MUNICIPAL INVESTMENT TR FD MULTISTATE SER 321 DEF ASSET FDS, 485BPOS, 1999-04-21

MUNICIPAL INVESTMENT TR FD MULTISTATE SER 321 DEF ASSET FDS
485BPOS, 1999-04-21

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 21, 1999

REGISTRATION NO. 333-41285
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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

POST-EFFECTIVE 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--321
DEFINED ASSET FUNDS

B. NAMES OF DEPOSITORS:

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

C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:

MERRILL LYNCH, PIERCE,
FENNER & SMITH
INCORPORATED
DEFINED ASSET FUNDS
POST OFFICE BOX 9051
PRINCETON, NJ 08543-9051 SALOMON SMITH BARNEY INC.
388 GREENWICH
STREET--23RD FLOOR
NEW YORK, NY 10013

PAINEWEBBER INCORPORATED
1285 AVENUE OF THE
AMERICAS
NEW YORK, NY 10019 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. ROBERT E. HOLLEY MICHAEL KOCHMANN
P.O. BOX 9051 1200 HARBOR BLVD. 388 GREENWICH ST.
PRINCETON, NJ 08543-9051 WEEHAWKEN, NJ 07087 NEW YORK, NY 10013

COPIES TO:
PIERRE DE SAINT PHALLE,
ESQ.
450 LEXINGTON AVENUE
NEW YORK, NY 10017
DOUGLAS LOWE, ESQ.
DEAN WITTER REYNOLDS INC.
TWO WORLD TRADE
CENTER--59TH FLOOR
NEW YORK, NY 10048

The issuer has registered an indefinite number of Units under the Securities Act
of 1933 pursuant to Rule 24f-2 and filed the Rule 24f-2 Notice for the most
recent fiscal year on March 25, 1999.

Check box if it is proposed that this filing will become effective on April 30,
1999 pursuant to paragraph (b) of Rule 485. / x /

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<PAGE>
DEFINED ASSET FUNDSSM
- --------------------------------------------
- ----------------------------------

MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES--321
(A UNIT INVESTMENT TRUST)
O CALIFORNIA, NEW JERSEY AND NEW YORK PORTFOLIOS
O PORTFOLIOS OF LONG-TERM MUNICIPAL BONDS
O DESIGNED FOR FEDERALLY TAX-FREE INCOME
O EXEMPT FROM SOME STATE TAXES
O MONTHLY DISTRIBUTIONS

SPONSORS: -------------------------------------------------
Merrill Lynch, The Securities and Exchange Commission has not
Pierce, Fenner & Smith approved or disapproved these Securities or
Incorporated passed upon the adequacy of this prospectus. Any
Salomon Smith Barney Inc. representation to the contrary is a criminal
PaineWebber Incorporated offense.
Dean Witter Reynolds Inc. Prospectus dated April 30, 1999.

<PAGE>
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Def ined Asset FundsSM
Defined Asset FundsSM is America's oldest and largest family of unit investment
trusts, with over $160 billion sponsored over the last 28 years. Defined Asset
Funds has been a leader in unit investment trust research and product
innovation. Our family of Funds helps investors work toward their financial
goals with a full range of quality investments, including municipal, corporate
and government bond portfolios, as well as domestic and international equity
portfolios.

Defined Asset Funds offer a number of advantages:
o A disciplined strategy of buying and holding with a long-term view is the
cornerstone of Defined Asset Funds.
o Fixed portfolio: Defined Funds follow a buy and hold investment strategy;
funds are not managed and portfolio changes are limited.
o Defined Portfolios: We choose the stocks and bonds in advance, so you know
what you're investing in.
o Professional research: Our dedicated research team seeks out stocks or bonds
appropriate for a particular fund's objectives.
o Ongoing supervision: We monitor each portfolio on an ongoing basis.
No matter what your investment goals, tolerance for risk or time horizon,
there's probably a Defined Asset Fund that suits your investment style. Your
financial professional can help you select a Defined Asset Fund that works best
for your investment portfolio.

THE FINANCIAL INFORMATION IN THIS PROSPECTUS IS AS OF JANUARY 31, 1999, THE
EVALUATION DATE.

CONTENTS
PAGE
-----------
California Insured Portfolio--
Risk/Return Summary.................................. 3
New Jersey Insured Portfolio-- Risk/Return Summary...... 6
New York Portfolio--Risk/Return Summary................. 9
What You Can Expect From Your Investment................ 13
Monthly Income....................................... 13
Return Figures....................................... 13
Records and Reports.................................. 13
The Risks You Face...................................... 14
Interest Rate Risk................................... 14
Call Risk............................................ 14
Reduced Diversification Risk......................... 14
Liquidity Risk....................................... 14
Concentration Risk................................... 14
State Concentration Risk............................. 15
Bond Quality Risk.................................... 17
Insurance Related Risk............................... 17
Litigation and Legislation Risks..................... 17
Selling or Exchanging Units............................. 17
Sponsors' Secondary Market........................... 18
Selling Units to the Trustee......................... 18
Exchange Option...................................... 19
How The Fund Works...................................... 19
Pricing.............................................. 19
Evaluations.......................................... 19
Income............................................... 19
Expenses............................................. 19
Portfolio Changes.................................... 20
Fund Termination..................................... 20
Certificates......................................... 21
Trust Indenture...................................... 21
Legal Opinion........................................ 22
Auditors............................................. 22
Sponsors............................................. 22
Trustee.............................................. 22
Underwriters' and Sponsors' Profits 22
Public Distribution.................................. 23
Code of Ethics....................................... 23
Year 2000 Issues..................................... 23
Taxes................................................... 23
Supplemental Information................................ 25
Financial Statements.................................... D-1

2
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CALIFORNIA INSURED PORTFOLIO--RISK/RETURN SUMMARY

1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks interest income that is exempt from regular
federal income taxes and some state and local taxes by
investing in a fixed portfolio consisting primarily of
insured, long term municipal revenue bonds.
2. WHAT ARE MUNICIPAL REVENUE BONDS?
Municipal revenue bonds are bonds issued by states,
municipalities and public authorities to finance the cost
of buying, building or improving various projects intended
to generate revenue, such as airports, health care
facilities, housing and municipal electric, water and sewer
utilities. Generally, payments on these bonds depend solely
on the revenues generated by the projects, excise taxes or
state appropriations, and are not backed by the
government's taxing power.

3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
O The Fund plans to hold to maturity 14 long-term tax-exempt
municipal bonds, and some short-term bonds reserved to pay
the deferred sales fee, with an aggregate face amount of
$4,690,000.
o The Fund is a unit investment trust which means that,
unlike a mutual fund, the Portfolio is not managed.
o The bonds are rated AAA or Aaa by Standard & Poor's,
Moody's or Fitch.
o Many of the bonds can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 100% of the bonds are insured by insurance companies that
guarantee timely payments of principal and interest on the
bonds (but not Fund units or the market value of the bonds
before they mature).

The Portfolio consists of municipal bonds of the following
types:

APPROXIMATE
PORTFOLIO
PERCENTAGE

/ / Airports/Ports/Highways 16%
/ / Hospital/Health Care 24%
/ / Lease Rental Appropriation 26%
/ / Municipal Water/Sewer Utilities 26%
/ / Municipal Electric Utilities 8%

4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN
HAPPEN FOR VARIOUS REASONS, INCLUDING:
o Rising interest rates, an issuer's worsening financial
condition or a drop in bond ratings can reduce the price of
your units.
o Because the Fund is concentrated in lease rental
appropriation and municipal water/sewer utility bonds,
adverse developments in these sectors may affect the value
of your units.
o Assuming no changes in interest rates, when you sell your
units, they will generally be worth less than your cost
because your cost included a sales fee.
o The Fund will receive early returns of principal if bonds
are called or sold before they mature. If this happens your
income will decline and you may not be able to reinvest the
money you receive at as high a yield or as long a maturity.

ALSO, THE PORTFOLIO IS CONCENTRATED IN BONDS OF CALIFORNIA
SO IT IS LESS DIVERSIFIED THAN A NATIONAL FUND AND IS
SUBJECT TO RISKS PARTICULAR TO CALIFORNIA WHICH ARE BRIEFLY
DESCRIBED UNDER STATE CONCENTRATION RISKS LATER IN THIS
PROSPECTUS.

3
<PAGE>

5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want federally tax-free income. You will
benefit from a professionally selected and supervised
portfolio whose risk is reduced by investing in insured
bonds of several different issuers.
The Fund is not appropriate for you if you want a
speculative investment that changes to take advantage of
market movements, if you do not want a tax-advantaged
investment or if you cannot tolerate any risk.

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):
Regular Monthly Income per unit $ 4.02
Annual Income per unit: $ 48.35
These figures are estimates determined on the evaluation
day; actual payments may vary.

6. WHAT ARE THE FUND'S FEES AND EXPENSES?
This table shows the costs and expenses you may pay,
directly or indirectly, when you invest in the Fund.
INVESTOR FEES
Maximum Sales Fee (Load) on new
purchases (as a percentage of
$1,000 invested) 2.90%
You will pay a deferred sales fee of $3.75 per unit
quarterly November, February, May and August through
February, 2001. Employees of some of the Sponsors and their
affiliates may pay a reduced sales fee of no less than $5.00
per unit.
The maximum sales fee is reduced if you invest at least
$100,000, as follows:

YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
----------------------------------- -----------------
Less than $100,000 2.90%
$100,000 to $249,999 2.65%
$250,000 to $499,999 2.40%
$500,000 to $999,999 2.15%
$1,000,000 and over 1.90%

Maximum Exchange Fee 1.90%

ESTIMATED ANNUAL FUND OPERATING EXPENSES

AMOUNT
PER UNIT
-----------
$ 0.72
Trustee's Fee
$ 0.46
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
$ 0.29
Evaluator's Fee
$ 0.20
Organization Costs
$ 0.62
Other Operating Expenses
-----------
$ 2.29
TOTAL

The Sponsors historically paid organization costs and
updating expenses.
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
In the following chart we show past performance of prior
California Portfolios, which had investment objectives,
strategies and types of bonds substantially similar to
this Fund. These prior Series differed in that they
charged a higher sales fee. These prior California Series
were offered between June 22, 1988 and September 27, 1996
and were outstanding on December 31, 1998. OF COURSE, PAST
PERFORMANCE OF PRIOR SERIES IS NO GUARANTEE OF FUTURE
RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
Reflecting all expenses. For periods ended 12/31/98.

WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 10 YEARS 1 YEAR 5 YEARS 10 YEARS

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

High 4.90% 5.03% 6.89% 7.72% 6.21% 7.48%
Average 2.54 4.30 6.87 5.81 5.32 7.46
Low 0.60 3.70 6.83 3.45 4.53 7.43

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Average
Sales fee 3.24% 5.09% 5.82%

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Note: All returns represent changes in unit price with distributions reinvested
into the Municipal Fund Investment Accumulation Program.

8. IS THE FUND MANAGED?
Unlike a mutual fund, the Fund is not managed and bonds are
not sold because of market changes. Rather, experienced
Defined Asset Funds financial analysts regularly review the
bonds in the Fund. The Fund may sell a bond if certain
adverse credit or other conditions exist.

4
<PAGE>

9. HOW DO I BUY UNITS?
The minimum investment is one unit.
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
UNIT PRICE PER UNIT $1,041.44
(as of January 31, 1999)
Unit price is based on the net asset value of the Fund plus
the sales fee. An amount equal to any principal cash, as
well as net accrued but undistributed interest on the unit,
is added to the unit price. An independent evaluator prices
the bonds at 3:30 p.m. Eastern time every business day.
Unit price changes every day with changes in the prices of
the bonds in the Fund.
10. HOW DO I SELL UNITS?
You may sell your units at any time to any Sponsor or the
Trustee for the net asset value determined at the close of
business on the date of sale, less any remaining deferred
sales fee. You will not pay any other fee when you sell
your units.

11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100% exempt
from regular federal income tax. Your income may also be
exempt from some California state and local personal income
taxes if you live in California.
You will also receive principal payments if bonds are sold
or called or mature, when the cash available is more than
$5.00 per unit. You will be subject to tax on any gain
realized by the Fund on the disposition of bonds.
12. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You will receive your income in cash unless you choose to
compound your income by reinvesting at no sales fee in the
Municipal Fund Investment Accumulation Program, Inc. This
program is an open-end mutual fund with a comparable
investment objective, but the bonds will generally not be
insured. Income from this program will generally be subject
to state and local income taxes. For more complete
information about the program, including charges and fees,
ask the Trustee for the program's prospectus. Read it
carefully before you invest. The Trustee must receive your
written election to reinvest at least 10 days before the
record day of an income payment.
EXCHANGE PRIVILEGES
You may exchange units of this Fund for units of certain
other Defined Asset Funds. You may also exchange into this
Fund from certain other funds. We charge a reduced sales fee
on exchanges.

5
<PAGE>
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NEW JERSEY INSURED PORTFOLIO--RISK/RETURN SUMMARY

3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
O The Fund plans to hold to maturity 12 long-term tax-exempt
municipal bonds, and some short-term bonds reserved to pay
the deferred sales fee, with an aggregate face amount of
$3,905,000.
o The Fund is a unit investment trust which means that,
unlike a mutual fund, the Portfolio is not managed.
o The bonds are rated AAA or Aaa by Standard & Poor's,
Moody's or Fitch.
o Many of the bonds can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 100% of the bonds are insured by insurance companies that
guarantee timely payments of principal and interest on the
bonds (but not Fund units or the market value of the bonds
before they mature).

The Portfolio consists of municipal bonds of the following
types:

APPROXIMATE
PORTFOLIO
PERCENTAGE

/ / General Obligation 13%
/ / Hospital/Health Care 26%
/ / Housing 12%
/ / Lease Rental Appropriation 8%
/ / Municipal Water/Sewer Utilities 25%
/ / Parking 2%
/ / Municipal Electric Utilities 1%
/ / Universities/Colleges 13%

4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN
HAPPEN FOR VARIOUS REASONS, INCLUDING:
o Rising interest rates, an issuer's worsening financial
condition or a drop in bond ratings can reduce the price of
your units.
o Because the Fund is concentrated in hospital/health care
and municipal water/sewer utility bonds, adverse
developments in these sectors may affect the value of your
units.
o Assuming no changes in interest rates, when you sell your
units, they will generally be worth less than your cost
because your cost included a sales fee.
o The Fund will receive early returns of principal if bonds
are called or sold before they mature. If this happens your
income will decline and you may not be able to reinvest the
money you receive at as high a yield or as long a maturity.

ALSO, THE PORTFOLIO IS CONCENTRATED IN BONDS OF NEW JERSEY
SO IT IS LESS DIVERSIFIED THAN A NATIONAL FUND AND IS
SUBJECT TO RISKS PARTICULAR TO NEW JERSEY WHICH ARE BRIEFLY
DESCRIBED UNDER STATE CONCENTRATION RISKS LATER IN THIS
PROSPECTUS.

6
<PAGE>

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):
Regular Monthly Income per unit $ 3.97
Annual Income per unit: $ 47.68
These figures are estimates determined on the evaluation
day; actual payments may vary.

6. WHAT ARE THE FUND'S FEES AND EXPENSES?
This table shows the costs and expenses you may pay,
directly or indirectly, when you invest in the Fund.
INVESTOR FEES
Maximum Sales Fee (Load) on new
purchases (as a percentage of
$1,000 invested) 2.90%
You will pay a deferred sales fee of $3.75 per unit
quarterly November, February, May and August through
February 2001. Employees of some of the Sponsors and their
affiliates may pay a reduced sales fee of no less than $5.00
per unit.
The maximum sales fee is reduced if you invest at least
$100,000, as follows:

Maximum Exchange Fee 1.90%

ESTIMATED ANNUAL FUND OPERATING EXPENSES

AMOUNT
PER UNIT
-----------
$ 0.72
Trustee's Fee
$ 0.46
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
$ 0.35
Evaluator's Fee
$ 0.20
Organization Costs
$ 0.73
Other Operating Expenses
-----------
$ 2.46
TOTAL

The Sponsors historically paid organization costs and
updating expenses.
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
In the following chart we show past performance of prior
New Jersey Portfolios, which had investment objectives,
strategies and types of bonds substantially similar to
this Fund. These prior Series differed in that they
charged a higher sales fee. These prior New Jersey Series
were offered between March 30, 1988 and September 19, 1996
and were outstanding on December 31, 1998. OF COURSE, PAST
PERFORMANCE OF PRIOR SERIES IS NO GUARANTEE OF FUTURE
RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
Reflecting all expenses. For periods ended 12/31/98.

WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 10 YEARS 1 YEAR 5 YEARS 10 YEARS

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

High 5.43% 4.75% 6.99% 7.57% 5.91% 7.59%
Average 2.81 4.17 6.87 5.70 5.19 7.46
Low 0.74 3.59 6.74 3.85 4.47 7.33

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

Average
Sales fee 2.86% 5.11% 5.70%

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

Note: All returns represent changes in unit price with distributions reinvested
into the Municipal Fund Investment Accumulation Program.

7
<PAGE>

9. HOW DO I BUY UNITS?
The minimum investment is one unit.
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
UNIT PRICE PER UNIT $1,037.73
(as of January 31, 1999)
Unit price is based on the net asset value of the Fund plus
the sales fee. An amount equal to any principal cash, as
well as net accrued but undistributed interest on the unit,
is added to the unit price. An independent evaluator prices
the bonds at 3:30 p.m. Eastern time every business day.
Unit price changes every day with changes in the prices of
the bonds in the Fund.
10. HOW DO I SELL UNITS?
You may sell your units at any time to any Sponsor or the
Trustee for the net asset value determined at the close of
business on the date of sale, less any remaining deferred
sales fee. You will not pay any other fee when you sell
your units.

11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100% exempt
from regular federal income tax. Your income may also be
exempt from some New Jersey state and local personal income
taxes if you live in New Jersey.
You will also receive principal payments if bonds are sold
or called or mature, when the cash available is more than
$5.00 per unit. You will be subject to tax on any gain
realized by the Fund on the disposition of bonds.
12. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You will receive your income in cash unless you choose to
compound your income by reinvesting at no sales fee in the
Municipal Fund Investment Accumulation Program, Inc. This
program is an open-end mutual fund with a comparable
investment objective. Income from this program will
generally be subject to state and local income taxes. For
more complete information about the program, including
charges and fees, ask the Trustee for the program's
prospectus. Read it carefully before you invest. The Trustee
must receive your written election to reinvest at least 10
days before the record day of an income payment.
EXCHANGE PRIVILEGES
You may exchange units of this Fund for units of certain
other Defined Asset Funds. You may also exchange into this
Fund from certain other funds. We charge a reduced sales fee
on exchanges.

8
<PAGE>
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NEW YORK PORTFOLIO--RISK/RETURN SUMMARY

3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
O The Fund plans to hold to maturity 12 long-term tax-exempt
municipal bonds, and some short-term bonds reserved to pay
the deferred sales fee, with an aggregate face amount of
$4,690,000.
o The Fund is a unit investment trust which means that,
unlike a mutual fund, the Portfolio is not managed.
o When the bonds were initially deposited they were rated A
or better by Standard & Poor's, Moody's or Fitch. The
quality of the bonds may currently be lower.
o Many of the bonds can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 9% of the bonds are insured by insurance companies.
o 26% of the bonds are backed by babnk letters of credit.
Letters of credit and insurance guarantee timely payments
of principal and interest on the bonds (but not Fund units
or the market value of the bonds before they mature).

The Portfolio consists of municipal bonds of the following
types:

APPROXIMATE
PORTFOLIO
PERCENTAGE

/ / General Obligation 19%
/ / Hospital/Health Care 41%
/ / Lease Rental Appropriation 15%
/ / Municipal Water/Sewer Utilities 5%
/ / Special Tax 15%
/ / Transit/Transportation 5%

4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN
HAPPEN FOR VARIOUS REASONS, INCLUDING:
o Rising interest rates, an issuer's worsening financial
condition or a drop in bond ratings can reduce the price of
your units.
o Because the Fund is concentrated in hospital/health care
bonds, adverse developments in this sector may affect the
value of your units.
o Assuming no changes in interest rates, when you sell your
units, they will generally be worth less than your cost
because your cost included a sales fee.
o The Fund will receive early returns of principal if bonds
are called or sold before they mature. If this happens your
income will decline and you may not be able to reinvest the
money you receive at as high a yield or as long a maturity.

ALSO, THE PORTFOLIO IS CONCENTRATED IN BONDS OF NEW YORK SO
IT IS LESS DIVERSIFIED THAN A NATIONAL FUND AND IS SUBJECT
TO RISKS PARTICULAR TO NEW YORK WHICH ARE BRIEFLY DESCRIBED
UNDER STATE CONCENTRATION RISKS LATER IN THIS PROSPECTUS.

9
<PAGE>

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):
Regular Monthly Income per unit $ 4.12
Annual Income per unit: $ 49.50
These figures are estimates determined on the evaluation
day; actual payments may vary.

Maximum Exchange Fee 1.90%

ESTIMATED ANNUAL FUND OPERATING EXPENSES

The Sponsors historically paid organization costs and
updating expenses.
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
In the following chart we show past performance of prior
New York Portfolios, which had investment objectives,
strategies and types of bonds substantially similar to
this Fund. These prior Series differed in that they
charged a higher sales fee. These prior New York Series
were offered between January 14, 1988 and October 16, 1996
and were outstanding on December 31, 1998. OF COURSE, PAST
PERFORMANCE OF PRIOR SERIES IS NO GUARANTEE OF FUTURE
RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
Reflecting all expenses. For periods ended 12/31/98.

WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 10 YEARS 1 YEAR 5 YEARS 10 YEARS

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

High 5.93% 5.02% 7.53% 8.20% 8.09% 8.13%
Average 2.83 4.25 7.23 6.01 5.27 7.83
Low 0.35 3.61 7.04 4.11 4.59 7.64

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

Average
Sales fee 3.15% 5.04% 5.82%

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

Note: All returns represent changes in unit price with distributions reinvested
into the Municipal Fund Investment Accumulation Program.

10
<PAGE>

9. HOW DO I BUY UNITS?
The minimum investment is one unit.
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
UNIT PRICE PER UNIT $1,038.81
(as of January 31, 1999)
Unit price is based on the net asset value of the Fund plus
the sales fee. An amount equal to any principal cash, as
well as net accrued but undistributed interest on the unit,
is added to the unit price. An independent evaluator prices
the bonds at 3:30 p.m. Eastern time every business day.
Unit price changes every day with changes in the prices of
the bonds in the Fund.
10. HOW DO I SELL UNITS?
You may sell your units at any time to any Sponsor or the
Trustee for the net asset value determined at the close of
business on the date of sale. You will not pay any other
fee when you sell your units.

11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100% exempt
from regular federal income tax. Your income may also be
exempt from some New York state and local personal income
taxes if you live in New York.
You will also receive principal payments if bonds are sold
or called or mature, when the cash available is more than
$5.00 per unit. You will be subject to tax on any gain
realized by the Fund on the disposition of bonds.
12. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You will receive your income in cash unless you choose to
compound your income by reinvesting at no sales fee in the
Municipal Fund Investment Accumulation Program, Inc. This
program is an open-end mutual fund with a comparable
investment objective, but the bonds generally will not be
insured. Income from this program will generally be subject
to state and local income taxes. For more complete
information about the program, including charges and fees,
ask the Trustee for the program's prospectus. Read it
carefully before you invest. The Trustee must receive your
written election to reinvest at least 10 days before the
record day of an income payment.
EXCHANGE PRIVILEGES
You may exchange units of this Fund for units of certain
other Defined Asset Funds. You may also exchange into this
Fund from certain other funds. We charge a reduced sales fee
on exchanges.

11
<PAGE>
- --------------------------------------------------------------------------------
TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS

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

<TABLE>
<CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 1999* 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

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

FOR NEW JERSEY RESIDENTS
- --------------------------------------------------------------------------------

COMBINED
EFFECTIVE
TAXABLE INCOME 1999* 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

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

FOR NEW YORK CITY RESIDENTS
- --------------------------------------------------------------------------------

COMBINED
EFFECTIVE
TAXABLE INCOME 1999* 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

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

FOR NEW YORK STATE RESIDENTS
- --------------------------------------------------------------------------------

COMBINED
EFFECTIVE
TAXABLE INCOME 1999* 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

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

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 1999
federal and applicable State (an 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, you should consult your own tax advisers in this
regard.

12
<PAGE>
WHAT YOU CAN EXPECT FROM YOUR INVESTMENT

MONTHLY INCOME

The Fund will pay you regular monthly income. Your monthly income may vary
because of:
o elimination of one or more bonds from the Fund's portfolio because of
calls, redemptions or sales;
o a change in the Fund's expenses; or
o the failure by a bond's issuer to pay interest.

Changes in interest rates generally will not affect your income because the
portfolio is fixed.

Along with your income, you will receive your share of any available bond
principal.

RETURN FIGURES

We cannot predict your actual return, which will vary with unit price, how long
you hold your investment and changes in the portfolio, interest income and
expenses.

Estimated Current Return equals the estimated annual cash to be received from
the bonds in the Fund less estimated annual Fund expenses, divided by the Unit
Price (including the maximum sales fee):

Estimated Annual Estimated
Interest Income - Annual Expenses
- -------------------------------------------------
Unit Price

Estimated Long Term Return is a measure of the estimated return over the
estimated life of the Fund. Unlike Estimated Current Return, Estimated Long Term
Return reflects maturities, discounts and premiums of the bonds in the Fund. It
is 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 Fund's
maximum sales fee and estimated expenses. We calculate the average yield for the
portfolio by weighting each bond's yield by its market value and the time
remaining to the call or maturity date.

Yields on individual 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.

These return quotations are designed to be comparative rather than predictive.

RECORDS AND REPORTS

You will receive:
o a monthly statement of income payments and any principal payments;
o a notice from the Trustee when new bonds are deposited in exchange or
substitution for bonds originally deposited;
o an annual report on Fund activity; and
o annual tax information. This will also be sent to the IRS. You must report the
amount of tax-exempt interest received during the year.

You may request:
o copies of bond evaluations to enable you to comply with federal and state tax
reporting requirements; and
o audited financial statements of the Fund.

You may inspect records of Fund transactions at the Trustee's office during
regular business hours.

13
<PAGE>
THE RISKS YOU FACE

INTEREST RATE RISK

Investing involves risks, including the risk that your investment will decline
in value if interest rates rise. Generally, bonds with longer maturities will
change in value more than bonds with shorter maturities. Bonds in the Fund are
more likely to be called when interest rates decline. This would result in early
returns of principal to you and may result in early termination of the Fund. Of
course, we cannot predict how interest rates may change.

CALL RISK

Many bonds can be prepaid or 'called' by the issuer before their stated
maturity.

For example, some bonds may be required to be called pursuant to mandatory
sinking fund provisions.

Also, an issuer might call its bonds during periods of falling interest rates,
if the issuer's bonds have a coupon higher than current market rates.

An issuer might call its bonds in extraordinary cases, including if:
o it no longer needs the money for the original purpose;
o the project is condemned or sold;
o the project is destroyed and insurance proceeds are used to redeem the
bonds;
o any related credit support expires and is not replaced; or
o interest on the bonds become taxable.

If the bonds are called, your income will decline and you may not be able to
reinvest the money you receive at as high a yield or as long a maturity. An
early call at par of a premium bond will reduce your return.

REDUCED DIVERSIFICATION RISK

If many investors sell their units, the Fund will have to sell bonds. This could
reduce the diversification of your investment and increase your share of Fund
expenses.

LIQUIDITY RISK

You can always sell back your units, but we cannot assure you that a liquid
trading market will always exist for the bonds in the portfolio, especially
since current law may restrict the Fund from selling bonds to any Sponsor. The
bonds will generally trade in the over-the-counter market. The value of the
bonds, and of your investment, may be reduced if trading in bonds is limited or
absent.

CONCENTRATION RISK

When a certain type of bond makes up 25% or more of the portfolio, it is said to
be 'concentrated' in that bond type, which makes the Portfolio less diversified.

Here is what you should know about the New Jersey and New York Portfolio's
concentration in hospital and health care bonds.
o payment for these bonds depends on revenues from private third-party payors
and government programs, including Medicare and Medicaid, which have
generally undertaken cost containment measures to limit payments to health
care providers;
o hospitals face increasing competition resulting from hospital mergers and
affiliations;
o hospitals need to reduce costs as HMOs increase market penetration and
hospital supply and drug companies raise prices;
o hospitals and health care providers are subject to various legal claims by
patients and others and are adversely affected by increasing costs of
insurance; and

14
<PAGE>
o many hospitals are aggressively buying physician practices and assuming
risk contracts to gain market share. If revenues do not increase
accordingly, this practice could reduce profits;
o Medicare is changing its reimbursement system for nursing homes. Many
nursing home providers are not sure how they will be treated. In many
cases, the providers may receive lower reimbursements and these would have
to cut expenses to maintain profitability; and
o most retirement/nursing home providers rely on entrance fees for operating
revenues. If people live longer than expected and turnover is lower than
budgeted, operating revenues would be adversely affected by less than
expected entrance fees.

Here is what you should know about the California and New Jersey Portfolio's
concentration in municipal water and sewer revenue bonds. The payment of
interest and principal of these bonds depends on the rates the utilities may
charge, the demand for their services and the cost of operating their business
which includes the expense of complying with environmental and other energy and
licensing laws and regulations. The operating results of utilities are
particularly influenced by:
o increases in operating and construction costs; and
o unpredicability of future usage requirements.

Here is what you should know about the California Portfolio's concentration in
lease rental bonds. Lease rental bonds are generally issued by governmental
financing authorities that cannot assess a tax to cover the cost of equipment or
construction of buildings that will be used by a state or local government. The
risks associated with these bonds include:
o the failure of the government to appropriate funds for the leasing rental
payments to service the bonds; and
o rental obligations, and therefore payments, may terminate in the event of
damages to or destruction or condemnation of the of the equipment or
building.

Changes to the portfolio from bond redemptions, maturities and sales may affect
the Fund's concentrations over time.

STATE CONCENTRATION RISK

CALIFORNIA RISKS

Generally

From the late 1980s through the early 1990s, an economic recession eroded
California's revenue base. At the same time rapid population growth caused State
expenditures to exceed budget appropriations.

o As a result California experienced a period of sustained budget imbalance.

o Since that time the California economy has improved and the extreme
budgetary pressures have begun to lessen.

State Government

The 1997-98 Budget Act allocated a State budget of approximately $66.9 Billion
and contains no tax increases or reductions. Despite this somewhat improved
state, California's budget is still subject to certain unforeseeable events. For
example:

o In December, 1994, Orange County and its investment pool filed for
bankruptcy. While a settlement has been reached, the full impact on the
State and Orange County is still unknown.

o California faces constant fluctuations in other expenses (including health
and welfare caseloads, property tax receipts,

15
<PAGE>
federal funding and natural disaster relief) that will undoubtedly create
new budgetary pressure and reduce issuers' ability to pay their debts.

o California's general obligation bonds are currently rated A1 by Moody's and
A+ by Standard & Poor's.

Other Risks

Issuers' ability to make payments on bonds (and the remedies available to
bondholders) could also be adversely affected by the following constraints:

o Certain provisions of California's Constitution, laws and regulatory system
contain tax, spending and appropriations limits and prohibit certain new
taxes.

o Certain other California laws subject the users of bond proceeds to strict
rules and limits regarding revenue repayment.

o Bonds of healthcare 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 recipients and bonds secured by liens
on real property are two of the types of bonds affected by these
provisions.

General obligations of the state are rated Aa2 by Moody's, AA+ by Standard &
Poor's and AA by Fitch.

NEW JERSEY RISKS

State and Local Government

Certain features of New Jersey law could affect the repayment of debt:

o the State of New Jersey and its agencies and public authorities issue
general obligation bonds, which are secured by the full faith and credit of
the state, backed by its taxing authority, without recourse to specific
sources of revenue, therefore, any liability to increase taxes could impair
the state's ability to repay debt; and

o the state is required by law to maintain a balanced budget, and state
spending for any given municipality or county cannot increase by more than
5% per year. This limit could make it harder for any particular county or
municipality to repay its debts.

In recent years the state budget's main expenditures have been

o elementary and secondary education, and

o state agencies and programs, including police and corrections facilities,
higher education, and environmental protection.

The state's general obligations are rated Aa1 by Moody's and AA+ by Standard &
Poor's.

NEW YORK RISKS

Generally

For decades, New York's economy has trailed the rest of the nation. Both the
state and New York City have experienced long-term structural imbalances between
revenues and expenses, and have repeatedly relied substantially on non-recurring
measures to achieve budget balance. The pressures that contribute to budgetary
problems at both the state and local level include:

o the high combined state and local tax burden;

o a decline in manufacturing jobs, leading to above-average unemployment;

o sensitivity to the financial services industry; and

o dependence on federal aid.

State Government

16
<PAGE>
The State government frequently has difficulty approving budgets on time. Budget
gaps of $1 billion and $4 billion are projected for the next two years. The
State's general obligation bonds are rated A by Standard & Poor's and A2 by
Moody's. There is $37 billion of state-related debt outstanding.

New York City Government

Even though the City had budget surpluses each year from 1981, budget gaps of $2
billion are projected for each of the next three years. New York City faces
fiscal pressures from:

o aging public facilities that need repair or replacement;

o welfare and medical costs;

o expiring labor contracts; and

o a high and increasing debt burden.

The City requires substantial state aid, and its fiscal strength depends heavily
on the securities industry. Its general obligation bonds are rated A-by Standard
& Poor's and A3 by Moody's.

BOND QUALITY RISK

A reduction in a bond's rating may decrease its value and, indirectly, the value
of your investment in the Fund.

INSURANCE RELATED RISK

Some bonds are backed by insurance companies (as shown under Portfolios).
Insurance policies generally make payments only according to a bond's original
payment schedule and do not make early payments when a bond defaults or becomes
taxable. Although the federal government does not regulate the insurance
business, various state laws and federal initiatives and tax law changes could
significantly affect the insurance business. The claims-paying ability of the
insurance companies is generally rated A or better by Standard & Poor's or
another nationally recognized rating organization. The insurance company ratings
are subject to change at any time at the discretion of the rating agencies.

LITIGATION AND LEGISLATION RISKS

We do not know of any pending litigation that might have a material adverse
effect upon the Fund.

Future tax legislation could affect the value of the portfolio by:
o limiting real property taxes,
o reducing tax rates,
o imposing a flat or other form of tax, or
o exempting investment income from tax.

SELLING OR EXCHANGING UNITS

You can sell your units at any time for a price based on net asset value. Your
net asset value is calculated each business day by:
o adding the value of the bonds, net accrued interest, cash and any other
Fund assets;
o subtracting accrued but unpaid Fund expenses, unreimbursed Trustee
advances, cash held to buy back units or for distribution to investors and
any other Fund liabilities; and
o dividing the result by the number of outstanding units.

Your net asset value when you sell may be more or less than your cost because of
sales fees, market movements and changes in the portfolio.

If you sell your units before the final deferred sales fee installment, the
amount of any remaining installments will be deducted from your proceeds.

17
<PAGE>
SPONSORS' SECONDARY MARKET

While we are not obligated to do so, we will buy back units at net asset value
without any other fee or charge other than any remaining deferred sales charge.
We may resell the units to other buyers or 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.

We have maintained the secondary market continuously for over 28 years, but we
could discontinue it without prior notice for any business reason.

SELLING UNITS TO THE TRUSTEE

Regardless of whether we maintain a secondary market, you can sell your units to
the Trustee at any time by sending the Trustee a letter (with any outstanding
certificates if you hold Unit certificates). You must properly endorse your
certificates (or execute a written transfer instrument with signatures
guaranteed by an eligible institution). Sometimes, additional documents are
needed such as a trust document, certificate of corporate authority, certificate
of death or appointment as executor, administrator or guardian.

Within seven days after your request and the necessary documents are received,
the Trustee will mail a check to you. Contact the Trustee for additional
information.

As long as we are maintaining a secondary market, the Trustee will sell your
units to us at a price based on net asset value. If there is no secondary
market, the Trustee may sell your units in the over-the-counter market for a
higher price, but it is not obligated to do so. In that case, you will receive
the net proceeds of the sale.

If the Fund does not have cash available to pay you for units you are selling,
the agent for the Sponsors will select bonds to be sold. Bonds will be selected
based on market and credit factors. These sales could be made at times when the
bonds would not otherwise be sold and may result in your receiving less than the
unit par value and also reduce the size and diversity of the Fund.

If you acquire 25% or more of the outstanding units of the Fund and you sell
units with a value exceeding $250,000, the Trustee may choose to pay you 'in
kind' by distributing bonds and cash with a total value equal to the price of
those units. The Trustee will try to distribute bonds in the portfolio pro rata,
but it reserves the right to distribute only one or a few bonds. The Trustee
will act as your agent in an in kind distribution and will either hold the bonds
for your account or sell them as you instruct. You must pay any transaction
costs as well as transfer and ongoing custodial fees on sales of bonds
distributed in kind.

There could be a delay in paying you for your units:
o if the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
o if the SEC determines that trading on the New York Stock Exchange is
restricted or that an emergency exists making sale or evaluation of the
bonds not reasonably practicable; and
o for any other period permitted by SEC order.

18
<PAGE>
EXCHANGE OPTION

You may exchange units of certain Defined Asset Funds for units of this Fund at
a maximum exchange fee of 1.90%. You may exchange units of this Fund for units
of certain other Defined Asset Funds at a reduced sales fee if your investment
goals change. To exchange units, you should talk to your financial professional
about what funds are exchangeable, suitable and currently available.

Normally, an exchange is taxable and you must recognize any gain or loss on the
exchange. However, the IRS may try to disallow a loss if the portfolios of the
two funds are not materially different; you should consult your own tax adviser.

We may amend or terminate this exchange option at any time without notice.

HOW THE FUND WORKS

PRICING

The price of a unit includes interest accrued on the bonds, less expenses, from
the initial most recent Record Day up to, but not including, the settlement
date, which is usually three business days after the purchase date of the unit.

A portion of the price of a unit consists of cash so that the Trustee can
provide you with regular monthly income. When you sell your units you will
receive your share of this cash.

In addition, as with mutual funds, the Fund (and therefore the investors) pay
all or some of the costs of organizing the Fund including:
o cost of initial preparation of legal documents;
o federal and state registration fees;
o initial fees and expenses of the Trustee;
o initial audit; and
o legal expenses and other out-of-pocket expenses.

EVALUATIONS

An independent Evaluator values the bonds on each business day (excluding
Saturdays, Sundays and the following holidays as observed by the New York Stock
Exchange: New Year's Day, Presidents' Day, Martin Luther King, Jr. Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas).
Bond values are based on current bid or offer prices for the bonds or comparable
bonds. In the past, the difference between bid and offer prices of publicly
offered tax-exempt bonds has ranged from 0.5% of face amount on actively traded
issues to 3.5% on inactively traded issues; the difference has averaged between
1 and 2%.

INCOME

The Trustee credits interest to an Income Account and other receipts to a
Capital Account. The Trustee may establish a Reserve Account by withdrawing from
these accounts amounts it considers appropriate to pay any material liability.
These accounts do not bear interest.

EXPENSES

The Trustee is paid monthly. It also benefits when it holds cash for the Fund in
non-interest bearing accounts. The Trustee may also receive additional amounts:
o to reimburse the Trustee for the Fund's operating expenses;

19
<PAGE>
o for extraordinary services and costs of indemnifying the Trustee and the
Sponsors;
o costs of actions taken to protect the Fund and other legal fees and
expenses;
o expenses for keeping the Fund's registration statement current; and
o Fund termination expenses and any governmental charges.

The Sponsors are currently reimbursed up to 45 cents per $1,000 face amount
annually for providing portfolio supervisory, bookkeeping and administrative
services and for any other expenses properly chargeable to the Fund. Legal,
typesetting, electronic filing and regulatory filing fees and expenses
associated with updating the Portfolio's registration statement yearly are also
now chargeable to the Portfolio. While this fee may exceed the amount of these
costs and expenses attributable to this Fund, the total of these fees for all
Series of Defined Asset Funds will not exceed the aggregate amount attributable
to all of these Series for any calendar year. The Fund also pays the Evaluator's
fees.

The Trustee's, Sponsors' and Evaluator's fees may be adjusted for inflation
without investors' approval.

Any quarterly deferred sales fees you owe are paid with interest and principal
from certain bonds. If these amounts are not enough, the rest will be paid out
of distributitons to you from the Fund's Capital and Income Accounts.

The Sponsors will pay advertising and selling expenses at no charge to the Fund.
If Fund expenses exceed initial estimates, the Fund will owe the excess. The
Trustee has a lien on Fund assets to secure reimbursement of Fund expenses and
may sell bonds if cash is not available.

PORTFOLIO CHANGES

The Sponsors and Trustee are not liable for any default or defect in a bond; if
a contract to buy any bond.

Unlike a mutual fund, the portfolio is designed to remain intact and we may keep
bonds in the portfolio even if their credit quality declines or other adverse
financial circumstances occur. However, we may sell a bond in certain cases if
we believe that certain adverse credit conditions exist or if a bond becomes
taxable.

If we maintain a secondary market in units but are unable to sell the units that
we buy in the secondary market, we will redeem units, which will affect the size
and composition of the portfolio. Units offered in the secondary market may not
represent the same face amount of bonds that they did originally.

We decide whether or not to offer units for sale that we acquire in the
secondary market after reviewing:
o diversity of the portfolio;
o size of the Fund relative to its original size;
o ratio of Fund expenses to income;
o current and long-term returns;
o degree to which units may be selling at a premium over par; and
o cost of maintaining a current prospectus.

FUND TERMINATION

The Fund will terminate following the stated maturity or sale of the last bond
in the portfolio. The Fund may also terminate earlier with the consent of
investors holding 51% of the units or if total assets of the Fund have

20
<PAGE>
fallen below 40% of the face amount of bonds deposited. We will decide whether
to terminate the Fund early based on the same factors used in deciding whether
or not to offer units in the secondary market.

When the Fund is about to terminate you will receive a notice, and you will be
unable to sell your units after that time. On or shortly before termination, we
will sell any remaining bonds, and you will receive your final distribution. Any
bond that cannot be sold at a reasonable price may continue to be held by the
Trustee in a liquidating trust pending its final sale.

You will pay your share of the expenses associated with termination, including
brokerage costs in selling bonds. This may reduce the amount you receive as your
final distribution.

CERTIFICATES

Certificates for units are issued on request. You may transfer certificates by
complying with the requirements for redeeming certificates, described above. You
can replace lost or mutilated certificates by delivering satisfactory indemnity
and paying the associated costs.

TRUST INDENTURE

The Fund is a 'unit investment trust' governed by a Trust Indenture, a contract
among the Sponsors, the Trustee and the Evaluator, which sets forth their duties
and obligations and your rights. A copy of the Indenture is available to you on
request to the Trustee. The following summarizes certain provisions of the
Indenture.

The Sponsors and the Trustee may amend the Indenture without your consent:
o to cure ambiguities;
o to correct or supplement any defective or inconsistent provision;
o to make any amendment required by any governmental agency; or
o to make other changes determined not to be materially adverse to your best
interest (as determined by the Sponsors).

Investors holding 51% of the units may amend the Indenture. Every investor must
consent to any amendment that changes the 51% requirement. No amendment may
reduce your interest in the Fund without your written consent.

The Trustee may resign by notifying the Sponsors. The Sponsors may remove the
Trustee without your consent if:
o it fails to perform its duties and the Sponsors determine that its
replacement is in your best interest; or
o it becomes incapable of acting or bankrupt or its affairs are taken over by
public authorities.
Investors holding 51% of the units may remove the Trustee. The Evaluator may
resign or be removed by the Sponsors and the Trustee without the consent of
investors. The resignation or removal of either becomes effective when a
successor accepts appointment. The Sponsors will try to appoint a successor
promptly; however, if no successor has accepted within 30 days after notice of
resignation, the resigning Trustee or Evaluator may petition a court to appoint
a successor.

Any Sponsor may resign as long as one Sponsor with a net worth of $2 million
remains and agrees to the resignation. The remaining Sponsors and the Trustee
may appoint a replacement. If there is only one

21
<PAGE>
Sponsor and it fails to perform its duties or becomes bankrupt the Trustee may:
o remove it and appoint a replacement Sponsor;
o liquidate the Fund; or
o continue to act as Trustee without a Sponsor.

Merrill Lynch, Pierce, Fenner & Smith Incorporated acts as agent for the
Sponsors.

The Trust Indenture contains customary provisions limiting the liability of the
Trustee, the Sponsors and the Evaluator.

LEGAL OPINION

Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, as
counsel for the Sponsors, has given an opinion that the units are validly
issued. Special counsel located in the relevant states have given state and
local tax opinions.

AUDITORS

Deloitte & Touche LLP, 2 World Financial Center, New York, New York 10281,
independent accountants, audited the Statements of Condition included in this
prospectus.

SPONSORS

The Sponsors are:

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (a wholly-owned subsidiary of
Merrill Lynch & Co., Inc.)
P.O. Box 9051,
Princeton, NJ 08543-9051

SALOMON SMITH BARNEY INC. (an indirectly wholly-owned subsidiary of Citigroup
Inc.)
388 Greenwich Street--23rd Floor,
New York, NY 10013
DEAN WITTER REYNOLDS INC. (a principal operating subsidiary of Morgan Stanley
Dean Witter & Co.)
Two World Trade Center--59th Floor,
New York, NY 10048
PAINEWEBBER INCORPORATED (a wholly-owned subsidiary of PaineWebber Group Inc.)
1285 Avenue of the Americas,
New York, NY 10019

Each Sponsor is a Delaware corporation and it, or its predecessor, has acted as
sponsor to many unit investment trusts. As a registered broker-dealer each
Sponsor buys and sells securities (including investment company shares) for
others (including investment companies) and participates as an underwriter in
various selling groups.

TRUSTEE

The Chase Manhattan Bank, Unit Investment Trust Department, 4 New York
Plaza--6th Floor, New York, New York 10004, is the Trustee.

It is supervised by the Federal Deposit Insurance Corporation, the Board of
Governors of the Federal Reserve System and New York State banking authorities.

UNDERWRITERS' AND SPONSORS' PROFITS

Underwriters receive sales charges when they sell units. The Sponsors also
realized a profit or loss on the initial date of deposit of the bonds. Any cash
made available by you to the Sponsors before the settlement date for those units
may be used in the Sponsors' businesses to the extent permitted by federal law
and may benefit the Sponsors.

A Sponsor or Underwriter may realize profits or sustain losses on bonds in the
Fund which

22
<PAGE>
were acquired from underwriting syndicates of which it was a member.

In maintaining a secondary market, 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 or redeem them.

PUBLIC DISTRIBUTION

The Sponsors do not intend to qualify units for sale in any foreign countries.
This prospectus does not constitute an offer to sell units in any country where
units cannot lawfully be sold.

CODE OF ETHICS

Merrill Lynch, as agent for the Sponsors, has adopted a code of ethics requiring
preclearance and reporting of personal securities transactions by its employees
with access to information on portfolio transactions. The goal of the code is to
prevent fraud, deception or misconduct against the Fund and to provide
reasonable standards of conduct.

YEAR 2000 ISSUES

Many computer systems were designed in such a way that they may be unable to
distinguish between the year 2000 and the year 1900 (commonly known as the 'Year
2000 Problem'). We do not expect that the computer system changes necessary to
prepare for the Year 2000 will cause any major operational difficulties for the
Fund. The Year 2000 Problem may adversely affect the issuers of the securities
contained in the Portfolio, but we cannot predict whether any impact will be
material to the Portfolio as a whole.

TAXES

The following summary describes some of the important income tax consequences of
holding units. It assumes that you are not a dealer, financial institution,
insurance company or other investor with special circumstances. You should
consult your own tax adviser about your particular circumstances.

At the date of issue of each bond, counsel for the issuer delivered an opinion
to the effect that interest on the bond is exempt from regular federal income
tax. However, interest may be subject to state and local taxes and federal
alternative minimum tax. Neither we nor our counsel have reviewed the issuance
of the bonds, related proceedings or the basis for the opinions of counsel for
the issuers. We cannot assure you 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, you could 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 our counsel, under existing law:

GENERAL TREATMENT OF THE FUND AND YOUR INVESTMENT

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

INCOME OR LOSS UPON DISPOSITION

When all or part of your share of a bond is disposed of (for example, when the
Fund sells,

23
<PAGE>
exchanges or redeems a bond or when you sell or exchange your units), you will
generally recognize capital gain or loss. Your gain, however, will generally be
ordinary income to the extent of any accrued 'market discount'. Generally you
will have market discount to the extent that your basis in a bond when you
purchase 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 on the bond before your purchase). You should consult
your tax adviser in this regard.

If your net long-term capital gains exceed your net short-term capital losses,
the excess may be subject to tax at a lower rate than ordinary income. Any
capital gain from the Fund will be long-term if you are considered to have held
your investment on each bond for more than one year and short-term if you held
it for one year or less. If you are an individual and sell your units after
holding them for more than one year, you may be entitled to a 20% maximum
federal tax rate on any resulting gains. Consult your tax adviser in this
regard. Because the deductibility of capital losses is subject to limitations,
you may not be able to deduct all of your capital losses.

YOUR BASIS IN THE BONDS

Your aggregate basis in the bonds will be equal to the cost of your units,
including any sales charges and the organizational expenses you pay, adjusted to
reflect any accruals of 'original issue discount,' 'acquisition premium' and
'bond premium'. You should consult your tax adviser in this regard.

EXPENSES

If you are not a corporate investor, you will not be entitled to a deduction for
your share of fees and expenses of the Fund. Also, if you borrowed money in
order to purchase or carry your units, you will not be able to deduct the
interest on this borrowing for federal income tax purposes. The IRS may treat
your purchase of units as made with borrowed money even if the money is not
directly traceable to the purchase of 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. If you are a New York taxpayer, your income from the
Fund will not be tax-exempt in New York except to the extent that the income is
earned on bonds that are tax-exempt for New York purposes. Depending on where
you live, your income from the Fund may be subject to state and local taxation.
You should consult your tax adviser in this regard.

CALIFORNIA TAXES

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

Under the income tax laws of the State of California, the Trust will not be
taxed as a corporation and you will be considered to own directly your share of
each bond of the Trust. If you are a California taxpayer, your share of the
income from the bonds of the Trust will not be tax-exempt in California except
for California personal income tax purposes and only to the extent that the
income is earned on bonds that are exempt for such purposes. If

24
<PAGE>
you are a California taxpayer and all or part of your share of a bond is
disposed of (for example, when a bond is sold, exchanged or redeemed at maturity
or you sell or exchange your units), you will recognize gain or loss for
California tax purposes. Depending on where you live, your income from the Trust
may be subject to state and local taxation. You should consult your tax advisor
in this regard.

NEW JERSEY TAXES

In the opinion of Drinker Biddle & Reath LLP, Philadelphia, Pennsylvania,
special counsel on New Jersey tax matters:

The Fund will not be taxed as a corporation under the current income tax laws of
the State of New Jersey. Your income from the Fund may be subject to taxation
depending on where you live. If you are a New Jersey taxpayer your income from
the Fund (including gains on sales of bonds by the Fund) and gains on sales of
units by you will be tax-exempt to the extent that income and gains are earned
on bonds that are tax-exempt for New Jersey purposes. You should consult your
tax adviser as to the consequences to you with respect to any investment you
make in the Fund.

SUPPLEMENTAL INFORMATION

You can receive at no cost supplemental information about the Fund by calling
the Trustee. The supplemental information includes more detailed risk disclosure
about the types of bonds that may be in the Fund's portfolios, general risk
disclosure concerning any insurance securing certain bonds, and general
information about the structure and operation of the Fund. The supplemental
information is also available from the SEC.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 321 (CALIFORNIA INSURED, NEW JERSEY INSURED
AND NEW YORK TRUSTS),
DEFINED ASSET FUNDS

REPORT OF INDEPENDENT ACCOUNTANTS

The Sponsors, Trustee and Holders
of Municipal Investment Trust Fund,
Multistate Series - 321 (California Insured, New Jersey
Insured and New York Trusts),
Defined Asset Funds:

We have audited the accompanying statements of condition of
Municipal Investment Trust Fund, Multistate Series - 321
(California Insured, New Jersey Insured and New York Trusts),
Defined Asset Funds, including the portfolios, as of
January 31, 1999 and the related statements of operations
and of changes in net assets for the period February 6,
1998 to January 31, 1999. 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. Securities owned at January
31, 1999, as shown in such portfolios, were confirmed to us
by The Chase Manhattan Bank, the Trustee. An audit also
includes assessing the accounting principles used and
significant estimates made by the Trustee, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Municipal Investment Trust Fund,
Multistate Series - 321 (California Insured, New Jersey Insured
and New York Trusts) at January 31, 1999 and the results of
their operations and changes in their net assets for the
above-stated period in conformity with generally accepted
accounting principles.

DELOITTE & TOUCHE LLP

New York, N.Y.
March 26, 1999

D - 1.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 321 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS

STATEMENT OF CONDITION
As of January 31, 1999

<TABLE>
<CAPTION>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
{ 20} at value (cost $ 4,682,044 )(Note 1)......... $ 4,739,958
{ 36} Accrued interest ............................... 74,453
Accrued interest on Segregated Bonds (Note 5) .. 1,923
Income payments receivable (Segregated Bonds) .. 78
{ 32} Cash - income .................................. 18,292
Cash - income on Segregated Bonds .............. 5,869
{ 34} Cash - principal ............................... 39,000
Deferred organization costs (Note 6) ........... 3,641
-----------
{ 40} Total trust property ......................... 4,883,214

LESS LIABILITIES:
{ 50} Income advance from Trustee..................... $ 79,703
Deferred sales charge (Note 6) ................. 51,064
{143} Accrued Sponsors' fees ......................... 184
Other liabilities (Note 6) ..................... 3,641 134,592
----------- -----------

NET ASSETS, REPRESENTED BY:
{ 80} 4,539 units of fractional undivided
{ 80} interest outstanding (Note 3)................ 4,735,764

{105} Undistributed net investment income ............ 12,858 $ 4,748,622
----------- ===========

{130}UNIT VALUE ($ 4,748,622 / 4,539 units )........... $ 1,046.18
===========

</TABLE>

See Notes to Financial Statements.

D - 2.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

STATEMENT OF OPERATIONS
<CAPTION>
February 6, 1998
to
January 31,
1999
----

<S> <C>
INVESTMENT INCOME:
{ 10} Interest income ........................ $ 225,279
Interest income on Segregated
Bonds (Note 5) ....................... 7,870
{ 20} Trustee's fees and expenses ............ (6,175)
{ 30} Sponsors' fees ......................... (2,082)
------------
{ 40} Net investment income .................. 224,892

UNREALIZED APPRECIATION
{ 60} OF INVESTMENTS ......................... 57,914
------------

NET INCREASE IN NET ASSETS
{ 80} RESULTING FROM OPERATIONS .............. $ 282,806
============

</TABLE>

See Notes to Financial Statements.

D - 3.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
February 6, 1998
to
January 31,
1999
----

<S> <C>
OPERATIONS:
{ 10} Net investment income .................. $ 224,892
Unrealized appreciation
{ 30} of investments ....................... 57,914
------------
Net increase in net assets
{ 40} resulting from operations ............ 282,806

INCOME DISTRIBUTIONS TO
{ 50} HOLDERS (Note 2)....................... (204,164)

DEFERRED SALES CHARGE (Note 5):
Principal ............................ (51,064)
------------

{ 90}NET INCREASE IN NET ASSETS ............... 27,578

{100}NET ASSETS AT BEGINNING OF PERIOD ........ 4,721,044
------------
{110}NET ASSETS AT END OF PERIOD .............. $ 4,748,622
============
PER UNIT:
Income distributions during
{120} period ............................... $ 44.98
============
Net asset value at end of
{140} period ............................... $ 1,046.18
============
TRUST UNITS:
{150} Outstanding at end of period ........... 4,539
============
</TABLE>

See Notes to Financial Statements.

D - 4.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

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

(A) Securities are stated at value as determined by the
Evaluator based on bid side evaluations for the securities
except that value on February 6, 1998 was based upon offering
side evaluations at February 4, 1998, the day prior to the
Date of Deposit. Cost of securities at February 6, 1998 was
also based on such offering side evaluations.

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

2. DISTRIBUTIONS

A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and applicable
expenses, are also distributed periodically.

3. NET CAPITAL
<S> <C>
{ 8} {Original Units and Unit Cost at Date of Deposit ........... 4,539 4,721,044 }
{ 10} Cost of 4,539 units at Date of Deposit ..................... $ 4,721,044
Transfer to capital of interest on Segregated Bonds (Note 5) 7,870
Deferred sales charge (Note 5) ............................. (51,064)
{ 70} Net unrealized appreciation of investments.................. 57,914
-----------

{ 80} Net capital applicable to Holders .......................... $ 4,735,764
===========
4. INCOME TAXES

As of January 31, 1999, net unrealized appreciation of investments, based on
cost for Federal income tax purposes, aggregated $57,914, of which
$128 related to depreciated securities and $58,042 related to
appreciated securities. The cost of investment securities for Federal income
tax purposes was $4,682,044 at January 31, 1999.

</TABLE>

D - 5.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 321 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS

NOTES TO FINANCIAL STATEMENTS

5. DEFERRED SALES CHARGE

$125,000 face amount of the County of Alameda, CA, Certs. of Part. (Rfdg.
and Cap. Proj.), Ser. 1997, $20,000 face amount of Los Angeles Cnty. Pub. Wks.
Fin. Auth., CA, Lease Rev. Rfdg. Bonds, Ser. A, $10,000 face amount of Riverside
Cnty. Trans. Comm., CA, Sales Tax Rev. Bonds, Ser. 1993 A and $35,000 face
amount of the City of Stockton, CA, Stockton Pub. Fin. Auth., Rev. Cert. of
Part., Ser. 1998 A have been segregated to fund the deferred sales charges. The
sales charges are being paid for with the interest received and by periodic
sales or maturity of these bonds. A deferred sales charge of $3.75 per Unit is
charged on a quarterly basis, and paid to the Sponsors periodically by the
Trustee on behalf of the Holders, up to an aggregate of $45.00 per Unit over the
first three years of the life of the Fund. Should a Holder redeem Units prior to
the third anniversary of the Fund, the remaining balance of the deferred sales
charge will be charged.

6. DEFERRED ORGANIZATION COSTS

Deferred organization costs are being amortized over five years. Included
in "Other liabilities" is $3,641 payable to the Trustee for reimbursement of
costs related to the organization of the Trust.

D - 6.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

PORTFOLIO
As of January 31, 1999

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

<S> <C> <C> <C> <C> <C> <C> <C>
1 California Hlth. Fac. Fin. Auth., Ins. AAA $ 700,000 5.125 % 2027 08/01/07 $ 700,000 $ 707,084
Rev. Bonds (Cedars-Sinai Med. Ctr.), {13033AZS3 } @ 102.000
Ser. 1997B (MBIA Ins.)

2 California Hlth. Facs. Fin. Auth., Ins. AAA 440,000 5.250 2027 08/15/07 445,689 450,732
Rev. Bonds (Sutter Hlth.), Ser. 1997 A {13033AVZ1 } @ 102.000
(FSA Ins.)

3 County of Alameda, CA, Certs. of Part. AAA 50,000 4.000 1999 None 50,222 50,183
(Rfdg. and Cap. Proj.), Ser. 1997 {010891MX4 }
(AMBAC Ins.) (6) 45,000 4.100 2000 None 45,296 45,593
{010891MY2 }
30,000 4.100 2001 None 30,184 30,487
{010891MZ9 }

4 Los Angeles Cnty. Pub. Wks. Fin. Auth., AAA 20,000 5.000 2001 None 20,631 20,732
CA, Lease Rev. Rfdg. Bonds (1997 Master {54473EFF6 }
Rfdg. Proj.), Ser. A (FSA Ins.) (6)

5 Eastern Mun. Wtr. and Swr. Rev. Rfdg., AAA 495,000 4.750 2023 07/01/08 473,849 480,358
Cert. of Part. (Eastern Mun. Wtr. Dist. {276771DY5 } @ 101.000
Fac. Corp.), Ser. 1998 A (Financial
Guaranty Ins.)

6 Riverside Cnty. Trans. Comm., CA, Sales AAA 10,000 4.875 1999 None 10,156 10,067
Tax Rev. Bonds, Ser. 1993 A (AMBAC {769125AX3 }
Ins.) (6)

7 Anaheim Pub. Fin. Auth., CA, Lease Rev. AAA 700,000 5.000 2037 09/01/07 688,163 700,539
Bonds (Anaheim Pub. Im. Proj.), Sr. {03255LAC3 } @ 101.000
Lease Rev. Bonds, Ser. 1997 A (FSA
Ins.)

</TABLE>
D - 7.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

PORTFOLIO
As of January 31, 1999

<S> <C> <C> <C> <C> <C> <C> <C>
8 City of Rancho Mirage, CA, Jt. Pwrs. AAA $ 355,000 5.375 % 2022 07/01/07 $ 363,346 $ 368,621
Fin. Auth., Cert. of Part. (Eisenhower {75212HBE7 } @ 102.000
Med. Ctr.), Ser. 1997 A (MBIA Ins.)

9 Airport Comm., City and Cnty. of San AAA 740,000 5.000 2024 01/01/08 734,591 740,585
Francisco, CA, San Francisco Intl. {797652Q64 } @ 102.000
Arpt. Second Series Rev. Bonds, Issue
15 B Bonds (MBIA Ins.)

10 City of Stockton, CA, Stockton Pub. AAA 35,000 4.000 1999 None 35,158 35,237
Fin. Auth., Rev. Cert. of Part. {861407AT1 }
(Wastewater Sys. Proj.), Ser. 1998 A
(MBIA Ins.) (6) 700,000 5.200 2029 09/01/08 706,405 715,883
{861407BK9 } @ 102.000

11 City of Visalia, CA, Visalia Pub. Fin. AAA 370,000 5.375 2026 12/01/06 378,354 383,857
Auth., Rfdg. Cert. of Part. (Multiple {92862PBW7 } @ 102.000
Proj.), Ser. 1996 B (MBIA Ins.)

--------- --------- ---------
TOTAL $ 4,690,000 $ 4,682,044 $ 4,739,958
========= ========= =========

See Notes to Portfolios on Page D - 23.
</TABLE>

D - 8.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (NEW JERSEY INSURED TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

STATEMENT OF CONDITION
As of January 31, 1999

<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
{ 20} at value (cost $ 3,896,427 )(Note 1)......... $ 3,936,304
{ 36} Accrued interest ............................... 21,470
Accrued interest on Segregated Bonds (Note 5) .. 1,871
{ 32} Cash - income .................................. 15,090
Cash - income on Segregated Bonds .............. 6,128
{ 34} Cash - principal ............................... 32,000
Deferred organization costs (Note 6) ........... 3,034
-----------
{ 40} Total trust property ......................... 4,015,897

LESS LIABILITIES:
{ 50} Income advance from Trustee..................... $ 25,862
Deferred sales charge (Note 5) ................. 42,548
{143} Accrued Sponsors' fees ......................... 146
Other liabilities (Note 6) ..................... 3,034 71,590
----------- -----------

NET ASSETS, REPRESENTED BY:
{ 80} 3,782 units of fractional undivided
{ 80} interest outstanding (Note 3)................ 3,933,755

{105} Undistributed net investment income ............ 10,552 $ 3,944,307
----------- ===========

{130}UNIT VALUE ($ 3,944,307 / 3,782 units )........... $ 1,052.05
===========

</TABLE>

See Notes to Financial Statements.

D - 9.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (NEW JERSEY INSURED TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

STATEMENT OF OPERATIONS
<CAPTION>
February 6, 1998
to
January 31,
1999
----

<S> <C>
INVESTMENT INCOME:
{ 10} Interest income ........................ $ 187,038
Interest income on Segregated
Bonds (Note 5) ....................... 7,999
{ 20} Trustee's fees and expenses ............ (6,990)
{ 30} Sponsors' fees ......................... (1,726)
------------
{ 40} Net investment income .................. 186,321

UNREALIZED APPRECIATION
{ 60} OF INVESTMENTS ......................... 39,877
------------

NET INCREASE IN NET ASSETS
{ 80} RESULTING FROM OPERATIONS .............. $ 226,198
============

</TABLE>

See Notes to Financial Statements.

D - 10.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (NEW JERSEY INSURED TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
February 6, 1998
to
January 31,
1999
----

<S> <C>
OPERATIONS:
{ 10} Net investment income .................. $ 186,321
Unrealized appreciation
{ 30} of investments ....................... 39,877
------------
Net increase in net assets
{ 40} resulting from operations ............ 226,198

INCOME DISTRIBUTIONS TO
{ 50} HOLDERS (Note 2)....................... (167,770)

DEFERRED SALES CHARGE (Note 5):
Principal ............................ (42,548)
------------

{ 90}NET INCREASE IN NET ASSETS ............... 15,880

{100}NET ASSETS AT BEGINNING OF PERIOD ........ 3,928,427
------------
{110}NET ASSETS AT END OF PERIOD .............. $ 3,944,307
============
PER UNIT:
Income distributions during
{120} period ............................... $ 44.36
============
Net asset value at end of
{140} period ............................... $ 1,042.92
============
TRUST UNITS:
{150} Outstanding at end of period ........... 3,782
============
</TABLE>

See Notes to Financial Statements.

D - 11.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (NEW JERSEY INSURED TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

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

2. DISTRIBUTIONS

A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and applicable
expenses, are also distributed periodically.
<CAPTION>
3. NET CAPITAL
<S> <C>
{ 8} {Original Units and Unit Cost at Date of Deposit ........... 3,782 3,928,427 }
{ 10} Cost of 3,782 units at Date of Deposit ..................... $ 3,928,427
Transfer to capital of interest on Segregated Bonds (Note 5) 7,999
Deferred sales charge (Note 5) ............................. (42,548)
{ 70} Net unrealized appreciation of investments.................. 39,877
-----------

{ 80} Net capital applicable to Holders .......................... $ 3,933,755
===========
4. INCOME TAXES

As of January 31, 1999, net unrealized appreciation of investments, based on
cost for Federal income tax purposes, aggregated $39,877, of which
$1,062 related to depreciated securities and $40,939 related to
appreciated securities. The cost of investment securities for Federal income
tax purposes was $3,896,427 at January 31, 1999.

</TABLE>

D - 12.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 321 (NEW JERSEY INSURED TRUST),
DEFINED ASSET FUNDS

NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
5. DEFERRED SALES CHARGE

$60,000 face amount of Casino Reinvestment Dev. Auth. Parking Fee Rev. Bonds,
Ser. 1997 A, $20,000 face amount of Middlesex Cnty., NJ, Util. Auth., Swr.
Rev. Bonds, Ser. 1991A, $25,000 face amount of Monmouth Cnty., NJ, Improvement
Auth., Govt. Loan Rev. Bonds, Ser. 1997 and $50,000 face amount of Puerto Rico
Elec. Pwr. Auth., Pwr. Rev. Bonds, Ser. R, have been segregated to fund the
deferred sales charges. The sales charges are being paid for with the interest
received and by periodic sales or maturity of these bonds. A deferred sales
charge of $3.75 per Unit is charged on a quarterly basis, and paid to the
Sponsors periodically by the Trustee on behalf of the Holders, up to an aggregate
of $45.00 per Unit over the first three years of the life of the Fund. Should a
Holder redeem Units prior to the third anniversary of the Fund, the remaining
balance of the deferred sales charge will be charged.

6. DEFERRED ORGANIZATION COSTS

Deferred organization costs are being amortized over five years. Included in
"Other liabilities" is $3,034 payable to the Trustee for reimbursement of costs
related to the organization of the Trust.
</TABLE>

D - 13.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (NEW JERSEY INSURED TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

PORTFOLIO
As of January 31, 1999

<S> <C> <C> <C> <C> <C> <C> <C>
1 New Jersey Bldg. Auth. (State Bldg. AAA $ 295,000 5.000 % 2018 06/15/07 $ 295,000 $ 298,319
Rev. Bonds), Ser. 1997 (MBIA Ins.) {645771JM9 } @ 102.000

2 New Jersey Educl. Fac. Auth., Rev. AAA 500,000 5.125 2024 07/01/06 500,975 505,380
Bonds (Trenton State Coll. Iss.), Ser. {64605ESE5 } @ 101.000
1996 A (MBIA Ins.)

3 New Jersey Hlth. Care Fac. Fin. Auth., AAA 500,000 5.125 2027 07/01/07 501,045 505,415
Rev. and Rfdg. Bonds (Kennedy Hlth. {64579EDA1 } @ 101.000
Sys. Oblig. Grp. Issue), Ser. 1997 A
(MBIA Ins.)

4 New Jersey Hlth. Care Fac. Fin. Auth., AAA 550,000 4.750 2019 07/01/08 528,534 539,407
Rev. and Rfdg. Bonds (Cmnty. Med. {64579EFZ4 } @ 101.000
Ctr./Kimball Med. Ctr./Kensington Manor
Care Ctr. Oblig. Grp. Issue), Ser. 1998
(FSA Ins.)

5 New Jersey Hsg. and Mtge. Fin. Agy., AAA 450,000 5.400 2028 11/01/07 457,794 462,911
Multifamily Hsg. Rev. Bonds, Ser. {646107WV0 } @ 101.500
1997B(AMBAC Ins.)

6 Casino Reinvestment Dev. Auth. (Parking AAA 60,000 5.000 1999 None 61,289 60,818
Fee Rev. Bonds), Ser. 1997 A (FSA Ins.) {147602AB2 }
(6)

7 Middlesex Cnty., NJ, Util. Auth., Swr. AAA 20,000 6.200 2001 None 21,305 21,171
Rev. Bonds, Ser. 1991A(Financial {596585CR8 }
Guaranty Ins.) (6)

8 Monmouth Cnty., NJ, Improvement Auth., AAA 25,000 4.000 1999 None 25,152 25,217
Govt. Loan Rev. Bonds, Ser. 1997 (AMBAC {609566PH1 }
Ins.) (6)

9 Bayonne Mun. Util. Auth. (Hudson Cnty., Aaa(m) 500,000 5.000 2028 01/01/08 496,140 502,490
NJ), Wtr. Sys. Rev. Bonds, Ser. 1997 {072896AN3 } @ 101.000
(MBIA Ins.)

</TABLE>
D - 14.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (NEW JERSEY INSURED TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

PORTFOLIO
As of January 31, 1999

<S> <C> <C> <C> <C> <C> <C> <C>
10 Lacey Mun. Util. Auth. (Ocean Cnty., Aaa(m) $ 455,000 5.100 % 2021 12/01/07 $ 456,970 $ 459,500
NJ), Wtr. Rev. Rfdg. Bonds, Ser. 1997 {50547PDG1 } @ 102.000
(MBIA Ins.)

11 The Board of Ed. of the Twp. of Mt. AAA 500,000 5.000 2019 None 500,000 503,910
Olive (Morris Cnty., NJ), Sch. Bonds {622214FM1 }
(Financial Guaranty Ins.)

12 Puerto Rico Elec. Pwr. Auth., Pwr. Rev. AAA 50,000 5.700 2000 None 52,223 51,766
Bonds, Ser. R (MBIA Ins.) (6) {745268WB4 }

--------- --------- ---------
TOTAL $ 3,905,000 $ 3,896,427 $ 3,936,304
========= ========= =========

See Notes to Portfolios on Page D - 23.
</TABLE>

D - 15.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (NEW YORK TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

STATEMENT OF CONDITION
As of January 31, 1999

<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
{ 20} at value (cost $ 4,668,126 )(Note 1)......... $ 4,731,260
{ 36} Accrued interest ............................... 40,823
Accrued interest on Segregated Bonds (Note 5) .. 831
{ 32} Cash - income .................................. 18,750
Cash - income on Segregated Bonds .............. 8,286
{ 34} Cash - principal ............................... 40,000
Deferred organization costs (Note 5) ........... 3,896
-----------
{ 40} Total trust property ......................... 4,843,846

LESS LIABILITIES:
{ 50} Income advance from Trustee..................... $ 46,299
Deferred sales charge (Note 5) ................. 51,075
{143} Accrued Sponsors' fees ......................... 175
Other liabilities (Note 6) ..................... 3,896 101,445
----------- -----------

NET ASSETS, REPRESENTED BY:
{ 80} 4,540 units of fractional undivided
{ 80} interest outstanding (Note 3)................ 4,729,302

{105} Undistributed net investment income ............ 13,099 $ 4,742,401
----------- ===========

{130}UNIT VALUE ($ 4,742,401 / 4,540 units )........... $ 1,044.58
===========

</TABLE>

See Notes to Financial Statements.

D - 16.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (NEW YORK TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

STATEMENT OF OPERATIONS
<CAPTION>
February 6, 1998
to
January 31,
1999
----

<S> <C>
INVESTMENT INCOME:
{ 10} Interest income ........................ $ 232,280
Interest income on Segregated
Bonds (Note 5) ....................... 9,117
{ 20} Trustee's fees and expenses ............ (7,950)
{ 30} Sponsors' fees ......................... (2,073)
------------
{ 40} Net investment income .................. 231,374

UNREALIZED APPRECIATION
{ 40} OF INVESTMENTS ......................... 63,134
------------

NET INCREASE IN NET ASSETS
{ 80} RESULTING FROM OPERATIONS .............. $ 294,508
============

</TABLE>

See Notes to Financial Statements.

D - 17.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (NEW YORK TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
February 6, 1998
to
January 31,
1999
----

<S> <C>
OPERATIONS:
{ 10} Net investment income .................. $ 231,374
Unrealized appreciation
{ 30} of investments ....................... 63,134
------------
Net increase in net assets
{ 40} resulting from operations ............ 294,508

INCOME DISTRIBUTIONS TO
{ 50} HOLDERS (Note 2)....................... (209,158)

DEFERRED SALES CHARGE (NOTE 5):
Principal .............................. (51,075)
------------

{ 90}NET INCREASE IN NET ASSETS ............... 34,275

{100}NET ASSETS AT BEGINNING OF PERIOD ........ 4,708,126
------------
{110}NET ASSETS AT END OF PERIOD .............. $ 4,742,401
============
PER UNIT:
Income distributions during
{120} period ............................... $ 46.07
============
Net asset value at end of
{140} period ............................... $ 1,044.58
============
TRUST UNITS:
{150} Outstanding at end of period ........... 4,540
============
</TABLE>

See Notes to Financial Statements.

{PAGE} D - 18.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (NEW YORK TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

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

2. DISTRIBUTIONS

A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and applicable
expenses, are also distributed periodically.

3. NET CAPITAL
<CAPTION>

<S> <C>
{ 8} {Original Units and Unit Cost at Date of Deposit ........... 4,540 4,708,126 }
{ 10} Cost of 4,540 units at Date of Deposit ..................... $ 4,708,126
Transfer to capital of interest on Segregated Bonds (Note 5) 9,117
Deferred sales charge (Note 5) ............................. (51,075)
{ 70} Net unrealized appreciation of investments.................. 63,134
-----------

{ 80} Net capital applicable to Holders .......................... $ 4,729,302
===========
4. INCOME TAXES

As of January 31, 1999, net unrealized appreciation of investments, based on
cost for Federal income tax purposes, aggregated $63,134, of which
$859 related to depreciated securities and $63,993 related to
appreciated securities. The cost of investment securities for Federal income
tax purposes was $4,668,126 at January 31, 1999.

</TABLE>

D - 19.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 321 (NEW YORK TRUST),
DEFINED ASSET FUNDS

NOTES TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S> <C>
5. DEFERRED SALES CHARGE

$110,000 face amount of Niagara Wheatfield Central Sch. Dist., Niagara Cnty., NY,
Sch. Dist. Serial Bonds, Ser 1997 and $80,000 face amount of the Town of Islip,
Suffolk Cnty., NY, Pub. Imp. G.O. Bonds, Ser. 1996 A, have been segregated to fund
the deferred sales charges. The sales charges are being paid for with the interest
received and by periodic sales or maturity of these bonds. A deferred sales charge
of $3.75 per Unit is charged on a quarterly basis, and paid to the Sponsors
periodically by the Trustee on behalf of the Holders, up to an aggregate of $45.00
per Unit over the first three years of the life of the Fund. Should a Holder redeem
Units prior to the third anniversary of the Fund, the remaining balance of the
deferred sales charge will be charged.

6. DEFERRED ORGANIZATION COSTS

Deferred organization costs are being amortized over five years. Included in
"Other liabilities" is $3,896 payable to the Trustee for reimbursement of costs
related to the organization of the Trust.
</TABLE>

D - 20.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (NEW YORK TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

PORTFOLIO
As of January 31, 1999

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

<S> <C> <C> <C> <C> <C> <C> <C>
1 New York Local Govt. Asst. Corp. (A A+ $ 175,000 5.375 % 2019 04/01/07 $ 179,042 $ 181,158
Pub. Benefit Corp. of the State of New {649876QQ5 } @ 101.000
York), Rfdg. Bonds, Ser. 1996 A

2 Dormitory Auth. of the State of New Aa3(m) 500,000 5.450 2026 07/01/08 504,460 511,940
York, Chapel Oaks, Inc., Rev. Bonds, {649837D24 } @ 102.000
Ser. 1997 (Allied Irish Bank, PLC -
Letter of Credit) (7)

3 Dormitory Auth. of the State of New A(f) 725,000 5.500 2025 07/01/06 739,348 750,288
York, Dept. of Hlth., Rev. Bonds, Ser. {649835W92 } @ 102.000
1996

4 New York State Urban Dev. Corp., Corr. A(f) 700,000 5.375 2025 01/01/06 709,352 714,637
Cap. Fac. Rev. Bonds, Ser. 6 {6500336S7 } @ 102.000

5 Metropolitan Trans. Auth., NY, Transit AAA 250,000 4.750 2021 07/01/08 238,108 242,277
Fac. Rev. Bonds, Ser. 1998 A (MBIA {592598V60 } @ 101.000
Ins.) (5)

6 Niagara Wheatfield Central Sch. Dist., Aaa(m) 55,000 4.600 2000 None 56,045 56,099
Niagara Cnty., NY, Sch. Dist. Serial {653590JJ9 }
Bonds - 1997 (FSA Ins.) (5) (6) 55,000 4.600 2001 None 56,287 56,571
{653590JK6 }
7 Town of Islip, Suffolk Cnty., NY, Pub. AAA 80,000 5.200 1999 None 81,730 80,871
Imp. G.O. Bonds, Ser. 1996 A (Financial {464722A49 }
Guaranty Ins.) (5)

8 The City of New York, NY, G.O. Bonds, A- 700,000 5.250 2017 08/01/07 695,772 714,742
Fiscal Ser. 1998 B {649667KR2 } @ 101.000

9 The City of New York, NY, Transitional AA+(f) 500,000 4.750 2023 05/15/08 475,015 481,625
Fin. Auth., Future Tax Secured Bonds, {649716CE5 } @ 101.000
Ser. 1998 B

</TABLE>
D - 21.
<PAGE>
<TABLE>
MUNICIPAL INVESTMENT TRUST FUND, {03/18/99 CHASE MANHATTAN BANK 18:44}
MULTISTATE SERIES - 321 (NEW YORK TRUST),
DEFINED ASSET FUNDS { PE REPORT VERSION C PAGE 2 CAI321 }

PORTFOLIO
As of January 31, 1999

<S> <C> <C> <C> <C> <C> <C> <C>
10 New York City Mun. Wtr. Fin. Auth., NY, AA-(f) $ 250,000 4.750 % 2025 06/15/08 $ 237,153 $ 238,770
Wtr. and Swr. Sys. Rev. Bonds, Fiscal {64970KDG9 } @ 101.000
Ser. 1998 D

11 City of Syracuse, NY, Ind. Dev. Agy., A 700,000 5.250 2017 01/01/08 695,814 702,282
Civic Fac. Rev. Bonds (Crouse Hlth., {871720BJ6 } @ 102.000
Inc. Proj.), Ser. 1997 (Fleet National
Bank - Letter of Credit) (7)

--------- --------- ---------
TOTAL $ 4,690,000 $ 4,668,126 $ 4,731,260
========= ========= =========

See Notes to Portfolios on Page D - 23.
</TABLE>

D - 22.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 321 (CALIFORNIA INSURED, NEW JERSEY INSURED
AND NEW YORK TRUSTS),
DEFINED ASSET FUNDS

NOTES TO PORTFOLIO
As of January 31, 1999
<TABLE>
<CAPTION>
<S> <C>
(1) The ratings of the bonds are by Standard & Poor's Ratings Group, or by Moody's
Investors Service, Inc. if followed by "(m)", or by Fitch Investors Service,
Inc. if followed by "(f)"; "NR" indicates that this bond is not currently rated
by any of the above-mentioned rating services. These ratings have been furnished
by the Evaluator but not confirmed with the rating agencies.

(2) See Notes to Financial Statements.

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

(4) All securities are insured, either on an individual basis or by portfolio
insurance, by a municipal bond insurance company which has been assigned
"AAA" claims paying ability by Standard & Poor's. Accordingly, Standard &
Poor's has assigned a "AAA" rating to the securities. Securities covered by
portfolio insurance are rated "AAA" only as long as they remain in the Trust.

(5) Insured by the indicated municipal bond insurance company.

(6) These bonds have been segregated to fund the deferred sales charges.

(7) Certain bonds are covered by letters of credit which may expire prior to
the maturity dates of the bonds. Upon expiration of a letter of credit, the
issuer of the bond is obligated to obtain a replacement letter of credit or
call the bond.
</TABLE>

D - 23.

<PAGE>
Defined
Asset FundsSM

HAVE QUESTIONS ? MUNICIPAL INVESTMENT TRUST FUND
Request the most MULTISTATE SERIES--321
recent free Information (A Unit Investment Trust)
Supplement that gives more ---------------------------------------
details about the Fund, This Prospectus does not contain
by calling: complete information about the
The Chase Manhattan Bank investment company filed with the
1-800-323-1508 Securities and Exchange Commission in
Washington, D.C. under the:
o Securities Act of 1933 (file no.
333-41285) and
o Investment Company Act of 1940 (file
no. 811-1777).
TO OBTAIN COPIES AT PRESCRIBED RATES--
WRITE: Public Reference Section of the
Commission
450 Fifth Street, N.W., Washington,
D.C. 20549-6009
CALL: 1-800-SEC-0330.
VISIT: http://www.sec.gov.
---------------------------------------
No person is authorized to give any
information or representations about
this Fund not contained in this
Prospectus or the Information
Supplement, and you should not rely on
any other information.
---------------------------------------
When units of this Fund are no longer
available, this Prospectus may be used
as a preliminary prospectus for a
future series, but some of the
information in this Prospectus will be
changed for that series.
Units of any future series may not be
sold nor may offers to buy be accepted
until that series has become effective
with the Securities and Exchange
Commission. No units can be sold in any
State where a sale would be illegal.

11366--4/99
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES
DEFINED ASSET FUNDS
CONTENTS OF REGISTRATION STATEMENT

This Post-Effective Amendment to 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.

The Signatures.

The following exhibits:

1.1.1--Form of Standard Terms and Conditions of Trust Effective as of
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).

4.1 --Consent of the Evaluator.

5.1 --Consent of independent accountants.

9.1 --Information Supplement (incorporated by reference to Post-Effective
Amendment No. 4 to Exhibit 9.1 to the Registration Statement of
Municipal Investment Trust Fund, Insured Series--207, 1933 Act File
No. 33-54037).

R-1
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES--321
DEFINED ASSET FUNDS

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
MUNICIPAL INVESTMENT TRUST FUND, MULTISTATE SERIES--321, DEFINED ASSET FUNDS,
CERTIFIES THAT IT MEETS ALL OF THE REQUIREMENTS FOR EFFECTIVENESS OF THIS
REGISTRATION STATEMENT PURSUANT TO RULE 485(B) UNDER THE SECURITIES ACT OF 1933
AND 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 21ST DAY OF
APRIL, 1999.

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

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 Salomon 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 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: 333-70593

HERBERT M. ALLISON, JR.
GEORGE A. SCHIEREN
JOHN L. STEFFENS
By J. DAVID MEGLEN
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)

R-3
<PAGE>
SALOMON SMITH BARNEY INC.
DEPOSITOR

By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Salomon Smith Barney Inc.: have been filed
under the 1933 Act
File Numbers:
333-63417 and
333-63033

MICHAEL A. CARPENTER
DERYCK C. MAUGHAN

By GINA LEMON
(As authorized signatory for
Salomon 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
the Board of Directors of PaineWebber under
Incorporated: the following 1933 Act File
Number: 33-55073

MARGO N. ALEXANDER
TERRY L. ATKINSON
BRIAN M. BAREFOOT
STEVEN P. BAUM
MICHAEL CULP
REGINA A. DOLAN
JOSEPH J. GRANO, JR.
EDWARD M. KERSCHNER
JAMES P. MacGILVRAY
DONALD B. MARRON
ROBERT H. SILVER
MARK B. SUTTON
By
ROBERT E. HOLLEY
(As authorized signatory for
PaineWebber Incorporated
and Attorney-in-fact for the persons listed above)

R-5
<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
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-6

<PAGE>
EXHIBIT 4.1

STANDARD & POOR'S
A DIVISION OF THE McGRAW-HILL COMPANIES
J. J. KENNY
65 BROADWAY
NEW YORK, N.Y. 10006-2551
TELEPHONE (212) 770-4422
FAX 212/797-8681

April 21, 1999

Frank A. Ciccotto, Jr.
Vice President
Tax-Exempt Evaluations

Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Defined Asset Funds
P.O. Box 9051
Princeton, New Jersey 08543-9051
The Chase Manhattan Bank
4 New York Plaza, 6th Floor
New York, New York 10004

RE: MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES--321, DEFINED ASSET FUNDS

Gentlemen:

We have examined the post-effective Amendment to the Registration Statement
File No. 333-41285 for the above-captioned trust. We hereby acknowledge that
Kenny S&P Evaluation Services, a division of J. J. Kenny Co., Inc. is currently
acting as the evaluator for the trust. We hereby consent to the use in the
Amendment of the reference to Kenny S&P Evaluation Services, a division of J. J.
Kenny Co., Inc. as evaluator.

In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings currently indicated in our
KENNYBASE database.

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

Sincerely,
FRANK A. CICCOTTO
Vice President

<PAGE>
Exhibit 5.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Sponsors and Trustee of
Municipal Investment Trust Fund--Multistate Series--321 (California Insured, New
Jersey Insured and New York Trusts), Defined Asset Funds:

We consent to the use in this Post-Effective Amendment No. 2 to Registration
Statement No. 333-41285 of our opinion dated March 26, 1999 appearing in the
Prospectus, which is part of such Registration Statement, and to the reference
to us under the heading 'Miscellaneous--Auditors' in such Prospectus.

DELOITTE & TOUCHE LLP
New York, N.Y.
April 21, 1999

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> New Jersey Insured Trust
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-END> JAN-31-1999
<INVESTMENTS-AT-COST> 3,896,427
<INVESTMENTS-AT-VALUE> 3,936,304
<RECEIVABLES> 23,341
<ASSETS-OTHER> 53,218
<OTHER-ITEMS-ASSETS> 3,034
<TOTAL-ASSETS> 4,015,897
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (71,590)
<TOTAL-LIABILITIES> (71,590)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,893,878
<SHARES-COMMON-STOCK> 3,782
<SHARES-COMMON-PRIOR> 3,782
<ACCUMULATED-NII-CURRENT> 10,552
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 39,877
<NET-ASSETS> 3,944,307
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 195,037
<OTHER-INCOME> 0
<EXPENSES-NET> (8,716)
<NET-INVESTMENT-INCOME> 186,321
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 39,877
<NET-CHANGE-FROM-OPS> 226,198
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (167,770)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 15,880
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> New York Trust
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1999
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</TABLE>