MUNICIPAL INVESTMENT TR FD MULTISTATE SER 316 DEF ASSET FDS, 487, 1997-08-22

MUNICIPAL INVESTMENT TR FD MULTISTATE SER 316 DEF ASSET FDS
487, 1997-08-22

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 22, 1997
REGISTRATION NO. 333-30861

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

---------------------------------
AMENDMENT NO. 1
TO
FORM S-6
---------------------------------

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

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

A. EXACT NAME OF TRUST:

MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES - 316
DEFINED ASSET FUNDS

B. NAMES OF DEPOSITORS:

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

C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:

MERRILL LYNCH, PIERCE, SMITH BARNEY INC. PAINEWEBBER INCORPORATED
FENNER & 388 GREENWICH 1285 AVENUE OF THE
SMITH INCORPORATED STREET--23RD FLOOR AMERICAS
UNIT INVESTMENT TRUST NEW YORK, NY 10013 NEW YORK, NY 10019
DIVISION
P.O. BOX 9051
PRINCETON, NJ 08543-9051
PRUDENTIAL SECURITIES
INCORPORATED
ONE NEW YORK PLAZA
NEW YORK, NY 10292
DEAN WITTER REYNOLDS INC.
TWO WORLD TRADE
CENTER--59TH FLOOR
NEW YORK, NY 10048

D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:

TERESA KONCICK, ESQ. LAURIE A. HESSLEIN ROBERT E. HOLLEY
P.O. BOX 9051 388 GREENWICH STREET 1285 AVENUE OF THE
PRINCETON, NJ 08543-9051 NEW YORK, NY 10013 AMERICAS
NEW YORK, NY 10019
COPIES TO:
LEE B. SPENCER, JR. PIERRE DE SAINT PHALLE, DOUGLAS LOWE, ESQ.
ONE NEW YORK PLAZA ESQ. 130 LIBERTY STREET--29TH
NEW YORK, NY 10292 450 LEXINGTON AVENUE FLOOR
NEW YORK, NY 10017 NEW YORK, NY 10006

E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:

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

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

G. AMOUNT OF FILING FEE: Not applicable

H. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:

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

/ x / Check box if it is proposed that this registration statement will become
effective upon filing on August 22, 1997, pursuant to Rule 487.

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<PAGE>
DEFINED ASSET FUNDSSM
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MUNICIPAL INVESTMENT ESTIMATED CURRENT RETURN shows the estimated
TRUST FUND annual cash to be received from interest-bearing
MULTISTATE SERIES 316 bonds in the Portfolio (net of estimated annual
(UNIT INVESTMENT TRUSTS) expenses) divided by the Public Offering Price
- ------------------------------(including the maximum deferred sales charge).
/ / EXEMPT FROM REGULAR ESTIMATED LONG TERM RETURN is a measure of the
FEDERAL INCOME TAX estimated return over the estimated life of the
AND SOME STATE TAXES Fund. This represents an average of the yields to
/ / DEFINED PORTFOLIOS OF maturity (or in certain cases, to an earlier call
MUNICIPAL BONDS date) of the individual bonds in the Portfolio,
/ / MONTHLY INCOME adjusted to reflect the maximum deferred sales
CALIFORNIA INSURED TRUST charge and estimated expenses. The average yield
4.90% for the Portfolio is derived by weighting each
ESTIMATED CURRENT RETURN bond's yield by its market value and the time
4.93% remaining to the call or maturity date, depending
ESTIMATED LONG TERM RETURN on how the bond is priced. Unlike Estimated
NEW JERSEY INSURED TRUST Current Return, Estimated Long Term Return takes
4.82% into account maturities, discounts and premiums of
ESTIMATED CURRENT RETURN the underlying bonds.
4.86% No return estimate can be predictive of your
ESTIMATED LONG TERM RETURN actual return because returns will vary with
NEW YORK INSURED TRUST purchase price (including sales charges), how long
4.92% units are held, changes in Portfolio composition,
ESTIMATED CURRENT RETURN changes in interest income and changes in fees and
4.95% expenses. Therefore, Estimated Current Return and
ESTIMATED LONG TERM RETURN Estimated Long Term Return are designed to be
AS OF AUGUST 21, 1997 comparative rather than predictive. A yield
calculation which is more comparable to an
individual bond may be higher or lower than
Estimated Current Return or Estimated Long Term
Return which are more comparable to return
calculations used by other investment products.

-------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
SPONSORS: HAS THE COMMISSION OR ANY STATE SECURITIES
Merrill Lynch, COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
Pierce, Fenner & Smith OF THIS DOCUMENT. ANY REPRESENTATION TO THE
Incorporated CONTRARY IS A CRIMINAL OFFENSE.
Smith Barney Inc. Inquiries should be directed to the Trustee at
PaineWebber Incorporated 1-800-221-7771.
Prudential Securities Prospectus dated August 22, 1997.
Incorporated INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
Dean Witter Reynolds Inc. AND RETAIN IT FOR FUTURE REFERENCE.

<PAGE>
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Defined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $115 billion sponsored in the last 25 years. Each Defined
Asset Fund is a portfolio of preselected securities. Each portfolio is divided
into 'units' representing equal shares of the underlying assets. Each unit
receives an equal share of income and principal distributions.

Defined Asset Funds offer several defined 'distinctives'. You know in advance
what you are investing in and that changes in the portfolio are limited - a
defined portfolio. Most defined bond funds pay interest monthly - defined
income. The portfolio offers a convenient and simple way to invest - simplicity
defined.

Your financial professional can help you select a Defined Asset Fund to meet
your personal investment objectives. Our size and market presence enable us to
offer a wide variety of investments. The Defined Asset Funds family offers:

o Municipal bond portfolios
o Corporate bond portfolios
o Government bond portfolios
o Equity portfolios
o International bond and equity portfolios

The terms of Defined Funds are as short as one year or as long as 30 years.
Special defined funds are available including: insured funds, double and triple
tax-free funds and funds with 'laddered maturities' to help protect against
changing interest rates. Defined Asset Funds are offered by prospectus only.
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Defined Multistate Series
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Our defined portfolios of municipal bonds offers you a simple and convenient way
to earn tax-free monthly income. And by purchasing Defined Asset Funds, you not
only receive professional selection but also gain the advantage of reduced risk
by investing in bonds of several different issuers.

INVESTMENT OBJECTIVE

To provide interest income exempt from regular federal income taxes through
investment in a fixed portfolio consisting primarily of municipal bonds issued
by or on behalf of a single State and its local governments and authorities.
Units may also be exempt from certain state and local taxes for residents of the
State.

DIVERSIFICATION

Each Portfolio contains a number of different bond issues. Spreading your
investment among different issuers reduces your risk, but does not eliminate it,
especially since each Portfolio contains bonds of only one State. Because of
maturities, sales or other dispositions of bonds, the size, composition and
return of the Portfolio will change over time.
- ---------------------------------------------------
Defining Your Portfolio
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PROFESSIONAL SELECTION AND SUPERVISION

Each Portfolio contains a variety of bonds selected by experienced buyers. The
Fund is not actively managed; however, it is regularly reviewed and a bond can
be sold if retaining it is considered detrimental to investors' interests.

MONTHLY FEDERALLY TAX-FREE INTEREST INCOME

Each Portfolio pays monthly income, even though the bonds generally pay interest
semi-annually.

INSURANCE
Certain bonds are insured. This insurance guarantees the timely payment of
principal and interest of the bonds, but does not guarantee the value of the
bonds or the units. Insurance does not cover accelerated payments of principal
or any increase in interest payments or premiums payable on mandatory
redemptions, including if interest on a bond is determined to be taxable. (See
Bonds Backed by Letters of Credit or Insurance in Part B).

BOND CALL FEATURES

It is possible that during periods of falling interest rates, a bond with a
coupon higher than current market rates will be prepaid or 'called', at the
option of the bond issuer, before its expected maturity. When bonds are
initially callable, the price is usually at a premium to par which then declines
to par over time. Bonds may also be subject to a mandatory sinking fund or have
extraordinary redemption provisions. For example, if the bond's proceeds are not
able to be used as intended the bond may be redeemed. This redemption and the
sinking fund are often at par.

CALL PROTECTION

Although many bonds are subject to optional refunding or call provisions, we
have selected bonds with call protection. This call protection means that any
bond in a Portfolio generally cannot be called for a number of years and
thereafter at a declining premium over par.

TAX INFORMATION

Based on the opinion of bond counsel, interest income from the bonds held by
this Fund is generally 100% exempt under existing laws from regular federal
income tax and certain state and local personal income taxes for residents of a
particular State. Any gain on a disposition of the underlying bonds or units
will be subject to tax.

LOW MINIMUM INVESTMENT

You can get started with a minimum purchase of about $1,000.

REINVESTMENT OPTION

You can elect to automatically reinvest your distributions into a separate
portfolio of federally tax-exempt bonds. Most or all of the bonds in that
portfolio, however, will not be insured or exempt from state and local taxes.
Reinvesting helps to compound your income free of federal income taxes.

PRINCIPAL DISTRIBUTIONS

Principal from sales, redemptions and maturities of bonds in the Portfolios will
be distributed to investors periodically when the amount to be distributed is
more than $5.00 per unit.

A-2
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Defining Your Investment
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PUBLIC OFFERING PRICE

The Public Offering Price as of August 21, 1997, the business day prior to the
Initial Date of Deposit, is based on the aggregate offer side value of the
underlying bonds in the Portfolio, plus cash, divided by the number of units
outstanding. The Public Offering Price on any subsequent date will vary. 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 underlying bonds
are evaluated by an independent evaluator at 3:30 p.m. Eastern time on every
business day.

SALES CHARGES

There is no up-front sales charge in the initial offering period until the
deduction of the first deferred sales charge installment from holders of record
on November 10, 1997. In the first three years of owning your units you will pay
a deferred sales charge of $15 per unit each year ($3.75 quarterly November,
February, May and August), a total of $45.00. This deferred sales charge will be
paid from interest on the short-term bonds in the Portfolio and proceeds from
the periodic sale or maturity of those bonds. Interest on these short-term bonds
is not included in a Trust's return figures. Units purchased after November 10,
1997 will be charged an up-front sales charge equal to 0.375% per unit based on
the Public Offering Price (less the value of the short-term bonds reserved to
pay the deferred sales charge not yet accrued) multiplied by the number of
deferred sales charge payments already deducted. (See How To Buy Units in Part
B.)

PAR VALUE

The par value represented by each unit--the amount of money you will receive by
termination of the Trust, assuming all the bonds are paid at maturity or are
redeemed by the issuer at par or sold by the Fund at par--is $1,000.

TERMINATION DATE

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

SPONSORS' PROFIT OR LOSS

The Sponsors' profit or loss associated with each Portfolio will include the
receipt of applicable sales charges, any fees for underwriting or placing bonds,
fluctuations in the Public Offering Price or secondary market price of units and
a gain or loss on the deposit of the bonds (see Underwriters' and Sponsors'
Profit in Part B).

REDEEMING OR SELLING YOUR INVESTMENT

You may redeem or sell your units at any time. Your price is based on the offer
side evaluation of the bonds during the initial public offering period and for
at least the first three months of the Trust and on the lower, bid side
evaluation thereafter, as determined by an independent evaluator, plus principal
cash, if any, as well as accrued interest. The per unit redemption and Sponsors'
repurchase price as of August 21, 1997, was $45.00 less than the Public Offering
Price, reflecting the deduction of the deferred sales charge, which declines by
$3.75 quarterly over approximately the first three years of the Trust. If you
redeem or sell your Units before the final deferred sales charge installment
deduction you will pay the remaining balance of the deferred sales charge. (See
How To Buy Units in Part B.)

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Defining Your Risks
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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.

UNDERWRITING ACCOUNT

One or more of the Sponsors has participated as sole underwriter, managing
underwriter or member of an underwriting syndicate from which approximately 20%
of the bonds in the California Trust and 2% the bonds in the New York Trust were
acquired.

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
P.O. Box 9051
Princeton, NJ 08543-9051 48.37%

SMITH BARNEY INC.
388 Greenwich Street--23rd Floor
New York, NY 10013 10.74%

PAINEWEBBER INCORPORATED
1285 Avenue of the Americas
New York, NY 10019 24.78%

PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza
New York, NY 10292 6.20%

DEAN WITTER REYNOLDS INC.
Two World Trade Center--59th Floor
New York, NY 10048 9.91%
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100.00%

A-3
<PAGE>

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Defined California Insured Trust
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PORTFOLIO DIVERSIFICATION

The Portfolio contains 9 California bond issues.

TYPES OF BONDS

The Portfolio consists of $4,690,000 face amount of municipal bonds of the
following types:

APPROXIMATE
PORTFOLIO PERCENTAGE

/ / Airports/Ports/Highways 13%
/ / Hospitals/Nursing Homes/Mental Health 18%
/ / Lease Rental Appropriation 32%
/ / Municipal Water/Sewer Utilities 9%
/ / Special Tax 16%
/ / Tax Allocation 12%

INSURED AAA-RATED BONDS

As a result of insurance, the bonds are rated AAA or Aaa.

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

AMBAC Insurance Company 17%
Financial Guaranty Insurance Company 8%
Financial Security Assurance Inc. 17%
MBIA Insurance Corporation 58%

PORTFOLIO CONCENTRATIONS

The Portfolio is considered to be concentrated in Lease Rental Appropriation
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
concentrated in bonds of California issuers and is subject to additional risk
from decreased diversification as well as from factors that may be particular to
California, which are briefly described on page A-6.
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Defining Your Income
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WHAT YOU MAY EXPECT
(PAYABLE ON THE 25TH DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 10TH DAY OF
THE MONTH):

First Distribution per unit
(September 25, 1997): $ 2.51
Regular Monthly Income per unit
(Beginning on October 25, 1997): $ 4.18
Annual Income per unit: $50.24

These figures are estimates determined as of the business day prior to the
Initial Date of Deposit and actual payments may vary.

Estimated cash flows are available upon request from the Sponsors.
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Defining Your Costs
- ---------------------------------------------------

SALES CHARGES

Although the Trust is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay (see
Sales Charges on page A-3).

As a %
of Initial
Offering
Period
Public Amount per
Offering $1,000
Price Invested
----------- -----------
MAXIMUM SALES CHARGES 4.50% $ 45.00

The Trust (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states and the initial audit of the Portfolio--as is common for mutual
funds.

ESTIMATED ANNUAL FUND OPERATING EXPENSES

As a %
of Average
Net Assets* Per Unit
----------- -----------
TRUSTEE'S FEE .071% $ 0.72
PORTFOLIO SUPERVISION,
BOOKKEEPING AND
ADMINISTRATIVE FEES .045% 0.46
EVALUATOR'S FEE .028% 0.29
ORGANIZATIONAL COSTS .020% 0.20
OTHER OPERATING
EXPENSES .062% 0.64
----------- -----------
TOTAL .226 $ 2.31

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* Based on the mean of the bid and offer side evaluations.

COSTS OVER TIME

You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods and
redemption at the end of the period:

1 Year 3 Years 5 Years 10 Years
$47 $52 $58 $74

No redemption at the end of the period:

1 Year 3 Years 5 Years 10 Years
$17 $52 $58 $74

The example assumes reinvestment of all distributions into additional units of
the Fund (a reinvestment option different from that offered by this Fund) and
uses a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The Costs Over Time above
reflect both sales charges and operating expenses on an increasing investment
(because the net annual return is reinvested). The example should not be
considered a representation of past or future expenses or annual rate of return;
the actual expenses and annual rate of return may be more or less than the
example.

As of August 21, 1997, the Public Offering Price was $1,024.36, based on the
aggregate offer side value of the bonds ($4,610,592), plus cash ($39,000),
divided by the number of units outstanding (4,539). 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. Sponsors' profit on deposit was $28,575.60.

A-4
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Defined California Insured Portfolio
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Municipal Investment Trust Fund
Multistate Series--316
California Insured Trust August 22, 1997

OPTIONAL SINKING
RATING REFUNDING FUND
OF ISSUES REDEMPTIONS REDEMPTIONS COST
PORTFOLIO TITLE (1) (2) (2) TO FUND (3)
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<S> <C> <C> <C> <C>

1. California Hlth. Facs. Fin.
Auth., Ins. Rev. Bonds (Sutter
Hlth.), Ser. 1997 A (FSA Ins.) (4) AAA
$5,000, 3.80%, 8/15/98 (5) -- -- $ 5,000.00
$70,000, 4.15%, 8/15/00 (5) -- -- 70,000.00
$725,000, 5.25%, 8/15/27 8/15/07 @ 102 8/15/18 698,508.50
2. $700,000 Los Angeles Cnty., CA,
Pub. Wks. Fin. Auth., Lease Rev.
Bonds (Multiple Cap. Fac. Proj. V),
Ser. 1996 B (AMBAC Ins.), 5.125%,
12/1/29 AAA 12/1/07 @ 101 12/1/18 675,857.00
3. $85,000 County of San Diego, CA,
Certs. of Part. (1997 Central Jail
Rfdg.) (AMBAC Ins.), 4.0%, 10/1/98
to 10/1/99 (5) AAA -- -- 84,942.35
4. $700,000 Hayward Pub. Fin.
Auth., CA, Certs. of Part. (Civic
Ctr. Proj.), Ser. 1996 (MBIA Ins.),
5.25%, 8/1/26 AAA 8/1/06 @ 101 8/1/18 684,684.00
5. $630,000 Harbor Dept. of the
City of Los Angeles, CA, Rev.
Bonds, Ser. 1996 C (MBIA Ins.),
5.375%, 11/1/25 AAA 11/1/06 @ 101 11/1/17 627,675.30
6. $745,000 Rancho Cucamonga, CA,
Redev. Agy., Rancho Redev. Proj.,
1994 Tax Allocation Rfdg. Bonds
(MBIA Ins.), 5.50%, 9/1/23 AAA 3/1/04 @ 102 9/1/16 747,376.55
7. $30,000 City of Rancho Mirage
Jt. Pwr. Fin. Auth., CA, Certs. of
Part. (Eisenhower Med. Ctr.), Ser.
1997 A (MBIA Ins.), 4.00%, 7/1/99
(5) Aaa(m) -- -- 30,050.10
8. $400,000 San Jose-Santa Clara
Clean Wtr. Fin. Auth., CA, Swr.
Rev. Bonds, Ser. 1995 A (Financial
Guaranty Ins.), 5.375%, 11/15/20 AAA 11/15/05 @ 101 11/15/16 398,648.00
9. $600,000 Community Dev. Agy. of
the City of Sebastopol Cmnty. Dev.
Proj. Rfdg. Tax Alloc. Bonds, Ser.
1997 (MBIA Ins.), 5.25%, 12/1/21 AAA 12/1/07 @ 102 12/1/13 587,850.00
--------------
$ 4,610,591.80
--------------
--------------
</TABLE>

- ----------------------------
(1) All ratings are by Standard & Poor's Ratings Group unless followed by
'(m)', which indicates a Moody's Investors Service rating. Moody's ratings are
furnished by the Evaluator but not confirmed with Moody's. (See Appendix A to
Part B.)
(2) Bonds are first subject to optional redemptions (which may be exercised in
whole or in part) on the dates and at the prices indicated under the Optional
Refunding Redemptions column. In subsequent years, bonds are redeemable at
declining prices, but typically not below par value. Some issues may be subject
to sinking fund redemption or extraordinary redemption without premium prior to
the dates shown.
(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, 17% of the bonds were deposited at a
premium, 2% at par and 81% at a discount from par.
(4) These bonds are when-issued bonds that are expected to settle 14 days after
the settlement date for Units. The Trustee's fees and expenses will be reduced
during the first year by $0.65 per Unit to compensate for interest that would
have been accrued on the bonds between the settlement date for Units and the
actual date of delivery of the bonds. (See Income, Distributions and
Reinvestment--Income in Part B.)
(5) It is anticipated that interest and principal received from these bonds
will be applied to the payment of the Trust's deferred sales charge and,
therefore, these amounts have not been included in the Trust's calculation of
Estimated Current and Long Term Returns.

A-5
<PAGE>

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California Taxes and Risks
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CALIFORNIA RISK FACTORS

From the latter years of the 1980s through fiscal year 1992-1993, California
weathered a turbulent period of repeated budgetary imbalance. Even as rapid
population growth escalated the demand for government services, an economic
recession ravaged the State's revenue base and drove expenditures above budget
appropriations.

Bolstered by strengthening revenues, reduced caseload growth and an
improving economy, the State has begun to experience some relief from the
serious budgetary pressures that characterized a significant portion of the
decade. Reflecting the belief shared by many analysts that the California
economy would remain strong, the 1996-1997 Budget Act allocated a State budget
of some $63 billion. In the context of optimistic revenue projections released
by the Department of Finance, the Budget Act granted a $230 million tax cut to
corporations while simultaneously providing an increase in funding for education
and prisons. However, only a relatively modest amount, $287 million, was
allocated to the reserve fund available for emergencies such as earthquakes.

Nonetheless, the State's budgetary fortunes continue to be subject to
unforeseeable events. In December, 1994, for example, Orange County, California
and its Investment Pool filed for bankruptcy. A plan of adjustment has been
approved by the court and became effective under which all non-municipal
creditors are to be paid in full. However, the ultimate financial impact on the
County and the State cannot be predicted with any certainty. In addition,
constant fluctuations in other factors affecting the State -- including health
and welfare caseloads, property tax receipts, federal funding and extraordinary
expenditures related to natural disasters -- will undoubtedly create new budget
challenges.

Furthermore, certain California constitutional amendments, legislative
measures, executive orders, administrative regulations and voter initiatives
could produce the adverse effects on the California economy. Among these are
measures that have established tax, spending or appropriations limits and
prohibited the imposition of certain new taxes, authorized the transfers of tax
liabilities and reallocations of tax receipts among governmental entities and
provided for minimum levels of funding.

Finally, certain bonds in the Trust may be subject to provisions of
California law that could adversely affect payments on those bonds or limit the
remedies available to bondholders. Among these are bonds of health care
institutions which are subject to the strict rules and limits regarding
reimbursement payments of California's Medi-Cal Program for health care services
to welfare beneficiaries, and bonds secured by liens on real property.

General obligation bonds of the State of California are currently rated A1
by Moody's and A+ by Standard & Poor's.

CALIFORNIA TAXES

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

The Trust is neither a business trust nor an association taxable as a
corporation for California tax purposes. Each holder will be considered the
owner of a pro rata portion of the Trust Fund and will be deemed to receive his
pro rata portion of the income therefrom. To the extent interest on the Debt
Obligations is exempt from California personal income taxes, said interest is
similarly exempt from California personal income taxes in the hands of the
holders, except to the extent such holders are banks or corporations subject to
the California franchise tax. Holders will be subject to California income tax
on any gain on the disposition of all or part of his pro rata portion of a Debt
Obligation in the Trust Fund. A holder will be considered to have disposed of
all or part of his pro rata portion of each Debt Obligation when he sells or
redeems all or some of his Units. A holder will also be considered to have
disposed of all or part of his pro rata portion of a Debt Obligation when all or
part of the Debt Obligation is sold by the Trust Fund or is redeemed or paid at
maturity. The Debt Obligations and the Units are not taxable under the
California personal property tax law.

A-6
<PAGE>

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Defined New Jersey Insured Trust
- --------------------------------------------------------------------------------

PORTFOLIO DIVERSIFICATION

The Portfolio contains 9 New Jersey bond issues.

TYPES OF BONDS

The Portfolio consists of $3,655,000 face amount of municipal bonds of the
following types:

APPROXIMATE
PORTFOLIO PERCENTAGE

/ / Airport/Ports/Highway Revenue Bonds 16%
/ / General Obligation Bonds 18%
/ / Hospitals/Nursing Homes/Mental Health 41%
/ / Municipal Water/Sewer Utilities 14%
/ / Universities/Colleges 11%

INSURED AAA-RATED BONDS
As a result of insurance, the bonds are rated AAA or Aaa.

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

AMBAC Insurance Company 55%
Financial Guaranty Insurance Company 2%
Financial Security Assurance Inc. 16%
MBIA Insurance Corporation 27%

PORTFOLIO CONCENTRATIONS

The Portfolio is considered to be concentrated in Hospital/Nursing Home/Mental
Health 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 concentrated in bonds of New Jersey issuers and is subject
to additional risk from decreased diversification as well as from factors that
may be particular to New Jersey, which are briefly described on page A-9.
- ---------------------------------------------------
Defining Your Income
- ---------------------------------------------------

WHAT YOU MAY EXPECT
(PAYABLE ON THE 25TH DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 10TH DAY OF
THE MONTH):

First Distribution per unit
(September 25, 1997): $ 2.48
Regular Monthly Income per unit
(Beginning on October 25, 1997): $ 4.13
Annual Income per unit: $49.60

These figures are estimates determined as of the business day prior to the
Initial Date of Deposit and actual payments may vary.

Estimated cash flows are available upon request from the Sponsors.
- ---------------------------------------------------
Defining Your Costs
- ---------------------------------------------------

SALES CHARGES

As a %
of Initial
Offering
Period
Public Amount per
Offering $1,000
Price Invested
----------- -----------
Maximum Sales Charges 4.50% $ 45.00

ESTIMATED ANNUAL FUND OPERATING EXPENSES

As a %
of Average
Net Assets* Per Unit
----------- -----------
Trustee's Fee .070% $ 0.72
Portfolio Supervision,
Bookkeeping and
Administrative Fees .045% 0.46
Evaluator's Fee .036% 0.37
Organizational Costs .020% 0.20
Other Operating
Expenses .078% 0.80
----------- -----------
TOTAL .249% $ 2.55

- ------------
* Based on the mean of the bid and offer side evaluations.

COSTS OVER TIME

You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods and
redemption at the end of the period:

1 Year 3 Years 5 Years 10 Years
$48 $53 $59 $77

No redemption at the end of the period:

1 Year 3 Years 5 Years 10 Years
$18 $53 $59 $77

As of August 21, 1997, the Public Offering Price was $1,028.74, based on the
aggregate offer side value of the bonds ($3,601,459), plus cash ($30,000),
divided by the number of units outstanding (3,530). 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. Sponsors' profit on deposit was $26,668.90.

A-7
<PAGE>
- --------------------------------------------------------------------------------
Defined New Jersey Insured Portfolio
- --------------------------------------------------------------------------------

Municipal Investment Trust Fund
Multistate Series--316
New Jersey Insured Trust August 22, 1997

1. 95,000 Borough of Milltown,
Cnty. of Middlesex, NJ, G.O. Bonds
(FSA Ins.), 4.75%, 9/1/99 to 9/1/00
(5) AAA -- -- $ 96,663.05
2. $500,000 Gloucester Cnty. Util.
Auth., NJ, Swr. Rev. Rfdg. Bonds,
Ser. 1996 (MBIA Ins.), 5.45%,
1/1/24 AAA 1/1/06 @ 101 1/1/17 503,605.00
3. $500,000 New Jersey Econ. Dev.
Auth., Rev. Bonds (St. Barnabas
Proj.), Ser. 1997 A (MBIA Ins.),
5.375%, 7/1/27 Aaa(m) 7/1/07 @ 102 -- 498,120.00
4. $500,000 New Jersey Hlth. Care
Facs. Fin. Auth., Rev. and Rfdg.
Bonds, Holy Name Hosp. Issue, Ser.
1997 (AMBAC Ins.), 5.25%, 7/1/20 AAA 7/1/07 @ 102 7/1/12 493,410.00
5. $500,000 New Jersey Hlth. Care
Facs. Fin. Auth., Rev. and Rfdg.,
AHS Hosp. Corp. Issue, Ser. 1997
(AMBAC Ins.), 5.375%. 7/1/19 (4) AAA 7/1/07 @ 102 -- 501,050.00
6. $60,000 The Board of Educ. of
the City of Clifton in the Cnty. of
Passaic, NJ, School Bonds
(Financial Guaranty Ins.), 5.00%,
12/15/98 (5) AAA -- -- 60,912.60
7. $485,000 The Cnty. of Monmouth,
NJ, The Bd. of Educ. of the Twp. of
Freehold (New Jersey Sch. Bond,
Reserve Act, P.L. 1980, c. 72) (FSA
Ins.), 5.40%, 7/15/23 AAA 7/15/06 @ 100 -- 485,000.00
8. $415,000 The Essex Cnty. Imp.
Auth., NJ, Gtd. Rev. Rfdg. Bonds
(Cnty. Coll. Proj.) (AMBAC Ins.),
5.35%, 12/1/24 AAA 12/1/06 @ 102 12/1/17 415,000.00
9. $600,000 The Port Auth. of New
York and New Jersey, Consol. Bonds,
One Hundred Fourth Ser. (AMBAC
Ins.), 4.75%, 1/15/26 AAA 1/15/06 @ 101 7/15/22 547,698.00
--------------
$ 3,601,458.65
--------------
--------------
</TABLE>

- ----------------------------
(1) All ratings are by Standard & Poor's Ratings Group unless followed by
'(m)', which indicates a Moody's Investors Service rating. Moody's ratings are
furnished by the Evaluator but not confirmed with Moody's. (See Appendix A to
Part B.)
(2) Bonds are first subject to optional redemptions (which may be exercised in
whole or in part) on the dates and at the prices indicated under the Optional
Refunding Redemptions column. In subsequent years, bonds are redeemable at
declining prices, but typically not below par value. Some issues may be subject
to sinking fund redemption or extraordinary redemption without premium prior to
the dates shown.
(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, approximately 31% of the bonds were
deposited at a premium, 25% at par and 44% at a discount from par.
(4) These bonds are when-issued bonds that are expected to settle 14 days after
the settlement date for Units. The Trustee's fees and expenses will be reduced
during the first year by $0.03 per Unit to compensate for interest that would
have been accrued on the bonds between the settlement date for Units and the
actual date of delivery of the bonds. (See Income, Distributions and
Reinvestment--Income in Part B.)
(5) It is anticipated that interest and principal received from these bonds
will be applied to the payment of the Trust's deferred sales charge and,
therefore, these amounts have not been included in the Trust's calculation of
Estimated Current and Long Term Returns.

A-8
<PAGE>

- --------------------------------------------------------------------------------
New Jersey Taxes and Risks
- --------------------------------------------------------------------------------

NEW JERSEY RISK FACTORS

New Jersey and certain of its public authorities have in recent years
experienced financial difficulties and pressures to a significant degree.
Employment in manufacturing, wholesale and retail trade and construction have
been in decline although gains have been recorded in the services, government,
financial/insurance/real estate and tranportation/communication/public utilities
sectors. The economic recovery in New Jersey is likely to be slow and uneven
because some sectors, like commercial and industrial construction, suffer from
excess capacity, and even in rebounding sectors, employers are expected to be
cautious about hiring.

State appropriations of funds are distributed among a diverse group of
public recipients. In fiscal 1997, the largest state aid appropriation is
provided for local elementary and secondary education programs, followed by
appropriations for operation of the state government (including the State
Legislature, Judiciary and Executive Office) and other programs including, among
others, correctional facilities and the State Police, higher education and
environmental protection. The effect on these appropriations and other State
funding requirements cannot yet be evaluated. By a bill signed into law on July
4, 1995, New Jersey personal income tax rates have been reduced so that coupled
with the prior rate reductions, beginning with tax year 1996, personal income
tax rates will be, depending on taxpayers' level of income and filing status,
30%, 15%, or 9% lower than 1993 rates.

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

General obligation bonds of New Jersey are currently rated Aa1 by Moody's
and AA+ by Standard & Poor's.

NEW JERSEY TAXES

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

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

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

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

A-9
<PAGE>

- --------------------------------------------------------------------------------
Defined New York Insured Trust
- --------------------------------------------------------------------------------

PORTFOLIO DIVERSIFICATION

The Portfolio contains 12 New York bond issues.

TYPES OF BONDS

The Portfolio consists of $4,170,000 face amount of municipal bonds of the
following types:

APPROXIMATE
PORTFOLIO PERCENTAGE

/ / Airports/Ports/Highways 5%
/ / General Obligation 3%
/ / Hospitals/Nursing Homes/Mental Health 32%
/ / Lease Rental Appropriation 11%
/ / Municipal Water/Sewer Utilities 14%
/ / University/College 14%
/ / Miscellaneous 21%

INSURED AAA-RATED BONDS

As a result of insurance, the bonds are rated AAA or Aaa.

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

AMBAC Insurance Company 30%
Financial Guaranty Insurance Company 21%
MBIA Insurance Corporation 49%

PORTFOLIO CONCENTRATIONS

The Portfolio is considered to be concentrated in Hospital/Nursing Home/Mental
Health 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 concentrated in bonds of New York issuers and is subject to
additional risk from decreased diversification as well as from factors that may
be particular to New York, which are briefly described on page A-12.
- ---------------------------------------------------
Defining Your Income
- ---------------------------------------------------

WHAT YOU MAY EXPECT
(PAYABLE ON THE 25TH DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 10TH DAY OF
THE MONTH):

First Distribution per unit
(September 25, 1997): $ 2.52
Regular Monthly Income per unit
(Beginning on October 25, 1997): $ 4.21
Annual Income per unit: $50.56

These figures are estimates determined as of the business day prior to the
Initial Date of Deposit and actual payments may vary.

Estimated cash flows are available upon request from the Sponsors.
- ---------------------------------------------------
Defining Your Costs
- ---------------------------------------------------

SALES CHARGES

As a %
of Initial
Offering
Period
Public Amount per
Offering $1,000
Price Invested
----------- -----------
Maximum Sales Charges 4.50% $ 45.00

ESTIMATED ANNUAL FUND OPERATING EXPENSES

As a %
of Average
Net Assets* Per Unit
----------- -----------
Trustee's Fee .071% $ 0.72
Portfolio Supervision,
Bookkeeping and
Administrative Fees .045% 0.46
Evaluator's Fee .032% 0.33
Organizational Costs .020% 0.20
Other Operating
Expenses .068% 0.70
----------- -----------
TOTAL .236% $ 2.41

- ------------
* Based on the mean of the bid and offer side evaluations.

COSTS OVER TIME

You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods and
redemption at the end of the period:

1 Year 3 Years 5 Years 10 Years
$47 $53 $58 $75

No redemption at the end of the period:

1 Year 3 Years 5 Years 10 Years
$17 $53 $58 $75

As of August 21, 1997, the Public Offering Price was $1,028.15, based on the
aggregate offer side value of the bonds ($4,113,608), plus cash ($36,000),
divided by the number of units outstanding (4,036). 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. Sponsors' profit on deposit was $45,944.60.

A-10
<PAGE>

- --------------------------------------------------------------------------------
Defined New York Insured Portfolio
- --------------------------------------------------------------------------------
Municipal Investment Trust Fund
Multistate Series--316
New York Insured Trust August 22, 1997

<TABLE>
<CAPTION>
OPTIONAL SINKING
RATING REFUNDING FUND
OF ISSUES REDEMPTIONS REDEMPTIONS COST
PORTFOLIO TITLE (1) (2) (2) TO FUND (3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

1. $450,000 Dormitory Auth. of the
State of New York, City Univ. Sys.,
Consol. Third Gen. Resolution Rev.
Bonds, Ser. 1996 1 (MBIA Ins.),
5.50%, 7/1/24 AAA 7/1/06 @ 102 7/1/20 $ 453,298.50
2. $665,000 Dormitory Auth. of the
State of New York, Mental Hlth.
Svcs. Fac. Imp. Rev. Bonds, Ser.
1996 C (MBIA Ins.), 5.125%, 2/15/21 AAA 2/15/06 @ 102 2/15/17 640,813.95
3. $600,000 Dormitory Auth. of the
State of New York, Millard Fillmore
Hosp., FHA-Insured Mtge. Hosp. Rev.
Bonds, Ser. 1997 (AMBAC Ins.),
5.375%, 2/1/32 AAA 8/1/04 @ 105 8/1/15 588,444.00
4. $600,000 Dormitory Auth. of the
State of New York, Mt. Sinai Sch.
of Medicine, Ins. Rev. Bonds, Ser.
1994 A (MBIA Ins.), 5.00%, 7/1/21 AAA 7/1/04 @ 102 7/1/17 567,978.00
5. $40,000 Dormitory Auth. of the
State of New York, Insured Rev.
Bonds (853 Schools Program Issue)
(The Children's Home of Kingston),
Ser. 1997 B (AMBAC Ins.), 4.25%,
7/1/99 (4) AAA -- -- 40,104.40
6. $70,000 Clinton Cnty., NY,
Northeastern Clinton Central Sch.
Dist. at Champlain Sch. Dist.
Serial Bonds, Series 1997
(Financial Guaranty Ins.), 4.80%,
9/1/98 to 9/1/99 (4) Aaa(m) -- -- 70,821.70
7. $200,000 Metropolian Trans.
Auth., NY, Commuter Fac. Rev.
Bonds, Ser. 1997 C-2 (Financial
Guaranty Ins.), 5.30%, 7/1/22 AAA 7/1/07 @ 101 -- 198,618.00
8. $50,000 Village of East
Rochester, NY, Hsg. Auth., FHA-Ins.
Mtge. Rev. Bonds (St. John's
Meadows Proj.), Ser. 1997 A (MBIA
Ins.), 5.75%, 8/1/37 AAA 8/1/07 @ 102 8/1/23 51,182.00
9. $600,000 New York City, NY, Mun.
Wtr. Fin. Auth., Wtr. and Swr. Sys.
Rev. Bonds, Fiscal Ser. 1996 A
(Financial Guaranty Ins.), 5.50%,
6/15/23 AAA 6/15/05 @ 100 6/15/21 601,836.00
10. $235,000 The Trust for Cultural
Resources of the City of New York,
NY, Rev. Bonds (American Museum of
Natural History), Ser. 1997 A (MBIA
Ins.), 5.65%, 4/1/27 AAA 4/1/07 @ 101 4/1/23 239,591.90
11. $60,000 Town of Brookhaven,
Suffolk Cnty., NY, Pub. Imp. Serial
Bonds, Ser. 1997 (MBIA Ins.),
4.60%, 8/15/00 (4) Aaa(m) -- -- 60,919.20
12. $600,000 Battery Park City
Auth., NY, Jr. Rev. Bonds, Ser.
1996 A (AMBAC Ins.), 5.50%, 11/1/29 AAA 11/1/06 @ 102 11/1/27 600,000.00
--------------
$ 4,113,607.65
--------------
--------------
</TABLE>
- ----------------------------
(1) All ratings are by Standard & Poor's Ratings Group unless followed by
'(m)', which indicates a Moody's Investors Service rating. Moody's ratings are
furnished by the Evaluator but not confirmed with Moody's. (See Appendix A to
Part B.)
(2) Bonds are first subject to optional redemptions (which may be exercised in
whole or in part) on the dates and at the prices indicated under the Optional
Refunding Redemptions column. In subsequent years, bonds are redeemable at
declining prices, but typically not below par value. Some issues may be subject
to sinking fund redemption or extraordinary redemption without premium prior to
the dates shown.
(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, 36% of the bonds were deposited at a
premium, 14% at par and 50% at a discount from par.
(4) It is anticipated that interest and principal received from these bonds
will be applied to the payment of the Trust's deferred sales charge and,
therefore, these amounts have not been included in the Trust's calculation of
Estimated Current and Long Term Returns.

A-11
<PAGE>

- --------------------------------------------------------------------------------
New York Taxes and Risks
- --------------------------------------------------------------------------------

NEW YORK RISK FACTORS

The State of New York and several of its public authorities and
municipalities including, in particular, New York City, continue to face
financial difficulties. For many years, the State accumulated deficits by
extraordinary borrowing, which have been paid off by the issuance of long-term
bonds under legislation limiting future borrowing for deficits. The State's
accumulated deficit is about $2.9 billion. For the 1996 fiscal year (ended March
31), to address a $5 billion projected budget gap, the State budget included
nearly $1 billion of non-recurring measures; a $445 million surplus was
realized. To address a $3.9 billion projected gap, the fiscal 1997 budget
included $1.3 billion of non-recurring measures. The State realized a surplus
(due primarily to higher-than expected revenue and reduced social services
spending). The State Comptroller projected gaps of over $3 billion for each of
the current and next fiscal years; the Governor estimated gaps of $2.3 billion
and $1.6 billion, respectively. The State adopted a budget for the current year
on July 31, the latest ever. State general obligation debt is rated A-by
Standard & Poor's and A2 by Moody's; at December 31, 1996, approximately $4.8
billion face amount was outstanding. 18 State authorities had an aggregate of
$73.5 billion of debt outstanding at September 30, 1995, of which approximately
$25.7 billion was State supported. Total State-related debt at December 31, 1996
was approximately $31.9 billion.

New York City finished its 1996 fiscal year with a small surplus, after
adopting measures to eliminate a projected $3.1 billion budget gap. The City
budget to close a projected $2.6 billion budget gap for the fiscal year ended
June 30, 1997, realized a surplus. The City has adopted a budget to close a $1.6
billion gap for the 1998 fiscal year. Budget revisions rely heavily on
questionable assumptions and non-recurring measures ($1.2 billion, $435 million
and $1.9 billion, respectively, in the 1996-98 fiscal years), and spending is
projected to continue to increase faster than revenue, leaving City-projected
future budget gaps of $2.0 billion, $2.9 billion and $2.7 billion, respectively
for the 1999 through 2001 fiscal years; fiscal monitors have higher estimates.
The City's unemployment rate averaged 9.7% for the first half of 1997. Because
the City was expected to reach the constitutional limit on debt issuance this
year, the State in 1997 authorized creation of the Transitional Finance
Authority to sell over several years up to $7.5 billion of additional bonds,
backed by City personal income tax revenues, to fund capital projects. Despite
this, if no further action is taken, the City estimates it will reach its debt
limit by June 2000. Debt service is expected to consume 20% of projected tax
revenues by next year. The State Court of Appeals in March upheld a lower court
decision preventing a proposed sale of the City's Water System, which could have
provided nearly $1 billion of surplus funds. The City also faces imminent cutoff
of Federal funds for over 200,000 illegal immigrants under welfare reform
legislation adopted last year. New York City bonds are rated BBB+ by Standard &
Poor's and Baa1 by Moody's. At March 31, 1997, approximately $26.0 billion of
New York City bonds (excluding City debt held by The Municipal Assistance
Corporation for the City of New York (MAC)), $3.8 billion of MAC bonds and $1.2
billion of public benefit corporation debt were outstanding. Other localities in
the State had an aggregate of approximately $17.7 billion of indebtedness
outstanding in 1994, of which $83 million was to finance budget deficits.

For decades, the State's economy has grown more slowly than that of the rest
of the nation as a whole. This low growth rate has been attributed, in part, to
the combined State and New York City tax burden which is among the highest in
the U.S. Because their tax structures are particularly sensitive to economic
cycles, both the State and New York City are prone to substantial budget gaps
during periods of economic weakness. Each has suffered a decline in population
and in manufacturing jobs over many years, and has become particularly dependent
on the financial services industry. Unemployment rates, especially in New York
City, have been above the national average for several years.

Both the State and New York City suffer from long-term structural imbalances
between revenues and expenditures, which historically have been narrowed through
extensive use of non-recurring measures such as bond refinancings, depletion of
reserves, sales of assets, cost-cuts and layoffs. Except for property taxes,
changes in New York City revenue measures require State approval. The City is
also particularly subject to unanticipated increases in labor costs, resulting
primarily from expiring union contracts and overtime expense. Both the State and
New York City also face substantial replacement costs for infrastructure (such
as roads, bridges and other public facilities) which has suffered from reduced
maintenance expenditures during various economic declines.

Various municipalities and State and local authorities in New York
(particularly, the Metropolitan Transportation Authority) are dependent to
varying degrees on State and federal aid, and could be adversely affected by the

A-12
<PAGE>

State's and federal government's actions to balance their budgets. The State's
dependence on federal aid and sensitivity to economic cycles, as well as high
levels of taxes and unemployment, may continue to make it difficult to balance
State and local budgets in the future.

NEW YORK TAXES

In the opinion of bond counsel delivered on the date of issuance of the
Bonds, interest on the Bonds will be exempt from New York State and City
personal income taxes except where such interest is subject to federal
income taxes (see Taxes).

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

The Trust is not an association taxable as a corporation, and income
received by the Trust will be treated as the income of the investors in the
same manner as for federal income tax purposes. Accordingly, each investor
will be considered to have received the interest on his pro rata portion of
each Bond when interest on the Bond is received by the Trust. A noncorporate
investor in Units of the Trust who is a New York State (and City) resident
will be subject to New York State (and City) personal income taxes on any
gain recognized from the disposition of his interest in any Bond. A
noncorporate investor who is not a New York State resident will not be
subject to New York State or City personal income taxes on any such gain
unless such Units are attributable to a business, trade, profession or
occupation carried on in New York. A New York State (and City) resident
should determine his tax basis for his pro rata portion of each Bond for New
York State (and City) income tax purposes in the same manner as for federal
income tax purposes. Interest income on, as well as any gain recognized on
the disposition of, an investor's pro rata portion of the Bonds is generally
not excludable from income in computing the New York State corporate
franchise tax or the New York City corporation tax.

A-13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

The Sponsors, Trustee and Holders of Municipal Investment Trust Fund, Multistate
Series--316, Defined Asset Funds (California, New Jersey and New York Trusts)
(the 'Trusts'):

We have audited the accompanying statements of condition and the related defined
portfolios included in the prospectus of the Trusts as of August 22, 1997. These
financial statements are the responsibility of the Trustee. Our responsibility
is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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. Our procedures included
confirmation of cash, securities and an irrevocable letter of credit deposited
for the purchase of securities, as described in the statements of condition,
with the Trustee. An audit also includes assessing the accounting principles
used and significant estimates made by the Trustee, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the Trusts as of August
22, 1997 in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP
New York, N.Y.
August 22, 1997

STATEMENTS OF CONDITION AS OF AUGUST 22, 1997

TRUST PROPERTY

CALIFORNIA NEW JERSEY NEW YORK
TRUST TRUST TRUST
-------------------- -------------------- --------------------
<S> <C> <C> <C>

Investments--Bonds and Contracts to purchase Bonds(1) $ 4,610,591.80 $ 3,601,458.65 $ 4,113,607.65
Cash 39,000.00 30,000.00 36,000.00
Accrued interest to initial date of deposit on underlying
Bonds 51,822.62 26,360.00 36,508.29
Organizational Costs(2) 4,539.00 3,530.00 4,036.00
-------------------- -------------------- --------------------
Total $ 4,705,953.42 $ 3,661,348.88 $ 4,190,151.94
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
LIABILITIES AND INTEREST OF HOLDERS
Liabilities:
Advance by Trustee for accrued interest(3) $ 51,822.62 $ 26,360.23 $ 36,508.29
Accrued Liability(2) 4,539.00 3,530.00 4,036.00
-------------------- -------------------- --------------------
Subtotal 56,361.62 29,890.23 40,544.29
-------------------- -------------------- --------------------
Interest of Holders of units of fractional undivided
interest outstanding
(California Trust--4,539; New Jersey Trust--3,530; New
York
Trust--4,036)
Cost to investors(4)(5) 4,649,591.80 3,631,458.65 4,149,607.65
-------------------- -------------------- --------------------
Total $ 4,705,953.42 $ 3,661,348.88 $ 4,190,151.94
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
</TABLE>

- ------------
(1) Aggregate cost to the Fund of the bonds listed under each portfolio
is based upon the offer side evaluation determined by the Evaluator at the
evaluation time on the business day prior to the initial date of deposit. The
contracts to purchase the bonds are collateralized by an irrevocable letter of
credit which has been issued by DBS Bank, New York Agency, in the amount of
$9,058,326.16 deposited with the Trustee. The amount of the letter of credit
includes $8,985,591.95 for the purchase of $9,190,000 face amount of the bonds,
plus $72,734.21 for accrued interest.
(2) This represents a portion of the Trust's organizational costs, which
will be deferred and amortized over five years.
(3) Representing a special distribution to the Sponsors by the Trustee
of an amount equal to the accrued interest on the bonds.
(4) A mandatory distribution of $3.75 per unit is payable quarterly
November, February May and August up to an aggregate of $45.00 per unit over a
three-year period. Distributions will be made to an account maintained by the
Trustee from which the deferred sales charge obligation of the investors to the
Sponsors will be satisfied. If units are redeemed prior to the end of the third
anniversary of a Trust, the remaining portion of the distribution applicable to
such units will be transferred to such account on the redemption date.
(5) Aggregate public offering price (exclusive of interest) computed on
the basis of the offer side evaluation of the underlying bonds as of the
evaluation time on the business day prior to the Initial Date of Deposit.

A-14
<PAGE>
- --------------------------------------------------------------------------------
TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS

FOR CALIFORNIA RESIDENTS
- --------------------------------------------------------------------------------

COMBINED
EFFECTIVE
TAXABLE INCOME 1997* 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

- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

$ 0- 24,650 $ $0- 41,200 20.10 5.01 5.63 6.26 6.88 7.51 8.14 8.76 9.39 10.01
$ 24,651- 59,750 $ 41,201- 99,600 34.70 6.13 6.89 7.66 8.42 9.19 9.95 10.72 11.48 12.25
$ 59,751-124,650 $ 99,601-151,750 37.42 6.39 7.19 7.99 8.79 9.59 10.39 11.19 11.98 12.78
$ 124,651-271,050 $ 151,751-271,050 41.95 6.89 7.75 8.61 9.47 10.34 11.20 12.06 12.92 13.78
OVER $271,050 OVER $271,050 45.22 7.30 8.21 9.13 10.04 10.95 11.87 12.78 13.69 14.60

<CAPTION>
FOR NEW JERSEY RESIDENTS
- --------------------------------------------------------------------------------

COMBINED
EFFECTIVE
TAXABLE INCOME 1997* 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- 24,650 $ 0- 41,200 16.49 4.79 5.39 5.99 6.59 7.18 7.78 8.38 8.98 9.58
$ 24,651- 59,750 $ 41,201- 99,600 31.98 5.88 6.62 7.35 8.09 8.82 9.56 10.29 11.03 11.76
$ 59,751-124,650 $ 99,601-151,750 35.40 6.19 6.97 7.74 8.51 9.29 10.06 10.84 11.61 12.38
$ 124,651-271,050 $ 151,751-271,050 40.08 6.68 7.51 8.34 9.18 10.01 10.85 11.68 12.52 13.35
OVER $271,050 OVER $271,050 43.45 7.07 7.96 8.84 9.73 10.61 11.49 12.38 13.26 14.15

<CAPTION>
FOR NEW YORK CITY RESIDENTS
- --------------------------------------------------------------------------------

COMBINED
EFFECTIVE
TAXABLE INCOME 1997* 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

- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

$ 0- 24,650 $ 0- 41,200 24.10 5.27 5.93 6.59 7.25 7.90 8.56 9.22 9.88 10.54
$ 24,651- 59,750 $ 41,201- 99,600 35.75 6.23 7.00 7.78 8.56 9.34 10.12 10.89 11.67 12.45
$ 59,751-124,650 $ 99,601-151,750 38.42 6.50 7.31 8.12 8.93 9.74 10.56 11.37 12.18 12.99
$ 124,651-271,050 $ 151,751-271,050 42.89 7.00 7.88 8.75 9.63 10.51 11.38 12.26 13.13 14.01
OVER $271,050 OVER $271,050 46.10 7.42 8.35 9.28 10.20 11.13 12.06 12.99 13.91 14.84

<CAPTION>
FOR NEW YORK STATE RESIDENTS
- --------------------------------------------------------------------------------

COMBINED
EFFECTIVE
TAXABLE INCOME 1997* 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

- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

$ 0- 24,650 $ 0- 41,200 20.82 5.05 5.68 6.31 6.95 7.58 8.21 8.84 9.47 10.10
$ 24,651- 59,750 $ 41,201- 99,600 32.93 5.96 6.71 7.46 8.20 8.95 9.69 10.44 11.18 11.93
$ 59,751-124,650 $ 99,601-151,750 35.73 6.22 7.00 7.78 8.56 9.34 10.11 10.89 11.67 12.45
$ 124,651-271,050 $ 151,751-271,050 40.38 6.71 7.55 8.39 9.23 10.06 10.90 11.74 12.58 13.42
OVER $271,050 OVER $271,050 43.74 7.11 8.00 8.89 9.78 10.66 11.55 12.44 13.33 14.22
</TABLE>

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 1997
federal and applicable State (and City) 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.

A-15
<PAGE>
DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
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

PAGE
----
Fund Description........................... 1
Risk Factors............................... 2
How to Buy Units........................... 8
How to Redeem or Sell Units................ 9
Income, Distributions and Reinvestment..... 10
Fund Expenses.............................. 11
Taxes...................................... 12
PAGE
----
Records and Reports........................ 13
Trust Indenture............................ 13
Miscellaneous.............................. 14
Exchange Option............................ 16
Supplemental Information................... 16
Appendix A--Description of Ratings......... a-1
Appendix B--Secondary Market Sales Charge
Schedule................................. b-1

FUND DESCRIPTION

BOND PORTFOLIO SELECTION

Professional buyers 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 Defined Asset Funds
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.

1
<PAGE>
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 refundings)
that, in the opinion of the Sponsors 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.

Every investment involves some risk; for example, the market prices of most
fixed-income investments decline when interest rates rise, and this exposure
increases with the remaining life of the investment. Historically, however,
municipal bonds generally have been second only in creditworthiness to U.S.
government obligations. Municipal unit trusts can be an efficient alternative to
investing in actively managed funds. Active management of a portfolio of quality
municipal bonds may not be as important as with other securities. Insured bonds
provide additional assurance of prompt payments of interest and principal (but
not stability of market value).

The Sponsors and the Trustee are not liable for any default or defect in a
Bond. If a contract to purchase any Bond fails within the 90-day period
following the initial date of deposit, the Sponsors may generally deposit a
replacement bond so long as it is a tax-exempt bond that is not a 'when, as and
if issued' bond, has a fixed maturity or disposition date substantially similar
to the failed Bond and has a rating at least equal to that of the Bond it
replaces (or, if not rated, has comparable credit characteristics). A
replacement bond must be deposited within 110 days after the initial date of
deposit, 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, if the value of the
short-term Bonds intended 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

2
<PAGE>
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. Recent
and significant changes in Federal welfare policy may have substantial negative
impact on certain states, and localities within those states, making their
ability to maintain balanced finances more difficult in the future.

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 revenues of the project,
excise taxes 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. The movement to introduce
competition in the investor-owned electric utility industry is likely to
indirectly affect municipal utility systems by inducing them to maintain
rates as low as possible. In this effort to keep rates low, municipal
utilities may have more trouble raising rates to completely recover
investment in generating plant;

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

3
<PAGE>
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, mental health and nursing home facility bonds whose payments
are dependent upon revenues of hospitals and other health care providers.
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
providers. Hospitals must also deal with shifting competition resulting from
hospital mergers and affiliations and the need to reduce costs as HMOs
increase market penetration. Nursing homes need to keep residential
facilities for the elderly, which are not reimbursable from
Medicare/Medicaid, on a profitable basis. Hospital supply and drug companies
must deal with their need to raise prices in an environment where hospitals
and other health care providers are under intense pressure to keep their
costs low. Hospitals and health care providers are subject to various legal
claims by patients and others and are adversely affected by increasing costs
of insurance;

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.

4
<PAGE>
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 (such as the recently
enacted phased repeal of the Puerto Rico and possession federal tax credit)
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 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 an Insured Series, in the event that the rating of an insurance
company insuring a bond 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, except at the
sole option of the insurer, 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 DECEMBER 31, 1996
(IN MILLIONS OF DOLLARS)
--------------------------------
DATE ADMITTED POLICYHOLDERS'
NAME ESTABLISHED ASSETS SURPLUS
- ------------------------------------------- ------------- ------------ ----------------
<S> <C> <C> <C>

AMBAC Indemnity Corporation................ 1970 $ 2,585 $ 899
Asset Guaranty Insurance Co. (AA by S&P)... 1988 204 87
Capital Markets Assurance Corp. (CAPMAC) 1987 321 194
Connie Lee Insurance Company............... 1987 233 116
Financial Guaranty Insurance Company....... 1984 2,392 1,093
Financial Security Assurance Inc. (FSA)
(including Financial Security Assurance
of Maryland Inc. (FSAM) (formerly Capital
Guaranty Insurance Company).............. 1984 1,155 449
MBIA Insurance Corporation................. 1986 4,189 1,467
</TABLE>

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,

5
<PAGE>
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 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.

6
<PAGE>
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.

HOW TO BUY UNITS

Units are available from any of the Sponsors, Underwriters and other
broker-dealers at the Public Offering Price plus accrued interest on the Units.
The Public Offering Price varies each Business Day with changes in the value of
the Portfolio and other assets and liabilities of the Fund.

PUBLIC OFFERING PRICE

Net accrued interest and principal cash, if any, are added to the Public
Offering Price, the Sponsors' Repurchase Price and the Redemption Price per
Unit. This represents the interest accrued on the Bonds, net of Fund expenses,
from the initial date of deposit to, but not including, the settlement date for
Units (less any prior distributions of interest income to investors). Bonds
deposited also carry accrued but unpaid interest up to the initial date of
deposit. To avoid having investors pay this additional accrued interest (which
earns no return) when they purchase Units, the Trustee advances and distributes
this amount to the Sponsors; it recovers this advance from interest received on
the Bonds. Because of varying interest payment dates on the Bonds, accrued
interest at any time will exceed the interest actually received by the Fund.

Because accrued interest on the Bonds is not received by the Fund at a
constant rate throughout the year, any Monthly Income Distribution may be more
or less than the interest actually received by the Fund. To eliminate
fluctuations in the Monthly Income Distribution, a portion of the Public
Offering Price may consist of cash in an amount necessary for the Trustee to
provide approximately equal distributions. Upon the sale or redemption of Units,
investors will receive their proportionate share of this cash. In addition, if a
Bond is sold, redeemed or otherwise disposed of, the Fund will periodically
distribute to investors the portion of this cash that is attributable to the
Bond.

The regular Monthly Income Distribution is stated in Part A of the
Prospectus and will change as the composition of the Portfolio changes over
time.

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During the initial offering period and for at least the first three months
of the Fund, the Public Offering Price (and the Initial Repurchase Price) is
based on the higher, offer side evaluation of the Bonds at the next Evaluation
Time after the order is received. In the secondary market (after the initial
offering period), the Public Offering Price (and the Sponsors' Repurchase Price
and the Redemption Price) is based on the lower, bid side evaluation of the
Bonds.

The Fund does not have an up-front sales charge in the initial offering
period until after the deduction of the first quarterly Deferred Sales Charge
installment which will commence on the date indicated in part A of this
Prospectus. Units redeemed or repurchased prior to the accrual of the final
Deferred Sales Charge installment will have the amount of any remaining
installments deducted from the redemption or repurchase proceeds, although this
deduction will be waived in the event of the death or disability (as defined in
the Internal Revenue Code of 1986) of an investor. Units purchased after the
deduction of the first Deferred Sales Charge installment will be charged the
up-front per Unit sales charge indicated in Part A of this Prospectus based on
the Public Offering Price (less the value of the short-term bonds reserved to
pay the deferred sales charge not yet accrued), multiplied by the number of
Deferred Sales Charge installments already deducted. Units purchased after the
deduction of the final Deferred Sales Charge installment will be subject only to
an up-front sales charge based on the maturities of the bonds in the Portfolio,
as set forth in Appendix B.

In the initial offering period the concession to dealers will be equal to:
the Public Offering Price less $30.00 per Unit for Monthly Payment Series,
Insured Series and long-term State Trusts; the Public Offering Price less $27.50
per Unit for Intermediate-Term Series (10 year) and Intermediate State Trusts;
and the Public Offering Price less $20.00 per Unit for Intermediate Term Series
(5 year).

EVALUATIONS

Evaluations are determined by the independent Evaluator on each Business
Day. This excludes Saturdays, Sundays and the following holidays as observed by
the New York Stock Exchange: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. Bond
evaluations are based on closing sales prices (unless the Evaluator deems these
prices inappropriate). If closing sales prices are not available, the evaluation
is generally determined on the basis of current bid or offer prices for the
Bonds or comparable securities or by appraisal or by any combination of these
methods. In the past, the bid prices of publicly offered tax-exempt issues have
been lower than the offer prices by as much as 3 1/2% or more of face amount in
the case of inactively traded issues and as little as 1/2 of 1% in the case of
actively traded issues, but the difference between the offer and bid prices has
averaged between 1 and 2% of face amount. Neither the Sponsors, the Trustee or
the Evaluator will be liable for errors in the Evaluator's judgment. The fees of
the Evaluator will be borne by the Fund.

CERTIFICATES

Certificates for Units are issued upon request and may be transferred by
paying any taxes or governmental charges and by complying with the requirements
for redeeming Certificates (see How To Redeem or Sell Units--Redeeming Units
with the Trustee). Certain Sponsors collect additional charges for registering
and shipping Certificates to purchasers. Lost or mutilated Certificates can be
replaced upon delivery of satisfactory indemnity and payment of costs.

HOW TO REDEEM OR SELL UNITS

You can redeem your Units at any time for a price based on net asset value.
In addition, the Sponsors have maintained an uninterrupted secondary market for
Units for over 20 years and will ordinarily buy back Units at the same price.
The following describes these two methods to redeem or sell Units in greater
detail.

REDEEMING UNITS WITH THE TRUSTEE

You can always redeem your Units directly with the Trustee for net asset
value. This can be done by sending the Trustee a redemption request together
with any Unit certificates you hold, which must be properly endorsed or
accompanied by a written transfer instrument with signatures guaranteed by an
eligible institution. In certain instances, additional documents may be required
such as a trust instrument, certificate of corporate authority, certificate of
death or appointment as executor, administrator or guardian.

Within seven days after the Trustee's receipt of your request containing the
necessary documents, a check will be mailed to you in an amount based on the net
asset value of your Units. If you redeem or sell your Units before the final

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deferred sales charge installment date, the remaining deferred sales charges
will be deducted from the net asset value. Because of sales charges, market
movements or changes in the Portfolio, net asset value at the time you redeem
your Units may be greater or less than the original cost of your Units. Net
asset value is calculated each Business Day by adding the value of the Bonds,
net accrued interest, cash and the value of any other Fund assets; deducting
unpaid taxes or other governmental charges, accrued but unpaid Fund expenses and
any remaining deferred sales charges, unreimbursed Trustee advances, cash held
to redeem Units or for distribution to investors and the value of any other Fund
liabilities; and dividing the result by the number of outstanding Units. Bonds
are evaluated on the offer side during the initial offering period and for at
least the first three months of the Fund (even in the secondary market) and on
the bid side thereafter.

As long as the Sponsors are maintaining a secondary market for Units (as
described below), the Trustee will not actually redeem your Units but will sell
them to the Sponsors for net asset value. If the Sponsors are not maintaining a
secondary market, the Trustee will redeem your Units for net asset value or will
sell your Units in the over-the-counter market if the Trustee believes it will
obtain a higher net price for your Units. If the Trustee is able to sell the
Units for a net price higher than net asset value, you will receive the net
proceeds of the sale.

If cash is not available in the Fund's Income and Capital Accounts to pay
redemptions, the Trustee may sell Bonds selected by the Agent for the Sponsors
based on market and credit factors determined to be in the best interest of the
Fund. These sales are often made at times when the Bonds would not otherwise be
sold and may result in lower prices than might be realized otherwise and may
also reduce the size and diversity of the Fund. If Bonds are being sold during a
time when additional Units are being created by the purchase of additional Bonds
(as described under Portfolio Selection), Bonds will be sold in a manner
designed to maintain, to the extent practicable, the proportionate relationship
among the face amounts of each Bond in the Portfolio.

The Trustee is authorized, on a redemption request for Units with a value
exceeding $250,000 by any investor who acquired 25% or more of the outstanding
Units of a Trust, to pay part or all of the redemption 'in kind' (by the
distribution of Bonds and cash with an aggregate value equal to the applicable
Redemption Price of the Units tendered for redemption). The Trustee will attempt
to make a pro rata distribution of Bonds in the Portfolio, but reserves the
right to distribute solely one or more Bonds. The distribution will be made to
the distribution agent and either held for the account of the investor or
disposed of in accordance with the instructions of the investor. Any transaction
costs as well as transfer and ongoing custodial fees on sales of the Bonds
distributed in kind will be borne by the redeeming investor.

Redemptions may be suspended or payment postponed (i) if the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (ii) if
the SEC determines that trading on the New York Stock Exchange is restricted or
that an emergency exists making disposal or evaluation of the Bonds not
reasonably practicable or (iii) for any other period permitted by SEC order.

SPONSORS' SECONDARY MARKET FOR UNITS

The Sponsors, while not obligated to do so, will buy back Units at net asset
value without any other fee or charge as long as they are maintaining a
secondary market for Units. Because of sales charges, market movements or
changes in the portfolio, net asset value at the time you sell your Units may be
greater or less than the original cost of your Units. The Sponsors may resell
the Units to other buyers or redeem the Units by tendering them to the Trustee.
You should consult your financial professional for current market prices to
determine if other broker-dealers or banks are offering higher prices for Units.

The Sponsors may discontinue the secondary market for Units without prior
notice if the supply of Units exceeds demand or for other business reasons.
Regardless of whether the Sponsors maintain a secondary market, you have the
right to redeem your Units for net asset value with the Trustee at any time, as
described above.

INCOME, DISTRIBUTIONS AND REINVESTMENT

INCOME

Some of the Bonds may have been purchased on a when-issued basis or may have
a delayed delivery. Since interest on these Bonds does not begin to accrue until
the date of their delivery to the Fund, the Trustee's annual fee and expenses
may be reduced to provide tax-exempt income to investors for this non-accrual
period. If a when-issued Bond is not delivered until later than expected and the
amount of the Trustee's annual fee and expenses is insufficient

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<PAGE>
to cover the additional accrued interest, the Sponsors will treat the contracts
as failed Bonds. The Trustee is compensated for its fee reduction by drawing on
the letter of credit deposited by the Sponsors before the settlement date for
these Bonds and depositing the proceeds in a non-interest bearing account for
the Fund.

Interest received is credited to an Income Account and other receipts to a
Capital Account. A Reserve Account may be created by withdrawing from the Income
and Capital Accounts amounts considered appropriate by the Trustee to reserve
for any material amount that may be payable out of the Fund.

DISTRIBUTIONS

Each Unit receives an equal share of monthly distributions of interest
income net of estimated expenses. Interest on the Bonds is generally received by
the Fund on a semi-annual or annual basis. Because interest on the Bonds is not
received at a constant rate throughout the year, any Monthly Income Distribution
may be more or less than the interest actually received. To eliminate
fluctuations in the Monthly Income Distribution, the Trustee will advance
amounts necessary to provide approximately equal interest distributions; it will
be reimbursed, without interest, from interest received on the Bonds, but the
Trustee is compensated, in part, by holding the Fund's cash balances in
non-interest bearing accounts. Along with the Monthly Income Distributions, the
Trustee will distribute the investor's pro rata share of principal received from
any disposition of a Bond to the extent available for distribution. In addition,
distributions of amounts necessary to pay the deferred sales charge will be made
from the Capital and Income Accounts to an account maintained by the Trustee for
purposes of satisfying investors' sales charge obligations.

The initial estimated annual income per Unit, after deducting estimated
annual Fund expenses and the portion of the deferred sales charge payable from
interest income) as stated in Part A of the Prospectus, will change as Bonds
mature, are called or sold or otherwise disposed of, as replacement bonds are
deposited and as Fund expenses change. Because the Portfolio is not actively
managed, income distributions will generally not be affected by changes in
interest rates. Depending on the financial conditions of the issuers of the
Bonds, the amount of income should be substantially maintained as long as the
Portfolio remains unchanged; however, optional bond redemptions or other
Portfolio changes may occur more frequently when interest rates decline, which
would result in early returns of principal and possibly earlier termination of
the Fund.

RETURN CALCULATIONS

Estimated Current Return shows the estimated annual cash to be received from
interest-bearing bonds in a Portfolio (net of estimated annual expenses) divided
by the Public Offering Price (including the maximum sales charge). Estimated
Long Term Return is a measure of the estimated return over the estimated life of
the Trust. This represents an average of the yields to maturity (or in certain
cases, to an earlier call date) of the individual Bonds in the Portfolio,
adjusted to reflect the maximum sales charge and estimated expenses. The average
yield for the Portfolio is derived by weighting each Bond's yield by its market
value and the time remaining to the call or maturity date, depending on how the
Bond is priced. Unlike Estimated Current Return, Estimated Long Term Return
takes into account maturities, discounts and premiums of the underlying Bonds.

No return estimate can be predictive of your actual return because returns
will vary with purchase price (including sales charges), how long units are
held, changes in Portfolio composition, changes in interest income and changes
in fees and expenses. Therefore, Estimated Current Return and Estimated Long
Term Return are designed to be comparative rather than predictive. A yield
calculation which is more comparable to an individual Bond may be higher or
lower than Estimated Current Return or Estimated Long Term Return which are more
comparable to return calculations used by other investment products.

REINVESTMENT

Distributions will be paid in cash unless the investor elects to have
distributions reinvested without sales charge in the Municipal Fund Accumulation
Program, Inc. The Program is an open-end management investment company whose
investment objective is to obtain income exempt from regular federal income
taxes by investing in a diversified portfolio of state, municipal and public
authority bonds rated A or better or with comparable credit characteristics.
Reinvesting compounds earnings free from federal tax. Advertisements and sales
literature may illustrate the effects of compounding at different hypothetical
interest rates. Investors participating in the Program will be subject to

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state and local income taxes to the same extent as if the distributions had been
received in cash, and most of the income on the Program is subject to state and
local income taxes. For more complete information about the Program, including
charges and expenses, request the Program's prospectus from the Trustee. Read it
carefully before you decide to participate. Written notice of election to
participate must be received by the Trustee at least ten days before the Record
Day for the first distribution to which the election is to apply.

FUND EXPENSES

Estimated annual Fund expenses are listed in Part A of the Prospectus; if
actual expenses exceed the estimate, the excess will be borne by the Fund. The
Trustee's annual fee is payable in monthly installments. The Trustee also
benefits when it holds cash for the Fund in non-interest bearing accounts.
Possible additional charges include Trustee fees and expenses for maintaining
the Fund's registration statement current with Federal and State authorities,
extraordinary services, costs of indemnifying the Trustee and the Sponsors,
costs of action taken to protect the Fund and other legal fees and expenses,
Fund termination expenses and any governmental charges. The Trustee has a lien
on Fund assets to secure reimbursement of these amounts and may sell Bonds for
this purpose if cash is not available. The Sponsors receive an annual fee
currently estimated at $0.35 per $1,000 face amount to reimburse them for the
cost of providing Portfolio supervisory services to the Fund. While the fee may
exceed their costs of providing these services to the Fund, the total
supervision fees from all Series of Municipal Investment Trust Fund will not
exceed their costs for providing these services to all of those Series during
any calendar year. The Sponsors may also be reimbursed for their costs of
providing bookkeeping and administrative services to Defined Asset Funds,
currently estimated at $0.10 per Unit. The Trustee's, Sponsors' and Evaluator's
fees may be adjusted for inflation without investors' approval.

All or a portion of expenses incurred in establishing the Fund, including
the cost of the initial preparation of documents relating to the Fund, Federal
and State registration fees, the initial fees and expenses of the Trustee, legal
expenses and any other out-of-pocket expenses will be paid by the Fund and
amortized over five years. Advertising and selling expenses will be paid from
the Underwriting Account at no charge to the Fund. Sales charges on Defined
Asset Funds range from under 1.0% to 5.5%. This may be less than you might pay
to buy and hold a comparable managed fund. Defined Asset Funds can be a
cost-effective way to purchase and hold investments. Annual operating expenses
are generally lower than for managed funds. Because Defined Asset Funds have no
management fees, limited transaction costs and no ongoing marketing expenses,
operating expenses are generally less than 0.25% a year. When compounded
annually, small differences in expense ratios can make a big difference in your
investment results. Because our portfolios rarely hold any significant amount of
cash, your money is more fully invested.

TAXES

The following summary describes some of the important income tax
consequences of holding Units, assuming that the investor is not a dealer,
financial institution or insurance company or other investor with special
circumstances. Investors should consult their tax advisers about an investment
in the Fund.

At the date of issue of each Bond, counsel for the issuer delivered an
opinion to the effect that interest on the Bond is generally exempt from regular
federal income tax. However, interest may be subject to federal alternative
minimum tax or state and local taxes. Neither the Sponsors nor Davis Polk &
Wardwell has reviewed the issuance of the Bonds, related proceedings or the
basis of the opinions of counsel for the issuers. There can be no assurance,
therefore, that the issuer (or other users) have complied or will comply with
any requirements necessary for a bond to be tax-exempt. If any of the Bonds were
determined not to be tax-exempt, investors might be required to pay income tax
for current and prior years, and if the Fund were to sell the Bond, it might
have to sell it at a substantial discount.

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

GENERAL TREATMENT OF THE FUND

The Fund will not be taxed as a corporation for federal income tax purposes,
and each investor will be considered to own directly a share of each Bond in the
Fund.

INCOME OR LOSS UPON DISPOSITION

Upon a disposition of all or part of an investor's pro rata portion of a
Bond (by sale, exchange or redemption of the Bond or his Units), an investor
will generally recognize capital gain or loss. However, gain from the
disposition will generally be ordinary income to the extent of any accrued
'market discount'. An investor will generally have

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<PAGE>
market discount to the extent that his basis in a Bond when he purchases a Unit
is less than its stated redemption price at maturity (or, if it is an 'original
issue discount' bond, the issue price increased by 'original issue discount'
that has accrued to previous holders). Investors should consult their tax
advisers in this regard.

The excess of a non-corporate investor's net long-term capital gains over
his net short-term capital losses may be subject to tax at a lower rate than
ordinary income. A capital gain or loss is long-term if the investment is held
for more than one year and short-term if held for one year or less. Because the
deduction of capital losses is subject to limitations, an investor may not be
able to deduct all of his capital losses. Under the recently enacted Taxpayer
Relief Act of 1997, an investor who is an individual and has held his pro rata
portions of Bonds for more than 18 months may be entitled to a 20% maximum
federal tax rate for gains from the sale of these Bonds or corresponding Units.
Investors should consult their tax advisers in this regard.

INVESTOR'S BASIS IN THE BONDS

An investor's aggregate basis in the Bonds will be equal to the cost of his
Units, including any sales charges and the organizational expenses borne by the
investor but excluding any amount paid for accrued interest, and adjusted to
reflect any accruals of 'original issue discount', 'acquisition premium' and
'bond premium'. Investors should consult their tax advisers in this regard.

EXPENSES

A non-corporate investor is not entitled to a deduction for his pro rata
share of fees and expenses of the Fund. Also, if an investor borrowed money in
order to purchase or carry his Units, he will not be able to deduct the interest
on this borrowing. The Internal Revenue Service may treat an investor's purchase
of Units as made with borrowed money even if the borrowed money was not directly
used to purchase the Units.

STATE AND LOCAL TAXES

Under the income tax laws of the State and City of New York, the Fund will
not be taxed as a corporation. The income recognized by investors that are New
York taxpayers will not be tax-exempt in New York except to the extent it is
earned on Bonds that are tax-exempt for New York purposes. Depending on where
investors live, income from the Fund may be subject to state and local taxation.
Investors should consult their tax advisers in this regard.

RECORDS AND REPORTS

The Trustee keeps a register of the names, addresses and holdings of all
investors. The Trustee also keeps records of the transactions of the Fund,
including a current list of the Bonds and a copy of the Indenture, and
supplemental information on the operations of the Fund and the risks associated
with the Bonds held by the Fund, which may be inspected by investors at
reasonable times during business hours.

With each distribution, the Trustee includes a statement of the interest and
any other receipts being distributed. Within five days after deposit of Bonds in
exchange or substitution for Bonds (or contracts) previously deposited, the
Trustee will send a notice to each investor, identifying both the Bonds removed
and the replacement bonds deposited. The Trustee sends each investor of record
an annual report summarizing transactions in the Fund's accounts and amounts
distributed during the year and Bonds held, the number of Units outstanding and
the Redemption Price at year end, the interest received by the Fund on the
Bonds, the cash proceeds received by the Fund from the disposition of any Bond
(resulting from redemption or payment at maturity or sale of any Bond), and the
fees and expenses paid by the Fund, among other matters. The Trustee will also
furnish annual information returns to each investor and to the Internal Revenue
Service. Investors are required to report to the Internal Revenue Service the
amount of tax-exempt interest received during the year. Investors may obtain
copies of Bond evaluations from the Trustee to enable them to comply with
federal and state tax reporting requirements. Fund accounts are audited annually
by independent accountants selected by the Sponsors. Audited financial
statements are available from the Trustee on request.

TRUST INDENTURE

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

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

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

Any Sponsor may resign so long as one Sponsor with a net worth of $2,000,000
remains and is agreeable to the resignation. A new Sponsor may be appointed by
the remaining Sponsors and the Trustee to assume the duties of the resigning
Sponsor. If there is only one Sponsor and it fails to perform its duties or
becomes incapable of acting or bankrupt or its affairs are taken over by public
authorities, the Trustee may appoint a successor Sponsor at reasonable rates of
compensation, terminate the Indenture and liquidate the Fund or continue to act
as Trustee without a Sponsor. Merrill Lynch, Pierce, Fenner & Smith Incorporated
has been appointed as Agent for the Sponsors by the other Sponsors.

The Sponsors, the Trustee and the Evaluator are not liable to investors or
any other party for any act or omission in the conduct of their responsibilities
absent bad faith, willful misfeasance, negligence (gross negligence in the case
of a Sponsor or the Evaluator) or reckless disregard of duty. The Indenture
contains customary provisions limiting the liability of the Trustee.

MISCELLANEOUS

LEGAL OPINION

The legality of the Units has been passed upon by Davis Polk & Wardwell, 450
Lexington Avenue, New York, New York 10017, as special counsel for the Sponsors.

AUDITORS

The Statement of Condition in the Prospectus was audited by Deloitte &
Touche LLP, independent accountants, as stated in their opinion. It is included
in reliance upon that opinion given on the authority of that firm as experts in
accounting and auditing.

TRUSTEE

The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and New York
State banking authorities.

SPONSORS

The Sponsors are listed on the back cover of the Prospectus. They may
include Merrill Lynch, Pierce, Fenner & Smith Incorporated, a wholly-owned
subsidiary of Merrill Lynch Co. Inc.; Smith Barney Inc., an indirect wholly-
owned subsidiary of The Travelers Inc.; Prudential Securities Incorporated, an
indirect wholly-owned subsidiary of the Prudential Insurance Company of America;
Dean Witter Reynolds, Inc., a principal operating subsidiary of Morgan Stanley,
Dean Witter, Discover & Co. and PaineWebber Incorporated, a wholly-owned
subsidiary of PaineWebber Group Inc. Each Sponsor, or one of its predecessor
corporations, has acted as Sponsor of a number of series of unit investment
trusts. Each Sponsor has acted as principal underwriter and managing underwriter
of other investment

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companies. The Sponsors, in addition to participating as members of various
selling groups or as agents of other investment companies, execute orders on
behalf of investment companies for the purchase and sale of securities of these
companies and sell securities to these companies in their capacities as brokers
or dealers in securities.

CODE OF ETHICS

The Agent for the Sponsors has adopted a code of ethics requiring
preclearance and reporting of personal securities transactions by its personnel
who have access to information on Defined Asset Funds portfolio transactions.
The code is intended to prevent any act, practice or course of conduct which
would operate as a fraud or deceit on any Fund and to provide guidance to these
persons regarding standards of conduct consistent with the Agent's
responsibilities to the Funds.

PUBLIC DISTRIBUTION

In the initial offering period Units will be distributed to the public
through the Underwriting Account and dealers who are members of the National
Association of Securities Dealers, Inc. The initial offering period is 30 days
or less if all Units are sold. If some Units initially offered have not been
sold, the Sponsors may extend the initial offering period for up to four
additional successive 30-day periods.

The Sponsors intend to qualify Units for sale in all states in which
qualification is deemed necessary through the Underwriting Account and by
dealers who are members of the National Association of Securities Dealers, Inc.;
however, Units of a State trust will be offered for sale only in the State for
which the trust is named, except that Units of a New Jersey trust will also be
offered in Connecticut, Units of a Florida trust will also be offered in New
York and Units of a New York trust will also be offered in Connecticut, Florida
and Puerto Rico. The Sponsors do not intend to qualify Units for sale in any
foreign countries and this Prospectus does not constitute an offer to sell Units
in any country where Units cannot lawfully be sold. Sales to dealers and to
introducing dealers, if any, will initially be made at prices which represent a
concession from the Public Offering Price, but the Agent for the Sponsors
reserves the right to change the rate of any concession from time to time. Any
dealer or introducing dealer may reallow a concession up to the concession to
dealers.

UNDERWRITERS' AND SPONSORS' PROFITS

Upon sale of the Units, the Underwriters will be entitled to receive sales
charges. The Sponsors also realize a profit or loss on deposit of the Bonds
equal to the difference between the cost of the Bonds to the Fund (based on the
offer side evaluation on the initial date of deposit) and the Sponsors' cost of
the Bonds. In addition, a Sponsor or Underwriter may realize profits or sustain
losses on Bonds it deposits in the Fund which were acquired from underwriting
syndicates of which it was a member. During the initial offering period, the
Underwriting Account also may realize profits or sustain losses as a result of
fluctuations after the initial date of deposit in the Public Offering Price of
the Units. In maintaining a secondary market for Units, the Sponsors will also
realize profits or sustain losses in the amount of any difference between the
prices at which they buy Units and the prices at which they resell these Units
(which include the sales charge) or the prices at which they redeem the Units.
Cash, if any, made available by buyers of Units to the Sponsors prior to a
settlement date for the purchase of Units may be used in the Sponsors'
businesses to the extent permitted by Rule 15c3-3 under the Securities Exchange
Act of 1934 and may be of benefit to the Sponsors.

FUND PERFORMANCE

Information on the performance of the Fund for various periods, on the basis
of changes in Unit price plus the amount of income and principal distributions
reinvested, may be included from time to time in advertisements, sales
literature, reports and other information furnished to current or prospective
investors. Total return figures are not averaged, and may not reflect deduction
of the sales charge, which would decrease the return. Average annualized return
figures reflect deduction of the maximum sales charge. No provision is made for
any income taxes payable.

Fund performance may be compared to performance on the same basis (with
distributions reinvested) of Moody's Municipal Bond Averages or performance data
from publications such as Lipper Analytical Services, Inc., Morningstar
Publications, Inc., Money Magazine, The New York Times, U.S. News and World
Report, Barron's Business Week, CDA Investment Technology, Inc., Forbes Magazine
or Fortune Magazine. Average annual compounded rates of return of selected asset
classes over various periods of time may also be compared to the rate of
inflation over the same periods.

14
<PAGE>
DEFINED ASSET FUNDS

Municipal Investment Trust Funds have provided investors with tax-free
income and balance for their portfolios for more than 30 years. As tax reforms
over the years have eliminated many of the ways to reduce individual taxes,
municipal bonds have remained a significant source of tax-free income. For
decades informed investors have purchased unit investment trusts for
dependability and professional selection of investments. Defined Asset Funds'
philosophy is to allow investors to 'buy with knowledge' (because, unlike
managed funds, the portfolio of municipal bonds and the return are relatively
fixed) and 'hold with confidence' (because the portfolio is professionally
selected and regularly reviewed). Defined Asset Funds offers an array of simple
and convenient investment choices, suited to fit a wide variety of personal
financial goals--a buy and hold strategy for capital accumulation, such as for
children's education or retirement, or attractive, regular current income
consistent with the preservation of principal. Tax-exempt income can help
investors keep more today for a more secure financial future. It can also be
important in planning because tax brackets may increase with higher earnings or
changes in tax laws. Defined equity funds offer growth potential and some
protection against inflation. Unit investment trusts are particularly suited for
the many investors who prefer to seek long-term income by purchasing sound
investments and holding them, rather than through active trading. Few
individuals have the knowledge, resources or capital to buy and hold a
diversified portfolio on their own; it would generally take a considerable sum
of money to obtain the breadth and diversity that Defined Asset Funds offer.
One's investment objectives may call for a combination of Defined Asset Funds.

Defined Asset Funds reflect a buy and hold strategy that the Sponsors
believe can be more effective and cost-effective than active management. This
strategy is premised on selection criteria and procedures, diversification and
regular monitoring by investment professionals. Various advertisements and sales
literature may summarize the results of economic studies concerning how stock
market movement has tended to be concentrated and how longer-term investments
can tend to reduce risk.

One of the most important investment decisions you face may be how to
allocate your investments among asset classes. Diversification among different
kinds of investments can balance the risks and rewards of each one. Most
investment experts recommend stocks for long-term capital growth. Long-term
corporate bonds offer relatively high rates of interest income.

EXCHANGE OPTION

You may exchange Units of the Fund for units of certain other Defined Asset
Funds subject only to a reduced sales charge.

Upon the deduction of the final Deferred Sales Charge installment for the
Fund, you may exchange your units of any Municipal Investment Trust Fund
Intermediate Term Series with a regular maximum sales charge of at least 3.25%,
of any other Defined Asset Fund with a regular maximum sales charge of at least
3.50%, or of any unaffiliated unit trust with a regular maximum sales charge of
at least 3.0%, for Units of this Fund at their relative net asset values,
subject only to a reduced sales charge or to any remaining deferred sales charge
on the units being exchanged, as applicable.

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

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

15
<PAGE>
SUPPLEMENTAL INFORMATION

Upon writing or calling the Trustee shown on the back cover of Part A of
this Prospectus, investors will receive at no cost to the investor supplemental
information about the Fund, which has been filed with the SEC. The supplemental
information includes more detailed risk factor disclosure about the types of
Bonds that may be part of the Fund's Portfolio, general risk disclosure
concerning any letters of credit or insurance securing certain Bonds, and
general information about the structure and operation of the Fund.

16
<PAGE>
APPENDIX A

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

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

AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

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

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

BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

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

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

A provisional rating, indicated by 'p' following a rating, assumes the
successful completion of the project being financed by the issuance of the debt
being rated and indicates that payment of debt service requirements is largely
or entirely dependent upon the successful and timely completion of the project.
This rating, however, while addressing credit quality subsequent to completion
of the project, makes no comment on the likelihood of, or the risk of default
upon failure of, such completion.

* Continuance of the rating is contingent upon S&P's receipt of an executed
copy of the escrow agreement or closing documentation confirming investments and
cash flows.

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

MOODY'S INVESTORS SERVICE, INC.

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

Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

a-1
<PAGE>
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

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

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

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

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

FITCH INVESTORS SERVICE, INC.

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

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

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

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

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

DUFF & PHELPS CREDIT RATING CO.

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

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

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

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

a-2
<PAGE>
APPENDIX B
SECONDARY MARKET SALES CHARGE SCHEDULE

Units purchased after the deduction of the final deferred sales charge
installment will be subject only to an up-front sales charge based on the
maturities of the bonds in the Portfolio, as set forth below.

ACTUAL SALES
CHARGE AS DEALER CONCESSION
PERCENT OF AS PERCENT OF
NUMBER OF EFFECTIVE SALES EFFECTIVE SALES
UNITS CHARGE CHARGE
- ------------- ---------------- ------------------
1-249 100% 65.00%
250-499 80 52.00
500-749 60 39.00
750-999 45 29.25
1,000 or more 35 22.75

EFFECTIVE SALES CHARGE

AS
PERCENT AS PERCENT
OF BID OF PUBLIC
TIME TO SIDE OFFERING
MATURITY EVALUATION PRICE
- ----------------------------- --------- -----------
Less than six months 0% 0%
Six months to less than 1
year 0.503 0.50
1 year to less than 2 years 1.010 1.00
2 years to less than 3 years 1.523 1.50
3 years to less than 4 years 2.302 2.25
4 years to less than 5 years 2.828 2.75
5 years to less than 6 years 3.093 3.00
6 years to less than 7 years 3.359 3.25
7 years to less than 8 years 3.627 3.50
8 years to less than 9 years 4.167 4.00
9 years to less than 12 years 4.439 4.25
12 years to less than 15
years 4.712 4.50
15 years or more 5.820 5.50

For this purpose, a Bond will be considered to mature on its stated maturity
date unless: it has been called for redemption; (although not called) its yield
to maturity is more than 40 basis points higher than its yield to any call date;
funds or securities have been placed in escrow to redeem it on an earlier date;
or the Bond is subject to a mandatory tender. In each of these cases the earlier
date will be considered the maturity date.

b-1
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES
DEFINED ASSET FUNDS
I want to learn more about automatic reinvestment in the Investment Accumulation
Program. Please send me information about participation in the Municipal Fund
Accumulation Program, Inc. and a current Prospectus.

My name (please print) _________________________________________________________

My address (please print):
Street and Apt. No. ____________________________________________________________

City, State, Zip Code __________________________________________________________

This page is a self-mailer. Please complete the information above, cut along the
dotted line, fold along the lines on the reverse side, tape, and mail with the
Trustee's address displayed on the outside.
<PAGE>

BUSINESS REPLY MAIL NO POSTAGE
FIRST CLASS PERMIT NO. 1313 NEW YORK, NY NECESSARY
IF MAILED
POSTAGE WILL BE PAID BY ADDRESSEE IN THE
THE BANK OF NEW YORK UNITED STATES
P.O. BOX 974
WALL STREET STATION
NEW YORK, NY 10268-0974

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

- --------------------------------------------------------------------------------
(Fold along this line.)
<PAGE>
Defined
Asset FundsSM

SPONSORS: MUNICIPAL INVESTMENT
Merrill Lynch, TRUST FUND
Pierce, Fenner & Smith IncorporatedMultistate Series--316
Defined Asset Funds (Unit Investment Trusts)
P.O. Box 9051,
Princeton, NJ This Prospectus does not contain all of the
08543-9051 information with respect to the investment
(609) 282-8500 company set forth in its registration
Smith Barney Inc. statement and exhibits relating thereto which
388 Greenwich Street--23rd Floor, have been filed with the Securities and
New York, NY 10013 Exchange Commission, Washington, D.C. under
(212) 816-4000 the Securities Act of 1933 and the Investment
PaineWebber Incorporated Company Act of 1940, and to which reference
1200 Harbor Blvd., is hereby made. Copies of filed material can
Weehawken, NJ 07087 be obtained from the Public Reference Section
(201) 902-3000 of the Commission, 450 Fifth Street, N.W.,
Prudential Securities Incorporated Washington, D.C. 20549 at prescribed rates.
One New York Plaza, The Commission also maintains a Web site that
New York, NY 10292 contains information statements and other
(212) 778-6164 information regarding registrants such as
Dean Witter Reynolds Inc. Defined Asset Funds that file electronically
Two World Trade Center--59th Floor,with the Commission at http://www.sec.gov.
New York, NY 10048 ------------------------
(212) 392-2222 No person is authorized to give any
EVALUATOR: information or to make any representations
Kenny Information Systems, with respect to this investment company not
a division of J. J. Kenny Co., Inc.contained in this Prospectus; and any
65 Broadway, New York, NY 10019 information or representation not contained
TRUSTEE: herein must not be relied upon as having been
The Bank of New York authorized.
Unit Investment Trust Department ------------------------
P.O. Box 974 When Units of this Fund are no longer
Wall Street Division available this Prospectus may be used as a
New York, NY 10268-0974 preliminary prospectus for a future series,
1-800-221-7771 and investors should note the following:
Information contained herein is subject to
amendment. A registration statement relating
to securities of a future series has been
filed with the Securities and Exchange
Commission. These securities may not be sold
nor may offers to buy be accepted prior to
the time the registration statement becomes
effective.
This Prospectus shall not constitute an offer
to sell or the solicitation of an offer to
buy nor shall there be any sale of these
securities in any State in which such offer,
solicitation or sale would be unlawful prior
to qualification under the securities laws of
any such State.

11320--08/97

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

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

I. Bonding arrangements of each of the Depositors are incorporated by reference
to Item A of Part II to the Registration Statement on Form S-6 under the
Securities Act of 1933 for Municipal Investment Trust Fund, Monthly Payment
Series--573 Defined Asset Funds (Reg. No. 333-08241).

II. The date of organization of each of the Depositors is set forth in Item B
of Part II to the Registration Statement on Form S-6 under the Securities Act of
1933 for Municipal Investment Trust Fund, Monthly Payment Series--573 Defined
Asset Funds (Reg. No. 333-08241) and is herein incorporated by reference
thereto.

III. The Charter and By-Laws of each of the Depositors are incorporated herein
by reference to Exhibits 1.3 through 1.12 to the Registration Statement on Form
S-6 under the Securities Act of 1933 for Municipal Investment Trust Fund,
Monthly Payment Series--573 Defined Asset Funds (Reg. No. 333-08241).

IV. Information as to Officers and Directors of the Depositors has been filed
pursuant to Schedules A and D of Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934 and is incorporated by reference to the SEC
filings indicated and made a part of this Registration Statement:

Merrill Lynch, Pierce, Fenner & Smith Incorporated 8-7221
Smith Barney Inc. ................................ 8-8177
PaineWebber Incorporated.......................... 8-16267
Prudential Securities Incorporated................ 8-27154
Dean Witter Reynolds Inc. ........................ 8-14172

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

B. The Internal Revenue Service Employer Identification Numbers of the
Sponsors and Trustee are as follows:

Merrill Lynch, Pierce, Fenner & Smith Incorporated 13-5674085
Smith Barney Inc. ................................ 13-1912900
PaineWebber Incorporated.......................... 13-2638166
Prudential Securities Incorporated................ 22-2347336
Dean Witter Reynolds Inc. ........................ 94-0899825
The Bank of New York, Trustee..................... 13-4941102

UNDERTAKING

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

II-1
<PAGE>
SERIES OF MUNICIPAL INVESTMENT TRUST FUND, EQUITY INCOME FUND
AND DEFINED ASSET FUNDS MUNICIPAL INSURED SERIES
DESIGNATED PURSUANT TO RULE 487 UNDER THE SECURITIES ACT OF 1933

SEC
SERIES NUMBER FILE NUMBER
- --------------------------------------------------------------------------------
Municipal Investment Trust Fund:
Thirty-Eighth Intermediate Term Series.................... 2-84267
Thirty-Eighth Insured Series.............................. 2-96953
Four Hundred Thirty-Eighth Monthly Payment Series......... 33-16561
Multistate Series 6E...................................... 33-29412
Multistate Series--48..................................... 33-50247
Multistate Series--83..................................... 33-57443
Monthly Payment Series 600................................ 333-13265
Defined Asset Funds Municipal Insured Series................ 33-54565
Equity Income Fund, Select Ten Portfolio--1995 Spring
Series...................................................... 33-55807

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

The facing sheet of Form S-6.

The Cross-Reference Sheet (incorporated by reference to the Cross-Reference
Sheet to the Registration Statement of Defined Asset Funds Municipal Insured
Series, 1933 Act File No. 33-54565).

The Prospectus.

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

The following exhibits:

1.1 --Form of Trust Indenture (incorporated by reference to Exhibit
1.1 to the Registration Statement of Equity Income Fund, Select
S&P Industrial Portfolio 1997 Series A. 1933 Act File No.
33-05683.
1.1.1 --Form of Standard Terms and Conditions of Trust Effective
October 21, 1993 (incorporated by reference to Exhibit 1.1.1 to
the Registration Statement of Municipal Investment Trust Fund,
Multistate Series--48, 1933 Act File No. 33-50247).
1.2 --Form of Master Agreement Among Underwriters (incorporated by
reference to Exhibit 1.2 to the Registration Statement of The
Corporate Income Fund, One Hundred Ninety-Fourth Monthly
Payment Series, 1933 Act File No. 2-90925).
2.1 --Form of Certificate of Beneficial Interest (included in Exhibit
1.1.1).
3.1 --Opinion of counsel as to the legality of the securities being
issued including their consent to the use of their names under
the headings 'Taxes' and 'Miscellaneous--Legal Opinion' in the
Prospectus.
4.1 --Consent of the Evaluator.
5.1 --Consent of independent accountants.
9.1 --Information Supplement (incorporated by reference to Exhibit
9.1 to the Registration Statement of Municipal Investment Trust
Fund, Insured Series 305, 1933 Act File No. 333-23111).

R-1
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES--316
DEFINED ASSET FUNDS

SIGNATURES

The registrant hereby identifies the series numbers of Municipal Investment
Trust Fund, Equity Income Fund and Defined Asset Funds Municipal Insured Series
listed on page R-1 for the purposes of the representations required by Rule 487
and represents the following:

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

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

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

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT HAS
DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY
AUTHORIZED IN THE CITY OF NEW YORK AND STATE OF NEW YORK ON THE 22ND DAY OF
AUGUST, 1997.

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

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

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

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

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

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

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

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

HERBERT M. ALLISON, JR.
BARRY S. FREIDBERG
EDWARD L. GOLDBERG
STEPHEN L. HAMMERMAN
JEROME P. KENNEY
DAVID H. KOMANSKY
DANIEL T. NAPOLI
THOMAS H. PATRICK
JOHN L. STEFFENS
DANIEL P. TULLY
ROGER M. VASEY
ARTHUR H. ZEIKEL
By DANIEL C. TYLER
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)

R-3
<PAGE>
SMITH BARNEY INC.
DEPOSITOR

By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Smith Barney Inc.: have been filed
under the 1933 Act
File Numbers:
33-49753, 33-55073
and 333-10441

STEVEN D. BLACK
JAMES BOSHART III
ROBERT A. CASE
JAMES DIMON
ROBERT DRUSKIN
ROBERT H. LESSIN
WILLIAM J. MILLS, II
MICHAEL B. PANITCH
PAUL UNDERWOOD

By KEVIN E. KOPCZYNSKI
(As authorized signatory for
Smith Barney Inc. and
Attorney-in-fact for the persons listed above)

R-4
<PAGE>
PAINEWEBBER INCORPORATED
DEPOSITOR

By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Executive Committee of the Board the following 1933 Act File
of Directors of PaineWebber Number: 33-55073
Incorporated:

DONALD J. MARRON
JOSEPH J. GRANO, JR.
By
ROBERT E. HOLLEY
(As authorized signatory for
PaineWebber Incorporated
and Attorney-in-fact for the persons listed above)

R-5
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED
DEPOSITOR

By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Prudential Securities have been filed
Incorporated: under Form SE and
the following 1933
Act File Numbers:
33-41631 and
333-15919

ROBERT C. GOLDEN
ALAN D. HOGAN
A. LAURENCE NORTON, JR.
LELAND B. PATON
VINCENT T. PICA II
MARTIN PFINSGRAFF
HARDWICK SIMMONS
LEE B. SPENCER, JR.
BRIAN M. STORMS

By RICHARD R. HOFFMANN
(As authorized signatory for Prudential Securities
Incorporated and Attorney-in-fact for the persons
listed above)

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

By the following persons, who constitute Powers of Attorney have been filed
a majority of under Form SE and the following 1933
the Board of Directors of Dean Witter Act File Numbers: 33-17085 and
Reynolds Inc.: 333-13039

RICHARD M. DeMARTINI
ROBERT J. DWYER
CHRISTINE A. EDWARDS
CHARLES A. FIUMEFREDDO
JAMES F. HIGGINS
MITCHELL M. MERIN
STEPHEN R. MILLER
RICHARD F. POWERS III
PHILIP J. PURCELL
THOMAS C. SCHNEIDER
WILLIAM B. SMITH
By
MICHAEL D. BROWNE
(As authorized signatory for
Dean Witter Reynolds Inc.
and Attorney-in-fact for the persons listed above)

R-7

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

AUGUST 22, 1997

Municipal Investment Trust Fund,
Multistate Series - 316
Defined Asset Funds

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

Dear Sirs:

We have acted as special counsel for you, as sponsors (the 'Sponsors') of
Multistate Series - 316 of Municipal Investment Trust Fund, Defined Asset Funds
(the 'Trusts'), in connection with the issuance of units of fractional undivided
interest in the Trusts (the 'Units') in accordance with the Trust Indentures
relating to the Trusts (the 'Indentures').

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

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

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

Very truly yours,

DAVIS POLK & WARDWELL

EXHIBIT 4.1

KENNY INFORMATION SYSTEMS,
A Division of J. J. Kenny Co., Inc.
65 Broadway
New York, New York 10006
Telephone: 212/770-4422
Fax: 212/797-8681
Frank A. Ciccotto, Jr.
Vice President

August 22, 1997

Merrill Lynch Pierce Fenner & Smith
Incorporated
Defined Asset Funds
P.O. Box 9051
Princeton, NJ 08543-9051

The Bank of New York
P.O. Box 974
Wall Street Division
New York, N.Y. 10268-0974

Re: Municipal Investment Trust Fund, Multistate Series - 316, Defined Asset
Funds

Gentlemen:

We have examined the Registration Statement File No. 333-30861 for the
above-captioned fund. We hereby acknowledge that Kenny Information Systems, a
Division of J. J. Kenny Co., Inc. is currently acting as the evaluator for the
fund. We hereby consent to the use in the Registration Statement of the
reference to Kenny Information Systems, a Division of J. J. Kenny Co., Inc. as
evaluator.

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

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

Sincerely,

FRANK A. CICCOTTO, JR.
VICE PRESIDENT

EXHIBIT 5.1
CONSENT OF INDEPENDENT ACCOUNTANTS

The Sponsors and Trustee of Municipal Investment Trust Fund, Multistate
Series--316,
Defined Asset Funds (California, New Jersey and New York Trusts):

We consent to the use in this Registration Statement No. 333-30861 of our report
dated August 22, 1997, relating to the Statements of Condition of Municipal
Investment Trust Fund, Multistate Series--316, Defined Asset Funds (California,
New Jersey and New York Trusts) and to the reference to us under the heading
'Miscellaneous-- Auditors' in the Prospectus which is a part of this
Registration Statement.

DELOITTE & TOUCHE LLP
New York, NY
August 22, 1997

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<NAME> CALIFORNIA INSURED SERIES 316

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<NAME> NEW JERSEY INSURED SERIES 316

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