholders pay for their Units or the amount that the Trusts will receive from
the Units sold.

SPONSORS' AND UNDERWRITERS' PROFITS

The Sponsors and the Underwriters will receive a gross underwriting
commission equal to 4.9% of the Public Offering Price per Unit (equivalent to

5.152% of the net amount invested in the Bonds). Additionally, the Sponsors may
realize a profit on the deposit of the Bonds in the Trusts representing the
difference between the cost of the Bonds to the Sponsors and the cost of the
Bonds to the Trusts (See 'Portfolios'). An element of such profit is the
increased market value of the Bonds which resulted from the difference between
the market value of the uninsured Bonds purchased by the Sponsors and the market
value of such Bonds after the Sponsors obtained insurance thereon. The Sponsors'
profit was reduced by the cost of the Insurance Premiums on the Sponsor-Insured
and Navigator Sponsor-Insured Bonds. (See 'Portfolio'.) The Sponsors or any
Underwriter may realize profits or sustain losses with respect to Bonds
deposited in the Trusts which were acquired from underwriting syndicates of
which they were a member.

The Sponsors may have participated as a sole underwriter or manager,
co-manager or member of underwriting syndicates from which some of the aggregate
principal amount of the Bonds were acquired for the Trusts in the amounts set
forth in Part A.

During the initial offering period the underwriting syndicate may also
realize profits or sustain losses as a result of fluctuations after the Date of
Deposit in the offering prices of the Bonds and hence in the Public Offering
Price received by the Sponsors and the Underwriters for the Units. Cash, if any,
made available to the Sponsors prior to settlement date for the purchase of
Units may be used in the Sponsors' business subject to the limitations of 17 CFR
240.15c3-3 under the Securities Exchange Act of 1934, and may be of benefit to
the Sponsors.

In maintaining a market for the Units (see 'Sponsors Repurchase') the
Sponsors will realize profits or sustain losses in the amount of any difference
between the price at which they buy Units and the price at which they resell
such Units.

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

COMPARISON OF PUBLIC OFFERING PRICE, SPONSORS' REPURCHASE PRICE AND REDEMPTION
PRICE

Although the Public Offering Price of Units of each Trust will be
determined on the basis of the current offering prices of the Bonds in such
Trust, the value at which Units may be redeemed or sold in the secondary market
will be determined on the basis of the current bid prices of such Bonds. On the
Date of Deposit, the Public Offering Price and the Sponsors' Initial Repurchase
Price per Unit of the Trusts (each based on the offering side evaluation of the
Bonds in the Trust) each exceeded the Redemption Price and the Sponsors'
secondary market Repurchase Price per Unit (based upon the current bid side
evaluation of the Bonds in the Trust) by the amounts shown under 'Summary of
Essential Information'. In the past, the bid prices of similar Bonds have been
lower than the offering prices by as much as 3% or more of principal amount in
the case of inactively traded Bonds or as little as 1/2 of 1% in the case of
actively traded Bonds, but the difference between such offering and bid prices
has averaged about 1 1/2% to 2% of principal amount. On the Date of Deposit, the
bid side evaluation for each Trust was lower than the offering side evaluation

for that Trust by the amount set forth in Part A. For this reason, among others
(including fluctuations in the market prices of such Bonds and the fact that the
Public Offering Price includes the applicable sales charge), the amount realized
by a

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<PAGE>
Certificateholder upon any redemption or Sponsor repurchase of Units may be less
than the price paid for such Units. See 'Sponsors Repurchase.'

ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN

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

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

changes in the offering prices (bid prices in the case of the secondary market)
of the Bonds. Therefore, there is no assurance that the present Estimated
Current Return or Estimated Long Term Return will be realized in the future.

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

RIGHTS OF CERTIFICATEHOLDERS

CERTIFICATES

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

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<PAGE>
connection with each such transfer or interchange. Mutilated, destroyed, stolen
or lost Certificates will be replaced upon delivery of satisfactory indemnity
and payment of expenses incurred.

INTEREST AND PRINCIPAL DISTRIBUTIONS

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

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

Because interest payments are not received by the Trusts at a constant rate

throughout the year, interest distributions may be more or less than the amount
credited to the Interest Account as of a given Record Date. For the purpose of
minimizing fluctuations in the distributions from the Interest Account, the
Trustee will advance sufficient funds, without interest, as may be necessary to
provide interest distributions of approximately equal amounts. The Trustee's fee
takes into account the costs attributable to the outlay of capital needed to
make such advances. All funds in respect of the Bonds received and held by the
Trustee prior to distribution to Certificateholders may be of benefit to the
Trustee and do not bear interest to Certificateholders.

In order to acquire the 'when issued' Bonds contracted for by the Trusts,
if any, it may be necessary to pay on the settlement dates for delivery of such
Bonds amounts covering accrued interest on such Bonds which exceed (1) the
amounts paid by Certificateholders and (2) the amount which will be made
available under the letter of credit furnished by the Sponsors on the Date of
Deposit for the purchase of such Bonds. The Trustee has agreed to pay for any
amounts necessary to cover any such excess and will be reimbursed therefor,
without interest, when funds become available from interest payments on the
particular Bonds with respect to which such payments may have been made. Also,
since interest on the Bonds in the portfolio of such Trust does not accrue to
the benefit of Certificateholders until their respective dates of delivery, the
Trustee will, in order to provide income to the Certificateholders for this
period of non-accrual, reduce its fee applicable to each Trust in an amount
equal to the amount of interest that would have so accrued on such Bonds in such
Trust between the date of settlement for the Units and such dates of delivery.
To the extent such non-accrual is in excess of the reduction in the Trustee's
fee, the amount of such excess will be distributed to Certificateholders as a
return of capital.

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

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<PAGE>
such amounts as may be necessary to cover purchases of Replacement Bonds and
redemptions of Units by the Trustee.

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

DISTRIBUTION ELECTIONS

At the time of purchase, during the initial offering period, investors may
choose either a monthly, semi-annual or annual interest distribution plan. When
placing an order for Units an individual must indicate the distribution plan
desired or his order will not be accepted. All Certificateholders purchasing
Units during the initial public offering period and prior to the first Record
Date will receive the first interest distribution regardless of the distribution
plan chosen. Thereafter, Record Dates for monthly interest distributions will be
the first day of each month and the first day of June and December for
semi-annual distributions. Payment Dates will be the fifteenth day of each month
following the respective Record Dates.

Certificateholders purchasing Units in the secondary market will initially
receive distributions in accordance with the elections of the prior owner. After
the initial public offering, every October each Certificateholder may change his
distribution election by notifying the Trustee in writing of such change between
October 1 and November 1 of each year. (Certificateholders deciding to change
their election should contact the Trustee by calling 1-800-428-8890 for
information regarding the procedures that must be followed in connection with
this written notification of the change of election.) Failure to notify the
Trustee on or before November 1 of each year will result in a continuation of
the plan for the following 12 months.

RECORDS

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

The Trustee shall keep available for inspection by Certificateholders at
all reasonable times during usual business hours, books of record and account of
its transactions as Trustee, including records of

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<PAGE>
the names and addresses of Certificateholders, Certificates issued or held, a
current list of Bonds in the portfolio and a copy of the Trust Agreement.

TAX STATUS

All Bonds to be acquired by each Trust pursuant to the contracts of
purchase were accompanied by copies of opinions of bond counsel to the issuing
governmental authorities given at the time of original delivery of the Bonds to
the effect that the interest thereon is currently exempt from regular federal
income tax, but such interest may be subject to the federal corporate and/or
individual alternative minimum tax except as provided below. The Bonds to be
acquired by the Navigator Trusts and the State Trusts pursuant to contracts to
purchase were accompanied by opinions of counsel to the issuing governmental
authorities given at the time of original delivery of the Bonds to the effect
that interest derived from the Bonds is exempt from state and local income tax
when received by persons subject to state and local income taxation in a state
in which the issuers of the Bonds are located. Neither the Sponsors nor the
Trustee nor their respective counsel have made any review of the proceedings
relating to the issuance of the Bonds or the bases for such opinions and express
no opinion as to these matters, and neither the Trustee nor the Sponsors nor
their respective counsel have made an independent examination or verification
that the federal, state or local income tax status of the Bonds has not been
altered since the time of the original delivery of those opinions.

The Revenue Reconciliation Act of 1993 ('P.L. 103-66') was recently
enacted. P.L. 103-66 increases maximum marginal income tax rates for individuals
and corporations (generally effective for taxable years beginning after December
31, 1992), extends the authority to issue certain categories of tax-exempt bonds
(qualified small issue bonds and qualified mortgage bonds), limits the
availability of capital gain treatment for tax-exempt bonds purchased at a
market discount, increases the amount of Social Security benefits subject to tax
(effective for taxable years beginning after December 31, 1993) and makes a
variety of other changes. Prospective investors are urged to consult their own
tax advisors as to the effect of P.L. 103-66 on an investment in Units.

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

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

The Trusts are not associations taxable as corporations for federal

income tax purposes under the Code, and income received by the Trusts that
consists of interest excludable from gross income under the Code will be
excludable from the regular federal gross income of the Certificateholders
of such Trusts.

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

Gain (other than any earned original issue discount) realized on a
sale or redemption of the Bonds or on a sale of a Unit is, however,
includable in gross income for regular federal income tax purposes,
generally as capital gain, although gain on the disposition of a Bond or a
Unit purchased at a market discount generally will be treated as ordinary
income, rather than capital gain, to the extent of accrued market discount.
(It should be noted in this connection that such gain does not include any
amounts received in respect of accrued interest.) Such gain may be long or
short-term gain depending on the holding period of the Bonds. Capital
assets acquired must be held for more than one year to qualify for
long-term capital gain treatment. Long-term capital

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<PAGE>
gains are generally taxed at the same rates applicable to ordinary income,
although individuals who realize long-term capital gains will be subject to
a maximum tax rate of 28% on such gain, rather than the 'regular' maximum
rate of 39.6%. Capital losses are deductible to the extent of capital
gains; in addition, up to $3,000 of capital losses of non-corporate
Certificateholders may be deducted against ordinary income.

Each Certificateholder of a Trust will realize taxable income or loss
when such Trust disposes of a Bond (whether by sale, exchange, redemption
or payment at maturity), as if the Certificateholder had directly disposed
of his pro rata share of such Bond. The gain or loss is measured by the
difference between (i) the tax cost of such pro rata share and (ii) the
amount received therefor. The Certificateholder's tax cost for each Bond is
determined by allocating the total tax cost of each Unit among all the
Bonds held in that Trust (in accordance with the portion of such Trust
allocable to each Bond). In order to determine the amount of taxable gain
or loss, the Certificateholder's amount received is similarly allocated at
that time. The Certificateholder may exclude from the amount received any
amounts that represent accrued interest or the earned portion of any
original issue discount but may not exclude amounts attributable to market
discount. Thus, when a Bond is disposed of by a Trust at a gain, taxable
gain will equal the difference between (i) the amount received and (ii) the
amount paid plus any original issue discount (limited, in the case of Bonds
issued after June 8, 1980, to the portion earned from the date of
acquisition to the date of disposition). Gain on the disposition of a Bond
purchased at a market discount generally will be treated as ordinary

income, rather than capital gain, to the extent of accrued market
discount. No deduction is allowed for the amortization of bond premium on
tax-exempt bonds such as the Bonds in computing regular federal income tax.

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

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

A portion of social security benefits is includable in gross income
for taxpayers whose 'modified adjusted gross income' combined with a
portion of their benefits exceeds a base amount. The base amount is $25,000
for an individual, $32,000 for a married couple filing a joint return and
zero for married persons filing separate returns. Interest on tax-exempt
bonds is to be added to adjusted gross income for purposes of computing the
amount of benefits that are includable in gross income and determining
whether an individual's income exceeds the base amount above which a
portion of the benefits would be subject to tax. For taxable years
beginning after December 31, 1993, the amount of Social Security benefits
subject to tax will be increased.

A Certificateholder is required to include as an item of tax
preference for purposes of the federal individual and corporate alternative
minimum taxes all tax-exempt interest on 'private activity' bonds (other
than Section 501(c)(3) bonds) issued after August 7, 1986. Corporate
Certificateholders are required to include as an item of tax preference for
purposes of the federal corporate alternative minimum tax 75 percent of the
amount by which the adjusted current earnings (which will include all
tax-exempt interest) of the corporation exceeds the alternative minimum
taxable income (determined without this tax preference item). Further,
interest on the Bonds is includable in a 0.12% additional corporate minimum
tax imposed by the Superfund Amendments and Reauthorization Act of 1986 for
taxable years beginning before January 1, 1996.

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In addition, in certain cases, Subchapter S corporations with accumulated
earnings and profits from Subchapter C years will be subject to a minimum
tax on excess 'passive investment income' which includes tax-exempt
interest. Corporate Certificateholders are urged to consult their own tax
advisers regarding an investment in the Trust.

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

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

Under the personal income tax laws of the State and City of New York,
the income of the New York Navigator Trust will be treated as the income of
the Certificateholders. Interest on the Bonds of the New York Navigator
Trust that is exempt from tax under the laws of the State and City of New
York when received by the New York Navigator Trust will retain its status
as tax-exempt interest to its Certificateholders. In addition,
non-residents of New York City will not be subject to the New York City
personal income tax on gains derived with respect to their Units of the New
York Navigator Trust. Non-residents of New York State will not be subject
to New York State personal income tax on such gains unless the Units are
employed in a business, trade or occupation carried on in New York State. A
New York State or New York City resident should determine his basis and
holding period for his Units in the same manner for New York State and New
York City tax purposes as for federal tax purposes. For corporations doing
business in New York State, interest earned on state and municipal
obligations that are exempt from federal income tax, including obligations
of New York State, its political subdivisions and instrumentalities, must
be included in calculating New York State and New York City entire net
income for purposes of computing New York State and New York City franchise
(income) tax.

Any proceeds received pursuant to the terms of the insurance on the
Bonds that represent maturing interest on defaulted obligations will be
excludable from federal gross income if, and to the same extent that, such
interest would have been so excludable if paid by the issuers of such
defaulted obligations.

In the opinion of Freeman, Zeller & Bryant, special counsel to the Sponsors
on New Jersey tax matters, which opinion is made in reliance upon certain
information and based on certain assumptions respecting the New Jersey Navigator
Trust, under existing New Jersey law applicable to individuals who are New
Jersey residents and New Jersey estates and trusts:

The New Jersey Navigator Trust will be recognized as a trust and not
as an association taxable as a corporation. The New Jersey Navigator Trust
will not be subject to the New Jersey Corporation Business Tax or the New
Jersey Corporation Income Tax.

The income of the New Jersey Navigator Trust will be treated as income
of the Certificateholders who are individuals, estates or trusts under the
New Jersey Gross Income Tax Act, N.J.S.A. 54A:1-1 et seq. (the 'Act').
Interest on the Bonds that is exempt from tax under the Act when received

by the New Jersey Navigator Trust will retain its status as tax-exempt
interest under the Act when distributed to Certificateholders who are
individuals, estates or trusts.

Certificateholders who are individuals, estates or trusts will not be
subject to the Act on any gain realized when the New Jersey Navigator Trust
disposes of a Bond (whether by sale, exchange, redemption, or payment at
maturity). Any loss realized on such disposition may not be utilized to
offset gains realized by such Certificateholder on the disposition of
assets the gain on which is subject to the New Jersey Gross Income Tax.

The sale, exchange or redemption of a Unit by a Certificateholder
shall be treated as a sale or exchange of a Certificateholder's pro rata
interest in the assets in the New Jersey Navigator Trust at the time of the
transaction and any gain will be exempt from tax under the Act to the
extent that the price received by the selling Certificateholder who is an
individual, estate or trust does not

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exceed the Redemption Price. To the extent that the amount received by the
Certificateholder exceeds the Redemption Price, any such gain will not be
exempt from tax under the Act.

All proceeds representing interest on defaulted obligations derived by
Certificateholders who are individuals, estates or trusts from an insurance
policy, either paid directly to the Certificateholders or through the New
Jersey Navigator Trust, are exempt from tax under the Act.

The Units of the New Jersey Navigator Trust may be taxable, in the
estates of New Jersey residents under the New Jersey Transfer Inheritance
Tax Law or the New Jersey Estate Tax Law.

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

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

Each Certificateholder of the California Trust will recognize gain or
loss when the California Trust disposes of a Bond (whether by sale,
exchange, redemption or payment at maturity) or upon the
Certificateholder's sale or other disposition of a Unit. The amount of gain

or loss for California income tax purposes will generally be calculated
pursuant to the Internal Revenue Code of 1986, as amended, certain
provisions of which are incorporated by reference under California law.

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

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

2. Because Florida does not impose a personal income tax,
non-corporate Certificateholders of Units of the Florida Trust will not be
subject to any Florida income taxes with respect to (i) amounts received by
the Florida Trust on the Bonds it holds; (ii) amounts which are distributed
by the Florida Trust to non-corporate Certificateholders of the Florida
Trust; or (iii) any gain realized on the sale or redemption of Bonds by the
Florida Trust or of a Unit of the Florida Trust by a noncorporate
Certificateholder. However, corporations 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 on the sale or
redemption of Units of the Florida Trust by the corporate
Certificateholder.

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

4. Bonds issued by the State of Florida or its political subdivisions
are exempt from Florida intangible personal property taxation under Chapter
199, Florida Statutes (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 Bonds in the Florida Trust issued
by the State of Florida or its political subdivisons, 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.

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

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

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

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

The exemption of interest on municipal obligations for federal income tax
purposes does not necessarily result in exemption under the income tax laws of
any state or political subdivision. In general, municipal bond interest exempt
from federal income tax is taxable income to residents of the several States
under the tax laws of those jurisdictions unless the bonds are issued by the
issuers located in that State or one of its political subdivisions. Earned
original issue discount will be reportable for state and local tax purposes
without a corresponding cash distribution. The laws of the several states and
local taxing authorities vary with respect to the taxation of such obligations
and each Certificateholder is advised to consult his own tax advisor as to the
tax consequences of his Certificates under state and local tax laws.

In the case of Bonds that are IRBs or certain types of private activity
bonds, the opinions of bond counsel to the respective issuing authorities
indicate that interest on such Bonds is exempt from regular federal income tax.
However, interest on such Bonds will not be exempt from regular federal income
tax for any period during which such Bonds are held by a 'substantial user' of
the facilities financed by the proceeds of such Bonds or by a 'related person'
thereof within the meaning of the Code. Therefore, interest on any such Bonds
allocable to a Certificateholder who is such a 'substantial user' or 'related
person' thereof will not be tax-exempt. Furthermore, in the case of Bonds that
qualify for the 'small issue' exemption, the 'small issue' exemption will not be

available or will be lost if, at any time during the three-year period beginning
on the later of the date the facilities are placed in service or the date of
issue, all outstanding tax-exempt IRBs, together with a proportionate share of
any present issue, of an owner or principal user (or related person) of the
facilities was determined to have exceeded $40,000,000 on the date of issue. In
the case of Bonds issued under the $10,000,000 'small issue' exemption, interest
on such Bonds will become taxable if the face amount of the Bonds plus certain
capital expenditures exceeds $10,000,000 within 3 years of the date of issue of
such Bonds.

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

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the Bonds. Investors should consult their tax advisors for advice with respect
to the effect of these provisions on their particular tax situation.

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

From time to time proposals have been introduced before Congress to
restrict or eliminate the federal income tax exemption for interest on debt
obligations similar to the Bonds in the Trusts, and it can be expected that
similar proposals may be introduced in the future. The Sponsors cannot predict
what additional legislation, if any, in respect of the tax status of interest on
such debt obligations may be proposed by the federal executive branch or by
members of Congress, nor can it predict which proposals, if any, might be
enacted or whether any legislation, if enacted, would apply to the Bonds in the
Trust.

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

Section 103 of the Code.

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

LIQUIDITY

SPONSORS REPURCHASE

The Sponsors, although not obligated to do so, intend to maintain a
secondary market for the Units and continuously to offer to repurchase the
Units. The Sponsors' secondary market repurchase price after the initial public
offering is completed will be based on the aggregate bid price of the Bonds in
each Trust portfolio and will be the same as the redemption price. The aggregate
bid price will be determined by the Evaluator on a daily basis after the initial
public offering is completed and computed on the basis set forth under 'Trustee
Redemption'. During the initial offering period, the Sponsors' repurchase price
will be based on the aggregate offering price of the Bonds in each Trust.
Certificateholders who wish to dispose of their Units should inquire of the
Sponsors as to current market prices prior to making a tender for redemption.
The Sponsors may discontinue repurchase of Units if the supply of Units exceeds
demand, or for other business reasons. The date of repurchase is deemed to be
the date on which Certificates representing Units are physically received in
proper form by Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New York
10167, on behalf of the Sponsors. Units received after 4 P.M., New York time,
will be deemed to have been repurchased on the next business day. In the event a
market is not maintained for the Units, a Certificateholder may be able to
dispose of Units only by tendering them to the Trustee for redemption.

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

Units purchased by the Sponsors in the secondary market may be reoffered
for sale by the Sponsors at a price based on the aggregate bid price of the
Bonds in that Trust plus a 4.9% sales charge (5.152% of the net amount invested)
plus net accrued interest. Any Units that are purchased by the Sponsors in the
secondary market also may be redeemed by the Sponsors if it determines such
redemption to be in its best interest.

The Sponsors may, under certain circumstances, as a service to

Certificateholders, elect to purchase any Units tendered to the Trustee for
redemption (see 'Trustee Redemption'). Factors which the Sponsors will consider
in making a determination will include the number of Units of all Trusts which
it has in inventory, its estimate of the salability and the time required to
sell such Units and general market conditions. For example, if in order to meet
redemptions of Units the Trustee must dispose of Bonds, and if such disposition
cannot be made by the redemption date (seven calendar days after tender), the
Sponsors may elect to purchase such Units. Such purchase shall be made by
payment to the Certificateholder not later than the close of business on the
redemption date of an amount equal to the Redemption Price on the date of
tender.

TRUSTEE REDEMPTION

Units may also be tendered to the Trustee for redemption at its corporate
trust office at 770 Broadway, New York, New York 10003, upon proper delivery of
Certificates representing such Units and payment of any relevant tax. At the
present time there are no specific taxes related to the redemption of Units. No
redemption fee will be charged by the Sponsors or the Trustee. Units redeemed by
the Trustee will be cancelled.

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

Within seven calendar days following a tender for redemption, or, if such
seventh day is not a business day, on the first business day prior thereto, the
Certificateholder will be entitled to receive in cash an amount for each Unit
tendered equal to the Redemption Price per Unit computed as of the Evaluation
Time set forth under 'Summary of Essential Information' in Part A on the date of
tender. The 'date of tender' is deemed to be the date on which Units are
received by the Trustee, except that with respect to Units received after the
close of trading on the New York Stock Exchange, the date of tender is the next
day on which such Exchange is open for trading, and such Units will be deemed to
have been tendered to the Trustee on such day for redemption at the Redemption
Price computed on that day.

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

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The Redemption Price per Unit is the pro rata share of each Unit in a Trust
determined by the Trustee on the basis of (i) the cash on hand in the Trust or
moneys in the process of being collected, (ii) the value of the Bonds in the
Trust based on the bid prices of such Bonds and (iii) interest accrued thereon,
less (a) amounts representing taxes or other governmental charges payable out of
the Trust, (b) the accrued expenses of the Trust and (c) cash allocated for the
distribution to Certificateholders of record as of the business day prior to the
evaluation being made. The Evaluator may determine the value of the Bonds in the
Trust (1) on the basis of current bid prices of the Bonds obtained from dealers
or brokers who customarily deal in bonds comparable to those held by the Trust,
(2) on the basis of bid prices for bonds comparable to any Bonds for which bid
prices are not available, (3) by determining the value of the Bonds by
appraisal, or (4) by any combination of the above. The Evaluator will determine
the aggregate current bid price evaluation of the Bonds in the Trust, taking
into account the market value of the Bonds insured under the Bond Insurance
Policy, in the manner described as set forth under 'Public Offering--Offering
Price.'

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

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

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

TOTAL REINVESTMENT PLAN

Under the Total Reinvestment Plan (the 'Plan'), semi-annual
Certificateholders of the Trusts (except Texas residents* ) may elect to have
all interest and principal distributions, if any, with respect to their Units
reinvested either in units of various series of 'Insured Municipal Securities
Trust' or 'Municipal Securities Trust' which will have been created shortly
before each semi-annual or annual Payment Date (a 'Primary Series') or, if units
of a Primary Series are not available, in units of a previously formed series of
a Trust which have been repurchased by the Sponsors in the secondary market or

which constitute a portion of the Units of a Trust not sold by the Sponsors
prior to such Payment Date (a 'Secondary Series') (Primary Series and Secondary
Series are hereafter collectively referred to as 'Available Series'). Series of
'Municipal Securities Trust' do not have insurance. The first interest
distribution to Certificateholders cannot be reinvested unless such distribution
is scheduled for June 15 or December 15 in the case of semi-annual
Certificateholders (each such date being referred to herein as the 'Plan
Reinvestment Date').

Under the Plan (subject to compliance with applicable blue sky laws),
fractional units ('Plan Units') will be purchased from the Sponsors at a price
equal to the aggregate offering price per Unit of

- ------------------
* Texas residents may elect to participate in the 'Total Reinvestment Plan for
Texas Residents' hereinafter described.

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the bonds in the Available Series portfolio during the initial offering of the
Available Series or at the aggregate bid price per Unit of the Available Series
if its initial offering has been completed, plus a sales charge equal to 3.627%
of the net amount invested in such bonds or 3 1/2% of the Reinvestment Price per
Plan Unit, plus accrued interest, divided by one hundred (the 'Reinvestment
Price per Plan Unit'). All Plan Units will be sold at this reduced sales charge
of 3 1/2% in comparison to the regular sales charge on primary and secondary
market sales of Units in any series of 'Municipal Securities Trust'.
Participants in the Plan will have the opportunity to designate, in the
Authorization Form for the Plan, the name of a broker to whom the Sponsors will
allocate a sales commission of 1 1/2% of the Reinvestment Price per Plan Unit,
payable out of the 3 1/2% sales charge. If no such designation is made, the
Sponsors will retain the sales commission.

Under the Plan, the entire amount of a participant's income and principal
distributions will be reinvested. For example, a Certificateholder who is
entitled to receive $130.50 interest income from a Trust would acquire 13.05
Plan Units assuming that the Reinvestment Price per Plan Unit, plus accrued
interest, approximated $10 (Ten Dollars).

A semi-annual Certificateholder may join the Plan at the time he invests in
Units of a Trust or any time thereafter by delivering to the Trustee an
Authorization Form which is available from brokers, any Underwriter of the Units
or the Sponsors. In order that distributions may be reinvested on a particular
Plan Reinvestment Date, the Authorization Form must be received by the Trustee
not later than the 15th day of the month preceding such Date. Authorization
Forms not received in time for a particular Plan Reinvestment Date will be valid
only for the second succeeding Plan Reinvestment Date. Similarly, a participant
may withdraw from the program at any time by notifying the Trustee (see below).
However, if written confirmation of withdrawal is not given to the Trustee prior
to a particular distribution, the participant will be deemed to have elected to
participate in the Plan with respect to that particular distribution and his
withdrawal would become effective for the next succeeding distribution.

Once delivered to the Trustee, an Authorization Form will constitute a

valid election to participate in the Plan with respect to Units purchased in the
particular Trust (and with respect to Plan Units purchased with the
distributions from the Units purchased in the Trust) for each subsequent
distribution so long as the Certificateholder continues to participate in the
Plan. However, if in the opinion of the Sponsors, an Available Series should
materially differ from the particular Trust, the authorization will be voided
and participants will be provided with both a notice of the material change and
a new Authorization Form which would have to be returned to the Trustee before
the Certificateholder would again be able to participate in the Plan. The
Sponsors anticipate that a material difference which would result in a voided
authorization would include such facts as the inclusion of bonds in the
Available Series portfolio the interest income on which was not exempt from all
Federal income tax, or the inclusion of bonds which were not rated 'A' or better
by Standard & Poor's Corporation or Moody's Investors Service, Inc. on the date
such bonds were initially deposited in the Available Series portfolio.

The Sponsors have the option at any time to use units of a Secondary Series
to fulfill the requirements of the Plan in the event units of a Primary Series
are not available either because a Primary Series is not then in existence or
because the registration statement relating thereto is not declared effective in
sufficient time to distribute final prospectuses to Plan participants (see
below). It should be noted that there is no assurance that the quality and
diversification of the Bonds in any Available Series or the estimated current
return thereon will be similar to that of these Trusts.

It is the Sponsors' intention that Plan Units will be offered on or about
each semi-annual Record Date for determining who is eligible to receive
distributions on the related Payment Date. Such Record Dates are June 1 and
December 1 of each year for semi-annual Certificateholders. On each Record Date
the Sponsors will send a current Prospectus relating to the Available Series
being offered for the next Plan Reinvestment Date along with a letter which
reminds each participant that Plan Units are being purchased for him as part of
the Plan unless he notifies the Trustee in writing by that Plan Reinvestment
Date that he no longer wishes to participate in the Plan. In the event a Primary
Series has

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not been declared effective in sufficient time to distribute a final Prospectus
relating thereto and there is no Secondary Series as to which a registration
statement is currently effective, it is the Sponsors' intention to suspend the
Plan and distribute to each participant his regular semi-annual distribution. If
the Plan is so suspended, it will resume in effect with the next Plan
Reinvestment Date assuming units of an Available Series are then being offered.

To aid a participant who might desire to withdraw either from the Plan or
from a particular distribution, the Trustee has established a toll free number
(see below) for participants to use for notification of withdrawal, which must
be confirmed in writing prior to the Plan Reinvestment Date. Should the Trustee
be so notified, it will make the appropriate cash disbursement. Unless the
withdrawing participant specifically indicates in his written confirmation that
(a) he wishes to withdraw from the Plan for that particular distribution only,
or (b) he wishes to withdraw from the Plan for less than all units of each
series of 'Insured Municipal Securities Trust' which he might then own (and

specifically identifies which series are to continue in the Plan), he will be
deemed to have withdrawn completely from the Plan in all respects. Once a
participant withdraws completely, he will only be allowed to again participate
in the Plan by submitting a new Authorization Form. A sale or redemption of a
portion of a participant's Plan Units will not constitute a withdrawal from the
Plan with respect to the remaining Plan Units owned by such participant.

Unless a Certificateholder notifies the Trustee in writing to the contrary,
each semi-annual Certificateholder who has acquired Plan Units will be deemed to
have elected the semi-annual plan of distribution and to participate in the Plan
with respect to distributions made in connection with such Plan Units. A
participant who subsequently desires to have distributions made with respect to
Plan Units delivered to him in cash may withdraw from the Plan with respect to
such Plan Units and remain in the Plan with respect to units acquired other than
through the Plan. Assuming a participant has his distributions made with respect
to Plan Units reinvested, all such distributions will be accumulated with
distributions generated from the Units of the particular Trust used to purchase
such additional Plan Units. However, distributions related to units in other
series of 'Municipal Securities Trust' will not be accumulated with the
foregoing distributions for Plan purchases. Thus, if a person owns units in more
than one series of 'Municipal Securities Trust' (which are not the result of
purchases under the Plan), distributions with respect thereto will not be
aggregated for purchases under the Plan.

Although not obligated to do so, the Sponsors intend to maintain a market
for the Plan Units and continuously to offer to purchase Plan Units at prices
based upon the aggregate offering price of the Bonds in the Available Series
portfolio during the initial offering of the Available Series, or at the
aggregate bid price of the Bonds of the Available Series after its initial
offering has been completed. The Sponsors may discontinue such purchases at any
time. The aggregate bid price of the underlying Bonds may be expected to be less
than the aggregate offering price. In the event that a market is not maintained
for Plan Units, a participant desiring to dispose of his Plan Units may be able
to do so only by tendering such Plan Units to the Trustee for redemption at the
Redemption Price of the full units in the Available Series corresponding to such
Plan Units, which is based upon the aggregate bid price of the underlying bonds
as described in the 'Municipal Securities Trust' Prospectus for the Available
Series in question. If a participant wishes to dispose of his Plan Units, he
should inquire of the Sponsors as to current market prices prior to making a
tender for redemption to the Trustee.

Any participant may tender his Plan Units for redemption to the Available
Series Trust. Participants may redeem Plan Units by making a written request to
the Trustee, 770 Broadway, New York, New York 10003, on the Redemption Form
supplied by the Trustee. The redemption price per Plan Unit will be determined
as set forth in the Prospectus of the Available Series from which such Plan Unit
was purchased following receipt of the request and adjusted to reflect the fact
that it relates to a Plan Unit. There is no charge for the redemption of Plan
Units.

The Trust Agreement requires that the Trustee notify the Sponsors of any
tender of Plan Units for redemption. So long as the Sponsors are maintaining a
bid in the secondary market, the Sponsors will purchase any Plan Units tendered
to the Trustee for redemption by making payment therefor to the

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Certificateholder in an amount not less than the redemption price for such Plan
Units on the date of tender not later than the day on which such Plan Units
otherwise would have been redeemed by the Trustee.

Participants in the Plan will not receive individual certificates for their
Plan Units unless the amount of Plan Units accumulated represents $1,000
principal amount of bonds underlying such Units and, in such case, a written
request for certificates is made to the Trustee. All Plan Units will be
accounted for by the Trustee on a book entry system. Each time Plan Units are
purchased under the Plan, a participant will receive a confirmation stating his
cost, number of Units purchased and estimated current return. Questions
regarding a participant's statements should be directed to the Trustee by
calling (800) 428-8890.

All expenses relating to the operation of the Plan will be borne by the
Sponsors. Both the Sponsors and the Trustee reserve the right to suspend, modify
or terminate the Plan at any time for any reason, including the right to suspend
the Plan if the Sponsors are unable or unwilling to establish a Primary Series
or is unable to provide Secondary Series Units. All participants will receive
notice of any such suspension, modification or termination.

TOTAL REINVESTMENT PLAN FOR TEXAS RESIDENTS

Except as specifically provided under this section, and unless the context
otherwise requires, all provisions and definitions contained under the heading
'Total Reinvestment Plan' shall be applicable to the Total Reinvestment Plan for
Texas Residents ('Texas Plan').

Semi-annual Certificateholders of the Trusts who are residents of Texas
have the option prior to any semi-annual distribution to affirmatively elect to
reinvest that distribution, including both interest and principal, if any, in an
Available Series.

A resident of Texas who is a semi-annual Certificateholder may join the
Texas Plan for any particular semi-annual distribution by delivering to the
Trustee an Authorization Form For Texas Residents ('Texas Authorization Form')
specifically mentioning the date of the particular semi-annual distribution he
wishes to reinvest. On or about each semi-annual Record Date, Texas
Authorization Forms shall be sent by the Trustee to every Certificateholder who,
according to the Trustee's records, is a resident of Texas. In the event that
the Sponsors suspend the Plan or the Texas Plan no Texas Authorization Forms
shall be sent. In order that distributions may be reinvested on a particular
Plan Reinvestment Date, the Texas Authorization Form must be received by the
Trustee on or before such Date. Texas Authorization Forms not received in time
for the Plan Reinvestment Date will be deemed void. A participant who delivers a
Texas Authorization Form to the Trustee may thereafter withdraw said
authorization by notifying the Trustee at its toll free telephone number prior
to a Plan Reinvestment Date. Such notification of withdrawal must be confirmed
in writing prior to the Plan Reinvestment Date. Under no circumstances shall a
Texas Authorization Form be provided or accepted by the Trustee which provides
for the reinvestment of distributions for more than one Plan Reinvestment Date.

On or about each semi-annual Record Date, the Sponsors will send a current
Prospectus relating to the Available Series being offered on the next Plan
Reinvestment Date along with a letter incorporating a Texas Authorization Form
which specifies the funds available for reinvestment, reminds each participant
that no Plan Units will be purchased for him unless the Texas Authorization Form
is received by the Trustee on or before that particular Plan Reinvestment Date,
and states that the Texas Authorization Form is valid only for that particular
semi-annual distribution. If the Available Series should materially differ from
the particular Trust, the participant will be provided with a notice of the
material change and a new Texas Authorization Form which would have to be
returned to the Trustee before the Certificateholder would again be able to
participate in the Plan.

Each semi-annual Certificateholder who has acquired Plan Units will be
deemed to have elected the semi-annual plan of distribution, respectively, with
respect to such Units, but such

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Certificateholder will not be deemed to participate in the Plan for any
particular distribution unless and until he delivers to the Trustee a Texas
Authorization Form pertaining to those Plan Units.

TRUST ADMINISTRATION

PORTFOLIO SUPERVISION

Except for the purchase of Replacement Bonds or as discussed herein, the
acquisition of any Bonds for a Trust other than Bonds initially deposited by the
Sponsors is prohibited. Although it is the Sponsors' and Trustee's intention not
to dispose of Bonds insured pursuant to the Bond Insurance in the event of
default, nevertheless, the Sponsors may direct the Trustee to dispose of Bonds
upon (i) default in payment of principal or interest on such Bonds, (ii)
institution of certain legal proceedings with respect to the issuers of such
Bonds, (iii) default under other documents adversely affecting debt service on
such Bonds, (iv) default in payment of principal or interest on other
obligations of the same issuer or guarantor, (v) with respect to revenue Bonds,
decline in revenues and income of any facility or project below the estimated
levels calculated by proper officials charged with the construction or operation
of such facility or project or (vi) decline in price or the occurrence of other
market or credit factors that in the opinion of the Sponsors would make the
retention of such Bonds in a Trust detrimental to the interests of the
Certificateholders. If a default in the payment of principal or interest on any
of the Bonds occurs and if the Sponsors fail to instruct the Trustee to sell or
hold such Bonds, the Trust Agreement provides that the Trustee may sell such
Bonds. The Trustee shall not be liable for any depreciation or loss by reason of
any sale of Bonds or by reason of the failure of the Sponsors to give directions
to the Trustee.

The Sponsors are authorized by the Trust Agreement to direct the Trustee to
accept or reject certain plans for the refunding or refinancing of any of the
Bonds. Any bonds received in exchange or substitution will be held by the
Trustee subject to the terms and conditions of the Agreement to the same extent

as the Bonds originally deposited. Within five days after such deposit, notice
of such exchange and deposit shall be given by the Trustee to each
Certificateholder registered on the books of the Trustee, including an
identification of the Bonds eliminated and the Bonds substituted therefor.

TRUST AGREEMENT, AMENDMENT AND TERMINATION

The Trust Agreement may be amended by the Trustee, the Sponsors and the
Evaluator without the consent of any of the Certificateholders: (1) to cure any
ambiguity or to correct or supplement any provision which may be defective or
inconsistent; (2) to change any provision thereof as may be required by the
Securities and Exchange Commission or any successor governmental agency; or (3)
to make such other provisions in regard to matters arising thereunder as shall
not adversely affect the interests of the Certificateholders.

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

The Trust Agreement provides that each Trust shall terminate upon the
maturity, redemption or other disposition, as the case may be, of the last of
the Bonds held in such Trust but in no event is it to continue beyond the end of
the calendar year preceding the fiftieth anniversary of the execution of the
Trust Agreement. If the value of a Trust shall be less than the minimum amount
set forth under 'Summary of Essential Information' in Part A, the Trustee may,
in its discretion, and shall when so

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directed by the Sponsors, terminate such Trust. Each Trust may also be
terminated at any time with the consent of the holders of Certificates
representing 100% of the Units then outstanding. In the event of termination,
written notice thereof will be sent by the Trustee to all Certificateholders.
Within a reasonable period after termination, the Trustee must sell any Bonds
remaining in the terminated Trust, and, after paying all expenses and charges
incurred by the Trust, distribute to each Certificateholder, upon surrender for
cancellation of his Certificate for Units, his pro rata share of the Interest
and Principal Accounts.

THE SPONSORS

The Sponsors, Bear, Stearns & Co. Inc. and Gruntal & Co., Incorporated,
have entered into an Agreement Among Co-Sponsors pursuant to which both parties
have agreed to act as Co-Sponsors for the Trusts as set forth in the 'Summary of

Essential Information' in Part A. Bear, Stearns & Co. Inc. has been appointed by
Gruntal & Co., Incorporated as agent for purposes of taking any action required
or permitted to be taken by the Sponsors under the Trust Agreement. If the
Sponsors are unable to agree with respect to action to be taken jointly by them
under the Trust Agreement and they cannot agree as to which Sponsor shall act as
sole Sponsor, then Bear, Stearns & Co. Inc. shall act as sole Sponsor. If one of
the Sponsors fails to perform its duties under the Trust Agreement or becomes
incapable of acting or becomes bankrupt or its affairs are taken over by public
authorities, that Sponsor may be discharged under the Trust Agreement and a new
Sponsor may be appointed or the remaining Sponsors may continue to act as
Sponsors.

Bear, Stearns & Co. Inc., a Delaware corporation, is engaged in the
underwriting, investment banking and brokerage business and is a member of the
National Association of Securities Dealers, Inc. and all principal securities
and commodities exchanges, including the New York Stock Exchange, the American
Stock Exchange, the Midwest Stock Exchange and the Pacific Stock Exchange. Bear
Stearns maintains its principal business offices at 245 Park Avenue, New York,
New York 10167 and, since its reorganization from a partnership to a corporation
in October, 1985, has been a wholly-owned subsidiary of The Bear Stearns
Companies Inc. Bear Stearns, through its predecessor entities, has been engaged
in the investment banking and brokerage business since 1923. Bear Stearns is the
sponsor for numerous series of unit investment trusts, including, A Corporate
Trust, Series 1 (and Subsequent Series); Equity Securities Trust, Series 1 (and
Subsequent Series); Mortgage Securities Trust, Series 1 (and Subsequent Series);
New York Municipal Trust, Series 1 (and Subsequent Series); Municipal Securities
Trust, Series 1 (and Subsequent Series), 1st Discount Series (and Subsequent
Series), Multi-State Series 1 (and Subsequent Series), High Income Series 1 (and
Subsequent Series), Short-Intermediate Term Series 1 (and Subsequent Series) and
Insured Municipal Securities Trust, Series 1-4 (and Subsequent Series); Series 1
(Multiplier Portfolio) (and Subsequent Series) and 5th Discount Series (and
Subsequent Series).

Gruntal & Co., Incorporated, a Delaware corporation, operates a securities
broker/dealer from its main office in New York City and branch offices in ten
states and the District of Columbia. The firm is active in the marketing of
investment companies and has signed dealer agreements with many major mutual
fund groups. Further, through its Syndicate Department, Gruntal & Co.,
Incorporated has underwritten a large number of Closed-End Funds and has been
Co-Manager on the following offerings: Cigna High Income Shares; Dreyfus New
York Municipal Income, Inc.; Franklin Principal Maturity Trust and Van Kampen
Merritt Limited Term High Income Trust.

The information included herein is only for the purpose of informing
investors as to the financial responsibility of the Sponsors and their ability
to carry out their contractual obligations.

The Sponsors are jointly and severally liable for the performance of their
obligations arising from their responsibilities under the Trust Agreement, but
will be under no liability to Certificateholders for taking any action, or
refraining from taking any action, in good faith pursuant to the Trust
Agreement,

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or for errors in judgment except in cases of their own willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations and duties.

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

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

THE TRUSTEE

The Trustee is United States Trust Company of New York, with its principal
place of business at 770 Broadway, New York, New York 10003. United States Trust
Company of New York has, since its establishment in 1853, engaged primarily in
the management of trust and agency accounts for individuals and corporations.
The Trustee is a member of the New York Clearing House Association and is
subject to supervision and examination by the Superintendent of Banks of the
State of New York, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System.

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

For further information relating to the responsibilities of the Trustee
under the Trust Agreement, reference is made to the material set forth under
'Rights of Certificateholders'.

The Trustee may resign by executing an instrument in writing and filing the
same with the Sponsors, and mailing a copy of a notice of resignation to all
Certificateholders. In such an event the Sponsors are obligated to appoint a
successor Trustee as soon as possible. In addition, if the Trustee becomes
incapable of acting or becomes bankrupt or its affairs are taken over by public
authorities, the Sponsors may remove the Trustee and appoint a successor as
provided in the Trust Agreement. Notice of such removal and appointment shall be

mailed to each Certificateholder by the Sponsors. If upon resignation of the
Trustee no successor has been appointed and has accepted the appointment within
thirty days after notification, the retiring Trustee may apply to a court of
competent jurisdiction for the appointment of a successor. The resignation or
removal of the Trustee becomes effective only when the successor Trustee accepts
its appointment as such or when a court of competent jurisdiction appoints a
successor Trustee. Upon execution of a written acceptance of such appointment by
such successor Trustee, all the rights, powers, duties and obligations of the
original Trustee shall vest in the successor.

Any corporation into which the Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Trustee shall be a party, shall be the successor Trustee. The
Trustee must always be a banking corporation organized under the laws of the
United States or any State and have at all times an aggregate capital, surplus
and undivided profits of not less than $2,500,000.

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THE EVALUATOR

The Evaluator is Kenny S&P Evaluation Services, a division of J.J. Kenny
Co., Inc. with main offices located at 65 Broadway, New York, New York 10006.
The Evaluator is a wholly-owned subsidiary of McGraw-Hill, Inc. The Evaluator is
a registered investment advisor and also provides financial information
services.

The Trustee, the Sponsors and the Certificateholders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Trust Agreement
shall be made in good faith upon the basis of the best information available to
it, provided, however, that the Evaluator shall be under no liability to the
Trustee, the Sponsors or Certificateholders for errors in judgment, except in
cases of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.

The Evaluator may resign or may be removed by the Sponsors and Trustee, and
the Sponsors and the Trustee are to use their best efforts to appoint a
satisfactory successor. Such resignation or removal shall become effective upon
the acceptance of appointment by the successor Evaluator. If upon resignation of
the Evaluator no successor has accepted appointment within thirty days after
notice of resignation, the Evaluator may apply to a court of competent
jurisdiction for the appointment of a successor.

TRUST EXPENSES AND CHARGES

At no cost to the Trusts, the Sponsors have borne the expenses of creating
and establishing the Trusts, including the cost of initial preparation and
execution of the Trust Agreement, registration of the Trusts and the Units under
the Investment Company Act of 1940 and the Securities Act of 1933, the premiums
on the Navigator Sponsor-Insured Bonds, the initial preparation and printing of

the Certificates, the fees of the Evaluator during the initial public offering,
legal expenses, advertising and selling expenses, expenses of the Trustee
including, but not limited to, an amount equal to interest accrued on certain
'when issued' bonds since the date of settlement for the Units, initial fees and
other out-of-pocket expenses. The fees of the Evaluator, however, incurred
during the initial public offering are paid directly by the Trusts.

The Sponsors will not charge the Trusts a fee for its services as such.
(See 'Sponsors' and Underwriters' Profits'.)

The Sponsors will receive for portfolio supervisory services to the Trusts
an Annual Fee in the amount set forth under 'Summary of Essential Information'
in Part A. The Sponsors' fee may exceed the actual cost of providing portfolio
supervisory services for these Trusts, but at no time will the total amount
received for portfolio supervisory services rendered to all series of the
Municipal Securities Trust in any calendar year exceed the aggregate cost to the
Sponsors of supplying such services in such year. (See 'Portfolio Supervision').
Pursuant to the Agreement Among Co-Sponsors, Bear Stearns shall receive the
entire Sponsors' fee set forth in the 'Summary of Essential Information' in Part
A.

The Trustee will receive for its ordinary recurring services to the Trusts
an annual fee in the amount set forth under 'Summary of Essential Information'
in Part A. For a discussion of the services performed by the Trustee pursuant to
its obligations under the Trust Agreement, see 'Trust Administration' and
'Rights of Certificateholders'.

The Evaluator will receive, for each daily evaluation of the Bonds in the
Trusts after the initial public offering is completed, a fee in the amount set
forth under 'Summary of Essential Information' in Part A.

The Trustee's and Evaluator's fees applicable to a Trust are payable
monthly as of the Record Date from the Interest Account of such Trust to the
extent funds are available and then from the Principal Account. Both fees may be
increased without approval of the Certificateholders by amounts not exceeding
proportionate increases in consumer prices for services as measured by the
United States Department of Labor's Consumer Price Index entitled 'All Services
Less Rent'. In addition, the Trustee's fee may be periodically adjusted in
response to fluctuations in short-term interest rates (reflecting the cost to
the Trustee of advancing funds to a Trust to meet scheduled distributions).

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The following additional charges are or may be incurred by the Trusts: all
expenses (including counsel fees) of the Trustee incurred and advances made in
connection with its activities under the Trust Agreement, including the expenses
and costs of any action undertaken by the Trustee to protect the Trusts and the
rights and interests of the Certificateholders; fees of the Trustee for any
extraordinary services performed under the Trust Agreement; indemnification of
the Trustee for any loss or liability accruing to it without gross negligence,
bad faith or willful misconduct on its part, arising out of or in connection
with its acceptance or administration of the Trusts; indemnification of the
Sponsors for any losses, liabilities and expenses incurred in acting as sponsors

of the Trusts without gross negligence, bad faith or willful misconduct on its
part; and all taxes and other governmental charges imposed upon the Bonds or any
part of the Trusts (no such taxes or charges are being levied, made or, to the
knowledge of the Sponsors, contemplated). The above expenses, including the
Trustee's fees, when paid by or owing to the Trustee are secured by a first lien
on the Trust to which such expenses are charged. In addition, the Trustee is
empowered to sell Bonds in order to make funds available to pay all expenses.

The accounts of the Trusts shall be audited not less than annually by
independent public accountants selected by the Sponsors. The expenses of the
audit shall be an expense of each Trust. So long as the Sponsors maintain a
secondary market, the Sponsors will bear any audit expense which exceeds 50cents
per Unit. Certificateholders covered by the audit during the year may receive a
copy of the audited financials upon request.
EXCHANGE PRIVILEGE AND CONVERSION OFFER
EXCHANGE PRIVILEGE

Certificateholders may elect to exchange any or all of their Units of these
Trusts for Units of one or more of any available series of Insured Municipal
Securities Trust, Municipal Securities Trust, New York Municipal Trust, Mortgage
Securities Trust, A Corporate Trust or Equity Securities Trust (the 'Exchange
Trusts') at a reduced sales charge as set forth below. Under the Exchange
Privilege, the Sponsors' repurchase price during the initial offering period of
the Units being surrendered will be based on the aggregate offer price of the
Bonds in the particular Trust portfolio; and, after the initial offering period
has been completed, will be based on the aggregate bid price of the Bonds in the
particular Trust portfolio. Units in an Exchange Trust then will be sold to the
Certificateholder at a price based on the aggregate offer price of the Bonds in
the Exchange Trust portfolio during the initial public offering period of the
Exchange Trust; or based on the aggregate bid price of the Bonds in the Exchange
Trust Portfolio if its initial offering has been completed plus accrued interest
and a reduced sales charge as set forth below. If the participant elects to
purchase units of the Equity Securities Trust under the Exchange Privilege, the
purchase price of the Units will be based, at all times, on the market value of
the underlying securities in the Equity Trust portfolio plus a sales charge.

Except for unitholders who wish to exercise the Exchange Privilege within
the first five months of their purchase of Units of the Trust, the sales charge
applicable to the purchase of units of an Exchange Trust shall be 1.5% of the
price of each Exchange Trust unit per unit (or per 1,000 Units for the Mortgage
Securities Trust or per 100 Units for the Equity Securities Trust). For
unitholders who wish to exercise the Exchange Privilege within the first five
months of their purchase of Units of the Trust, the sales charge applicable to
the purchase of units of an Exchange Trust shall be the greater of (i) 1.5% per
unit (or per 1,000 Units for the Mortgage Securities Trust or 100 Units for the
Equity Securities Trust), or (ii) an amount which when coupled with the sales
charge paid by the unitholder upon his original purchase of Units of the Trust
at least equals the sales charge applicable in the direct purchase of units of
an Exchange Trust. The Exchange Privilege is subject to the following
conditions:

1. The Sponsors must be maintaining a secondary market in both the
Units of the Trust held by the Certificateholder and the Units of the
available Exchange Trust. While the Sponsors have indicated their intention
to maintain a market in the Units of all Trusts sponsored by it, the
Sponsors are under no obligation to continue to maintain a secondary market
and therefore there is no assurance that the Exchange Privilege will be
available to a Certificateholder at any specific

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time in the future. At the time of the Certificateholder's election to
participate in the Exchange Privilege, there also must be Units of the
Exchange Trust available for sale, either under the initial primary
distribution or in the Sponsor's secondary market.

2. Exchanges will be effected in whole units only. Any excess proceeds
from the Units surrendered for exchange will be remitted and the selling
Certificateholder will not be permitted to advance any new funds in order
to complete an exchange. Units of the Mortgage Securities Trust may only be
acquired in blocks of 1,000 Units. Units of the Equity Securities Trust may
only be acquired in blocks of 100 Units.

3. The Sponsors reserve the right to suspend, modify or terminate the
Exchange Privilege. The Sponsors will provide unitholders of the Trust with
60 days prior written notice of any termination or material amendment to
the Exchange Privilege, provided that, no notice need be given if (i) the
only material effect of an amendment is to reduce or eliminate the sales
charge payable at the time of the exchange, to add one or more series of
the Trust eligible for the Exchange Privilege or to delete a series which
has been terminated from eligibility for the Exchange Privilege, (ii) there
is a suspension of the redemption of units of an Exchange Trust under
Section 22(e) of the Investment Company Act of 1940, or (iii) an Exchange
Trust temporarily delays or ceases the sale of its units because it is
unable to invest amounts effectively in accordance with its investment
objectives, policies and restrictions. During the 60 day notice period
prior to the termination or material amendment of the Exchange Privilege
described above, the Sponsors will continue to maintain a secondary market
in the units of all Exchange Trusts that could be acquired by the affected
unitholders. Unitholders may, during this 60 day period, exercise the
Exchange Privilege in accordance with its terms then in effect. In the
event the Exchange Privilege is not available to a Certificateholder at the
time he wishes to exercise it, the Certificateholder will immediately be
notified and no action will be taken with respect to his Units without
further instructions from the Certificateholder.

To exercise the Exchange Privilege, a Certificateholder should notify the
Sponsors of his desire to exercise his Exchange Privilege. If Units of a
designated, outstanding series of an Exchange Trust are at the time available
for sale and such Units may lawfully be sold in the state in which the
Certificateholder is a resident, the Certificateholder will be provided with a
current prospectus or prospectuses relating to each Exchange Trust in which he
indicates an interest. He may then select the Trust or Trusts into which he
desires to invest the proceeds from his sale of Units. The exchange transaction

will operate in a manner essentially identical to a secondary market transaction
except that units may be purchased at a reduced sales charge.

EXAMPLE: Assume that after the initial public offering has been completed, a
Certificateholder has five units of a Trust with a current value of $700 per
unit which he has held for more than 5 months and the Certificateholder wishes
to exchange the proceeds for units of a secondary market Exchange Trust with a
current price of $725 per unit. The proceeds from the Certificateholder's
original units will aggregate $3,500. Since only whole units of an Exchange
Trust may be purchased under the Exchange Privilege, the Certificateholder would
be able to acquire four units (or 4,000 Units of the Mortgage Securities Trust
or 400 Units of the Equity Securities Trust) for a total cost of $2,943.50
($2,900 for units and $43.50 for the sales charge). The remaining $556.50 would
be remitted to the Certificateholder in cash. If the Certificateholder acquired
the same number of units at the same time in a regular secondary market
transaction, the price would have been $3,059.50 ($2,900 for units and $159.50
for the sales charge, assuming a 5 1/2% sales charge times the public offering
price).

THE CONVERSION OFFER

Unit owners of any registered unit investment trust for which there is no
active secondary market in the units of such trust (a 'Redemption Trust') may
elect to redeem such units and apply the proceeds of the redemption to the
purchase of available Units of one or more series of A Corporate Trust,
Municipal Securities Trust, Insured Municipal Securities Trust, Mortgage
Securities Trust, New York Municipal Trust or Equity Securities Trust sponsored
by Bear, Stearns & Co. Inc. or the Sponsors (the 'Conversion Trusts') at the
Public Offering Price for units of the Conversion Trust based on a reduced sales
charge as set forth below. Under the Conversion Offer, units of the Redemption
Trust

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must be tendered to the trustee of such trust for redemption at the redemption
price, which is based upon the aggregate bid side evaluation of the underlying
bonds in such trust and is generally about 1 1/2% to 2% lower than the offering
price for such bonds. The purchase price of the units will be based on the
aggregate offer price of the underlying bonds in the Conversion Trust portfolio
during its initial offering period; or, at a price based on the aggregate bid
price of the underlying bonds if the initial public offering of the Conversion
Trust has been completed, plus accrued interest and a sales charge as set forth
below. If the participant elects to purchase units of the Equity Securities
Trust under the conversion offer, the purchase price of the Units will be based
at all times, on the market value of the underlying securities in the Equity
Trust portfolio plus a sales charge.

Except for unitholders who wish to exercise the Conversion Offer within the
first five months of their purchase of units of a Redemption Trust, the sales
charge applicable to the purchase of Units of the Conversion Trust shall be 1.5%

of the public offering price of the Conversion Trust Unit (or per 1,000 Units
for the Mortgage Securities Trust or per 100 Units for the Equity Securities
Trust). For unitholders who wish to exercise the Conversion Offer within the
first five months of their purchase of units of a Redemption Trust, the sales
charge applicable to the purchase of Units of a Conversion Trust shall be the
greater of (i) 1.5% of the public offering price of the Conversion Trust Unit
(or per 1,000 Units for the Mortgage Securities Trust or per 100 Units for the
Equity Securities Trust) or (ii) an amount which when coupled with the sales
charge paid by the unitholder upon his original purchase of units of the
Redemption Trust at least equals the sales charge applicable in the direct
purchase of Units of a Conversion Trust. The Conversion Offer is subject to the
following limitations:

1. The Conversion Offer is limited only to unit owners of any
Redemption Trust, defined as a unit investment trust for which there is no
active secondary market at the time the Certificateholder elects to
participate in the Conversion Offer. At the time of the unit owner's
election to participate in the Conversion Offer, there also must be
available units of a Conversion Trust, either under a primary distribution
or in the Sponsors' secondary market.

2. Exchanges under the Conversion Offer will be effected in whole
units only. Unit owners will not be permitted to advance any new funds in
order to complete an exchange under the Conversion Offer. Any excess
proceeds from units being redeemed will be returned to the unit owner.
Units of the Mortgage Securities Trust may only be acquired in blocks of
1,000 units. Units of the Equity Securities Trust may only be acquired in
blocks of 100 Units.

3. The Sponsors reserve the right to modify, suspend or terminate the
Conversion Offer at any time without notice to unit owners of Redemption
Trusts. In the event the Conversion Offer is not available to a unit owner
at the time he wishes to exercise it, the unit owner will be notified
immediately and no action will be taken with respect to his units without
further instruction from the unit owner. The Sponsors also reserve the
right to raise the sales charge based on actual increases in the Sponsors'
costs and expenses in connection with administering the program, up to a
maximum sales charge of $20 per unit (or per 1,000 units for the Mortgage
Securities Trust or per 100 Units for the Equity Securities Trust).

To exercise the Conversion Offer, a unit owner of a Redemption Trust should
notify his retail broker of his desire to redeem his Redemption Trust Units and
use the proceeds from the redemption to purchase Units of one or more of the
Conversion Trusts. If Units of a designated, outstanding series of a Conversion
Trust are at that time available for sale and if such Units may lawfully be sold
in the state in which the unit owner is a resident, the unit owner will be
provided with a current prospectus or prospectuses relating to each Conversion
Trust in which he indicates an interest. He then may select the Trust or Trusts
into which he decides to invest the proceeds from the sale of his Units. The
transaction will be handled entirely through the unit owner's retail broker. The
retail broker must tender the units to the trustee of the Redemption Trust for
redemption and then apply the proceeds to the redemption toward the purchase of
units of a Conversion Trust at a price based on the aggregate offer or bid side

evaluation per Unit of the Conversion Trust, depending on which price is
applicable, plus accrued interest and the applicable sales charge. The
certificates must be surrendered to the broker at the time the redemption order
is placed and the broker must specify to the Sponsors that the

75
<PAGE>
purchase of Conversion Trust Units is being made pursuant to the Conversion
Offer. The unit owner's broker will be entitled to retain $5 of the applicable
sales charge.

EXAMPLE: Assume a unit owner has five units of a Redemption Trust which has
held for more than 5 months with a current redemption price of $675 per unit
based on the aggregate bid price of the underlying bonds and the unit owner
wishes to participate in the Conversion Offer and exchange the proceeds for
units of a secondary market Conversion Trust with a current price of $750 per
Unit. The proceeds for the unit owner's redemption of units will aggregate
$3,375. Since only whole units of a Redemption Trust may be purchased under the
Conversion Offer, the unit owner will be able to acquire four units of the
Conversion Trust (or 4,000 units of the Mortgage Securities Trust or 400 Units
of the Equity Securities Trust) for a total cost of $3,045 ($3,000 for units and
$45 for the sales charge). The remaining $330 would be remitted to the unit
owner in cash. If the unit owner acquired the same number of Conversion Trust
units at the same time in a regular secondary market transaction, the price
would have been $3,165 ($3,000 for units and $165 sales charge, assuming a
5 1/2% sales charge times the public offering price).

DESCRIPTION OF THE EXCHANGE
TRUSTS AND THE CONVERSION TRUSTS

A Corporate Trust may be an appropriate investment vehicle for an investor
who is more interested in a higher current return on his investment (although
taxable) than a tax-exempt return (resulting from the fact that the current
return from taxable fixed income securities is normally higher than that
available from tax-exempt fixed income securities). Municipal Securities Trust
and New York Municipal Trust may be appropriate investment vehicles for an
investor who is more interested in tax-exempt income. The interest income from
New York Municipal Trust is, in general, also exempt from all New York State and
local New York income taxes, while the interest income from Municipal Securities
Trust is subject to applicable New York State and local New York taxes, except
for that portion of the income which is attributable to New York obligations in
the Trust portfolio, if any. The interest income from each State Trust of the
Municipal Securities Trust, Multi-State Series is, in general, exempt from state
and local taxes when held by residents of the state where the issuers of bonds
in such State Trusts are located. The Insured Municipal Securities Trust
combines the advantages of providing interest income free from regular federal
income tax under existing law with the added safety of irrevocable insurance.
Insured Navigator Series further combines the advantages of providing interest
income free from regular federal income tax and state and local taxes when held
by residents of the state where issuers of the bonds in such state trusts are
located with the added safety of irrevocable insurance. Mortgage Securities
Trust offers an investment vehicle for investors who are interested in obtaining

safety of capital and a high level of current distribution of interest income
through investment in a fixed portfolio of collateralized mortgage obligations.
Equity Securities Trust offers investors an opportunity to achieve capital
appreciation together with a high level of current income.

TAX CONSEQUENCES OF THE EXCHANGE
PRIVILEGE AND THE CONVERSION OFFER

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

76
<PAGE>
OTHER MATTERS
LEGAL OPINIONS

The legality of the Units offered hereby and certain matters relating to
federal tax law have been passed upon by Messrs. Battle Fowler LLP, 75 East 55th
Street, New York, New York 10022 as counsel for the Sponsors. Messrs. Freeman,
Zeller & Bryant have acted as special New Jersey counsel for the Sponsors.
Messrs. Brown & Wood have acted as special California counsel for the Sponsors.
Messrs. Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. have acted as
special Florida counsel for the Sponsors. Messrs. Hunton & Williams have acted
as special Virginia counsel for the Sponsors. Messrs. Carter, Ledyard & Milburn,
Two Wall Street, New York, New York 10005 have acted as counsel for the Trustee.

INDEPENDENT AUDITORS

The Statement of Condition and Portfolio(s) are included herein in reliance
upon the report of KPMG Peat Marwick LLP, independent auditors, and upon the
authority of said firm as experts in accounting and auditing.

DESCRIPTION OF BOND RATINGS*
STANDARD & POOR'S CORPORATION

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

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

The bond rating is not a recommendation to purchase or sell a security,

inasmuch as it does not comment as to market price.

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

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

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

II. Nature of and provisions of the obligation.

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

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

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

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

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

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

77
<PAGE>
Plus (+) or Minus (-): To provide more detailed indications of credit
quality, the ratings from 'AA' to 'BB' may be modified by the addition of a plus
or minus sign to show relative standing within the major rating categories.
MOODY'S INVESTORS SERVICE, INC.

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

Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
'gilt edge'. Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are

likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements 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. The market value of the Baa-rated
bonds is more sensitive to changes in economic circumstances. Aside from
occasional speculative factors and the aforementioned economic circumstances
applying to some bonds of this Class, Baa market valuations move in parallel
with Aaa, Aa and A obligations during periods of economic normalcy, except in
instances of oversupply.

Those bonds in the A and Baa group which Moody's believes possess the
strongest investment attributes are designated by the symbol A 1 and Baa 1.
Other A bonds comprise the balance of the group. These rankings (1) designate
the bonds which offer the maximum in security within their quality group, (2)
designate bonds which can be bought for possible upgrading in quality and (3)
additionally afford the investor an opportunity to gauge more precisely the
relative attractiveness of offerings in the market place.

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

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

- ------------------
* As described by Standard & Poor's Corporation.

78
<PAGE>
purchase, sell, or hold units, inasmuch as the rating does not comment as to
market price of the units or suitability for a particular investor.

Funds rated 'AAA' are composed exclusively of assets that are rated 'AAA'
by Standard & Poor's or, have, in the opinion of Standard & Poor's, credit
characteristics comparable to assets that are rated 'AAA', or certain short-term
investments. Standard & Poor's defines its AAA rating for such assets as the
highest rating assigned by Standard & Poor's to a debt obligation. Capacity to
pay interest and repay principal is very strong.

79
<PAGE>
AUTHORIZATION FOR INVESTMENT IN INSURED MUNICIPAL SECURITIES TRUST
AND MUNICIPAL SECURITIES TRUST
TRP PLAN -- TOTAL REINVESTMENT PLAN

I hereby elect to participate in the TRP Plan and am the owner of
Insured Fund and/or ______ units of New York Navigator Insured Series
______ and/or ______ units of New Jersey Navigator Insured Series
______ and/or ______ units of California Trust and/or units of Florida
Trust and/or ______ units of Virginia Trust.

I hereby authorize the United States Trust Company of New York, Trustee
to pay all semi-annual distributions of interest and principal (if any)
with respect to such units to the United States Trust Company of New
York, as TRP Plan Agent, who shall immediately invest the distributions
in units of the available series of Insured Municipal Securities Trust,
or Municipal Securities Trust.

The foregoing authorization is subject in
all respects to the terms and conditions of Date --------------- 19------
participation set forth in the prospectus
relating to such available series.

- --------------------------------------- -----------------------------
Registered Holder (Print) Registered Holder (Print)

- --------------------------------------- -----------------------------
Registered Holder Signature Registered Holder Signature
(Two signatures if joint tenancy)

My Brokerage Firm's Name _________________________________________________

Street Address ___________________________________________________________

City, State and Zip Code__________________________________________________

Salesman's Name _________ Salesman's No. _________________________________

UNIT HOLDERS NEED ONLY DATE AND SIGN THIS FORM

MAIL TO YOUR BROKER

UNITED STATES TRUST COMPANY OF NEW YORK
ATTN: THE UIT INVESTMENT DEPARTMENT UNIT A
770 BROADWAY
NEW YORK, NEW YORK 10003
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
===============================================================================
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
NOT CONTAINED IN PARTS A AND B OF THIS PROSPECTUS; AND ANY INFORMATION OR
REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE TRUSTS, THE TRUSTEE, THE EVALUATOR, OR THE SPONSORS. THE
TRUSTS ARE REGISTERED AS UNIT INVESTMENT TRUSTS UNDER THE INVESTMENT COMPANY ACT
OF 1940. SUCH REGISTRATION DOES NOT IMPLY THAT THE TRUSTS OR ANY OF THEIR UNITS
HAVE BEEN GUARANTEED, SPONSORED, RECOMMENDED OR APPROVED BY THE UNITED STATES OR
ANY STATE OR ANY AGENCY OR OFFICER THEREOF.
------------------------

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, SECURITIES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO
MAKE SUCH OFFER IN SUCH STATE.
TABLE OF CONTENTS

<TABLE>
<CAPTION>
TITLE PAGE
<S> <C>
PART A
Summary of Essential Information............... A-2
Independent Auditors' Report................... A-17
Statements of Condition........................ A-18
Portfolios..................................... A-20
Underwriting Syndicates........................ A-27

PART B
The Trust...................................... 1
Risk Considerations.......................... 11
Public Offering................................ 52
Estimated Long Term Return and Estimated
Current Return............................... 55
Rights of Certificateholders................... 55
Tax Status..................................... 58
Liquidity...................................... 63
Total Reinvestment Plan........................ 65
Trust Administration........................... 69
Trust Expenses and Charges..................... 72
Exchange Privilege and Conversion Offer........ 73
Other Matters.................................. 77
Description of Bond Ratings.................... 77
Description of Rating.......................... 78
</TABLE>

PARTS A AND B OF THIS PROSPECTUS DO NOT CONTAIN ALL OF THE INFORMATION SET
FORTH IN THE REGISTRATION STATEMENT AND EXHIBITS RELATING THERETO, FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C., UNDER THE SECURITIES
ACT OF 1933, AND THE INVESTMENT COMPANY ACT OF 1940, AND TO WHICH REFERENCE IS
MADE.

SERIES 33,
NEW YORK NAVIGATOR INSURED SERIES 17,
NEW JERSEY NAVIGATOR INSURED SERIES 13
AND
MULTI-STATE SERIES 46

(UNIT INVESTMENT TRUSTS)
PROSPECTUS
DATED: APRIL 6, 1995

SPONSORS:
BEAR, STEARNS & CO. INC.
245 PARK AVENUE
NEW YORK, NY 10167
212-272-2500

GRUNTAL & CO., INCORPORATED
14 WALL STREET
NEW YORK, NY 10005
212-267-8800

TRUSTEE:
UNITED STATES TRUST COMPANY
OF NEW YORK
770 BROADWAY
NEW YORK, NY 10003

EVALUATOR:
KENNY S&P EVALUATION SERVICES
A DIVISION OF J.J. KENNY CO. INC.
65 BROADWAY
NEW YORK, NY 10006

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

<PAGE>
PART II -- ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM A -- BONDING ARRANGEMENTS

The employees of Bear, Stearns & Co. Inc. are covered under Brokers'
Blanket Policy, Standard Form 14, in the amount of $11,000,000 (plus
$196,000,000 excess coverage under Brokers' Blanket Policies, Standard Form 14
and Form B Consolidated). Gruntal & Co., Incorporated is bonded by Gulf
Insurance Company which is a subsidiary of Commercial Credit Corporation. This
policy has an aggregate annual coverage of $15 million.
ITEM B -- CONTENTS OF REGISTRATION STATEMENT

This Registration Statement on Form S-6 comprises the following papers and
documents:

The facing sheet on Form S-6.
The Cross-Reference Sheet.
The Prospectus consisting of pages.
Undertakings.
Signatures.

Written consents of the following persons:
Battle Fowler LLP (included in Exhibit 99.3.1)
Freeman, Zeller & Bryant (included in Exhibit 99.3.2)
Brown & Wood (included in Exhibit 99.3.3)
Greenberg Traurig Hoffman Lipoff Rosen & Quentel P.A. (included in
Exhibit 99.3.4)
Hunton & Williams (included in Exhibit 99.3.5)
KPMG Peat Marwick LLP
Kenny S&P Evaluation Services (included in Exhibit 99.5.1)

The following exhibits:

<TABLE>
<S> <C>
*99.1.1 --Reference Trust Agreements including certain amendments to the Trust Indenture and Agreements
referred to under Exhibit 99.1.1.1 below.
99.1.1.1 --Trust Indenture and Agreements for Insured Municipal Securities Trust, 47th Discount Series and
Series 20 and Subsequent Series (filed as Exhibit 1.1.1 to Amendment No. 1 to Form S-6 Registration
Statement No. 33-28384 of Insured Municipal Securities Trust, 47th Discount Series and Series 20 on
June 16, 1989 and incorporated herein by reference), Municipal Securities Trust, Series 45 and 73rd
Discount Series and Subsequent Series (filed as Exhibit 1.1.1 to Amendment No. 1 to Form S-6
Registration Statement No. 33-29313 of Municipal Securities Trust, Series 45 and 73rd Discount
Series on July 20, 1989 and incorporated herein by reference), and Municipal Securities Trust,
Multi-State Series 37 and Subsequent Series (filed as Exhibit 1.1.1 to Amendment No. 1 to Form S-6
Registration Statement No. 33-29202 of Municipal Securities Trust, Multi-State Series 37 on June
30, 1989 and incorporated herein by reference).
99.1.3.4 --Certificate of Incorporation of Bear, Stearns & Co. Inc., as amended (filed as Exhibit 99.1.3.4 to
Form S-6 Registration Statement Nos. 33-50891 and 33-50901 of Insured Municipal Securities Trust,
New York Navigator Insured Series 15 and New Jersey Navigator Insured Series 11; and Municipal
Securities Trust, Multi-State Series 44, respectively, on December 9, 1993 and incorporated herein
by reference).

99.1.3.5 --By-Laws of Bear, Stearns & Co. Inc., as amended (filed as Exhibit 99.1.3.5. to Form S-6
Registration Statement Nos. 33-50891 and 33-50901 of Insured Municipal Securities Trust, New York
Navigator Insured Series 15 and New Jersey Navigator Insured Series 11; and Municipal Securities
Trust, Multi-State Series 44, respectively, on December 9, 1993 and incorporated herein by
reference).
99.1.3.6 --Certificate of Incorporation of Gruntal & Co., Incorporated, as amended (filed as Exhibit 1.3.6 to
Amendment No. 1 to Form S-6 Registration Statement No. 33-28384 of Insured Municipal Securities
Trust, 47th Discount Series and Series 20 on June 16, 1989 and incorporated herein by reference).
</TABLE>

- ------------
* Filed herewith.

II-1
<PAGE>

<TABLE>
<S> <C>
99.1.3.7 --By-Laws of Gruntal & Co., Incorporated, as amended (filed as Exhibit 1.3.7 to Amendment No. 1 to
Form S-6 Registration Statement No. 33-28384 of Insured Municipal Securities Trust, 47th Discount
Series and Series 20 on June 16, 1989 and incorporated herein by reference).
99.1.4 --Form of Agreement Among Underwriters (filed as Exhibit 1.4 to Amendment No. 1 to Form S-6
Registration Statement No. 33-28384 of Insured Municipal Securities Trust, 47th Discount Series and
Series 20 on June 16, 1989 and incorporated herein by reference).
99.1.5 --Form of Insurance Policy of Financial Guaranty Insurance Company for Sponsor-Insured Bonds (filed
as Exhibit 1.5 to Amendment No. 1 to Form S-6 Registration Statement No. 2-95261 of Insured
Municipal Securities Trust, 7th Discount Series on February 7, 1985 and incorporated herein by
reference).
99.1.5.1 --Form of Insurance Policy of Bond Investors Guaranty for Sponsor-Insured Bonds (filed as Exhibit
1.5.1 to Amendment No. 1 to Form S-6 Registration Statement No. 33-08700 of Insured Municipal
Securities Trust, 24th Discount Series on October 2, 1986 and incorporated herein by reference).
99.1.5.2 --Form of Insurance Policy of MBIA Insurance Corporation (formerly known as Municipal Bond Investors
Assurance Corporation) (filed as Exhibit 1.5.2 to Amendment No. 2 to Form S-6 Registration
Statement No. 33-29467 of Insured Municipal Securities Trust, Series 22 and New York Navigator
Insured Series 1 on January 18, 1990 and incorporated herein by reference).
99.2.1 --Form of Certificate (filed as Exhibit 2.1 to Amendment No. 1 to Form S-6 Registration Statement No.
33-28384 of Insured Municipal Securities Trust, 47th Discount Series and Series 20 on June 16, 1989
and incorporated herein by reference).
*99.3.1 --Opinion of Battle Fowler LLP as to the legality of the securities being registered, including their
consent to the filing thereof and to the use of their name under the headings 'Tax Status' and
'Legal Opinions' in the Prospectus, and to the filing of their opinion regarding tax status of the
Trust.
*99.3.2 --Opinion of Special New Jersey Counsel.
*99.3.3 --Opinion of Special California Counsel.
*99.3.4 --Opinion of Special Florida Counsel.
*99.3.5 --Opinion of Special Virginia Counsel.
99.4.1 --Form of Custody Agreement (filed as Exhibit 4.1 to Amendment No. 1 to Form S-6 Registration
Statement No. 33-36215 of Insured Municipal Securities Trust, Series 25 and New York Navigator
Insured Series 4 and incorporated herein by reference).
99.4.2 --Form of First Amendment to Custody Agreement (filed as Exhibit 4.2 to Amendment No. 1 to Form S-6
Registration Statement No. 33-36215 of Insured Municipal Securities Trust, Series 25 and New York
Navigator Series 4 and incorporated herein by reference).
*99.5.1 --Consent of the Evaluator and confirmation of ratings.
99.6.0 --Power of Attorney of Bear, Stearns & Co. Inc., the Depositor, by its officers and a majority of its

Directors (filed as Exhibit 6.0 to Post-Effective Amendment No. 8 to Form S-6 Registration
Statements Nos. 2-92113, 2-92660, 2-93073, 2-93884 and 2-94545 on October 30, 1992).
99.6.1 --Power of Attorney of Gruntal & Co., Incorporated, by its officers and a majority of its Directors
(filed as Exhibit 6.1 to Form S-6 Registration Statement No. 33-36316 of Mortgage Securities Trust,
CMO Series 1 on August 10, 1990 and incorporated herein by reference).
99.7.0 --Form of Agreement Among Co-Sponsors (filed as Exhibit 7.0 to Amendment No. 1 to Form S-6
Registration Statement No. 33-28384 of Insured Municipal Securities Trust, 47th Discount Series and
Series 20 on June 16, 1989 and incorporated herein by reference).
</TABLE>

- ------------
* Filed herewith.

II-2
<PAGE>
UNDERTAKING TO FILE REPORTS

Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.

SIGNATURES

The registrant, Insured Municipal Securities Trust Series 33, New York
Navigator Insured Series 17 and New Jersey Navigator Insured Series 13; and
Municipal Securities Trust, Multi-State Series 46 hereby identifies Insured
Municipal Securities Trust, Series 22 and New York Navigator Insured Series 1,
Insured Municipal Securities Trust, 50th Discount Series, New Jersey Navigator
Insured Series 1 and Pennsylvania Navigator Insured Series 1 and Municipal
Securities Trust, Series 54 and Multi-State 44 for purposes of the
representations required by Rule 487 and represents the following:

(1) That the portfolio securities deposited in the series as to
securities of 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 the securities of 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 statement for such previous series as to which the effective
date was determined by the Commissioner 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,
INSURED MUNICIPAL SECURITIES TRUST, SERIES 33, NEW YORK NAVIGATOR INSURED SERIES
17 AND NEW JERSEY NAVIGATOR INSURED SERIES 13; AND MUNICIPAL SECURITIES TRUST,
MULTI-STATE SERIES 46 HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, HEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW
YORK AND STATE OF NEW YORK ON THE 6TH DAY OF APRIL, 1995.

Insured Municipal Securities Trust,
Series 33,
New York Navigator Insured Series 17
and
New Jersey Navigator Insured Series
13; and
Municipal Securities Trust,
Multi-State Series 46
(Registrant)

BEAR, STEARNS & CO. INC.
(Depositor)

By /s/ PETER J. DEMARCO
------------------------------------
Peter J. DeMarco
(Authorized Signator)

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS, WHO
CONSTITUTE THE PRINCIPAL OFFICERS AND A MAJORITY OF THE DIRECTORS OF BEAR,
STEARNS & CO. INC., THE DEPOSITOR, IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------- -------------------------------------------------- -----------------------------
<S> <C> <C> <C>
ALAN C. GREENBERG Chairman of the Board, Director and Senior )
Managing )
Director )
)
JAMES E. CAYNE President, Chief Executive Officer, Director and ) April 6, 1995
Senior Managing Director )
JOHN C. SITES, JR. Executive Vice President, Director and Senior )
Managing Director )
MICHAEL L. TARNOPOL Executive Vice President, Director and Senior ) By /s/PETER J. DEMARCO
Managing Director ) Peter J. DeMarco
VINCENT J. MATTONE Executive Vice President, Director and Senior ) Attorney-in-Fact*
Managing Director )
ALAN D. SCHWARTZ Executive Vice President, Director and Senior )
Managing Director )

DOUGLAS P.C. NATION Director and Senior Managing Director )
WILLIAM J. MONTGORIS Chief Operating Officer/Chief Financial )
Officer/Chief Operating Officer, Senior Vice )
President-Finance and Senior Managing Director )
KENNETH L. EDLOW Secretary and Senior Managing Director )
MICHAEL MINIKES Treasurer and Senior Managing Director )
MICHAEL J. ABATEMARCO Controller, Assistant Secretary and Senior )
Managing Director )
MARK E. LEHMAN Senior Vice President -- General Counsel/Chief )
Legal Officer and Senior Managing Director )
FREDERICK B. CASEY Assistant Treasurer and Senior Managing Director )
</TABLE>

- ------------
* An executed copy of the power of attorney was filed as Exhibit 6.0 to
Post-Effective Amendment No. 8 to Registration Statements Nos. 2-92113, 2-92660,
2-93073, 2-93884, and 2-94545 on October 30, 1992.

II-3
<PAGE>
UNDERTAKING TO FILE REPORTS

SIGNATURES

date was determined by the Commissioner or the staff; and

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

Insured Municipal Securities Trust,
Series 33,
New York Navigator Insured Series 17
and
New Jersey Navigator Insured Series
13; and
Municipal Securities Trust,
Multi-State Series 46
(Registrant)

GRUNTAL & CO., INCORPORATED
(Depositor)

By /s/ ROBERT SABLOWSKY
------------------------------------
Robert Sablowsky
(Authorized Signator)

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS, WHO
CONSTITUTE THE PRINCIPAL OFFICERS AND A MAJORITY OF THE DIRECTORS OF GRUNTAL &
CO., INCORPORATED, THE DEPOSITOR, IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------- -------------------------------------------------- -----------------------------
<S> <C> <C> <C>
)
HOWARD SILVERMAN Chief Executive Officer and Director )
EDWARD E. BAO Executive Vice President and ) April 6, 1995
Director )
)
BARRY RICHTER Executive Vice President and ) By /s/ROBERT SABLOWSKY
Director ) Robert Sablowsky
ROBERT SABLOWSKY Executive Vice President and ) Attorney-in-Fact*
Director )

LIONEL G. HEST Senior Executive and Director )
)
)
)
)
</TABLE>

- ------------
* An executed copy of the power of attorney was filed as Exhibit 6.1 to
Registration Statement No. 33-36316 on August 10, 1990.

II-4
<PAGE>
CONSENT OF INDEPENDENT AUDITORS

The Sponsors, Trustee, and Certificateholders:
Insured Municipal Securities Trust -- Series 33, New York Navigator Insured
Series 17 and
New Jersey Navigator Insured Series 13; and
Municipal Securities Trust, Multi-State Series 46 (California Trust,
Florida Trust and Virginia Trust)

We hereby consent to the use of our report dated April 6, 1995 included
herein and to the reference to our Firm under the heading 'Independent Auditors'
in the Prospectus.

KPMG PEAT MARWICK LLP

New York, New York
April 6, 1995

II-5

<PAGE>

REGISTRATION NO. 33-58167

EXHIBITS
FILED WITH
AMENDMENT NO. 1
TO
FORM S-6

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

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

INSURED MUNICIPAL SECURITIES TRUST, SERIES 33,

NEW YORK NAVIGATOR INSURED SERIES 17 AND

NEW JERSEY NAVIGATOR INSURED SERIES 13; AND

MUNICIPAL SECURITIES TRUST, MULTI-STATE SERIES 46

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

<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- --------- ---------------------------------------------------------------------------------------------- -----------
<S> <C> <C> <C>
*99.1.1 -- Reference Trust Agreements including certain amendments to the Trust Indenture and
Agreements referred to under Exhibit 99.1.1.1 below.

99.1.1.1 -- Trust Indenture and Agreements for Insured Municipal Securities Trust, 47th Discount
Series and Series 20 and Subsequent Series (filed as Exhibit 1.1.1 to Amendment No. 1 to
Form S-6 Registration Statement No. 33-28384 of Insured Municipal Securities Trust, 47th
Discount Series and Series 20 on June 16, 1989 and incorporated herein by reference),
Municipal Securities Trust, Series 45 and 73rd Discount Series and Subsequent Series
(filed as Exhibit 1.1.1 to Amendment No. 1 to Form S-6 Registration Statement No.
33-29313 of Municipal Securities Trust, Series 45 and 73rd Discount Series on July 20,
1989 and incorporated herein by reference), and Municipal Securities Trust, Multi-State
Series 37 and Subsequent Series (filed as Exhibit 1.1.1 to Amendment No. 1 to Form S-6
Registration Statement No. 33-29202 of Municipal Securities Trust, Multi-State Series 37
on June 30, 1989 and incorporated herein by reference).

99.1.3.4 -- Certificate of Incorporation of Bear, Stearns & Co. Inc., as amended (filed as Exhibit
99.1.3.4 to Form S-6 Registration Statement Nos. 33-50891 and 33-50901 of Insured
Municipal Securities Trust, New York Navigator Insured Series 15 and New Jersey
Navigator Insured Series 11; and Municipal Securities Trust, Multi-State Series 44,
respectively, on December 9, 1993 and incorporated herein by reference).

99.1.3.6 -- Certificate of Incorporation of Gruntal & Co., Incorporated, as amended (filed as
Exhibit 1.3.6 to Amendment No. 1 to Form S-6 Registration Statement No. 33-28384 of
Insured Municipal Securities Trust, 47th Discount Series and Series 20 on June 16, 1989
and incorporated herein by reference).

99.1.3.7 -- By-Laws of Gruntal & Co., Incorporated, as amended (filed as Exhibit 1.3.7 to Amendment
No. 1 to Form S-6 Registration Statement No. 33-28384 of Insured Municipal Securities
Trust, 47th Discount Series and Series 20 on June 16, 1989 and incorporated herein by
reference).

99.1.4 -- Form of Agreement Among Underwriters (filed as Exhibit 1.4 to Amendment No. 1 to Form
S-6 Registration Statement No. 33-28384 of Insured Municipal Securities Trust, 47th
Discount Series and Series 20 on June 16, 1989 and incorporated herein by reference).

99.1.5 -- Form of Insurance Policy of Financial Guaranty Insurance Company for Sponsor-Insured
Bonds (filed as Exhibit 1.5 to Amendment No. 1 to Form S-6 Registration Statement No.
2-95261 of Insured Municipal Securities Trust, 7th Discount Series on February 7, 1985
and incorporated herein by reference).

99.1.5.1 -- Form of Insurance Policy of Bond Investors Guaranty for Sponsor-Insured Bonds (filed as
Exhibit 1.5.1 to Amendment No. 1 to Form S-6 Registration Statement No. 33-08700 of
Insured Municipal Securities Trust, 24th Discount Series on October 2, 1986 and
incorporated herein by reference).

99.1.5.2 -- Form of Insurance Policy of MBIA Insurance Corporation (formerly known as Municipal Bond
Investors Assurance Corporation) (filed as Exhibit 1.5.2 to Amendment No. 2 to Form S-6
Registration Statement No. 33-29467 of Insured Municipal Securities Trust, Series 22 and
New York Navigator Insured Series 1 on January 18, 1990 and incorporated herein by
reference).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- --------- ---------------------------------------------------------------------------------------------- -----------
<S> <C> <C> <C>
99.2.1 -- Form of Certificate (filed as Exhibit 2.1 to Amendment No. 1 to Form S-6 Registration
Statement No. 33-28384 of Insured Municipal Securities Trust, 47th Discount Series and
Series 20 on June 16, 1989 and incorporated herein by reference).
*99.3.1 -- Opinion of Battle Fowler LLP as to the legality of the securities being registered,
including their consent to the filing thereof and to the use of their name under the
headings 'Tax Status' and 'Legal Opinions' in the Prospectus, and to the filing of their
opinion regarding tax status of the Trust.
*99.3.2 -- Opinion of Special New Jersey Counsel.
*99.3.3 -- Opinion of Special California Counsel.
*99.3.4 -- Opinion of Special Florida Counsel.
*99.3.5 -- Opinion of Special Virginia Counsel.
99.4.1 -- Form of Custody Agreement (filed as Exhibit 4.1 to Amendment No. 1 to Form S-6
Registration Statement No. 33-36215 of Insured Municipal Securities Trust, Series 25 and
New York Navigator Insured Series 4 and incorporated herein by reference).
99.4.2 -- Form of First Amendment to Custody Agreement (filed as Exhibit 4.2 to Amendment No. 1 to
Form S-6 Registration Statement No. 33-36215 of Insured Municipal Securities Trust,
Series 25 and New York Navigator Series 4 and incorporated herein by reference).
*99.5.1 -- Consent of the Evaluator and confirmation of ratings.
99.6.0 -- Power of Attorney of Bear, Stearns & Co. Inc., the Depositor, by its officers and a
majority of its Directors (filed as Exhibit 6.0 to Post-Effective Amendment No. 8 to
Form S-6 Registration Statements Nos. 2-92113, 2-92660, 2-93073, 2-93884 and 2-94545 on
October 30, 1992).
99.6.1 -- Power of Attorney of Gruntal & Co., Incorporated, by its officers and a majority of its
Directors (filed as Exhibit 6.1 to Form S-6 Registration Statement No. 33-36316 of
Mortgage Securities Trust, CMO Series 1 on August 10, 1990 and incorporated herein by
reference).
99.7.0 -- Form of Agreement Among Co-Sponsors (filed as Exhibit 7.0 to Amendment No. 1 to Form S-6
Registration Statement No. 33-28384 of Insured Municipal Securities Trust, 47th Discount
Series and Series 20 on June 16, 1989 and incorporated herein by reference).
</TABLE>

- ------------------
* Filed herewith.

EX-99.1.1
Reference Trust Agreements

INSURED MUNICIPAL SECURITIES TRUST

SERIES 33

REFERENCE TRUST AGREEMENT

This Reference Trust Agreement dated April 6, 1995 among
Bear, Stearns & Co. Inc., as Depositor, United States Trust Company
of New York, as Trustee and Kenny S&P Evaluation Services, a
division of J.J. Kenny Co., Inc., as Evaluator, sets forth certain
provisions in full and incorporates other provisions by reference
to the document entitled "Insured Municipal Securities Trust, 47th
Discount Series and Series 20, and Subsequent Series, Trust
Indenture and Agreement" dated June 16, 1989 as amended in part by
this Reference Trust Agreement (herein as amended or supplemented
called the "Indenture"). This Reference Trust Agreement and the
Indenture, as incorporated by reference herein, will constitute a
single instrument.

WITNESSETH THAT:

In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, and the
Evaluator agree as follows:

Part I

STANDARD TERMS AND CONDITIONS OF TRUST

Subject to the provisions of Part II hereof, all the
provisions contained in the Indenture are herein incorporated by
reference in their entirety and shall be deemed to be a part of
this instrument as fully and to the same extent as though said
provisions had been set forth in full in this instrument except
that the following sections of the Indenture hereby are amended
as follows:

(a) For purposes of the references made to Section 7.04
in Sections 3.05(d), 3.06(A)(3), 3.06(B)(3) and 7.05 of the
Indenture, the Indenture is hereby amended to delete such
references made to Section 7.04 and to substitute therefor
references to Section 7.05.

(b) All references to the words "Standard & Poor's
Corporation" appearing therein are hereby deleted and the words
"Kenny S&P Evaluation Services, a division of J.J. Kenny Co.,
Inc." are hereby added in place thereof.

(c) All references to the words "Gruntal & Co.,
Incorporated" are hereby deleted. In addition, the word
"Depositors" appearing therein is hereby deleted and the word
"Depositor" is hereby added in place thereof.

(d) Section 3.05 is hereby amended by adding the
following:

(i) inserting after the last line of the fifth
paragraph, "The Trustee's fee takes into account the costs
attributable to the outlay of capital needed to make such
advances.",

(ii) inserting after the ninth paragraph, "If the
Trustee determines that an event has occurred as a result of
which there has been an excessive distribution from the Interest
Account, it shall reduce subsequent distributions so as to
reconcile, as promptly as practicable, the aggregate net income
and distributions from such Account.",

(iii) inserting in the tenth paragraph after the
first sentence, "The Trustee's fee takes into account the costs
attributable to the outlay of capital needed to make such
advances.", and

(iv) deleting all reference to an optional annual plan
of distribution, there being no such option for this Series (the
paragraph numbering referred to in the preceding clauses of this
paragraph (d) reflects the paragraphs in Section 3.05 prior to the
deletions made by this clause (iv).

(e) Section 6.04 is hereby amended as follows:

(i) substituting the word "greatest" with the word
"largest" and

(ii) revising the second sentence to read "The
Trustee may periodically adjust the compensation as set forth
above in response to fluctuations in short-term interest rates
and average cash balances of the Trust accounts (reflecting the
cost to the Trustee of advancing funds to a Trust to meet
scheduled distributions and changes anticipated earnings on cash
balances) and may, in addition, adjust such portion of its fee as
is not computed by reference to the cash balances in the Trust
accounts in accordance with the percentage of the total increase,
after the date hereof, in consumer prices for services as
measured by the United States Department of Consumer Price Index
entitled "All services Less Rent," or, if such index shall cease
to be published, then measured by the available index most
nearly comparable to such index."

Part II

SPECIAL TERMS AND CONDITIONS OF TRUST

The following special terms and conditions are hereby
agreed to:

(a) The interest-bearing obligations listed in Sched-
ule A hereto have been deposited in trust under this Indenture.

(b) For the purposes of the definition of the Unit in
Article I the fractional undivided interest in and ownership of
the Trust is 1/2,000.

(d) The term Record Date shall mean the first day of
each month (or the last business day prior thereto) commencing on
June 1, 1995 for monthly distributions and December 1 and June 1 of
each year for semi-annual distributions (commencing on December 1,
1995).

(e) The term Payment Date shall mean the fifteenth day
of each month (or the last business day prior thereto) commencing
on June 15, 1995 for monthly distributions and December 15 and
June 15 of each year for semi-annual distributions (commencing on
December 15, 1995).

(f) All Certificateholders of record on May 1, 1995
(the "First Record Date"), regardless of the plan of distribution
selected, will receive a distribution to be made on or shortly
after May 15, 1995 (the "First Payment Date"), and thereafter
distributions will be made monthly or semi-annually, depending
upon the plan of distribution chosen by each Certificateholder.

(g) The First Settlement Date shall mean April 13,
1995.

(h) The number of Units referred to in Section 2.03 is
2,000.

(i) For the purposes of Section 4.02, the Evaluator
shall receive for each evaluation of the Bonds in the Trust a
minimum fee of $2.83, plus a fee of $0.25 for determining the
aggregate value of each issue of Bonds in excess of 50 issues
(treating separate maturities of Bonds as separate issues).

(j) For the purposes of Section 6.01(8), the
liquidation amount is hereby specified to be $800,000

(k) For purposes of Section 6.04, the Trustee shall be
paid per annum $1.46 per $1,000 principal amount of Bonds for
that portion of the Trust under the monthly distribution plan,
$1.01 per $1,000 principal amount of Bonds for that portion of the
Trust under the semi-annual distribution plan. During the first

year after the date hereof, such payments to the Trustee will be
reduced by a portion [a maximum of $1.32 per Unit times the number
of Units on the monthly distribution plan, $1.01 per unit plus
$.31 of Trust expenses (to be assumed and paid by the Trustee)
times the number of Units on the semi-annual distribution plan] of
the amount of interest which accrues on any "when, as and if
issued" Bonds between the first settlement date of the Trust and
the respective dates of delivery of such Bonds.

(l) For purposes of Section 7.05, the Depositor's
maximum annual fee is hereby specified to be $.25 per $1,000
principal amount of Bonds in the Trust.

(m) For purposes of this Series of Insured Municipal
Securities Trust, the form of Certificate set forth in this
Indenture shall be appropriately modified to reflect the title of
this Series as set forth above.

(n) For purposes of this Series of Insured Municipal
Securities Trust, the execution date of this Indenture shall be
the date first written above.

IN WITNESS WHEREOF, the parties hereto have caused this
Reference Trust Agreement to be duly executed on the date first
above written.

[Signatures on separate pages]

BEAR, STEARNS & CO. INC.
Depositor

By: PETER J. DEMARCO
-----------------------------------
Authorized Signator

STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )

On this 5th day of April, 1995, before me
personally appeared Peter J. DeMarco, to me known, who being by
me duly sworn, said that he is an Authorized Signator of Bear,
Stearns & Co. Inc., one of the corporations described in and
which executed the foregoing instrument, and that he signed his
name thereto by authority of the Board of Directors of said
corporation.

TERESA SCILLA
-----------------------------------
Notary Public
State of New York
No. 31-4752676
Qualified in the County of New York
Commission Expires 8-31-96

UNITED STATES TRUST COMPANY OF NEW YORK
Trustee

By: THOMAS J. CENTRONE
-----------------------------------
Vice President

STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )

On this 30th day of March, 1995, before me personally
appeared Thomas J. Centrone, to me know, who being by me duly
sworn, said that he is an Authorized Signator United States Trust
Company of New York, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation and that he signed his
name thereto by like authority.

Dorothy S. Bochino
-----------------------------------
Notary Public, State of New York
No. 01B04950864
Qualified in Richmond County
Commission Expires 5-8-95

KENNY S&P EVALUATION SERVICES,
a division of J.J. Kenny Co., Inc.

By: James A. Quandt
-----------------------------------
President
SEAL
ATTEST:

Frank A. Ciccotto, Jr.
- ------------------------------
Vice President

<PAGE>

SCHEDULE A

INSURED MUNICIPAL SECURITIES TRUST
PORTFOLIO
------------------------

SERIES 33
------------------------
AS OF APRIL 6, 1995

A MONTHLY PAYMENT SERIES OR
SEMI-ANNUAL PAYMENT SERIES

2 250,000 Ma. Hsg. Finc. Agcy. Hsg. Proj. AAA 6.150% 4/01/14 @ 100 S.F. 250,000
Rev. Bonds 1993 Series A Bonds 10/01/2015 4/01/03 @ 102 Opt.
(AMBAC)

3 50,000 Ma. Bay Trans. Auth. Gen. Trans. AAA 5.500% 3/01/17 @ 100 S.F. 45,812
System Bonds 1992 Series B Ref. 3/01/2021 3/01/03 @ 100 Opt.
(MBIA Corp.)

4 240,000 Mi. St. Hsg. Dev. Auth. Rntl. AAA 5.900% 4/01/18 @ 100 S.F. 232,032
Hsg. Rev. Bonds, 1993 Series A 4/01/2023 4/01/03 @ 102 Opt.
(AMBAC)

5 400,000 R.I. Hlth. and Ed. Bldg. Corp. AAA 6.500% 11/15/12 @ 100 S.F. 408,556
Hgr. Ed. Fac. Rev. Bonds (Connie 11/15/2024 11/15/02 @ 102 Opt.
Lee)

6 275,000 Piedmont Muni. Pwr. Agcy. (S.C.) AAA 6.300% 1/01/12 @ 100 S.F. 278,960
Elec. Rev. Bonds, 1992 Ref. 1/01/2014 1/01/03 @ 102 Opt.
Series (MBIA Corp.)

7 300,000 Wa. Hlth. Care Facs. Auth. Rev. AAA 5.750% 8/15/09 @ 100 S.F. 282,294
Bonds, Series 1992 (Multicare 8/15/2022 8/15/02 @ 102 Opt.
Med. Cntr., Tacoma) (Financial
Guaranty)

8 170,000 Wa. Pub. Pwr. Spply. Systm. Nuc. AAA 6.250% 7/01/16 @ 100 S.F. 171,165
Proj. No. 1 Ref. Rev. Bonds, 7/01/2017 7/01/02 @ 102 Opt.

Series 1992 A (MBIA Corp.)

9 50,000 Muni. of Met. Seattle (Seattle, AAA 6.300% 1/01/24 @ 100 S.F. 50,537
Wa.) Swr. Rev. Bonds, Series W 1/01/2033 1/01/03 @ 102 Opt.
(MBIA Corp.)

10 65,000 Metro. Pier and Expo. Auth. AAA 0.000% No Sinking Fund 12,802
(Il.) McCormick Place Expansion 6/15/2021 None
Prjt. Bonds Series 1992 A
(Financial Guaranty)
---------- -------------
$2,000,000 $ 1,932,158
---------- -------------
---------- -------------
</TABLE>

INSURED MUNICIPAL SECURITIES TRUST

NEW YORK NAVIGATOR INSURED SERIES 17

REFERENCE TRUST AGREEMENT

This Reference Trust Agreement dated April 6, 1995
among Bear, Stearns & Co. Inc. and Gruntal & Co., Incorporated,
as Depositors, United States Trust Company of New York, as
Trustee and Kenny S&P Evaluation Services, a division of
J.J. Kenny Co., Inc., as Evaluator, sets forth certain
provisions in full and incorporates other provisions by reference
to the document entitled "Insured Municipal Securities Trust,
47th Discount Series and Series 20, and Subsequent Series, Trust
Indenture and Agreement" dated June 16, 1989 as amended in part
by this Reference Trust Agreement (herein as amended or
supplemented called the "Indenture"). This Reference Trust
Agreement and the Indenture, as incorporated by reference herein,
will constitute a single instrument.

WITNESSETH THAT:

In consideration of the premises and of the mutual
agreements herein contained, the Depositors, the Trustee, and the
Evaluator agree as follows:

Part I

STANDARD TERMS AND CONDITIONS OF TRUST

(a) For purposes of the references made to Section 7.04 in
Sections 3.05(d), 3.06(A)(3), 3.06(B)(3) and 7.05 of the
Indenture, the Indenture is hereby amended to delete such
references made to Section 7.04 and to substitute therefor
references to Section 7.05.

(i) inserting after the last line of the fifth
paragraph, "The Trustee's fee takes into account the costs

attributable to the outlay of capital needed to make such
advances.",

(iii) inserting in the tenth paragraph after the
first sentence, "The Trustee's fee takes into account the costs
attributable to the outlay of capital needed to make such
advances.", and

(iv) deleting all reference to an optional annual plan
of distribution, there being no such option for this Series (the
paragraph numbering referred to in the preceding clauses of this
paragraph (c) reflects the paragraphs in Section 3.05 prior to the
deletions made by this clause (iv).

(d) Section 6.04 is hereby amended as follows:

(i) substituting the word "greatest" with the word
"largest" and

Part II

SPECIAL TERMS AND CONDITIONS OF TRUST

The following special terms and conditions are hereby
agreed to:

(a) The interest-bearing obligations listed in Sched-
ule A hereto have been deposited in trust under this Indenture.

(b) For the purposes of the definition of the Unit in
Article I the fractional undivided interest in and ownership of
the Trust is 1/3,000.

(g) The First Settlement Date shall mean April 13,
1995.

(h) The number of Units referred to in Section 2.03 is
3,000.

(j) For the purposes of Section 6.01(8), the
liquidation amount is hereby specified to be $1,200,000.

(k) For purposes of Section 6.04, the Trustee shall be
paid per annum $1.41 per $1,000 principal amount of Bonds for
that portion of the Trust under the monthly distribution plan,
$1.04 per $1,000 principal amount of Bonds for that portion of the
Trust under the semi-annual distribution plan. During the first
year after the date hereof, such payments to the Trustee will be
reduced by a portion [a maximum of $1.35 per Unit times the number
of Units on the monthly distribution plan, $1.04 per unit plus
$.31 of Trust expenses (to be assumed and paid by the Trustee)
times the number of Units on the semi-annual distribution plan]
of the amount of interest which accrues on any "when, as and if
issued" Bonds between the first settlement date of the Trust and
the respective dates of delivery of such Bonds.

(l) For purposes of Section 7.05, the Depositors'
maximum annual fee is hereby specified to be $.25 per $1,000
principal amount of Bonds in the Trust.

(n) For purposes of this Series of Insured Municipal
Securities Trust, the execution date of this Indenture shall be
the date first written above.

IN WITNESS WHEREOF, the parties hereto have caused this
Reference Trust Agreement to be duly executed on the date first
above written.

[Signatures on separate pages]

BEAR, STEARNS & CO. INC.
Depositor

By: PETER J. DEMARCO
-----------------------------------
Authorized Signator

STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )

TERESA SCILLA
-----------------------------------
Notary Public
State of New York
No. 31-4752676
Qualified in the County of New York
Commission Expires 8-31-96

GRUNTAL & CO. INCORPORATED
Depositor

By: J. KEVIN LAMBERT
-----------------------------------
Authorized Signator

STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)

On this 5th day of April, 1995, before me
personally appeared J. Kevin Lambert, to me know, who being by me
duly sworn, said that he is an Authorized Signator of Gruntal &
Co. Incorporated, one of the corporations described in and which
executed and foregoing instrument, and that he signed his name
thereto by authority of the Board of Directors of said
corporation.

CARLA VOGEL
-----------------------------------
Notary Public
State of New York
No. 31-02V05019906
Qualified in Bronx County
Commission Expires November 1, 1995

UNITED STATES TRUST COMPANY OF NEW YORK
Trustee

By: THOMAS J. CENTRONE
-----------------------------------
Vice President

STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )

Dorothy S. Bochino
-----------------------------------
Notary Public, State of New York
No. 01B04950864
Qualified in Richmond County
Commission Expires 5-8-95

KENNY S&P EVALUATION SERVICES,
a division of J.J. Kenny Co., Inc.

By: James A. Quandt
-----------------------------------
President
SEAL
ATTEST:

Frank A. Ciccotto, Jr.
- ------------------------------
Vice President

<PAGE>
SCHEDULE A

INSURED MUNICIPAL SECURITIES TRUST
PORTFOLIO
------------------------

NEW YORK NAVIGATOR INSURED SERIES 17
------------------------
AS OF APRIL 6, 1995

A MONTHLY PAYMENT SERIES OR
SEMI-ANNUAL PAYMENT SERIES

PORTFOLIO COST OF BONDS
NO. TO TRUST(5)
- ---------- -------------
<S> <C>
1 $ 251,997

2 219,773

3 134,117

4 180,698

5 411,804

6 423,780

7 402,513

8 397,228

9 129,402

10 52,017

11 242,705

12 35,032

-------------
$ 2,881,066
-------------
-------------
</TABLE>

INSURED MUNICIPAL SECURITIES TRUST

NEW JERSEY NAVIGATOR INSURED SERIES 13

REFERENCE TRUST AGREEMENT

This Reference Trust Agreement dated April 6, 1995,
1993 among Bear, Stearns & Co. Inc. and Gruntal & Co.,
Incorporated, as Depositors, United States Trust Company of New
York, as Trustee and Kenny S&P Evaluation Services, a division of
J.J. Kenny Co., Inc., as Evaluator, sets forth certain
provisions in full and incorporates other provisions by reference
to the document entitled "Insured Municipal Securities Trust,
47th Discount Series and Series 20, and Subsequent Series, Trust
Indenture and Agreement" dated June 16, 1989 as amended in part
by this Reference Trust Agreement (herein as amended or
supplemented called the "Indenture"). This Reference Trust
Agreement and the Indenture, as incorporated by reference herein,
will constitute a single instrument.

WITNESSETH THAT:

In consideration of the premises and of the mutual
agreements herein contained, the Depositors, the Trustee, and the
Evaluator agree as follows:

Part I

STANDARD TERMS AND CONDITIONS OF TRUST

Subject to the provisions of Part II hereof, all the
provisions contained in the Indenture are herein incorporated by
reference in their entirety and shall be deemed to be a part of
this instrument as fully and to the same extent as though said
provisions had been set forth in full in this instrument except that the
following sections of the Indenture hereby are amended as follows:

(a) For purposes of the references made to Section 7.04 in
Sections 3.05(d), 3.06(A)(3), 3.06(B)(3) and 7.05 of the
Indenture, the Indenture is hereby amended to delete such
references made to Section 7.04 and to substitute therefor
references to Section 7.05.

(i) inserting after the last line of the fifth
paragraph, "The Trustee's fee takes into account the costs
attributable to the outlay of capital needed to make such

advances.",

(iii) inserting in the tenth paragraph after the
first sentence, "The Trustee's fee takes into account the costs
attributable to the outlay of capital needed to make such
advances.", and

(iv) deleting all reference to an optional annual plan
of distribution, there being no such option for this Series (the
paragraph numbering referred to in the preceding clauses of this
paragraph (c) reflects the paragraphs in Section 3.05 prior to the
deletions made by this clause (iv).

(d) Section 6.04 is hereby amended as follows:

(i) substituting the word "greatest" with the word
"largest" and

(ii) revising the second sentence to read "The
Trustee may periodically adjust the compensation as set forth
above in response to fluctuations in short-term interest rates
and average cash balances of the Trust accounts (reflecting the
cost to the Trustee of advancing funds to a Trust to meet
scheduled distributions and changes anticipated earnings on cash
balances) and may, in addition, adjust such portion of its fee as
is not computed by reference to the cash balances in the Trust
accounts in accordance with the percentage of the total increase,
after the date hereof, in consumer prices for services as
measured by the United States Department of Consumer Price Index
entitled "All services Less Rent," or, if such index shall cease
to be published, then as measured by the available index most
nearly comparable to such index."

Part II

SPECIAL TERMS AND CONDITIONS OF TRUST

The following special terms and conditions are hereby
agreed to:

(a) The interest-bearing obligations listed in Sched-
ule A hereto have been deposited in trust under this Indenture.

(b) For the purposes of the definition of the Unit in
Article I the fractional undivided interest in and ownership of
the Trust is 1/2,200.

(f) All Certificateholders of record on May 1, 1995
(the "First Record Date"), regardless of the plan of distribution
selected, will receive a distribution to be made on or shortly
after May 15, 1995 (the "First Payment Date"), and thereafter
distributions will be made monthly or semi-annually, depending upon the
plan of distribution chosen by each Certificateholder.

(g) The First Settlement Date shall mean April 13,
1995.

(h) The number of Units referred to in Section 2.03 is
2,200.

(j) For the purposes of Section 6.01(8), the
liquidation amount is hereby specified to be $880,000.

(k) For purposes of Section 6.04, the Trustee shall be
paid per annum $1.49 per $1,000 principal amount of Bonds for that
portion of the Trust under the monthly distribution plan, $1.04 per
$1,000 principal amount of Bonds for that portion of the Trust under the
semi-annual distribution plan. During the first year after the date
hereof, such payments to the Trustee will be reduced by a portion [a
maximum of $1.35 per Unit times the number of Units on the monthly
distribution plan, $1.04 per unit plus $.31 of Trust expenses (to be
assumed and paid by the Trustee) times the number of Units on the
semi-annual distribution plan] of the amount of interest which accrues
on any "when, as and if issued" Bonds between the first settlement date
of the Trust and the respective dates of delivery of such Bonds.

(l) For purposes of Section 7.05, the Depositors'
maximum annual fee is hereby specified to be $.25 per $1,000
principal amount of Bonds in the Trust.

(n) For purposes of this Series of Insured Municipal
Securities Trust, the execution date of this Indenture shall be
the date first written above.

IN WITNESS WHEREOF, the parties hereto have caused this
Reference Trust Agreement to be duly executed on the date first
above written.

[Signatures on separate pages]

BEAR, STEARNS & CO. INC.
Depositor

By: PETER J. DEMARCO
-----------------------------------
Authorized Signator

STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )

TERESA SCILLA
-----------------------------------
Notary Public
State of New York
No. 31-4752676
Qualified in the County of New York
Commission Expires 8-31-96

GRUNTAL & CO. INCORPORATED
Depositor

By: J. KEVIN LAMBERT
-----------------------------------
Authorized Signator

STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)

CARLA VOGEL
-----------------------------------
Notary Public
State of New York
No. 02V05 019906
Qualified in Bronx County
Commission Expires November 1, 1995

UNITED STATES TRUST COMPANY OF NEW YORK
Trustee

By: THOMAS J. CENTRONE
-----------------------------------
Vice President

STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )

Dorothy S. Bochino
-----------------------------------
Notary Public, State of New York
No. 01B04950864
Qualified in Richmond County
Commission Expires 5-8-95

KENNY S&P EVALUATION SERVICES,
a division of J.J. Kenny Co., Inc.

By: James A. Quandt
-----------------------------------
President
SEAL
ATTEST:

Frank A. Ciccotto, Jr.
- ------------------------------
Vice President

<PAGE>
SCHEDULE A

INSURED MUNICIPAL SECURITIES TRUST
PORTFOLIO
------------------------
NEW JERSEY NAVIGATOR INSURED SERIES 13
------------------------
AS OF APRIL 6, 1995

A MONTHLY PAYMENT SERIES OR
SEMI-ANNUAL PAYMENT SERIES

<TABLE>
<CAPTION>
AGGREGATE NAME OF ISSUER AND COUPON/ REDEMPTION FEATURE
PORTFOLIO PRINCIPAL TITLE OF BONDS MATURITY S.F.--SINKING FUND COST OF BONDS
NO. AMOUNT CONTRACTED FOR(6) RATINGS(1)(7) DATE(2) OPT.--OPTIONAL(2)(3) TO TRUST(5)
- ---------- ---------- ------------------------ -------------- ----------- ---------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 300,000 N.J. Hlth. Care Fac. AAA 6.000% 7/01/17 @ 100 S.F. $ 301,182
Fincg. Auth. Rev. Bonds 7/01/2024 7/01/04 @ 102 Opt.
Newark Beth Israel Med.
Cntr. Issue Series 1994
(FSA Insrd.) (MBIA
Corp.)

2 240,000 N.J. Hlth. Care Fac. AAA 6.250% 7/01/15 @ 100 S.F. 245,810
Fincg. Auth. Rev. Bonds 7/01/2016 7/01/04 @ 102 Opt.
Jersey Shore Med. Cntr.
Ob. Grp. Issue, Series
1994 (MBIA Corp.)

3 300,000 N.J. Hsg. & Mtg. Finc. AAA 5.500% 4/01/19 @ 100 S.F. 274,935
Agncy. Home Buyer Rev. 10/01/2026 10/01/03 @ 102 Opt.
Bonds 1993 Series H
(AMT) (MBIA Corp.)

4 300,000 The Port Auth. of N.Y. AAA 6.125% 7/15/17 @ 100 S.F. 301,785
and N.J. Consld. 7/15/2022 7/15/04 @ 101 Opt.
Ninety-Fifth Series
(AMT) (MBIA Corp.)

5 300,000 The Hoboken--Union AAA 6.200% 8/01/16 @ 100 S.F. 305,274
City-- Weehawken Swrg. 8/01/2019 8/01/02 @ 102 Opt.
Auth. (N.J.) Swr. Rev.
Bonds (Ref. Series 1992)
(MBIA Corp.)

6 60,000 Mercer Cnty. (N.J.) AAA 6.700% 4/01/08 @ 100 S.F. 62,885
Improvement Auth. Insrd. 4/01/2013 4/01/02 @ 102 Opt.
Solid Waste Rev. Bonds
(Resource Rec. Prjt.)
Rfndg. Series 1992A

(AMT) (MBIA Corp.)

8 300,000 Cmmwlth. of P.R. Pub. AAA 6.500% 7/01/18 @ 100 S.F. 312,099
Imprvmnt. Ref. Bonds of 7/01/2023 7/01/04 @ 101.5 Opt.
1994 (Gen. Obg. Bonds)
(MBIA Corp.)

MUNICIPAL SECURITIES TRUST

MULTI-STATE SERIES 46

REFERENCE TRUST AGREEMENT

This Reference Trust Agreement dated April 6, 1995, among
Bear, Stearns & Co. Inc., as Depositor, United States Trust Company of
New York, as Trustee and Kenny S&P Evaluation Services, a division of
J.J. Kenny Co., Inc., as Evaluator, sets forth certain provisions
in full and incorporates other provisions by reference to the
document entitled "Municipal Securities Trust, Multi-State Series 37 and
Subsequent Series, Trust Indenture and Agreement" dated June 30, 1989 as
amended in part by this Reference Trust Agreement (herein as amended or
supplemented called the "Indenture"). This Reference Trust Agreement
and the Indenture, as incorporated by reference herein, will constitute
a single instrument.

WITNESSETH THAT:

In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, and the
Evaluator agree as follows:

Part I

STANDARD TERMS AND CONDITIONS OF TRUST

(a) All references to the words "Standard & Poor's
Corporation" appearing therein are hereby deleted and the words
"Kenny S&P Evaluation Services, a division of J.J. Kenny Co.,
Inc." are hereby added in place thereof.

(b) All references to the words "Gruntal & Co.,
Incorporated" are hereby deleted. In addition, the word
"Depositors" appearing therein is hereby deleted and the word
"Depositor" is hereby added in place thereof.

(i) inserting after the last line of the fifth
paragraph, "The Trustee's fee takes into account the costs
attributable to the outlay of capital needed to make such
advances.",

(iii) inserting in the tenth paragraph after the
first sentence, "The Trustee's fee takes into account the costs
attributable to the outlay of capital needed to make such
advances.", and

(iv) deleting all reference to an optional annual plan
of distribution, there being no such option for this Series (the
paragraph numbering referred to in the preceding clauses of this
paragraph (c) reflects the paragraphs in Section 3.05 prior to the
deletions made by this clause (iv).

(d) Section 6.04 is hereby amended as follows:

(i) substituting the word "greater" with the word
"largest" and

(ii) revising the second sentence to read "The
Trustee may periodically adjust the compensation as set forth
above in response to fluctuations in short-term interest rates
and average cash balances of the Trust accounts (reflecting the
cost to the Trustee of advancing funds to a Trust to meet
scheduled distributions and changes anticipated earnings on cash
balances) and may, in addition adjust such portion of its fee as
is not computed by reference to the cash balances in the Trust
accounts in accordance with the percentage of the total increase,
after the date hereof, in consumer prices for services as
measured by the United States Department of Consumer Price Index
entitled "All services Less Rent," or, if such index shall cease
to be published, then measured by the available index most
nearly comparable to such index."

Part II

SPECIAL TERMS AND CONDITIONS OF TRUST

The following special terms and conditions are hereby
agreed to:

(a) The interest-bearing obligations listed in Sched-
ule A hereto have been deposited in trust under this Indenture.

(b) For the purposes of the definition of the Unit in
Article I the fractional undivided interest in and ownership of
the State Trust is as follows :

California Trust: 1/2,000

Florida Trust: 1/2,000
Virginia Trust: 1/2,000

(e) The term Payment Date shall mean the fifteenth day
of each month (or the last business day prior thereto) commencing
on June 15, 1995 for monthly distributions and December 15 and June
15 of each year for semi-annual distributions (commencing on
December 15, 1995).

(g) The First Settlement Date shall mean April 13,
1995.

(h) The number of Units referred to in Section 2.03
for the State Trust is as follows:

California Trust: 2,000
Florida Trust: 2,000
Virginia Trust: 2,000

(j) For the purposes of Section 6.01(8), the
liquidation amount is hereby specified to be as follows:

California Trust: $800,000
Florida Trust: $800,000
Virginia Trust: $800,000
(k) For purposes of Section 6.04, the Trustee shall be
paid per annum $1.46 per $1,000 principal amount of Bonds for
that portion of the California Trust under the monthly
distribution plan and $1.01 per $1,000 principal amount of Bonds for
that portion of the California Trust under the semi-annual
distribution plan. During the first year after the date hereof,
such payments to the Trustee will be reduced by a portion [a

maximum of $1.32 per Unit times the number of Units on the monthly
distribution plan and $1.01 per unit plus $.31 of California Trust
expenses (to be assumed and paid by the Trustee) times the number
of Units on the semi-annual distribution plan] of the amount of
interest which accrues on any "when, as and if issued" Bonds between
the first settlement date of the California Trust and the respective
dates of delivery of such Bonds.

(l) For purposes of Section 6.04, the Trustee shall be
paid per annum $1.47 per $1,000 principal amount of Bonds for
that portion of the Florida Trust under the monthly
distribution plan and $1.02 per $1,000 principal amount of Bonds for
that portion of the Florida Trust under the semi-annual
distribution plan. During the first year after the date hereof,
such payments to the Trustee will be reduced by a portion [a
maximum of $1.33 per Unit times the number of Units on the monthly
distribution plan and $1.02 per unit plus $.31 of Florida Trust
expenses (to be assumed and paid by the Trustee) times the number
of Units on the semi-annual distribution plan] of the amount of
interest which accrues on any "when, as and if issued" Bonds between
the first settlement date of the Florida Trust and the respective
dates of delivery of such Bonds.

(m) For purposes of Section 6.04, the Trustee shall be
paid per annum $1.45 per $1,000 principal amount of Bonds for
that portion of the Virginia Trust under the monthly
distribution plan and $1.00 per $1,000 principal amount of Bonds for
that portion of the California Trust under the semi-annual
distribution plan. During the first year after the date hereof,
such payments to the Trustee will be reduced by a portion [a
maximum of $1.31 per Unit times the number of Units on the monthly
distribution plan and $1.00 per unit plus $.31 of Virginia Trust
expenses (to be assumed and paid by the Trustee) times the number
of Units on the semi-annual distribution plan] of the amount of
interest which accrues on any "when, as and if issued" Bonds between
the first settlement date of the Virginia Trust and the respective
dates of delivery of such Bonds.

(n) For purposes of Section 7.05, the Depositor's
maximum annual fee is hereby specified to be $0.25 per $1,000
principal amount of Bonds in the Trust.

(o) For purposes of this Series of Municipal
Securities Trust, the form of Certificate set forth in this
Indenture shall be appropriately modified to reflect the title of
this Series as set forth above.

IN WITNESS WHEREOF, the parties hereto have caused this
Reference Trust Agreement to be duly executed on the date first
above written.

[Signatures on separate pages]

BEAR, STEARNS & CO. INC.
Depositor

By: PETER J. DEMARCO
-----------------------------------
Authorized Signator

STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )

TERESA SCILLA
-----------------------------------
Notary Public
State of New York
No. 31-4752676
Qualified in the County of New York
Commission Expires 8-31-96

UNITED STATES TRUST COMPANY OF NEW YORK
Trustee

By: THOMAS J. CENTRONE
-----------------------------------
Vice President

STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )

Dorothy S. Bochino
-----------------------------------
Notary Public, State of New York
No. 01B04950864
Qualified in Richmond County
Commission Expires 5-8-95

KENNY S&P EVALUATION SERVICES,
a division of J.J. Kenny Co., Inc.

By: James A. Quandt
-----------------------------------
President
SEAL
ATTEST:

Frank A. Ciccotto, Jr.
- ------------------------------
Vice President

<PAGE>
SCHEDULE A

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46
PORTFOLIO
------------------------
CALIFORNIA TRUST
------------------------
AS OF APRIL 6, 1995

A MONTHLY PAYMENT SERIES OR
SEMI-ANNUAL PAYMENT SERIES

<S> <C> <C> <C> <C> <C>
1 $ 115,000 Ca. Hsg. Fincg. Agency Home Mtg. Rev. Bonds 1995 Aa* 6.500% None
Series C 8/01/2009 2/01/05 @ 102 Opt.

2 300,000 Ins. Hlth. Fac. Ref. Rev. COP (Eskaton Prop. A 5.800% 5/01/06 @ 100 S.F.
Inc.) Series 1993 Ca. Statewide C.D.A. 5/01/2013 5/01/03 @ 102 Opt.

3 270,000 Costa Mesa Pub. Fincg. Auth. Orange Cnty, Ca. A+ 5.250% 10/01/09 @ 100 S.F.
Rfndg. Rev. Bonds, 1993 Series A (Pub. Facs. 10/01/2018 10/01/03 @ 102 Opt.
Prjt.)

4 300,000 Redding JT. Pwrs. Fincg. Auth. Solid Waste and A 5.500% 1/01/06 @ 100 S.F.
Corp. Yard Rev. Bonds, 1993 Series A. 1/01/2013 1/01/04 @ 102 Opt.

5 300,000 San Diego Ca. Muni. Trans. Dstrct. Bd. Auth. 1993 Aa 5.375% 6/01/19 @ 100 S.F.
Lease Rev. Bonds (Old Town Light Rail Trans. 6/01/2023 6/01/03 @ 101 Opt.
Ext.)

6 115,000 Santa Clara Ca. Trans. Dstrct. Sales Tax Rev. AA 6.250% 6/01/14 @ 100 S.F.
Bonds 1991 Series A 6/01/2021 12/01/00 @ 100 Opt.

7 300,000 So. Ca. Pub. Pwr. Auth. Multiple Prjt. Rev. A 6.000% 7/01/14 @ 100 S.F.
Bonds, 1989 Series 7/01/2018 7/01/00 @ 100 Opt.

8 300,000 Cmmnwlth. of P.R. Pub. Imprvmnt. Ref. Bonds of A 6.500% 7/01/18 @ 100 S.F.
1994 (Gen. Obg. Bonds) 7/01/2023 7/01/04 @ 101.5 Opt.
----------
$2,000,000
----------
----------

<CAPTION>
COST OF
PORTFOLIO BONDS TO
NO. TRUST(5)
- --------- ----------
<S> <C>
1 $ 116,405

2 282,393

3 232,527

4 271,578

5 267,207

6 115,259

7 290,835

8 307,170

----------
$1,883,374
----------
----------
</TABLE>

<PAGE>

SCHEDULE A

MUNICIPAL SECURITIES TRUST
MULTI-STATE SERIES 46
PORTFOLIO
--------------------
FLORIDA TRUST
------------------------
AS OF APRIL 6, 1995

A MONTHLY PAYMENT SERIES OR
SEMI-ANNUAL PAYMENT SERIES

<S> <C> <C> <C> <C> <C>
1 $ 150,000 State of Fla. Full Faith and Credit State Bd. of AA 6.100% 6/01/21 @ 100 S.F.
Ed. Pub. Ed. Cap. Outlay Bonds, 1993 Series F 6/01/2024 6/01/05 @ 101 Opt.