MUNICIPAL INVESTMENT TR FD MULTISTATE SER 323 DEF ASSET FDS, 497, 1999-08-31

MUNICIPAL INVESTMENT TR FD MULTISTATE SER 323 DEF ASSET FDS
497, 1999-08-31

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

MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES--323
(A UNIT INVESTMENT TRUST)
O CALIFORNIA, FLORIDA AND NEW JERSEY PORTFOLIOS
O PORTFOLIOS OF INSURED 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 September 3, 1999.

<PAGE>
- --------------------------------------------------------------------------------

Defined 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 APRIL 30, 1999, THE
EVALUATION DATE.

CONTENTS
PAGE
-----------
California Insured Portfolio--
Risk/Return Summary.................................. 3
Florida Insured Portfolio-- Risk/Return Summary......... 6
New Jersey Insured 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.................................... 16
Insurance Related Risk............................... 16
Litigation and Legislation Risks..................... 16
Selling or Exchanging Units............................. 17
Sponsors' Secondary Market........................... 17
Selling Units to the Trustee......................... 17
Exchange Option...................................... 18
How The Fund Works...................................... 18
Pricing.............................................. 18
Evaluations.......................................... 18
Income............................................... 19
Expenses............................................. 19
Portfolio Changes.................................... 19
Fund Termination..................................... 20
Certificates......................................... 20
Trust Indenture...................................... 20
Legal Opinion........................................ 21
Auditors............................................. 21
Sponsors............................................. 21
Trustee.............................................. 22
Underwriters' and Sponsors' Profits 22
Public Distribution.................................. 22
Code of Ethics....................................... 22
Year 2000 Issues..................................... 22
Taxes................................................... 22
Supplemental Information................................ 25
Financial Statements.................................... D-1

2
<PAGE>
- --------------------------------------------------------------------------------

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 10 long-term tax-exempt
municipal bonds, and some short-term bonds reserved to pay
the deferred sales fee, with an aggregate face amount of
$4,015,000.
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 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 28%
/ / General Obligation 18%
/ / Hospital/Health Care 1%
/ / Housing 14%
/ / Lease Rental Appropriation 9%
/ / Municipal Water/Sewer Utilities 15%
/ / Tax Allocation 15%

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 airport/port/highway
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 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 $ 3.99
Annual Income per unit: $ 47.89
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 May,
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)
$ 0.34
Evaluator's Fee
$ 0.20
Organization Costs
$ 0.15
Other Operating Expenses
-----------
$ 1.87
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 March 31, 1999. 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 3/31/99.

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

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

High 4.57% 7.62% 7.61% 8.82%
Average 2.32 5.66 5.52 6.70
Low 0.40 4.27 3.11 5.10

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

Average
Sales fee 3.18% 5.10%

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

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 $1,024.39
(as of April 30, 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>
- --------------------------------------------------------------------------------

FLORIDA INSURED PORTFOLIO--RISK/RETURN SUMMARY

3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
O The Fund plans to hold to maturity 11 long-term tax-exempt
municipal bonds, and some short-term bonds reserved to pay
the deferred sales fee, with an aggregate face amount of
$3,345,000.
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 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 14%
/ / Hospital/Health Care 15%
/ / Lease Rental Appropriation 15%
/ / Miscellaneous 15%
/ / Municipal Water/Sewer Utilities 23%
/ / Special Tax Issues 17%
/ / Municipal Electric Utilities 1%

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 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 FLORIDA SO
IT IS LESS DIVERSIFIED THAN A NATIONAL FUND AND IS SUBJECT
TO RISKS PARTICULAR TO FLORIDA 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 $ 3.98
Annual Income per unit: $ 47.81
These figures are estimates determined on the evaluation
day; actual payments may vary.

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)
$ 0.41
Evaluator's Fee
$ 0.20
Organization Costs
$ 0.13
Other Operating Expenses
-----------
$ 1.92
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
Florida 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 Florida Series
were offered between August 25, 1988 and December 6, 1996
and were outstanding on March 31, 1999. 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 3/31/99.

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

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

High 4.94% 7.40% 6.95% 7.59% 8.61% 7.55%
Average 2.24 5.62 6.79 5.45 6.67 7.39
Low -0.66 4.39 6.71 3.15 5.28 7.31

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

Average
Sales fee 3.19% 5.13% 5.82%

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

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 $1,029.14
(as of April 30, 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 Florida state and local personal income
taxes if you live in Florida.
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>
- --------------------------------------------------------------------------------

NEW JERSEY INSURED PORTFOLIO--RISK/RETURN SUMMARY

3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
O The Fund plans to hold to maturity 13 long-term tax-exempt
municipal bonds, and some short-term bonds reserved to pay
the deferred sales fee, with an aggregate face amount of
$3,745,000.
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 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 10%
/ / General Obligation 1%
/ / Hospital/Health Care 22%
/ / Lease Rental Appropriation 10%
/ / Municipal Water/Sewer Utilities 41%
/ / State/Local Government Supported 1%
/ / Parking 1%
/ / 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 municipal water/sewer
utilities 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 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.

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 $ 3.99
Annual Income per unit: $ 47.93
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 deferred sales fee of $3.75 per unit quarterly
November, February, May and August through May, 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)
$ 0.36
Evaluator's Fee
$ 0.20
Organization Costs
$ 0.18
Other Operating Expenses
-----------
$ 1.92
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 June 22, 1988 and September 19, 1996
and were outstanding on March 31, 1999. 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 3/31/99.

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

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

High 5.83% 7.04% 6.92% 7.45% 8.24% 7.52%
Average 2.55 5.41 6.80 5.53 6.46 7.40
Low 0.51 4.20 6.73 3.51 5.19 7.33

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

Average
Sales fee 2.96% 5.14% 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 $1,030.83
(as of April 30, 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, 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
- --------------------------------------------------------------------------------

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 FLORIDA RESIDENTS
- --------------------------------------------------------------------------------

EFFECTIVE
TAXABLE INCOME 1999* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 3% 3.5% 4% 4.5% 5% 5.5% 6% 6.5% 7%
IS EQUIVALENT TO A TAXABLE YIELD OF

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

FOR NEW JERSEY 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

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

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 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.

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<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 California Portfolio's concentration in
airport, port and highway bonds. Airport, port and highway revenue bonds are
dependent for payment on revenues from financial projects including:
o user fees from ports and airports;
o tolls on turnpikes and bridges;
o rents from buildings; and
o additional financial resources including
--federal and state subsidies,
--lease rentals paid by state or local governments, or
--the pledge of a special tax such as a sales tax or a property tax.

Airport income is largely affected by:
o increased competition;
o excess capacity; and
o increased fuel costs.

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<PAGE>
Here is what you should know about the 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.

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, 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.

FLORIDA RISKS

Generally

Florida's financial condition is affected by numerous national, economic, social
and

15
<PAGE>
environmental policies and conditions. For example:

o south Florida is heavily involved with foreign tourism, trade and
investment capital. As a result, the region is susceptible to international
trade and currency imbalances and economic problems in Central and South
America;

o central and northern Florida are more vulnerable to agricultural problems,
such as crop failures or severe weather conditions, especially in the
citrus and sugar industries; and

o the state as a whole is also very dependent on tourism and construction.

State and Local Government

The state of Florida and its local governments are restricted in their ability
to raise taxes and incur debts. These restrictions limit their ability to
generate revenue, and so could hurt their ability to pay debts.

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.

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

The 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.

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<PAGE>
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.

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 25 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.

17
<PAGE>
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.

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,

18
<PAGE>
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;
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.

19
<PAGE>
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 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

20
<PAGE>
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 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

21
<PAGE>
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 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 in securities, 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

22
<PAGE>
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, 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.

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<PAGE>
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 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.

FLORIDA TAXES

In the opinion of Greenberg, Traurig, P.A., Miami, Florida, special counsel on
Florida tax matters:

Under the income tax laws of the State of Florida, the Fund will not be taxed as
a corporation. Florida imposes an income tax on corporations but does not impose
a personal income tax. Accordingly, if you are an individual taxpayer your
income from the Fund will not be subject to tax in Florida. However, if you are
an entity that is normally taxed as a corporation, your income from the fund
will not be exempt from tax in Florida and special rules for taxation apply
depending on the type of entity. You should consult your tax adviser in this
regard.

Florida also imposes a tax on intangible personal property, such as stocks,
bonds, notes and units in trusts. The tax is imposed on Florida taxpayers as of
January 1st of each year. Florida exempts certain types of bonds and debt
obligations from this tax. Your units will be exempt from the intangible
personal property tax as long as the Fund invests exclusively in bonds and other
debt obligations that are tax-exempt for Florida purposes.

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

24
<PAGE>
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 - 323 (CALIFORNIA INSURED,
FLORIDA INSURED AND NEW JERSEY INSURED TRUSTS),
DEFINED ASSET FUNDS

REPORT OF INDEPENDENT ACCOUNTANTS

The Sponsors, Trustee and Holders
of Municipal Investment Trust Fund,
Multistate Series - 323 (California Insured, Florida
Insured and New Jersey Insured Trusts),
Defined Asset Funds:

We have audited the accompanying statements of condition of
Municipal Investment Trust Fund, Multistate Series - 323
(California Insured, Florida Insured and New Jersey Insured
Trusts), including the portfolios, as of April 30, 1999 and
the related statements of operations and of changes in net
assets for the year ended April 30, 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 audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the financial statements. Securities owned at April 30,
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 - 323 (California Insured, Florida
Insured and New Jersey Insured Trusts), at April 30, 1999
and the results of their operations and changes in their net
assets for the above-stated year in conformity with generally
accepted accounting principles.

DELOITTE & TOUCHE LLP

New York, N.Y.
August 13, 1999
D - 1.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS

STATEMENT OF CONDITION
As of April 30, 1999

<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
{ 20} at value (cost $ 3,915,198 )(Note 1)......... $ 3,984,897
{ 36} Accrued interest ............................... 63,189
Accrued interest on Segregated Bonds (Note 5)... 1,871
Cash - income on Segregated Bonds .............. 5,809
{ 34} Cash - principal ............................... 33,630
Deferred organization costs (Note 6) ......... 3,228
-----------
{ 40} Total trust property ......................... 4,092,624

LESS LIABILITIES:
{ 50} Income advance from Trustee..................... $ 51,756
Deferred sales charge payable (Note 5) ......... 50,726
Principal advance from Trustee ................. 1,301
{143} Accrued Sponsors' fees ......................... 613
Other liabilities (Note 6) ..................... 3,228 107,624
----------- -----------

NET ASSETS, REPRESENTED BY:
{ 80} 3,877 units of fractional undivided
{ 80} interest outstanding (Note 3)................ 3,974,180

{105} Undistributed net investment income ............ 10,820 $ 3,985,000
----------- ===========

{130}UNIT VALUE ($ 3,985,000 / 3,877 units )........... $ 1,027.86
===========

</TABLE>

See Notes to Financial Statements.

D - 2.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS

STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
May 1, 1998
to
April 30,
1999
----

<S> <C>
INVESTMENT INCOME:
{ 10} Interest income ........................ $ 200,995
Interest income on Segregated
Bonds (Note 5) ....................... 7,680
{ 20} Trustee's fees and expenses ............ (7,689)
{ 30} Sponsors' fees ......................... (1,855)
------------
{ 40} Net investment income .................. 199,131
------------

REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Realized gain on
{ 50} securities sold or redeemed .......... 1,620
Unrealized appreciation
{ 60} of investments ....................... 69,699
------------
Net realized and unrealized
{ 70} gain on investments ................. 71,319
------------

NET INCREASE IN NET ASSETS
{ 80} RESULTING FROM OPERATIONS .............. $ 270,450
============

</TABLE>

See Notes to Financial Statements.

D - 3.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS

STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
May 1, 1998
to
April 30,
1999
----

<S> <C>
OPERATIONS:
{ 10} Net investment income .................. $ 199,131
Realized gain on
{ 20} securities sold or redeemed .......... 1,620
Unrealized appreciation
{ 30} of investments ....................... 69,699
------------
Net increase in net assets
{ 40} resulting from operations ............ 270,450
------------

INCOME DISTRIBUTIONS TO
{ 50} HOLDERS (Note 2)....................... (180,268)
------------
SHARE TRANSACTIONS:
Deferred sales charge (Note 5):
Principal ............................ (50,726)

Redemption amounts:
{ 82} Income ............................... (363)
{ 83} Principal ............................ (158,364)
------------
{ 84} Net share transactions ................. (209,453)
------------

{ 90}NET DECREASE IN NET ASSETS ............... (119,271)

{100}NET ASSETS AT BEGINNING OF YEAR ......... 4,104,271
------------
{110}NET ASSETS AT END OF YEAR ................ $ 3,985,000
============
PER UNIT:
Income distributions during
{120} year ................................. $ 45.18
============
Net asset value at end of
{140} year . ............................... $ 1,027.86
============
TRUST UNITS:
{ 83} Redeemed during year ................... 158
{150} Outstanding at end of year ............. 3,877
============
</TABLE>

See Notes to Financial Statements.

D - 4.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS

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 May 1, 1998 was based upon offering
side evaluations at April 30, 1998, the day prior to the
Date of Deposit. Cost of securities at May 1, 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
<TABLE>
<S> <C>

{ 10} Cost of 3,877 units at Date of Deposit
(net of initial sales charge) ............................ $ 3,943,558
Transfer to capital of interest on Segregated Bonds (Note 5) 7,680
{ 31} Redemptions of units - net cost of 158 units redeemed
{143} less redemption amounts (principal)....................... 2,349
Deferred sales charge (Note 5) ............................. (50,726)
{ 40} Realized gain on securities sold or redeemed ............... 1,620
{ 70} Net unrealized appreciation of investments.................. 69,699
-----------

{ 80} Net capital applicable to Holders .......................... $ 3,974,180
===========
</TABLE>
4. INCOME TAXES

As of April 30, 1999, net unrealized appreciation of investments, based on
cost for Federal income tax purposes, aggregated $69,699, of which
$384 related to depreciated securities and $70,083 related to
appreciated securities. The cost of investment securities for Federal income
tax purposes was $3,915,198 at April 30, 1999.

D - 5.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND, MULTISTATE SERIES - 323, (CALIFORNIA iRUST)
MULTISTATE SERIES - 323 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS

NOTES TO FINANCIAL STATEMENTS

5. DEFERRED SALES CHARGE

$55,000 face amount of California Hlth. Fac. Fin. Auth., Ins. Rev. Bonds,
(Catholic Healthcare West), Ser. 1997 A, $55,000 face amount of El Segundo
Unified Sch. Dist. (Los Angeles Cnty., CA), G.O. Bonds, 1997 Election, Ser.
A and $60,000 face amount of The City of Los Angeles Cnty., CA), G.O. Bonds,
Ser. 1994 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, as well as principal proceeds received in
conjunction with the disposition on the unsegregated bonds in the portfolio.
A deferred sales charge of $3.75 per Unit is charged on a quarter basis, and
paid to the Sponsors periodically by the Trustee on behalf of the Holders,
up to an aggregate of $45 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 $3,228 payable to the Trustee for reimbursement of
costs related to the organization of the Trust.

D - 6.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (CALIFORNIA TRUST) (INSURED),
DEFINED ASSET FUNDS

PORTFOLIO
As of April 30, 1999

Rating of 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 State of California, G.O. Bonds (MBIA AAA $ 600,000 5.000 % 2021 02/01/08 $ 580,164 $ 592,896
Ins.) @ 101.000

2 California Hlth. Fac. Fin. Auth., Ins. AAA 55,000 4.500 1999 None 55,433 55,115
Rev. Bonds (Catholic Healthcare West),
Ser. 1997 A (MBIA Ins.) (6)

3 California Hsg. Fin. Agy., Multifamily AAA 565,000 5.300 2028 08/01/08 565,000 569,243
Hsg. Rev. Bonds III, Ser. 1998 C (MBIA @ 101.500
Ins.)

4 El Segundo Unified Sch. Dist., (Los AAA 55,000 3.900 2001 None 54,748 55,411
Angeles Cnty., CA), G.O. Bonds, 1997
Election, Ser. A (FSA Ins.) (6)

5 Long Beach Bond Fin. Auth., CA, Lease AAA 375,000 5.000 2027 10/01/07 358,309 367,185
Rev. and Rfdg. Bonds (Civic Ctr. @ 102.000
Proj.), Ser. 1997 A (MBIA Ins.)

6 The City of Los Angeles, CA, G.O. AAA 60,000 5.100 2000 None 61,522 61,456
Bonds, Ser. 1994 A (MBIA Ins.) (6)

7 The Community Redev. Agy. of the City AAA 600,000 5.000 2022 07/01/08 579,546 589,452
of Los Angeles, CA, Tax Alloc. Bonds @ 102.000
(Hollywood Redev. Proj.), Ser. C (MBIA
Ins.)

8 Public Fac. Fin. Auth. of the City of AAA 600,000 5.000 2020 05/15/05 580,530 591,534
San Diego, CA, Swr. Rev. Bonds, Ser. @ 101.000
1995 (Financial Guaranty Ins.)

9 Airport Comm., City and Cnty. of San AAA 600,000 5.000 2024 01/01/08 578,850 590,742
Francisco, CA, San Francisco Intl. {797652Q64 } @ 102.000
Arpt. Second Series Rev. Bonds, Issue
15 B Bonds (MBIA Ins.)

10 San Joaquin Hills, CA, Trans. Corridor AAA 505,000 5.250 2030 01/15/07 501,096 511,863
Agy., Toll Road Rfdg. Rev. Bonds, Ser. {798111CD0 } @ 102.000
1997 A (MBIA Ins.)

----------- --------- ---------
TOTAL $ 4,015,000 $ 3,915,198 $ 3,984,897
=========== ========= =========

</TABLE>

See Notes to Portfolios on Page D - 21.

D - 7.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (FLORIDA INSURED TRUST),
DEFINED ASSET FUNDS

STATEMENT OF CONDITION
As of April 30, 1999

<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
{ 20} at value (cost $ 3,293,457 )(Note 1)......... $ 3,342,236
{ 36} Accrued interest ............................... 33,443
Accrued interest on Segregated Bonds (Note 5) .. 1,356
{ 42} Income payments receivable ..................... 2,439
Cash - income on Segregated Bonds .............. 6,371
{ 34} Cash - principal ............................... 33,910
Deferred organization costs (Note 6) ........... 2,622
-----------
{ 40} Total trust property ......................... 3,422,377

LESS LIABILITIES:
{ 50} Income advance from Trustee..................... $ 26,335
Deferred sales charge (Note 5) ................. 34,440
Principal payments payable ..................... 2,439
Principal payments payable (Segregated Bonds) .. 3,821
{ 51} Accrued Sponsors' fees ......................... 504
Other liabilities (Note 6) ..................... 2,622 70,161
----------- -----------
{143}

NET ASSETS, REPRESENTED BY:
{ 80} 3,237 units of fractional undivided
{ 80} interest outstanding (Note 3)................ 3,343,173

{105} Undistributed net investment income ............ 9,043 $ 3,352,216
----------- ===========

{130}UNIT VALUE ($ 3,352,216 / 3,237 units )........... $ 1,035.59
===========

</TABLE>

See Notes to Financial Statements.
D - 8.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (FLORIDA INSURED TRUST),
DEFINED ASSET FUNDS

STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
May 1, 1998
to
April 30,
1999
----

<S> <C>
INVESTMENT INCOME:
{ 10} Interest income ........................ $ 164,709
Interest incomeon Segregated
, Bonds (Note 5) ....................... 7,727
{ 20} Trustee's fees and expenses ............ (6,483)
{ 30} Sponsors' fees ......................... (1,514)
------------
{ 40} Net investment income .................. 164,439
------------

REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Realized gain on
{ 50} securities sold or redeemed .......... 423
Unrealized appreciation
{ 60} of investments ....................... 48,779
------------
Net realized and unrealized
{ 70} gain on investments ................. 49,202
------------

NET INCREASE IN NET ASSETS
{ 80} RESULTING FROM OPERATIONS .............. $ 213,641
============

</TABLE>

See Notes to Financial Statements.
D - 9.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (FLORIDA INSURED TRUST),
DEFINED ASSET FUNDS

STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
May 1, 1998
to
April 30,
1999
----

<S> <C>
OPERATIONS:
{ 10} Net investment income .................. $ 164,439
Realized gain on
{ 20} securities sold or redeemed .......... 423
Unrealized appreciation
{ 30} of investments ....................... 48,779
------------
Net increase in net assets
{ 40} resulting from operations ............ 213,641
------------

INCOME DISTRIBUTIONS TO
{ 50} HOLDERS (Note 2)....................... (147,511)
------------
SHARE TRANSACTIONS:
Deferred sales charge (Note 5):
Principal ............................ (38,261)

{ 82} Redemption amounts:
Income ............................... (158)
{ 83} Principal ............................ (41,123)
------------
{ 84} Net share transactions ................. (79,542)
------------

{ 90}NET INCREASE IN NET ASSETS ............... (13,412)

{100}NET ASSETS AT BEGINNING OF YEAR ........ 3,365,628
------------
{110}NET ASSETS AT END OF YEAR .............. $ 3,352,216
============
PER UNIT:
Income distributions during
{120} year ............................... $ 45.10
============
Net asset value at end of
{140} year ............................... $ 1,035.59
============
TRUST UNITS:
{ 83} Redeemed during year ................. 41
{150} Outstanding at end of year ........... 3,237
============
</TABLE>

See Notes to Financial Statements.

D - 10.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (FLORIDA INSURED TRUST),
DEFINED ASSET FUNDS

NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

(A) Securities are stated at value as determined by the
Evaluator based on bid side evaluations for the securities,
except that value on May 1, 1998 was based upon offering side
evaluations at April 30, 1998, the day prior to the Date of
Deposit. Cost of securities at May 1, 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
<TABLE>
<S> <C>
{ 10} Cost of 3,237 units at Date of Deposit ..................... $ 3,323,532
Transfer to capital of interest on Segregated Bonds (Note 5)
{ 31} Redemptions of units - net cost of 41 units redeemed 7,727
{143} less redemption amounts (principal)....................... 973
Deferred sales charge (Note 5) ............................. (38,261)
{ 40} Realized gain on securities sold or redeemed ............... 423
{ 70} Net unrealized appreciation of investments.................. 48,779
-----------

{ 80} Net capital applicable to Holders .......................... $ 3,343,173
===========
</TABLE>
4. INCOME TAXES

As of April 30, 1999, net unrealized appreciation of investments, based on
cost for Federal income tax purposes, aggregated $48,779, of which
$1,313 related to depreciated securities and $50,092 related to
appreciated securities. The cost of investment securities for Federal income
tax purposes was $3,293,457 at April 30, 1999.

D - 11.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND, MULTISTATE SERIES - 323, (CALIFORNIA iRUST)
MULTISTATE SERIES - 323 (FLORIDA INSURED TRUST),
DEFINED ASSET FUNDS

NOTES TO FINANCIAL STATEMENTS

5. DEFERRED SALES CHARGE

$25,000 face amount of City of Gulf Breeze, FL, South Santa Rosa Util. Sys.
Rev. Bonds, Ser. 1994, $25,000 face amount of City of Jacksonville, FL,
Excise Taxes Rev. Rfdg. Bonds, Ser. 1991, $40,000 face amount of City of
Sunrise, FL, Pub. Fac. Rfdg. Rev. Bonds, Ser. 1992 A 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, as well
as principal proceeds received in conjunction with the disposition on the
unsegregated bonds in the portfolio. A deferred sales charge of $3.75 per Unit
is charged on a quarter basis, and paid to the Sponsors periodically by the
Trustee on behalf of the Holders, up to an aggregate of $45 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 $2,622 payable to the Trustee for reimbursement of
costs related to the organization of the Trust.

D - 12.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (FLORIDA TRUST) (INSURED),
DEFINED ASSET FUNDS

PORTFOLIO
As of April 30, 1999

Rating of 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 The School Board of Alachua Cnty., FL, AAA $ 500,000 5.000 % 2018 07/01/07 $ 490,620 $ 498,135
Certs. of Part., Ser. 1997 (AMBAC Ins.) @ 101.000

2 Charlotte Cnty., FL, Util. Sys. Rfdg. AAA 250,000 5.000 2023 10/01/08 242,980 244,813
Rev. Bonds, Ser. 1998 (Financial @ 101.000
Guaranty Ins.)

3 Dade Cnty., FL, Seaport G.O. Rfdg. AAA 455,000 5.125 2026 10/01/06 446,628 453,321
Bonds, Ser. 1996 (MBIA Ins.) @ 102.000

4 Dade Cnty., FL, Wtr. and Swr. Sys. Rev. AAA 500,000 5.250 2026 10/01/07 500,000 508,410
Bonds, Ser. 1997 (Financial Guaranty @ 101.000
Ins.)

5 Orange Cnty., FL, Tourist Dev. Tax AAA 500,000 5.125 2021 10/01/07 494,930 501,460
Rfdg. Rev. Bonds, Ser. 1997 (MBIA Ins.) @ 101.000

6 City of Gulf Breeze, FL, South Santa AAA 25,000 4.250 2001 None 25,118 25,419
Rosa Util. Sys. Rev. Bonds, Ser. 1994
(AMBAC Ins.) (6)

7 City of Jacksonville, FL, Excise Taxes AAA 25,000 6.300 2001 None 26,737 26,571
Rev. Rfdg. Bonds, Ser. 1991 (Financial
Guaranty Ins.) (6)

8 City of Sunrise, FL, Pub. Fac. Rfdg. AAA 40,000 5.600 1999 None 41,012 40,392
Rev. Bonds, Ser. 1992 A (MBIA Ins.) (6)

9 Sunrise Lakes Phase 4 Recreation Dist., AAA 500,000 5.250 2024 08/01/07 500,000 508,020
FL, G.O. and Rev. Rfdg. and Completion @ 101.000
Bonds, Ser. 1998 (AMBAC Ins.)

10 City of Tampa, FL, Hlth. Sys. Rev. AAA 500,000 4.875 2018 11/15/08 473,580 484,370
Bonds (Catholic Hlth. East Iss.), Ser. @ 102.000
1998 A-1 (MBIA Ins.)

11 Puerto Rico Elec. Pwr. Auth., Pwr. Rev. AAA 50,000 5.700 2000 None 51,852 51,325
Bonds, Ser. R (MBIA Ins.) (6)

----------- --------- ---------
TOTAL $ 3,345,000 $ 3,293,457 $ 3,342,236
=========== ========= =========
</TABLE>

See Notes to Portfolios on Page D - 21.
D - 13.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (NEW JERSEY INSURED TRUST),
DEFINED ASSET FUNDS

STATEMENT OF CONDITION
As of April 30, 1999

<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
{ 20} at value (cost $ 3,675,900 )(Note 1)......... $ 3,746,094
{ 36} Accrued interest ............................... 54,101
Accrued interest on Segregated Bonds (Note 5) .. 1,823
{ 42} Income payments receivable ..................... 1,000
Cash - income on Segregated Bonds .............. 5,965
{ 34} Cash - principal ............................... 37,480
Deferred organization costs (Note 6) ........... 3,026
-----------
{ 40} Total trust property ......................... 3,849,489

LESS LIABILITIES:
{ 50} Income advance from Trustee..................... $ 44,400
Deferred sales charge (Note 5) ................. 43,108
Principal payments payable (Segregated Bonds) .. 4,885
Principal payments payable ..................... 1,000
{ 51} Accrued Sponsors' fees ......................... 571
{143} Other liabilities (Note 6) ..................... 3,026 96,990
----------- -----------

NET ASSETS, REPRESENTED BY:
{ 80} 3,622 units of fractional undivided
{ 80} interest outstanding (Note 3)................ 3,742,369

{105} Undistributed net investment income ............ 10,130 $ 3,752,499
----------- ===========

{130}UNIT VALUE ($ 3,752,499 / 3,622 units )........... $ 1,036.03
===========

</TABLE>

See Notes to Financial Statements.
D - 14.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (NEW JERSEY INSURED TRUST),
DEFINED ASSET FUNDS

STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
May 1, 1998
to
April 30,
1999
----

<S> <C>
INVESTMENT INCOME:

{ 10} Interest income ........................ $ 189,472
Interest income on Segregated
Bonds (Note 5)........................ 7,788
{ 20} Trustee's fees and expenses ............ (7,537)
{ 30} Sponsors' fees ......................... (1,735)
------------
{ 40} Net investment income .................. 187,988
------------

REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Realized gain on
{ 50} securities sold or redeemed .......... 1,908
Unrealized appreciation
{ 60} of investments ....................... 70,194
------------
Net realized and unrealized
{ 70} gain on investments ................. 72,102
------------

NET INCREASE IN NET ASSETS
{ 80} RESULTING FROM OPERATIONS .............. $ 260,090
============

</TABLE>

See Notes to Financial Statements.
D - 15.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (NEW JERSEY INSURED TRUST),
DEFINED ASSET FUNDS

STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
May 4, 1998
to
April 30,
1999
----

<S> <C>
OPERATIONS:
{ 10} Net investment income .................. $ 187,988
Realized gain on
{ 20} securities sold or redeemed .......... 1,908
Unrealized appreciation
{ 30} of investments ....................... 70,194
------------
Net increase in net assets
{ 40} resulting from operations ............ 260,090
------------

INCOME DISTRIBUTIONS TO
{ 50} HOLDERS (Note 2)....................... (169,593)
------------

SHARE TRANSACTIONS:
Deferred sales charge (Note 5):
Principal ............................ (47,993)

{ 82} Redemption amounts:
Income ............................... (477)
{ 83} Principal ............................ (161,682)
------------
{ 84} Net share transactions ................. (210,152)
------------

{ 90}NET DECREASE IN NET ASSETS ............... (119,655)

{100}NET ASSETS AT BEGINNING OF YEAR ........ 3,872,154
------------
{110}NET ASSETS AT END OF YEAR .............. $ 3,752,499
============
PER UNIT:
Income distributions during
{120} year ............................... $ 45.30
============
Net asset value at end of
{140} year ............................... $ 1,036.03
============
TRUST UNITS:
{ 83} Redeemed during year ................. 161
{150} Outstanding at end of year ........... 3,622
============
</TABLE>

See Notes to Financial Statements.
D - 16.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (NEW JERSEY INSURED TRUST),
DEFINED ASSET FUNDS

NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

(A) Securities are stated at value as determined by the
Evaluator based on bid side evaluations for the securities,
except that value on May 1, 1998 was based upon offering side
evaluations at April 30, 1998, the day prior to the Date of Deposit.
Cost of securities at May 1, 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
<TABLE>
<S> <C>
{ 10} Cost of 3,622 units at Date of Deposit ..................... $ 3,707,360
Transfer of capital to interest on Segregated Bonds (Note 5) 7,788
{ 31} Redemptions of units - net cost of 161 units redeemed
{143} less redemption amounts (principal)....................... 3,112
Deferred sales charge (Note 5) ............................. (47,993)
{ 40} Realized gain on securities sold or redeemed ............... 1,908
{ 70} Net unrealized appreciation of investments.................. 70,194
-----------

{ 80} Net capital applicable to Holders .......................... $ 3,742,369
===========
</TABLE>
4. INCOME TAXES

As of April 30, 1999, net unrealized appreciation of investments, based on
cost for Federal income tax purposes, aggregated $70,194, of which
$866 related to depreciated securities and $71,060 related to
appreciated securities. The cost of investment securities for Federal income
tax purposes was $3,675,900 at April 30, 1999.

D - 17.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND, MULTISTATE SERIES - 323, (CALIFORNIA iRUST)
MULTISTATE SERIES - 323 (NEW JERSEY INSURED TRUST),
DEFINED ASSET FUNDS

NOTES TO FINANCIAL STATEMENTS

5. DEFERRED SALES CHARGE

$40,000 face amount of Casino Reinvestment Dev. Auth., Ser. 1997 A, $30,000
face amount of New Jersey Educl. Fac. Auth., Rev. Bonds, Higher Educ. Fac.
Trust Fund Bonds, Ser. 1995 A, $15,000 face amount of The Monmouth Cnty. Imp.
Auth. Govt. Loan Rev. Bonds, Ser. 1997, $20,000 face amount of Gloucester Cnty.,
NJ, The Bd. of Educ. of The Clearview Regl. High Sch. Dist. 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, as well as principal proceeds received in conjunction with the
disposition on the unsegregated bonds in the portfolio. 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 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 $3,026 payable to the Trustee for reimbursement of
costs related to the organization of the Trust.

D - 18.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (NEW JERSEY TRUST) (INSURED),
DEFINED ASSET FUNDS

PORTFOLIO
As of April 30, 1999

<S> <C> <C> <C> <C> <C> <C> <C>
1 The Port Auth. of New York and New AAA $ 365,000 4.750 % 2026 01/15/06 $ 338,479 $ 345,432
Jersey, Consol. Bonds, One Hundred @ 101.000
Fourth Ser. (AMBAC Ins.)

2 New Jersey Educl. Fac. Auth., Rev. AAA 30,000 5.125 2001 None 30,948 31,035
Bonds, Higher Educ. Fac. Trust Fund
Bonds, Ser. 1995 A (AMBAC Ins.) (6)

3 Essex Cnty. Imp. Auth., NJ, Util. Sys. AAA 490,000 5.750 2027 07/01/07 513,006 528,578
Rev. Bonds (Orange Fran. Acquisition @ 101.000
Proj.), Ser. 1997 A (MBIA Ins.)

4 New Jersey Hlth. Care Fac. Fin. Auth., AAA 250,000 5.250 2021 02/01/08 250,000 253,468
Rev. and Rfdg. Bonds, Cathedral Hlth. @ 102.000
Svcs. Issue (FHA Ins. Mtge.), Ser. 1998
(MBIA Ins.)

5 The County of Middlesex, NJ, Certs. of AAA 385,000 5.250 2023 06/15/08 386,690 394,105
Part. Ser. 1998 (MBIA Ins.) @ 102.000

6 City of Vineland, Cumberland Cnty., NJ, AAA 500,000 4.950 2020 None 483,760 496,115
Wtr. Util. Bonds (Financial Guaranty
Ins.)

7 Casino Reinvestment Dev. Auth. (Parking AAA 40,000 5.000 1999 None 40,628 40,289
Fee Rev. Bonds), Ser. 1997 A (FSA Ins.)
(6)

8 University of Medicine and Dentistry of AAA 500,000 5.000 2022 09/01/08 486,245 497,240
New Jersey, Certs. of Part., Ser A @ 102.000
(MBIA Ins.)

9 The Monmouth Cnty. Imp. Auth. (Monmouth AAA 15,000 4.000 2000 None 15,000 15,134
Cnty., NJ), Govt. Loan Rev. Bonds, Ser.
1997 (AMBAC Ins.) (6)

10 New Jersey Hlth. Care Fac. Fin. Auth. Aaa(m) 550,000 4.750 2027 07/01/08 513,013 519,783
Rev. Rfdg. Bonds (Bayonne Hosp. Oblig. @ 101.000
Grp. Issue), Ser. 1998 (FSA Ins.)

</TABLE>
D - 19.

<PAGE>

MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (NEW JERSEY TRUST) (INSURED),
DEFINED ASSET FUNDS

PORTFOLIO
As of April 30, 1999

Rating of 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>
11 Lacey Mun. Util. Auth. (Ocean Cnty., Aaa(m) $ 550,000 5.100 % 2021 12/01/07 $ 546,244 $ 553,553
NJ), Wtr. Rev. Rfdg. Bonds, Ser. 1997 @ 102.000
(MBIA Ins.)

12 Gloucester Cnty., NJ, The Bd. of Educ. Aaa(m) 20,000 4.000 1999 None 20,035 20,037
of The Clearview Regl. High Sch. Dist.
(Financial Guaranty Ins.) (6)

13 Puerto Rico Elec. Pwr. Auth., Pwr. Rev. AAA 50,000 5.700 2000 None 51,852 51,325
Bonds, Ser. R (MBIA Ins.) (6)

----------- --------- ---------
TOTAL $ 3,745,000 $ 3,675,900 $ 3,746,094
=========== ========= =========

</TABLE>

See Notes to Portfolios on Page D - 21.

D - 20.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 323 (CALIFORNIA INSURED,
FLORIDA INSURED AND NEW JERSEY INSURED TRUSTS),
DEFINED ASSET FUNDS

NOTES TO PORTFOLIOS
As of April 30, 1999

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

D - 21.

<PAGE>
Defined
Asset FundsSM

HAVE QUESTIONS ? MUNICIPAL INVESTMENT TRUST FUND
Request the most MULTISTATE SERIES--323
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.
333-45439) 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.

70075--9/99