RISK FACTORS

Unit price fluctuates and could be adversely affected by increasing interest rates as well as the financial condition of the issuers of the bonds and any insurance companies backing certain of the bonds. Because of the possible maturity, sale or other disposition of securities, the size, composition and return of the portfolio may change at any time. Because of the sales charges, returns of principal and fluctuations in unit price, among other reasons, the sale price will generally be less than the cost of your units. Unit prices could also be adversely affected if a limited trading market exists in any security to be sold. There is no guarantee that the Fund will achieve its investment objective.

In addition, each Portfolio has fewer bond issues than a national fund, and is concentrated in bonds of issuers located in only one State. There may be additional risk from decreased diversification as well as from factors particular to that State.

PORTFOLIO DIVERSIFICATION

The Portfolio contains 8 Pennsylvania bonds.

TYPES OF BONDS

The Portfolio consists of municipal bonds of the following types:

/ / General Obligation                                 18%
/ / Hospitals/Health Care Facilities                   41%
/ / Refunded Bonds                                     20%
/ / State/Local Municipal Electric
  Utilities                                            2%
/ / Universities/Colleges                              19%

AMBAC Indemnity Corporation                             42%
Financial Guaranty Insurance Company                    8%
MBIA Insurance Corporation                              50%

RISK FACTORS

The Portfolio is concentrated in Hospital/Health Care Facility bonds and is therefore dependent to a significant degree on revenues generated from those particular activities. (See Risk Factors in Part B.) The Portfolio is also concentrated in bonds of Pennsylvania issuers and is subject to additional risk from decreased diversification as well as from factors that may be particular to Pennsylvania, which are briefly described on the following page.

PREMIUM AND DISCOUNT ISSUES

On the evaluation date, 92% of the bonds were valued at a premium over par and 8% at a discount from par (see Risk Factors in Part B).

TERMINATION DATE
The Portfolio will generally terminate no later than the maturity date of the last maturing bond listed in the Portfolio. The Portfolio may be terminated if the value is less than 40% of the face amount of bonds deposited. On the evaluation date the value of the Portfolio was 81% of the face amount of bonds deposited.

WHAT YOU MAY EXPECT

(PAYABLE ON THE 25TH DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 10TH DAY OF
THE MONTH):

Regular Monthly Income per unit: $ 5.32 Annual Income per unit: $ 63.86

PUBLIC OFFERING PRICE PER UNIT $1,082.64

The Public Offering Price as of April 30, 1996, the evaluation date, is based on the aggregate bid side value of the bonds ($4,065,374), divided by the number of units outstanding (3,864), plus a sales charge of 2.82% of the Public Offering Price (2.901% of the value of the underlying bonds). An amount equal to principal cash, if any, as well as net accrued but undistributed interest on the unit is added to the Public Offering Price.

The per unit bid side redemption and secondary market repurchase price as of the evaluation date was $1,052.11 ($30.53 less than the Public Offering Price).

                                                          As a %
                                                    of Secondary
                                                   Market Public
                                                   Offering Price
                                                   -----------------
Maximum Sales Charges                                       5.50%


ESTIMATED ANNUAL FUND OPERATING EXPENSES


                                                       Per Unit
                                                   --------------
Trustee's Fee                                        $     0.70
Maximum Portfolio Supervision and Bookkeeping
  Fees                                               $     0.38
Evaluator's Fee                                      $     0.43
Other Operating Expenses                             $     0.50
                                                   --------------
TOTAL                                                $     2.01

PENNSYLVANIA RISK FACTORS

The Commonwealth of Pennsylvania and certain of its municipal subdivisions, including the City of Philadelphia, have undergone the financial difficulties and pressures that accompany a decline in economic conditions. As the heavy industries historically associated with Pennsylvania -- e.g., coal, steel and railroad -- have declined with increasing competition from foreign producers, the services sector, including trade, medical and health services, education and financial institutions, has provided major new sources of growth. Agriculture and related industries continue to be an important part of Pennsylvania's economy.

Both the Commonwealth of Pennsylvania and the City of Philadelphia have historically experienced significant revenue shortfalls. On the other hand, rising demands on state programs, particularly for medical assistance and cash assistance programs, and the increased cost of special education programs and correction facilities and programs, have contributed to increased expenditures. In response, the Commonwealth and the City of Philadelphia have, in recent years, sought to balance budgets with a combination of tax increases and expenditure restraints.

To deal with its budget deficits, Philadelphia has considered significant service cuts and a plan to privatize certain city-provided services. In addition, in 1991 the Commonwealth created the Pennsylvania Inter-Governmental Cooperation Authority ('PICA'), with authority to issue notes and bonds on behalf of Philadelphia to cover budget shortfalls, to eliminate projected deficits and to fund capital spending. PICA has issued approximately $1.4 billion of Special Revenue Bonds on behalf of the City. However, its power to issue bonds for the most purposes expired on December 31, 1994 and its power to issue bonds to finance a cash flow deficit will expire on December 31, 1996. PICA's authority to refund existing debt will not expire.

Although there can be no assurance that such conditions will continue, the Commonwealth's general obligation bonds are currently rated AA-by Standard & Poor's and A1 by Moody's, while Philadelphia's general obligation bonds are rated BBB-and Baa by Standard & Poor's and Moody's, respectively.

PENNSYLVANIA TAXES

The following summarizes the opinion of Drinker Biddle & Reath, Philadelphia, Pennsylvania, special counsel on Pennsylvania tax matters, under existing law:

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

2. Units of the Fund are not subject to the County Personal Property Tax presently in effect in Pennsylvania to the extent of that proportion of the Fund represented by bonds issued by the Commonwealth of Pennsylvania, its agencies and instrumentalities, or by any county, city, borough, town, township, school district, municipality or local housing or parking authority in the Commonwealth of Pennsylvania ('Pennsylvania Obligations'). Fund Units may be taxable under the Pennsylvania inheritance and estate taxes.

3. Distributions to investors in the Fund attributable to interest from Pennsylvania Obligations are not taxable under the Pennsylvania Personal Income Tax or under the Corporate Net Income Tax imposed on corporations by Article IV of the Pennsylvania Tax Reform Code, nor are such distributions taxable under the Philadelphia School District Investment Income Tax imposed on Philadelphia resident individuals.

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

5. Distributions to investors in the Fund attributable to gain on the disposition by the Fund of Pennsylvania Obligations (whether by sale, redemption or payment at maturity) will be taxable under the Pennsylvania Personal Income Tax, the Pennsylvania Corporate Income Tax, and, unless the obligation has been held for more than six months, the Philadelphia School District Investment Income Tax. Distributions attributable to gain on the disposition of any obligation held more than six months will not be subject to the Philadelphia School District Investment Income Tax.

6. To the extent the value of Units is represented by obligations of the Commonwealth of Puerto Rico or obligations of the territory of Guam, such value will not be subject to the Pennsylvania County Personal Property Tax to the extent required by Federal statutes. Distributions to investors in the Fund attributable to interest on such obligations

is not taxable under any of the Pennsylvania State and local income taxes referred to above. Distributions to investors in the Fund attributable to gain on the disposition of such obligations will be taxable under the Pennsylvania State and local income taxes referred to above, except that gain on any obligation held for more than six months is not subject to the Philadelphia School District Investment Income Tax.

7. Gain on the disposition of a Unit will be taxable under the Pennsylvania Personal Income Tax, the Pennsylvania Corporate Income Tax, and, unless the Unit has been held for more than six months, the Philadelphia School District Investment Income tax. Gain on the disposition of a Unit held more than six monthls will not be subject to the Philadelphia School District Investment Income Tax.

PORTFOLIO DIVERSIFICATION

The Portfolio contains 9 Texas bonds.

TYPES OF BONDS

The Portfolio consists of municipal bonds of the following types:

APPROXIMATE
PORTFOLIO
PERCENTAGE

/ / Hospitals/Health Care Facilities 30% / / Municipal Water/Sewer Utilities 15% / / Refunded Bonds 42% / / State/Local Municipal Electric
Utilities 13%

INSURED AND AAA-RATED BONDS

The approximate percentage of the aggregate face amount of the Portfolio insured by each insurance company is:

AMBAC Indemnity Corporation 58% Financial Guaranty Insurance Company 42%

RISK FACTORS

The Portfolio is concentrated in Hospital/Health Care Facility bonds and is therefore dependent to a significant degree on revenues generated from those particular activities. In addition, the Portfolio is concentrated in Refunded Bonds. The Portfolio is also concentrated in bonds of Texas issuers and is subject to additional risk from decreased diversification as well as from factors that may be particular to Texas, which are briefly described on the following page.

PREMIUM AND DISCOUNT ISSUES

On the evaluation date, 88% of the bonds were valued at a premium over par and 12% at a discount from par (see Risk Factors in Part B).

TERMINATION DATE

The Portfolio will generally terminate no later than the maturity date of the last maturing bond listed in the Portfolio. The Portfolio may be terminated if the value is less than 40% of the face amount of bonds deposited. On the evaluation date the value of the Portfolio was 68% of the face amount of bonds deposited.

WHAT YOU MAY EXPECT

(PAYABLE ON THE 25TH DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 10TH DAY OF
THE MONTH):

Regular Monthly Income per unit: $ 5.47 Annual Income per unit: $ 65.69

PUBLIC OFFERING PRICE PER UNIT $1,071.83

The Public Offering Price as of April 30, 1996, the evaluation date, is based on the aggregate bid side value of the bonds ($6,805,637), divided by the number of units outstanding (6,543), plus a sales charge of 2.96% of the Public Offering Price (3.047% of the value of the underlying bonds). An amount equal to principal cash, if any, as well as net accrued but undistributed interest on the unit is added to the Public Offering Price.

The per unit bid side redemption and secondary market repurchase price as of the evaluation date was $1,040.14 ($31.69 less than the Public Offering Price).

                                                          As a %
                                                    of Secondary
                                                   Market Public
                                                   Offering Price
                                                   -----------------
Maximum Sales Charges                                       5.50%


ESTIMATED ANNUAL FUND OPERATING EXPENSES


                                                      Per Unit
                                                  ---------------
Trustee's Fee                                        $    0.69
Maximum Portfolio Supervision and Bookkeeping
  Fees                                               $    0.38
Evaluator's Fee                                      $    0.25
Other Operating Expenses                             $    0.29
                                                  ---------------
TOTAL                                                $    1.61

TEXAS RISK FACTORS

Although the Texas economy performed well in 1995, the state economy faces a number of challenges. In 1994, trade with Mexico and Latin America and exports were an important component of the economy of Texas, accounting for approximately $60 billion of the state's gross state product. The recent financial crisis in Mexico has placed that segment of the Texas economy at risk, and has also adversely affected retail trade in the Texas-Mexico border region. One governmental estimate suggests that the Mexican crisis could lead to a one-half of one percent reduction in the forecasted growth in the Texas economy for the 1996-1997 fiscal biennium in Texas. In addition, the recent decisions relating to military base closures included a decision to close Kelly Air Force Base in San Antonio, Texas, which is a major employer of civilians in the metropolitan San Antonio area. State and local officials are concerned that this closure could result in the loss of 13,000 jobs in the area and would affect the Hispanic population of the area disproportionately. Military bases in three other communities in Texas will be adversely affected by the decisions of the base closure commission.

Texas' population growth has recently exceeded job growth, and Texas has the highest poverty rate among the ten most populace states. Consequently, the Texas state government faces challenges as demands for state services increase and the spending of state funds is required by court orders, federal mandates and growing social services caseloads. Developments in national health and human services policy could effect the Texas economy significantly. Approximately one-third of the Texas state government's expenditures in recent years have been made in the area of health and human services, and Texas has received substantial amounts of federal funds to pay for such services in part. Legislation under consideration in the United States Congress proposing to modify the manner in which federal funding is allocated to the states, including through the use of block grants, could have a negative effect on the federal funding of Texas' social assistance programs. It is estimated by state officials that one formula contained in legislation under consideration by the United States Congress would result in the loss of over $800 million in federal funding over the next fiscal biennium. In fiscal 1995, the Texas state government's expenditures exceeded its net revenues for the first time in many years. Although Texas continued to maintain cash surplus in the state treasury that state treasury official believe to be adequate to meet the state's spending requirements despite this budgetary shortfall, there is no assurance that it can continue to operate on such a basis if increased responsibility for funding health and human services is placed on the states by the federal government.

Property tax revenues are a major source of funding for public education in Texas. The method for funding public education in Texas has undergone material changes over the last five years and has been the subject of rancorous litigation during that period. In response to challenges to prior laws relating to the funding of public education in Texas, the Texas legislature adopted new legislation in 1993 that attempts to reduce the disparity of revenues per student between low-wealth school districts and high-wealth school districts by causing high-wealth school districts to share their ad valorem tax revenues with low-wealth school districts. In January 1995, the Texas Supreme Court affirmed the constitutionality of this legisltion. There is no assurance that further challenges to this method of funding public education will not be mounted in Texas.

Texas' general obligation bonds are rated AA by Standard & Poor's and Aa by Moody's.

TEXAS TAXES

In the opinion of Hughes & Luce, L.L.P., Dallas, Texas, special counsel on Texas tax matters, under Texas law existing on December 31, 1995, applicable to individuals who are residents of Texas for state tax purposes:

1. The Texas franchise tax functions as an income tax in certain respects, and is imposed on corportions, limited liability companies and certain banks, limited banking associations and savings and loan associtions. Assuming that the Texas Trust is not a corporation, limited liability company, bank, limited banking association or savings and loan association (in each case for Texas franchise tax purposes), the income of the Texas Trust will not be subject to an income tax levied by the State of Texas or any political subdivision thereof.

2. The income derived from the Texas Trust by the Holders who are individuals will not be subject to any income tax levied by the State of Texas or any political subdivision thereof.

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

4. Units of the Texas Trust held by individuals may be subject to Texas inheritance taxes.

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

                           FOR PENNSYLVANIA RESIDENTS
- --------------------------------------------------------------------------------
                                  COMBINED
                                  EFFECTIVE
TAXABLE INCOME 1996*              TAX RATE                       TAX-FREE YIELD OF
 SINGLE RETURN      JOINT RETURN     %       4%     4.5%     5%     5.5%     6%     6.5%     7%     7.5%     8%
                                                        IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
$      0- 24,000  $      0- 40,100  17.38     4.84   5.45     6.05   6.66     7.26   7.87     8.47   9.08     9.68
$ 24,000- 58,150  $ 40,100- 96,900  30.02     5.72   6.43     7.14   7.86     8.57   9.29    10.00  10.72    11.43
$ 58,150-121,300  $ 96,900-147,700  32.93     5.96   6.71     7.46   8.20     8.95   9.69    10.44  11.18    11.93
$121,300-263,750  $147,700-263,750  37.79     6.43   7.23     8.04   8.84     9.65  10.45    11.25  12.06    12.86
OVER $263,750        OVER $263,750  41.29     6.81   7.66     8.52   9.37    10.22  11.07    11.92  12.77    13.63

                              FOR TEXAS RESIDENTS
- --------------------------------------------------------------------------------
                                  EFFECTIVE
TAXABLE INCOME 1996*              TAX RATE                       TAX-FREE YIELD OF
 SINGLE RETURN      JOINT RETURN     %       4%     4.5%     5%     5.5%     6%     6.5%     7%     7.5%     8%
                                                        IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
$      0- 24,000  $      0- 40,100  15.00     4.71   5.29     5.88   6.47     7.06   7.65     8.24   8.82     9.41
$ 24,000- 58,150  $ 40,100- 96,900  28.00     5.56   6.25     6.94   7.64     8.33   9.03     9.72  10.42    11.11
$ 58,150-121,300  $ 96,900-147,700  31.00     5.80   6.52     7.25   7.97     8.70   9.42    10.14  10.87    11.59
$121,300-263,750  $147,700-263,750  36.00     6.25   7.03     7.81   8.59     9.38  10.16    10.94  11.72    12.50
OVER $263,750        OVER $263,750  39.60     6.62   7.45     8.28   9.11     9.93  10.76    11.59  12.42    13.25

To compare the yield of a taxable security with the yield of a tax-free security, find your taxable income and read across. The table incorporates 1996 federal and applicable State income tax rates and assumes that all income would otherwise be taxed at the investor's highest tax rate. Yield figures are for example only.

*Based upon net amount subject to federal income tax after deductions and exemptions. This table does not reflect the possible effect of other tax factors, such as alternative minimum tax, personal exemptions, the phase out of exemptions, itemized deductions or the possible partial disallowance of deductions. Consequently, investors are urged to consult their own tax advisers in this regard.

DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 8Q (PENNSYLVANIA AND
TEXAS TRUSTS)

TRUST PROPERTY:
  Investment in marketable securities -
     at value (cost $ 3,741,373 )(Note 1).........                                                 $ 4,065,374
  Accrued interest ...............................                                                      78,390
  Cash - principal ...............................                                                       3,686
                                                                                                   -----------
    Total trust property .........................                                                   4,147,450


LESS LIABILITIES:
  Income advance from Trustee.....................                                 $    17,827
  Accrued Sponsors' fees .........................                                         492          18,319
                                                                                   -----------     -----------


NET ASSETS, REPRESENTED BY:
  3,864 units of fractional undivided
     interest outstanding (Note 3)................                                   4,069,060

  Undistributed net investment income ............                                      60,071     $ 4,129,131
                                                                                   -----------     ===========

UNIT VALUE ($ 4,129,131 / 3,864 units )...........                                                 $  1,068.62
                                                                                                   ===========

                                                                            Years Ended April 30,
                                                                     1996              1995              1994
                                                                     ----              ----              ----

INVESTMENT INCOME:
  Interest income ........................                     $   265,319       $   295,886       $   317,739
  Trustee's fees and expenses ............                          (7,091)           (7,335)           (7,689)
  Sponsors' fees .........................                          (3,772)           (1,570)           (1,497)
                                                               ------------------------------------------------
  Net investment income ..................                         254,456           286,981           308,553
                                                               ------------------------------------------------


REALIZED AND UNREALIZED GAIN (LOSS)
  ON INVESTMENTS:
  Realized gain on
    securities sold or redeemed ..........                          42,640             7,167            52,756
  Unrealized appreciation (depreciation)
    of investments .......................                          (8,811)           32,892          (202,839)
                                                               ------------------------------------------------
  Net realized and unrealized
     gain (loss) on investments ..........                          33,829            40,059          (150,083)
                                                               ------------------------------------------------


NET INCREASE IN NET ASSETS
  RESULTING FROM OPERATIONS ..............                     $   288,285       $   327,040       $   158,470
                                                               ================================================

See Notes to Financial Statements.

D - 3.

DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 8Q (PENNSYLVANIA TRUST)

                                                                              Years Ended April 30,
                                                                       1996              1995              1994
                                                                       ----              ----              ----

OPERATIONS:
  Net investment income ..................                     $   254,456       $   286,981       $   308,553
  Realized gain on
    securities sold or redeemed ..........                          42,640             7,167            52,756
  Unrealized appreciation (depreciation)
    of investments .......................                          (8,811)           32,892          (202,839)
                                                               ------------------------------------------------
  Net increase in net assets
    resulting from operations ............                         288,285           327,040           158,470
                                                               ------------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
  Income  ................................                        (257,051)         (287,266)         (309,125)
  Principal ..............................                         (37,919)           (9,083)           (8,367)
                                                               ------------------------------------------------
  Total distributions ....................                        (294,970)         (296,349)         (317,492)
                                                               ------------------------------------------------
SHARE TRANSACTIONS:











  Redemption amounts - income ............                          (7,500)           (1,442)           (5,343)
  Redemption amounts - principal .........                        (562,724)         (106,742)         (421,647)
                                                               ------------------------------------------------
  Total share transactions ...............                        (570,224)         (108,184)         (426,990)
                                                               ------------------------------------------------

NET DECREASE IN NET ASSETS ...............                        (576,909)          (77,493)         (586,012)

NET ASSETS AT BEGINNING OF YEAR ..........                       4,706,040         4,783,533         5,369,545
                                                               ------------------------------------------------
NET ASSETS AT END OF YEAR ................                     $ 4,129,131       $ 4,706,040       $ 4,783,533
                                                               ================================================
PER UNIT:
  Income distributions during
    year .................................                     $     64.21       $     65.08       $     65.35
                                                               ================================================
  Principal distributions during
    year .................................                     $      9.50       $      2.07              1.76
                                                               ================================================
  Net asset value at end of
    year .................................                     $  1,068.62       $  1,072.48       $  1,065.61
                                                               ================================================
TRUST UNITS:
  Redeemed during year ...................                             524               101               380
  Outstanding at end of year .............                           3,864             4,388             4,489
                                                               ================================================

See Notes to Financial Statements.

D - 4.

DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 8Q (PENNSYLVANIA TRUST)

1.   SIGNIFICANT ACCOUNTING POLICIES

     The Fund is registered under the Investment Company Act of 1940 as a Unit
     Investment Trust. The following is a summary of significant accounting
     policies consistently followed by the Fund in the preparation of its
     financial statements. The policies are in conformity with generally accepted
     accounting principles.

      (A)      Securities are stated at value as determined by the
               Evaluator based on bid side evaluations for the securities.
               See "How to Sell Units - Trustee's Redemption of Units"
               in this Prospectus, Part B.

      (B)      The Fund is not subject to income taxes. Accordingly, no
               provision for such taxes is required.

      (C)      Interest income is recorded as earned.












2.   DISTRIBUTIONS

     A distribution of net investment income is made to Holders each month.
     Receipts other than interest, after deductions for redemptions and applicable
     expenses, are distributed as explained in "Income, Distributions and
     Reinvestment - Distributions" in this Prospectus, Part B.

3.   NET CAPITAL

     Cost of 3,864 units at Date of Deposit .....................   $ 3,989,928
     Less sales charge ..........................................       179,546
                                                                    -----------
     Net amount applicable to Holders ...........................     3,810,382
     Redemptions of units - net cost of 1,136 units redeemed
       less redemption amounts (principal).......................      (106,435)
     Realized gain on securities sold or redeemed ...............       107,826
     Principal distributions ....................................       (66,714)
     Unrealized appreciation of investments .....................       324,001
                                                                    -----------
     Net capital applicable to Holders ..........................   $ 4,069,060
                                                                    ===========

4.   INCOME TAXES

     As of April 30, 1996, unrealized appreciation of investments, based on cost
     for Federal income tax purposes, aggregated $324,001, all of which related
     to appreciated securities. The cost of investment securities for Federal
     income tax purposes was $3,741,373 at April 30, 1996.

5.   CHANGE OF TRUSTEE

     Effective May 27, 1995, The Chase Manhattan Bank, N.A. replaced Bankers Trust
     Company as Trustee.

                                          Rating of                                            Optional
  Portfolio No. and Title of                Issues       Face                                 Redemption
         Securities                        (1) (4)       Amount    Coupon      Maturities(3) Provisions(3)    Cost      Value(2)
         ----------                       ---------  ----------- -----------   ------------  ------------  ----------  ---------












1 Carbon Cnty., PA, Hosp. Auth., Cnty.       AAA     $   750,000     7.000 %      2014      11/15/00     $   752,918 $   809,198
  Gtd. Rfdg. Hosp. Rev. Bonds (Gnaden                                                       @  102.000
  Huetten Mem. Hosp.), Ser. 1990A
  (AMBAC Ins.)

2 Leighton, PA, Area School Dist. Rev.       AAA         695,000     6.900        2010      09/15/98         697,099     736,443
  Bonds, Ser. 1991 (MBIA Ins.)                                                              @  101.000

3 Pennsylvania Higher Educl. Fac. Auth.,     AAA         585,000     7.200        2019      07/01/99         595,448     633,678
  Univ. Rev. Bonds, Ser. of 1989                                                            @  102.000
  (Hahnemann Univ. Proj.) (MBIA Ins.)

4 Pennsylvania Higher Educl. Fac. Auth.,     AAA         155,000     6.750        2011      11/01/99         154,157     167,160
  La Salle Univ. Rev. Bonds, Ser. of 1989                                                   @  102.000
  (MBIA Ins.)

5 City of Philadelphia, PA, Gas Works        AAA         450,000     7.000        2020      None             453,420     517,991
  Rev. Bonds, Twelfth Ser. B (MBIA Ins.)

6 Sayre, PA, Hlth. Care Fac. Rev. Bonds,     AAA         170,000     7.000        2011      03/01/01         170,653     185,344
  Guthrie Healthcare Sys. Ser. A                                                            @  102.000
  (AMBAC Ins.)
                                                         600,000     7.100        2017      03/01/01         607,086     652,386
                                                                                            @  102.000

7 Municipal Auth. of Westmoreland Cnty.,     AAA         225,000     2.000        2004      None             134,208     167,778
  PA, Mun. Svc. Rev. Bonds, Ser. K
  (Financial Guaranty Ins.)                               80,000     2.000        2007      None              43,233      55,380

8 City of Philadelphia, PA, Gas Works        AAA         105,000     7.250        2010      01/01/99         107,545     112,803
  Rev. Bonds, Eleventh Ser. C                                                               @  102.000
  (AMBAC Ins.)
                                                          25,000     7.250        2010(5)   01/01/99          25,606      27,213
                                                                                            @  102.000

                                                       ---------                                           ---------   ---------
  TOTAL                                              $ 3,840,000                                         $ 3,741,373 $ 4,065,374
                                                       =========                                           =========   =========

                                  See Notes to Portfolios on page D - 12.

                                                  D -  6.

DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 8Q (TEXAS TRUST)

STATEMENT OF CONDITION

TRUST PROPERTY:
  Investment in marketable securities -
     at value (cost $ 6,328,651 )(Note 1).........                                                 $ 6,805,637
  Accrued interest ...............................                                                     117,903
  Cash - principal ...............................                                                       4,064
                                                                                                   -----------
    Total trust property .........................                                                   6,927,604


LESS LIABILITIES:
  Income advance from Trustee.....................                                 $    23,902
  Accrued Sponsors' fees .........................                                         831          24,733
                                                                                   -----------     -----------


NET ASSETS, REPRESENTED BY:
  6,543 units of fractional undivided
     interest outstanding (Note 3)................                                   6,809,701

  Undistributed net investment income ............                                      93,170     $ 6,902,871
                                                                                   -----------     ===========

UNIT VALUE ($ 6,902,871 / 6,543 units )...........                                                 $  1,055.00
                                                                                                   ===========

See Notes to Financial Statements.

D - 7.

DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 8Q (TEXAS TRUST)

                                                                            Years Ended April 30,
                                                                     1996              1995              1994
                                                                     ----              ----              ----

INVESTMENT INCOME:
  Interest income ........................                     $   470,647       $   521,308       $   558,679
  Trustee's fees and expenses ............                          (8,891)           (9,307)           (9,908)
  Sponsors' fees .........................                          (6,433)           (2,800)           (2,742)
                                                               ------------------------------------------------
  Net investment income ..................                         455,323           509,201           546,029
                                                               ------------------------------------------------


REALIZED AND UNREALIZED GAIN (LOSS)
  ON INVESTMENTS:
  Realized gain on
    securities sold or redeemed ..........                         105,653            38,905            27,537
  Unrealized depreciation
    of investments .......................                         (36,269)          (27,926)         (194,957)
                                                               ------------------------------------------------
  Net realized and unrealized
     gain (loss) on investments ..........                          69,384            10,979          (167,420)
                                                               ------------------------------------------------


NET INCREASE IN NET ASSETS
  RESULTING FROM OPERATIONS ..............                     $   524,707       $   520,180       $   378,609
                                                               ================================================

See Notes to Financial Statements.

D - 8.

DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 8Q (TEXAS TRUST)

                                                                            Years Ended April 30,
                                                                     1996              1995              1994
                                                                     ----              ----              ----

OPERATIONS:
  Net investment income ..................                     $   455,323       $   509,201       $   546,029
  Realized gain on
    securities sold or redeemed ..........                         105,653            38,905            27,537
  Unrealized depreciation
    of investments .......................                         (36,269)          (27,926)         (194,957)
                                                               ------------------------------------------------
  Net increase in net assets
    resulting from operations ............                         524,707           520,180           378,609
                                                               ------------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
  Income  ................................                        (458,440)         (510,300)         (546,394)
  Principal ..............................                         (47,230)          (26,106)           (7,040)
                                                               ------------------------------------------------
  Total distributions ....................                        (505,670)         (536,406)         (553,434)
                                                               ------------------------------------------------
SHARE TRANSACTIONS:
  Redemption amounts - income ............                         (14,402)           (6,694)           (3,169)
  Redemption amounts - principal .........                      (1,093,747)         (521,193)         (239,888)
                                                               ------------------------------------------------
  Total share transactions ...............                      (1,108,149)         (527,887)         (243,057)
                                                               ------------------------------------------------

NET DECREASE IN NET ASSETS ...............                      (1,089,112)         (544,113)         (417,882)

NET ASSETS AT BEGINNING OF YEAR ..........                       7,991,983         8,536,096         8,953,978
                                                               ------------------------------------------------
NET ASSETS AT END OF YEAR ................                     $ 6,902,871       $ 7,991,983       $ 8,536,096
                                                               ================================================
PER UNIT:
  Income distributions during
    year .................................                     $     65.89       $     66.28       $     66.48











                                                               ================================================
  Principal distributions during
    year .................................                     $      6.96       $      3.43       $      0.86
                                                               ================================================
  Net asset value at end of
    year .................................                     $  1,055.00       $  1,054.91       $  1,057.10
                                                               ================================================
TRUST UNITS:
  Redeemed during year ...................                           1,033               499               220
  Outstanding at end of year .............                           6,543             7,576             8,075
                                                               ================================================

See Notes to Financial Statements.

D - 9.

1.   SIGNIFICANT ACCOUNTING POLICIES

     The Fund is registered under the Investment Company Act of 1940 as a Unit
     Investment Trust. The following is a summary of significant accounting
     policies consistently followed by the Fund in the preparation of its
     financial statements. The policies are in conformity with generally accepted
     accounting principles.

      (A)      Securities are stated at value as determined by the
               Evaluator based on bid side evaluations for the securities.
               See "How to Sell Units - Trustee's Redemption of Units"
               in this Prospectus, Part B.

      (B)      The Fund is not subject to income taxes. Accordingly, no
               provision for such taxes is required.

      (C)      Interest income is recorded as earned.

2.   DISTRIBUTIONS

     A distribution of net investment income is made to Holders each month.
     Receipts other than interest, after deductions for redemptions and applicable
     expenses, are distributed as explained in "Income, Distributions and
     Reinvestment - Distributions" in this Prospectus, Part B.

3.   NET CAPITAL

     Cost of 6,543 units at Date of Deposit .....................   $ 6,757,349
     Less sales charge ..........................................       304,082
                                                                    -----------











     Net amount applicable to Holders ...........................     6,453,267
     Redemptions of units - net cost of 3,457 units redeemed
       less redemption amounts (principal).......................      (262,151)
     Realized gain on securities sold or redeemed ...............       284,208
     Principal distributions ....................................      (142,609)
     Unrealized appreciation of investments .....................       476,986
                                                                    -----------
     Net capital applicable to Holders ..........................   $ 6,809,701
                                                                    ===========

4.   INCOME TAXES

     As of April 30, 1996, unrealized appreciation of investments, based on cost
     for Federal income tax purposes, aggregated $476,986, all of which related
     to appreciated securities. The cost of investment securities for Federal
     income tax purposes was $6,328,651 at April 30, 1996.

5.   CHANGE OF TRUSTEE

     Effective May 27, 1995, The Chase Manhattan Bank, N.A. replaced Bankers Trust
     Company as Trustee.

D - 10.

                                          Rating of                                            Optional
  Portfolio No. and Title of                Issues       Face                                 Redemption
         Securities                        (1) (4)       Amount    Coupon      Maturities(3) Provisions(3)    Cost      Value(2)
         ----------                       ---------  ----------- -----------   ------------  ------------  ----------  ---------
1 City of Austin, TX, Combined Util. Sys.    AAA     $   500,000     6.000 %      2015      05/15/00     $   452,960 $   504,255
  Rev. Rfdg. Bonds, Ser. 1990A (Financial                                                   @  100.000
  Guaranty Ins.)
                                                         305,000     6.000        2010      05/15/00         279,164     310,231
                                                                                            @  100.000

2 Coastal Water Auth. of Texas, Water        AAA         145,000     6.250        2017      None             135,237     144,459
  Conveyance Sys. Rfdg. Rev. Bonds
  (AMBAC Ins.)

3 Gregg Cnty., TX, Hlth. Fac. Dev. Corp.,    AAA       1,250,000     7.500        2015(5)   10/01/00       1,308,413   1,414,400
  Hosp. Rev. Bonds (Good Shepherd Med.                                                      @  102.000
  Ctr. Proj.), Ser. 1990A (AMBAC Ins.)












4 Harris Cnty., TX, Toll Rd. Multiple        AAA         620,000     7.100        2017(5)   08/15/99         629,511     685,869
  Mode Sr. Lien Rev. Bonds, Ser. 1985-F                                                     @  103.000
  (Financial Guaranty Ins.)

5 Harris Cnty., TX, Hlth. Fac. Dev.          AAA       1,250,000     7.000        2012      06/01/99       1,250,000   1,338,725
  Corp., Hosp. Rev. Bonds (Mem. Hosp.                                                       @  102.000
  Sys. Proj.), Ser. 1989 (AMBAC Ins.)

6 Lubbock, TX, Hlth. Fac. Dev. Corp.,        AAA         120,000     7.250        2019(5)   12/01/00         123,301     135,008
  Hosp. Rev. Bonds (Methodist Hosp.),                                                       @  102.000
  Ser. 1990 (AMBAC Ins.)

7 Tarrant Cnty., TX, Hlth. Fac. Dev.         AAA         660,000     5.000        2015      09/01/97         519,585     579,533
  Corp., Hlth. Sys. Rev. Bonds, Ser.                                                        @  100.000
  1987A (Harris Methodist Hlth. Sys.)
  (Financial Guaranty Ins.)

8 Texas Turnpike Auth., Dallas North         AAA         595,000     6.900        2009      01/01/98         595,000     627,927
  Tollway Rev. Bonds, Ser. 1989                                                             @  102.000
  (Financial Guaranty Ins.)

9 Texas Water Resources Fin. Auth. Rev.      AAA       1,000,000     7.500        2013      08/15/99       1,035,480   1,065,230
  Bonds, Ser. 1989 (AMBAC Ins.)                                                             @  100.000

                                                       ---------                                           ---------   ---------
  TOTAL                                              $ 6,445,000                                         $ 6,328,651 $ 6,805,637
                                                       =========                                           =========   =========

                                   See Notes to Portfolios on page D - 12.

                                                   D - 11.

(1)   The rating of the bonds are by Standard & Poor's Ratings Group, or Moody's
      Investors Service, Inc. if followed by "(m)", or by Fitch Investors Service,
      Inc. if followed by "(f)"; "NR" indicates that this bonds is not currently
      rated by any of the above-mentioned rating services. These ratings have been
      furnished by the Evaluator but not confirmed with the rating agencies. See
      "Description of Ratings" in Part B of this Prospectus.

(2)   See Notes to Financial Statements.

(3)   Optional redemption provisions, which may be exercised in whole or in part,
      are initially at prices of par plus a premium, then subsequently at prices
      declining to par. Certain securities may provide for redemption at par prior











      or in addition to any optional or mandatory redemption dates or maturity, for
      example, through the operation of a maintenance and replacement fund, if
      proceeds are not able to be used as contemplated, the project is condemned or
      sold or the project is destroyed and insurance proceeds are used to redeem
      the securities. Many of the securities are also subject to mandatory sinking
      fund redemption commencing on dates which may be prior to the date on which
      securities may be optionally redeemed. Sinking fund redemptions are at par
      and redeem only part of the issue. Some of the securities have mandatory
      sinking funds which contain optional provisions permitting the issuer to
      increase the principal amount of securities called on a mandatory redemption
      date. The sinking fund redemptions with optional provisions may, and optional
      refunding redemptions generally will, occur at times when the redeemed
      securities have an offering side evaluation which represents a premium over
      par. To the extent that the securities were acquired at a price higher than
      the redemption price, this will represent a loss of capital when compared
      with the Public Offering Price of the Units when acquired. Distributions will
      generally be reduced by the amount of the income which would otherwise have
      been paid with respect to redeemed securities and there will be distributed
      to Holders any principal amount and premium received on such redemption after
      satisfying any redemption requests for Units received by the Fund. The
      estimated current return may be affected by redemptions. The tax effect on
      Holders of redemptions and related distributions is described under "Taxes"
      in this Prospectus, Part B.

(4)   All securities are insured, either on an individual basis or by portfolio
      insurance, by a municipal bond insurance company which has been assigned
      "AAA" claims paying ability by Standard & Poor's. Accordingly, Standard &
      Poor's has assigned a "AAA" rating to the securities. Securities covered by
      portfolio insurance are rated "AAA" only as long as they remain in the Trust.
      See "Risk Factors - Bonds backed by Letters of Credit or Insurance" in this
      Prospectus, Part B.

(5)   Bonds with an aggregate face amount of $ 25,000 of the Pennsylvania Trust
      and $ 1,990,000 of the Texas Trust have been pre-refunded and are expected to be
      called for redemption on the optional redemption provision dates shown.

D - 12.

DEFINED ASSET FUNDS
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES

I want to learn more about automatic reinvestment in the Investment Accumulation Program. Please send me information about participation in the Municipal Fund Accumulation Program, Inc. and a current Prospectus. My name (please
print) ________________________________________________________________________ My address (please print):
Street and Apt.
No. ___________________________________________________________________________ City, State, Zip
Code __________________________________________________________________________ This page is a self-mailer. Please complete the information above, cut along the dotted line, fold along the lines on the reverse side, tape, and mail with the Trustee's address displayed on the outside.

BUSINESS REPLY MAIL                                              NO POSTAGE
FIRST CLASS PERMIT NO. 644, NEW YORK, N.Y.                       NECESSARY
                                                                 IF MAILED
POSTAGE WILL BE PAID BY ADDRESSEE                                  IN THE
          THE CHASE MANHATTAN BANK (MITF)                      UNITED STATES
          RETAIL PROCESSING DEPARTMENT
          770 BROADWAY--7th FLOOR
          NEW YORK, NY 10003-9598


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

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

DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
DEFINED ASSET FUNDS MUNICIPAL SERIES
MUNICIPAL INVESTMENT TRUST FUND
FURTHER DETAIL REGARDING ANY OF THE INFORMATION PROVIDED IN THE PROSPECTUS MAY

BE OBTAINED WITHIN FIVE DAYS BY WRITING OR CALLING THE TRUSTEE, THE ADDRESS AND TELEPHONE NUMBER OF WHICH ARE SET FORTH ON THE BACK COVER OF PART A OF THIS

PROSPECTUS.

Index

Fund Description......................................          1
Risk Factors..........................................          2
How to Buy Units......................................          8
How to Sell Units.....................................         10
Income, Distributions and Reinvestment................         10
Fund Expenses.........................................         12
Taxes.................................................         12
Records and Reports...................................         13

                                                          PAGE
                                                        ---------
Trust Indenture.......................................         14
Miscellaneous.........................................         14
Exchange Option.......................................         16
Supplemental Information..............................         17
Appendix A--Description of Ratings....................        a-1
Appendix B--Sales Charge Schedules for Defined Asset
Funds Municipal Series................................        b-1
Appendix C--Sales Charge Schedules for Municipal
Investment Trust Fund.................................        c-1

FUND DESCRIPTION

BOND PORTFOLIO SELECTION

Professional buyers and research analysts for Defined Asset Funds, with access to extensive research, selected the Bonds for the Portfolio after considering the Fund's investment objective as well as the quality of the Bonds (all Bonds in the Portfolio are initially rated in the category A or better by at least one nationally recognized rating organization or have comparable credit characteristics), the yield and price of the Bonds compared to similar securities, the maturities of the Bonds and the diversification of the Portfolio. Only issues meeting these stringent criteria of the Defined Asset Funds team of dedicated research analysts are included in the Portfolio. No leverage or borrowing is used nor does the Portfolio contain other kinds of securities to enhance yield. A summary of the Bonds in the Portfolio appears in Part A of the Prospectus. In a Fund that includes multiple Trusts or Portfolios, the word Fund should be understood to mean each individual Trust or Portfolio.

The deposit of the Bonds in the Fund on the initial date of deposit established a proportionate relationship among the face amounts of the Bonds. During the 90-day period following the initial date of deposit the Sponsors may deposit additional Bonds in order to create new Units, maintaining to the extent possible that original proportionate relationship. Deposits of additional Bonds subsequent to the 90-day period must generally replicate exactly the proportionate relationship among the face amounts of the Bonds at the end of the initial 90-day period.

Yields on bonds depend on many factors including general conditions of the bond markets, the size of a particular offering and the maturity and quality rating of the particular issues. Yields can vary among bonds with similar maturities, coupons and ratings. Ratings represent opinions of the rating organizations as to the quality of the bonds rated, based on the credit of the issuer or any guarantor, insurer or other credit provider, but these ratings are only general standards of quality (see Appendix A).

After the initial date of deposit, the ratings of some Bonds may be reduced or withdrawn, or the credit characteristics of the Bonds may no longer be comparable to bonds rated A or better. Bonds rated BBB or Baa (the lowest investment grade rating) or lower may have speculative characteristics, and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity to make principal and interest

payments than is the case with higher grade bonds. Bonds rated below investment grade or unrated bonds with similar credit characteristics are often subject to greater market fluctuations and risk of loss of principal and income than higher grade bonds and their value may decline precipitously in response to rising interest rates.

Because each Defined Asset Fund is a preselected portfolio of bonds, you know the securities, maturities, call dates and ratings before you invest. Of course, the Portfolio will change somewhat over time, as Bonds mature, are redeemed or are sold to meet Unit redemptions or in other limited circumstances. Because the Portfolio is not actively managed and principal is returned as the Bonds are disposed of, this principal should be relatively unaffected by changes in interest rates.

BOND PORTFOLIO SUPERVISION

The Fund follows a buy and hold investment strategy in contrast to the frequent portfolio changes of a managed fund based on economic, financial and market analyses. The Fund may retain an issuer's bonds despite adverse financial developments. Experienced financial analysts regularly review the Portfolio and a Bond may be sold in certain circumstances including the occurrence of a default in payment or other default on the Bond, a decline in the projected income pledged for debt service on a revenue bond, institution of certain legal proceedings, if the Bond becomes taxable or is otherwise inconsistent with the Fund's investment objectives, a decline in the price of the Bond or the occurrence of other market or credit factors (including advance refunding) that, in the opinion of Defined Asset Funds research analysts, makes retention of the Bond detrimental to the interests of investors. The Trustee must generally reject any offer by an issuer of a Bond to exchange another security pursuant to a refunding or refinancing plan.

The Sponsors and the Trustee are not liable for any default or defect in a Bond. If a contract to purchase any Bond fails, the Sponsors may generally deposit a replacement bond so long as it is a tax-exempt bond, has a fixed maturity or disposition date substantially similar to the failed Bond and is rated A or better by at least one nationally recognized rating organization or has comparable credit characteristics. A replacement bond must be deposited within 110 days after deposit of the failed contract, at a cost that does not exceed the funds reserved for purchasing the failed Bond and at a yield to maturity and current return substantially equivalent (considering then current market conditions and relative creditworthiness) to those of the failed Bond, as of the date the failed contract was deposited.

RISK FACTORS

An investment in the Fund entails certain risks, including the risk that the value of your investment will decline with increases in interest rates. Generally speaking, bonds with longer maturities will fluctuate in value more than bonds with shorter maturities. In recent years there have been wide fluctuations in interest rates and in the value of fixed-rate bonds generally. The Sponsors cannot predict the direction or scope of any future fluctuations.

Certain of the Bonds may have been deposited at a market discount or premium principally because their interest rates are lower or higher than prevailing rates on comparable debt securities. The current returns of market discount bonds are lower than comparably rated bonds selling at par because discount bonds tend to increase in market value as they approach maturity. The current returns of market premium bonds are higher than comparably rated bonds selling at par because premium bonds tend to decrease in market value as they approach maturity. Because part of the purchase price is returned through current income payments and not at maturity, an early redemption at par of a premium bond will result in a reduction in yield to the Fund. Market premium or discount attributable to interest rate changes does not indicate market confidence or lack of confidence in the issue.

Certain Bonds deposited into the Fund may have been acquired on a when-issued or delayed delivery basis. The purchase price for these Bonds is determined prior to their delivery to the Fund and a gain or loss may result from fluctuations in the value of the Bonds. Additionally, in any Defined Asset Funds Municipal Series, if the value of the Bonds reserved for payment of the periodic deferred sales charge, together with the interest thereon, were to become insufficient to pay these charges, additional bonds would be required to be sold.

The Fund may be concentrated in one or more of types of bonds. Concentration in a State may involve additional risk because of the decreased diversification of economic, political, financial and market risks. Set forth below is a brief description of certain risks associated with bonds which may be held by the Fund.

Additional information is contained in the Information Supplement which is available from the Trustee at no charge to the investor.

GENERAL OBLIGATION BONDS

Certain of the Bonds may be general obligations of a governmental entity. General obligation bonds are backed by the issuer's pledge of its full faith, credit and taxing power for the payment of principal and interest. However, the taxing power of any governmental entity may be limited by provisions of state constitutions or laws and its credit will depend on many factors, including an erosion of the tax base resulting from population declines, natural disasters, declines in the state's industrial base or an inability to attract new industries, economic limits on the ability to tax without eroding the tax base and the extent to which the entity relies on federal or state aid, access to capital markets or other factors beyond the entity's control. In addition, political restrictions on the ability to tax and budgetary constraints affecting state governmental aid may have an adverse impact on the creditworthiness of cities, counties, school districts and other local governmental units.

As a result of the recent recession's adverse impact upon both revenues and expenditures, as well as other factors, many state and local governments have confronted deficits which were the most severe in recent years. Many issuers are facing highly difficult choices about significant tax increases and spending reductions in order to restore budgetary balance. The failure to implement these actions on a timely basis could force these issuers to issue additional debt to finance deficits or cash flow needs and could lead to a reduction of their bond ratings and the value of their outstanding bonds.

MORAL OBLIGATION BONDS

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

REFUNDED BONDS

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

MUNICIPAL REVENUE BONDS

Municipal revenue bonds are tax-exempt securities issued by states, municipalities, public authorities or similar entities to finance the cost of acquiring, constructing or improving various projects. Municipal revenue bonds are not general obligations of governmental entities backed by their taxing power and payment is generally solely dependent upon the creditworthiness of the public issuer or the financed project or state appropriations. Examples of municipal revenue bonds are:

Municipal utility bonds, including electrical, water and sewer revenue bonds, whose payments are dependent on various factors, including the rates the utilities may charge, the demand for their services and their operating costs, including expenses to comply with environmental legislation and other energy and licensing laws and regulations. Utilities are particularly sensitive to, among other things, the effects of inflation on operating and construction costs, the unpredictability of future usage requirements, the costs and availability of fuel and, with certain electric utilities, the risks associated with the nuclear industry;

Lease rental bonds which are generally issued by governmental financing authorities with no direct taxing power for the purchase of equipment or construction of buildings that will be used by a state or local government. Lease rental bonds are generally subject to an annual risk that the lessee government might not appropriate funds for the leasing rental payments to service the bonds and may also be subject to the risk that rental obligations may terminate in the event of damage to or destruction or condemnation of the equipment or building;

Multi-family housing revenue bonds and single family mortgage revenue bonds which are issued to provide financing for various housing projects and which are payable primarily from the revenues derived from mortgage loans to housing projects for low to moderate income families or notes secured by mortgages on residences; repayment of this type of bond is therefore dependent upon, among other things, occupancy levels, rental income, the rate of default on underlying mortgage loans, the ability of mortgage insurers to pay claims, the continued availability of federal, state or local housing subsidy programs, economic conditions in local markets, construction costs, taxes, utility costs and other operating expenses and the managerial ability of project managers. Housing bonds are generally prepayable at any time and therefore their average life will ordinarily be less than their stated maturities;

Hospital and health care facility bonds whose payments are dependent upon revenues of hospitals and other health care facilities. These revenues come from private third-party payors and government programs, including the Medicare and Medicaid programs, which have generally undertaken cost containment measures to limit payments to health care facilities. Hospitals and health care facilities are subject to various legal claims by patients and others and are adversely affected by increasing costs of insurance. The Internal Revenue Service has been engaged in a program of intensive audits of certain large tax-exempt hospital and health care facility organizations. Although these audits have not yet been completed, it has been reported that the tax-exempt status of some of these organizations may be revoked;

Airport, port, highway and transit authority revenue bonds which are dependent for payment on revenues from the financed projects, including user fees from ports and airports, tolls on turnpikes and bridges, rents from buildings, transit fare revenues and additional financial resources including federal and state subsidies, lease rentals paid by state or local governments or a pledge of a special tax such as a sales tax or a property tax. In the case of the air travel industry, airport income is largely affected by the airlines' ability to meet their obligations under use agreements which in turn is affected by increased competition among airlines, excess capacity and increased fuel costs, among other factors;

Solid waste disposal bonds which are generally payable from dumping and user fees and from revenues that may be earned by the facility on the sale of electrical energy generated in the combustion of waste products and which are therefore dependent upon the ability of municipalities to fully utilize the facilities, sufficient supply of waste for disposal, economic or population growth, the level of construction and maintenance costs, the existence of lower-cost alternative modes of waste processing and increasing environmental regulation. A recent decision of the U.S. Supreme Court limiting a municipality's ability to require use of its facilities may have an adverse affect on the credit quality of various issues of these bonds;

Special tax bonds which are not secured by general tax revenues but are only payable from and secured by the revenues derived by a municipality from a particular tax--for example, a tax on the rental of a hotel room, on the purchase of food and beverages, on the rental of automobiles or on the consumption of liquor and may therefore be adversely affected by a reduction in revenues resulting from a decline in the local economy or population or a decline in the consumption, use or cost of the goods and services that are subject to taxation;

Student loan revenue bonds which are typically secured by pledges of new or existing student loans. The loans, in turn, are generally either guaranteed by eligible guarantors and reinsured by the Secretary of the U.S. Department of Education, directly insured by the federal government, or financed as part of supplemental or alternative loan programs within a state (e.g., loan repayments are not guaranteed). These bonds often permit the issuer to enter into interest rate swap agreements with eligible counterparties in which event the bonds are subject to the additional risk of the counterparty's ability to fulfill its swap obligation;

University and college bonds, the payments on which are dependent upon various factors, including the size and diversity of their sources of revenues, enrollment, reputation, the availability of endowments and other funds and, in the case of public institutions, the financial condition of the relevant state or other governmental entity and its policies with respect to education; and

Tax increment and tax allocation bonds, which are secured by ad valorem taxes imposed on the incremental increase of taxable assessed valuation of property within a jurisdiction above an established base of assessed value. The issuers of these bonds do not have general taxing authority and the tax assessments on which the taxes used to service the bonds are based may be

subject to devaluation due to market price declines or governmental action.

Puerto Rico. Certain Bonds may be affected by general economic conditions in the Commonwealth of Puerto Rico. Puerto Rico's economy is largely dependent for its development on federal programs, and current federal budgetary policies suggest that an expansion of its programs is unlikely. Reductions in federal tax benefits or incentives or curtailment of spending programs could adversely affect the Puerto Rican economy.

Industrial Development Revenue Bonds. Industrial development revenue bonds are municipal obligations issued to finance various privately operated projects including pollution control and manufacturing facilities. Payment is generally solely dependent upon the creditworthiness of the corporate operator of the project and, in certain cases, an affiliated or third party guarantor and may be affected by economic factors relating to the particular industry as well as varying degrees of governmental regulation. In many cases industrial revenue bonds do not have the benefit of covenants which would prevent the corporations from engaging in capital restructurings or borrowing transactions which could reduce their ability to meet their obligations and result in a reduction in the value of the Portfolio.

BONDS BACKED BY REPURCHASE COMMITMENTS

Certain Funds contain Bonds that were purchased from commercial banks, savings banks, savings and loan associations or other institutions (thrifts) that had held the Bonds in their investment portfolios prior to selling the Bonds to the Fund. These banks or thrifts (the Sellers) have committed to repurchase the Bonds from the Fund in certain circumstances. In some cases a Seller's Repurchase Commitments may be backed by a security interest in collateral or by a letter of credit (see Bonds Backed by Letters of Credit or Insurance below).

A Seller may have committed to repurchase any Bond sold by it if necessary to satisfy investors' unit redemption requests (a Liquidity Repurchase). A Seller may also have committed to repurchase any Bond sold by it if the issuer of the Bond fails to make payments of interest or principal on the Bond (a Default Repurchase) or if the issuer becomes or is deemed to be bankrupt or insolvent (an Insolvency Repurchase). A Seller may have committed to repurchase any Bond if the interest on that Bond becomes taxable (a Tax Repurchase). Investors should realize that they are subject to having all or a portion of the principal amount of their investment returned prior to termination of the Fund if any of these situations occurs. A Seller may also have committed to repurchase the Bonds sold by it on their scheduled disposition dates (as shown under Portfolio in Part A) (a Disposition Repurchase). The price at which any of these repurchases will occur (the Put Price) is shown in Part A of the Prospectus. Any collateral securing any of the Repurchase Commitments may consist of mortgage-backed securities issued by GNMA (Ginnie Maes), FNMA (Fannie Maes) or FHLMC (Freddie Macs); mortgages; municipal obligations; corporate obligations; U.S. government securities; and cash.

Investors in a Fund containing any of these credit-supported Bonds should be aware that many thrifts have failed in recent years and that the thrift industry generally has experienced severe strains. New federal legislation has resulted that imposes many new limitations on the ways banks and thrifts may do business and mandates aggressive, early intervention into unhealthy institutions. One result of this legislation is an increased possibility of early payment of the principal amount of an investment in Bonds backed by collateralized letters of credit or repurchase commitments if a Seller becomes or is deemed to be insolvent.

BONDS BACKED BY LETTERS OF CREDIT OR INSURANCE

Certain Bonds may be secured by letters of credit issued by commercial banks or savings banks, savings and loan associations and similar thrift institutions or are direct obligations of banks or thrifts. The letter of credit may be drawn upon, and the Bonds redeemed, if an issuer fails to pay amounts due on the Bonds or, in certain cases, if the interest on the Bond becomes taxable. Letters of credit are irrevocable obligations of the issuing institutions. The profitability of a financial institution is largely dependent upon the credit quality of its loan portfolio which, in turn, is affected by the institution's underwriting criteria, concentrations within the portfolio and specific industry and general economic conditions. The operating performance of financial institutions is also impacted by changes in interest rates, the availability and cost of funds, the intensity of competition and the degree of governmental regulation.

Certain Bonds may be insured or guaranteed by insurance companies listed below. The claims-paying ability of each of these companies, unless otherwise indicated, was rated AAA by Standard & Poor's or another nationally recognized rating organization at the time the insured Bonds were purchased by the Fund. The ratings are subject to change at any time at the discretion of the rating agencies. In the event that the rating of an Insured Fund is reduced, the Sponsors are authorized to direct the Trustee to obtain other insurance on behalf of the Fund. The insurance policies guarantee the timely payment of principal and interest on the Bonds but do not guarantee their market value or the value of the Units. The insurance policies generally do not provide for accelerated payments of principal or cover redemptions resulting from events of taxability.

The following summary information relating to the listed insurance companies has been obtained from publicly available information:

                                                                                        FINANCIAL INFORMATION
                                                                                          AS OF JUNE 30, 1995
                                                                                     (IN MILLIONS OF DOLLARS)
                                                                         --------------------------------------
                                                                                            POLICYHOLDERS'
                        NAME                          DATE ESTABLISHED   ADMITTED ASSETS           SURPLUS
- ----------------------------------------------------  -----------------  ---------------  ---------------------
AMBAC Indemnity Corporation.........................           1970        $     2,230         $       805
Asset Guaranty Insurance Co. (AA by S&P)                       1988                173                  78
Capital Guaranty Insurance Company (CGIC)...........           1986                316                 171
Capital Markets Assurance Corp. (CAPMAC)............           1987                221                 136
Connie Lee Insurance Company........................           1987                202                 108
Continental Casualty Company........................           1948             20,114               3,747
Financial Guaranty Insurance Company................           1984              2,249                 978
Financial Security Assurance Inc. (FSA).............           1984                776                 344
Firemen's Insurance Company of Newark, NJ                      1855              2,083                 403
Industrial Indemnity Co. (HIBI).....................           1920              1,706                 302
MBIA Insurance Corporation..........................           1986              3,623               1,165

Insurance companies are subject to extensive regulation and supervision where they do business by state insurance commissioners who regulate the standards of solvency which must be maintained, the nature of and limitations on investments, reports of financial condition, and requirements regarding reserves for unearned premiums, losses and other matters. A significant portion of the assets of insurance companies are required by law to be held in reserve against potential claims on policies and is not available to general creditors. Although the federal government does not regulate the business of insurance, federal initiatives including pension regulation, controls on medical care costs, minimum standards for no-fault automobile insurance, national health insurance, tax law changes affecting life insurance companies and repeal of the antitrust exemption for the insurance business can significantly impact the insurance business.

STATE RISK FACTORS

Investment in a single State Trust, as opposed to a Fund which invests in the obligations of several states, may involve some additional risk due to the decreased diversification of economic, political, financial and market risks. A brief description of the factors which may affect the financial condition of the applicable State for any State Trust, together with a summary of tax considerations relating to that State, appear in Part A (or for certain State Trusts, Part C), of the Prospectus; further information is contained in the Information Supplement.

LITIGATION AND LEGISLATION

The Sponsors do not know of any pending litigation as of the initial date of deposit which might reasonably be expected to have a material adverse effect upon the Fund. At any time after the initial date of deposit, litigation may be initiated on a variety of grounds, or legislation may be enacted, affecting the Bonds in the Fund. Litigation, for example, challenging the issuance of pollution control revenue bonds under environmental protection statutes may affect the validity of certain Bonds or the tax-free nature of their interest. While the outcome of litigation of this nature can never be entirely predicted, opinions of bond counsel are delivered on the date of issuance of each Bond to the effect that it has been validly issued and that the interest thereon is exempt

from federal income tax. From time to time, proposals are introduced in Congress to, among other things, reduce federal income tax rates, impose a flat tax, exempt investment income from tax or abolish the federal income tax and replace it with another form of tax. Enactment of any such legislation could adversely affect the value of the Units. The Fund, however, cannot predict what legislation, if any, in respect of tax rates may be proposed, nor can it predict which proposals, if any, might be enacted.

Also, certain proposals, in the form of state legislative proposals or voter initiatives, seeking to limit real property taxes have been introduced in various states, and an amendment to the constitution of the State of California, providing for strict limitations on real property taxes, has had a significant impact on the taxing powers of local governments and on the financial condition of school districts and local governments in California. In addition, other factors may arise from time to time which potentially may impair the ability of issuers to make payments due on the Bonds. Under the Federal Bankruptcy Code, for example, municipal bond issuers, as well as any underlying corporate obligors or guarantors, may proceed to restructure or otherwise alter the terms of their obligations.

From time to time Congress considers proposals to prospectively and retroactively tax the interest on state and local obligations, such as the Bonds. The Supreme Court clarified in South Carolina v. Baker (decided on April 20, 1988) that the U.S. Constitution does not prohibit Congress from passing a nondiscriminatory tax on interest on state and local obligations. This type of legislation, if enacted into law, could require investors to pay income tax on interest from the Bonds and could adversely affect an investment in Units. See Taxes.

PAYMENT OF THE BONDS AND LIFE OF THE FUND

The size and composition of the Portfolio will change over time. Most of the Bonds are subject to redemption prior to their stated maturity dates pursuant to optional refunding or sinking fund redemption provisions or otherwise. In general, optional refunding redemption provisions are more likely to be exercised when the value of a Bond is at a premium over par than when it is at a discount from par. Some Bonds may be subject to sinking fund and extraordinary redemption provisions which may commence early in the life of the Fund. Additionally, the size and composition of the Fund will be affected by the level of redemptions of Units that may occur from time to time. Principally, this will depend upon the number of investors seeking to sell or redeem their Units and whether or not the Sponsors are able to sell the Units acquired by them in the secondary market. As a result, Units offered in the secondary market may not represent the same face amount of Bonds as on the initial date of deposit. Factors that the Sponsors will consider in determining whether or not to sell Units acquired in the secondary market include the diversity of the Portfolio, the size of the Fund relative to its original size, the ratio of Fund expenses to income, the Fund's current and long-term returns, the degree to which Units may be selling at a premium over par and the cost of maintaining a current prospectus for the Fund. These factors may also lead the Sponsors to seek to terminate the Fund earlier than its mandatory termination date.

FUND TERMINATION

The Fund will be terminated no later than the mandatory termination date specified in Part A of the Prospectus. It will terminate earlier upon the disposition of the last Bond or upon the consent of investors holding 51% of the Units. The Fund may also be terminated earlier by the Sponsors once the total assets of the Fund have fallen below the minimum value specified in Part A of the Prospectus. A decision by the Sponsors to terminate the Fund early will be based on factors similar to those considered by the Sponsors in determining whether to continue the sale of Units in the secondary market.

Notice of impending termination will be provided to investors and thereafter units will no longer be redeemable. On or shortly before termination, the Fund will seek to dispose of any Bonds remaining in the Portfolio although any Bond unable to be sold at a reasonable price may continue to be held by the Trustee in a liquidating trust pending its final disposition. A proportional share of the expenses associated with termination, including brokerage costs in disposing of Bonds, will be borne by investors remaining at that time. This may have the effect of reducing the amount of proceeds those investors are to receive in any final distribution.

LIQUIDITY

Up to 40% of the value of the Portfolio may be attributable to guarantees or similar security provided by corporate entities. These guarantees or other security may constitute restricted securities that cannot be sold

publicly by the Trustee without registration under the Securities Act of 1933, as amended. The Sponsors nevertheless believe that, should a sale of the Bonds guaranteed or secured be necessary in order to meet redemption of Units, the Trustee should be able to consummate a sale with institutional investors.

The principal trading market for the Bonds will generally be in the over-the-counter market and the existence of a liquid trading market for the Bonds may depend on whether dealers will make a market in them. There can be no assurance that a liquid trading market will exist for any of the Bonds, especially since the Fund may be restricted under the Investment Company Act of 1940 from selling Bonds to any Sponsor. The value of the Portfolio will be adversely affected if trading markets for the Bonds are limited or absent.