MUNICIPAL INVESTMENT TR FD MULTISTATE SER 401 DEF ASSET FDS, 497, 1998-09-28

MUNICIPAL INVESTMENT TR FD MULTISTATE SER 401 DEF ASSET FDS
497, 1998-09-28

Previous: MUNICIPAL INVESTMENT TR FD MULTISTATE SER 312 DEF ASSET FDS, 497, 1998-09-28

Next: ALL COMMUNICATIONS CORP/NJ, SC 13G, 1998-09-28

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

MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES 401
(A UNIT INVESTMENT TRUST)
O CALIFORNIA, OHIO AND PENNSYLVANIA PORTFOLIOS
O PORTFOLIOS OF LONG TERM MUNICIPAL BONDS
O DESIGNED FOR FEDERALLY TAX-FREE INCOME
O EXEMPT FROM SOME STATE TAXES
O DISTRIBUTIONS TWICE A YEAR

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 25, 1998.

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

Defined Asset FundsSM
FOR MORE THAN 25 YEARS, DEFINED ASSET FUNDSSM HAS BEEN A LEADER IN UNIT
INVESTMENT TRUST RESEARCH AND PRODUCT INNOVATION. OUR FAMILY OF 'DEFINEDSM'
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 FIXED PORTFOLIO: DEFINED FUNDS FOLLOW A BUY AND HOLD INVESTMENT STRATEGY;
FUNDS ARE NOT MANAGED AND PORTFOLIO CHANGES ARE LIMITED.
O PRESELECTED 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.

CONTENTS
PAGE
-----------
CALIFORNIA INSURED PORTFOLIO............................ 3
RISK/RETURN SUMMARY AND PORTFOLIO.................... 3
OHIO PORTFOLIO.......................................... 6
RISK/RETURN SUMMARY AND PORTFOLIO.................... 6
PENNSYLVANIA PORTFOLIO.................................. 9
RISK/RETURN SUMMARY AND PORTFOLIO.................... 9
WHAT YOU CAN EXPECT FROM YOUR INVESTMENT................ 12
INCOME TWICE A YEAR.................................. 12
RETURN FIGURES....................................... 12
RECORDS AND REPORTS.................................. 12
THE RISKS YOU FACE...................................... 13
INTEREST RATE RISK................................... 13
CALL RISK............................................ 13
REDUCED DIVERSIFICATION RISK......................... 13
LIQUIDITY RISK....................................... 13
CONCENTRATION RISK................................... 13
STATE CONCENTRATION RISK............................. 14
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.......................................... 19
INCOME............................................... 19
EXPENSES............................................. 19
PORTFOLIO CHANGES.................................... 20
FUND TERMINATION..................................... 20
CERTIFICATES......................................... 20
TRUST INDENTURE...................................... 21
LEGAL OPINION........................................ 21
AUDITORS............................................. 21
SPONSORS............................................. 22
TRUSTEE.............................................. 22
UNDERWRITERS' AND SPONSORS' PROFITS.................. 22
PUBLIC DISTRIBUTION.................................. 22
CODE OF ETHICS....................................... 23
YEAR 2000 ISSUES..................................... 23
TAXES................................................... 23
SUPPLEMENTAL INFORMATION................................ 25
FINANCIAL STATEMENTS.................................... 26
REPORT OF INDEPENDENT ACCOUNTANTS.................... 26
STATEMENTS OF CONDITION.............................. 26

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

CALIFORNIA INSURED PORTFOLIO--RISK/RETURN SUMMARY

3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
O The Fund plans to hold to maturity long-term tax-exempt
municipal bonds with an aggregate face amount of
$5,000,000, and some short-term bonds reserved to pay the
deferred sales fee. The Fund is a unit investment trust
which means that, unlike a mutual fund, the Fund's
portfolio is not managed.
o The bonds are rated AAA or Aaa by Standard & Poor's,
Moody's or Fitch.
o Most of the bonds cannot be called for several years, and
after that they can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 100% of the bonds are insured by AAA-rated 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

o General Obligation 26%
o Hospitals/Health Care 26%
o Lease Rental Appropriation 16%
o Municipal Water/Sewer Utilities 16%
o Special Tax 1%
o State/Local Municipal Electric Utilities 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 Hospital/Health Care
and General Obligation bonds, adverse developments in these
sectors may affect the value of your units.
o Assuming no changes in interest rates, when you sell your
units, they will generally be worth less than your cost
because your cost included a sales fee.
o The Fund will receive early returns of principal if bonds
are called or sold before they mature. If this happens your
income will decline and you may not be able to reinvest the
money you receive at as high a yield or as long a maturity.

ALSO, THE PORTFOLIO IS CONCENTRATED IN BONDS OF CALIFORNIA
SO IT IS LESS DIVERSIFIED THAN A NATIONAL FUND AND IS
SUBJECT TO RISKS PARTICULAR TO CALIFORNIA WHICH ARE BRIEFLY
DESCRIBED ON PAGE 14.
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 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.

3
<PAGE>
- --------------------------------------------------------------------------------
DEFINED CALIFORNIA INSURED PORTFOLIO
- --------------------------------------------------------------------------------

Multistate Series--401

RATING COST
PORTFOLIO TITLE COUPON MATURITY (1) OF ISSUES (2) TO FUND (3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GENERAL OBLIGATION (26%):
1. $600,000 South Whittier Elem. Sch. Dist., 5.00% 8/1/23 AAA $ 602,622.00
Los Angeles Cnty., CA, Election of 1998
G.O. Bonds, Ser. A (Financial Guaranty
Ins.)
2. $750,000 State of California, G.O. Rfdg. 5.00 2/1/23 AAA 755,917.50
Bonds (Financial Guaranty Ins.)
3. $5,000 El Segundo Unified Sch. Dist., (Los 3.90 8/1/01 AAA 5,040.10
Angeles Cnty., CA), G.O. Bonds, 1997
Election, Ser. A (FSA Ins.) (4)

HOSPITALS/HEALTH CARE (26%):

4. $40,000 California Statewide Cmntys. Dev. 5.25 8/15/00 AAA 41,271.20
Auth., Certs. of Part. (Sutter Hlth.
Oblig. Grp.) (AMBAC Ins.) (4)
5. $500,000 County of Madera, CA, Certs. of 5.00 3/15/23 AAA 500,000.00
Part. (Valley Children's Hosp. Proj.),
Ser. 1998 (MBIA Ins.)
6. $800,000 California Hlth. Facs. Fin. 5.00 11/15/28 AAA 800,000.00
Auth., Rev. Bonds (USCF -Stanford Hlth.
Care), Ser. 1998 B (AMBAC Ins.)

LEASE RENTAL APPROPRIATION (16%):
7. $800,000 City of La Habra, CA, Rfdg. 4.80 9/1/22 AAA 788,768.00
Certs. of Part. (Park La Habra and
Viewpark Refinancing Proj.) Ser. 1998 A
(FSA Ins.)

MUNICIPAL WATER/SEWER UTILITIES (16%):

8. $800,000 East Bay Mun. Util. Dist. 4.75 6/1/34 AAA 779,808.00
(Alameda and Contra Costa Cntys., CA),
Wtr. Sys. Sub. Rev. Bonds, Ser. 1998 (MBIA
Ins.)

SPECIAL TAX (1%):
9. $45,000 Alameda Cnty. Trans. Auth., CA, 4.10 11/1/99 AAA 45,531.45
Sub. Sales Tax Rev. Bonds (Limited Tax
Bonds), Ser. 1997 (AMBAC Ins.) (4)

STATE/LOCAL MUNICIPAL ELECTRIC UTILITIES (15%):

10. $750,000 City of Santa Clara, CA, Sub. 5.00 7/1/27 AAA 753,255.00
Elec. Rev. Rfdg. Bonds, Ser. 1998 A
(AMBAC Ins.)
--------------------
$ 5,072,213.25
--------------------
--------------------

</TABLE>

- ------------------------------------
(1) Approximately 98% of the bonds are callable beginning in 2008.
(2) All ratings are by Standard & Poor's Ratings Group unless followed by
'(m)', which indiciates a Moody's Investors Service rating or by '(f)',
which indicates a Fitch IBCA rating. Ratings A through AAA indicate good to
highest quality bonds with a strong to very strong capacity to pay interest
and repay principal.
(3) Approximately 43% of the bonds were deposited at a premium, 26% at par and
31% at a discount from par. Sponsors' profit on deposit was $44,611.95.
(4) The interest and principal on these bonds will be used to pay the deferred
sales charge obligations of the investors, and these amounts are not
included in the calculation of Estimated Current and Long Term Returns.
------------------------------------

PLEASE NOTE THAT IF THIS PROSPECTUS IS USED AS A PRELIMINARY
PROSPECTUS
FOR A FUTURE FUND IN THIS SERIES, THE PORTFOLIO WILL CONTAIN
DIFFERENT
BONDS FROM THOSE DESCRIBED ABOVE.
<PAGE>
CALIFORNIA INSURED PORTFOLIO (CONTINUED)

DEFINING YOUR INCOME
AND ESTIMATING YOUR RETURN

WHAT YOU MAY EXPECT (Record Day: 10th day of
each April and October)
First payment per 1,000 units (4/25/99): $ 25.79
Regular Semi-Annual Income per 1,000 units
(each April and October beginning 10/25/99): $ 23.80
Annual Income per 1,000 units: $ 47.62
These figures are estimates on the business day before the
initial date of deposit; actual payments may vary.
Estimated Current Return 4.64%
Estimated Long Term Return 4.62%
Returns will vary (see page 12).

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
2.90%
Maximum Sales Fee (Load) on new purchases
(as a percentage of $1,000 invested)

You will pay an up-front sales fee of 1.00%, as well as a
total deferred sales fee of $19.00 ($2.38 per 1,000 units
quarterly in the first year and $2.37 per 1,000 units
quarterly in the second year). Employees of some of the
Sponsors and their affiliates may pay a reduced sales fee
of at least $5.00 per 1,000 units.
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

AS A % OF AMOUNT
$1,000 PER 1,000
INVESTED UNITS
--------- -----------
.062% $ 0.63
Trustee's Fee
.045% $ 0.46
Portfolio Supervision,
Bookkeeping and
Administrative Fees
.026% $ 0.26
Evaluator's Fee
.031% $ 0.31
Other Operating Expenses
--------- -----------
.164% $ 1.66
TOTAL

AMOUNT
PER 1,000
UNITS
---------------------
$ 2.00
ORGANIZATION COSTS (deducted from
Fund assets at the close of the
initial offering period)

EXAMPLE
This example may help you compare the cost of investing in
the Fund to the cost of investing in other funds.
The example assumes that you invest $10,000 in the Fund for
the periods indicated and sell all your units at the end of
those periods. The example also assumes a 5% return on your
investment each year and that the Fund's operating expenses
stay the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years
$138 $173 $213 $329

You will pay the following expenses if you do not sell your
units:

1 Year 3 Years 5 Years 10 Years
$128 $173 $213 $329

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 March 1, 1988 and September 30, 1996 and were
outstanding on June 30, 1998. OF COURSE, PAST PERFORMANCE OF
PRIOR SERIES IS NO GUARANTEE OF FUTURE RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
Reflecting all expenses. For periods ended 6/30/98.

WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 1 YEAR 5 YEARS
- ---------------------------------------------------------------
High 6.08% 5.25% 12.17% 6.39%
Average 3.94 4.43 7.49 5.46
Low 2.57 3.94 3.62 4.76
- ---------------------------------------------------------------

Average
Sales fee 3.45% 5.12%

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

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>
CALIFORNIA INSURED PORTFOLIO (CONTINUED)

9. HOW DO I BUY UNITS?
The minimum investment is $250.
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 1,000 UNITS $1,026.50
(as of September 24, 1998)
Unit price is based on the net asset value of the Fund plus
the up-front 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. Unit price also
includes the estimated organization costs shown on the
previous page. 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.
UNIT PAR VALUE $1.00
Unit par value means the total amount of money you should
generally receive on each unit by the termination of the
Fund (other than interest and premium on the bonds). This
total amount assumes that all bonds in the Fund are either
paid at maturity or called by the issuer at par or are sold
by the Fund at par. If you sell your units before the Fund
terminates, you may receive more or less than the unit par
value.
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 twice a year.
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 1,000 units. 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.

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

FOR CALIFORNIA RESIDENTS

COMBINED
EFFECTIVE
TAXABLE INCOME 1998* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 3% 3.5% 4% 4.5% 5% 5.5% 6% 6.5%
IS EQUIVALENT TO A TAXABLE YIELD OF

- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 25,350 $ $0- 42,350 20.10 3.75 4.38 5.01 5.63 6.26 6.88 7.51 8.14
$ 25,351- 61,400 $ 42,351-102,300 34.70 4.59 5.36 6.13 6.89 7.66 8.42 9.19 9.95
$ 61,401-128,100 $102,301-155,950 37.42 4.79 5.59 6.39 7.19 7.99 8.79 9.59 10.39
$128,101-278,450 $155,951-278,450 41.95 5.17 6.03 6.89 7.75 8.61 9.47 10.34 11.20
OVER $278,450 OVER $278,450 45.22 5.48 6.39 7.30 8.21 9.13 10.04 10.95 11.87
</TABLE>

To compare the yield of a taxable security with the yield of a tax-free
security, find your taxable income and read across. The table incorporates 1998
federal 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.

5
<PAGE>
- --------------------------------------------------------------------------------

OHIO 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 15-
to 30-year 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 long-term tax-exempt
municipal bonds with an aggregate face amount of
$5,000,000, and some short-term bonds reserved to pay the
deferred sales charge. The Fund is a unit investment trust
which means that, unlike a mutual fund, the Fund's
portfolio is not managed.
o The bonds are rated A or better by Standard & Poor's,
Moody's or Fitch or in the opinion of the agent for the
Sponsors have similar credit quality to other bonds in the
Portfolio.
o Most of the bonds cannot be called for several years, and
after that they can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 59% of the bonds are insured by AAA-rated 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

o Airports/Ports/Highways 16%
o Hospitals/Health Care 40%
o Municipal Water/Sewer Utilities 15%
o Parking/Stadiums/Recreational Facilities 14%
o Special Tax 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 Hospital/Health Care
bonds, adverse developments in this sector may affect the
value of your units.
o Assuming no changes in interest rates, when you sell your
units, they will generally be worth less than your cost
because your cost included a sales fee.
o The Fund will receive early returns of principal if bonds
are called or sold before they mature. If this happens your
income will decline and you may not be able to reinvest the
money you receive at as high a yield or as long a maturity.

ALSO, THE PORTFOLIO IS CONCENTRATED IN OHIO BONDS, SO IT IS
LESS DIVERSIFIED THAN A NATIONAL FUND AND IS SUBJECT TO
RISKS PARTICULAR TO OHIO WHICH ARE BRIEFLY DESCRIBED ON
PAGE 15.
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 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.

6
<PAGE>
- --------------------------------------------------------------------------------
DEFINED OHIO PORTFOLIO
- --------------------------------------------------------------------------------

Multistate Series--401

RATING COST
PORTFOLIO TITLE COUPON MATURITY (1) OF ISSUES (2) TO FUND (3)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIRPORT/PORTS/HIGHWAYS (16%):
1. $750,000 State of Ohio Tpke. Comm., Tpke. 4.75% 2/15/28 AAA $ 726,855.00
Rev. Bonds, Ser. 1998 B (Financial
Guaranty Ins.)
2. $45,000 State of Ohio Tpke. Comm., Tpke. 3.75 2/15/00 AA 45,000.00
Rev. Bonds, Ser. 1998 B (4)
3. $45,000 State of Ohio Tpke. Comm., Tpke. 3.80 2/15/01 AAA 45,000.00
Rev. Bonds, Ser. 1998 B (Financial
Guaranty Ins.) (4)

HOSPITALS/HEALTH CARE (40%):

4. $520,000 County of Butler, OH, Hosp. Fac. 5.00 11/15/28 A2(m) 508,086.80
Rev. Rfdg. and Imp. Bonds (Middletown
Regl. Hosp. Oblig. Grp.), Ser. 1998
5. $750,000 County of Franklin, OH, Hlth. 5.375 8/15/28 A 754,867.50
Care Facs. Rev. Rfdg. and Imp. Bonds
(Friendship Village of Columbus, Ohio,
Inc. Proj.), Ser. 1998 (ACA Ins.)
6. $750,000 County of Franklin, OH, Hlth. 5.50 7/1/21 NR 750,000.00
Care Facs. Rfdg. Rev. Bonds (Ohio
Presbyterian Retirement Svcs.), Ser.
1997

MUNICIPAL WATER/SEWER UTILITIES (15%):

7. $750,000 City of Cleveland, OH, Wtrwks. 5.00 1/1/28 AAA 753,150.00
Imp. and Rfdg. Rev. Bonds, Ser. 1998 I
(FSA Ins.)
PARKING/STADIUMS/RECREATIONAL FACILITIES
(14%):
8. $730,000 City of Cleveland, OH, Certs. Of 5.25 11/15/27 AAA 751,688.30
Part. (Cleveland Stadium Proj.), Ser. 1997
(AMBAC Ins.)
SPECIAL TAX (15%):
9. $750,000 County of Hamilton, OH, Sales Tax 5.00 12/1/27 AAA 753,022.50
Bonds (Hamilton Cnty. Football Proj.),
Ser. 1998 B (MBIA Ins.)
--------------------
$ 5,087,670.10
--------------------
--------------------

</TABLE>

- ------------------------------------
(1) Approximately 14% of the bonds are callable beginning in 2007 and 84% of
the bonds are callable beginning in 2008.
(2) All ratings are by Standard & Poor's Ratings Group unless followed by
'(m)', which indiciates a Moody's Investors Service rating or by '(f)',
which indicates a Fitch IBCA rating. Ratings A through AAA indicate good to
highest quality bonds with a strong to very strong capacity to pay interest
and repay principal. Bonds designated by 'NR' are not rated but in the
opinion of the agent for the Sponsors have similar credit quality to other
bonds in the Portfolio.
(3) Approximately 59% of the bonds were deposited at a premium, 16% at par and
25% at a discount from par. Sponsors' profit on deposit was $40,397.80.
(4) The interest and principal on these bonds will be used to pay the deferred
sales charge obligations of the investors, and these amounts are not
included in the calculation of Estimated Current and Long Term Returns.
------------------------------------

DEFINING YOUR INCOME
AND ESTIMATING YOUR RETURN

WHAT YOU MAY EXPECT (Record Day: 10th day of
each April and October)
First payment per 1,000 units (4/25/99): $ 26.88
Regular Semi-Annual Income per 1,000 units
(each April and October beginning 10/25/99): $ 24.82
Annual Income per 1,000 units: $ 49.64
These figures are estimates on the business day before the
initial date of deposit; actual payments may vary.
Estimated Current Return 4.82%
Estimated Long Term Return 4.78%
Returns will vary (see page 12).

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
2.90%
Maximum Sales Fee (Load) on new purchases (as
a percentage of $1,000 invested)

ESTIMATED ANNUAL FUND OPERATING EXPENSES

AS A % OF AMOUNT
$1,000 PER 1,000
INVESTED UNITS
--------- -----------
.062% $ 0.63
Trustee's Fee
.045% $ 0.46
Portfolio Supervision,
Bookkeeping and
Administrative Fees
.026% $ 0.26
Evaluator's Fee
.030% $ 0.31
Other Operating Expenses
--------- -----------
.163% $ 1.66
TOTAL

AMOUNT
PER 1,000
UNITS
---------------------
$ 2.00
ORGANIZATION COSTS (deducted from
Fund assets at the close of the
initial offering period)

1 Year 3 Years 5 Years 10 Years
$138 $173 $212 $328

You will pay the following expenses if you do not sell your
units:

1 Year 3 Years 5 Years 10 Years
$128 $173 $212 $328

7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
In the following chart we show past performance of prior
Ohio 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 Ohio Series were offered between March 1,
1988 and September 30, 1996 and were outstanding on June 30,
1998. OF COURSE, PAST PERFORMANCE OF PRIOR SERIES IS NO
GUARANTEE OF FUTURE RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
Reflecting all expenses. For periods ended 6/30/98.

WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 1 YEAR 5 YEARS
- ---------------------------------------------------------------
High 5.42% 5.15% 11.48% 6.11%
Average 3.67 4.37 6.89 5.41
Low 2.05 3.80 3.80 4.67
- ---------------------------------------------------------------

Average
Sales fee 3.08% 5.14%

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

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

7
<PAGE>
OHIO PORTFOLIO (CONTINUED)

9. HOW DO I BUY UNITS?
The minimum investment is $250.
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 1,000 UNITS $1,029.63
(as of September 24, 1998)
Unit price is based on the net asset value of the Fund plus
the up-front 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. Unit price also
includes the estimated organization costs shown on the
previous page. 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.
UNIT PAR VALUE $1.00
Unit par value means the total amount of money you should
generally receive on each unit by the termination of the
Fund (other than interest and premium on the bonds). This
total amount assumes that all bonds in the Fund are either
paid at maturity or called by the issuer at par or are sold
by the Fund at par. If you sell your units before the Fund
terminates, you may receive more or less than the unit par
value.
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 don 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 twice a year.
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 Ohio state and local taxes if you live in
Ohio.
You will also receive principal payments if bonds are sold
or called or mature, when the cash available is more than
$5.00 per 1,000 units. 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.

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

FOR OHIO RESIDENTS
- --------------------------------------------------------------------------------

COMBINED
EFFECTIVE
TAXABLE INCOME 1998* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 3% 3.5% 4% 4.5% 5% 5.5% 6% 6.5%
IS EQUIVALENT TO A TAXABLE YIELD OF

- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 42,350 19.24 3.71 4.33 4.95 5.57 6.19 6.81 7.43 8.05
$ 0- 25,350 18.64 3.89 4.30 4.92 5.53 6.15 6.76 7.37 7.99
$ 42,350-102,300 32.77 4.46 5.21 5.95 6.69 7.44 8.18 8.92 9.67
$ 25,350- 61,400 31.59 4.39 5.12 5.85 6.58 7.31 8.04 8.77 9.50
$ 61,400-128,100 $102,300-155,950 35.57 4.66 5.43 6.21 6.98 7.76 8.54 9.31 10.09
$128,100-278,450 $155,950-278,450 40.61 5.05 5.89 6.73 7.58 8.42 9.26 10.10 10.94
OVER $278,450 OVER $278,450 43.95 5.35 6.24 7.14 8.03 8.92 9.81 10.70 11.60
</TABLE>

8
<PAGE>
- --------------------------------------------------------------------------------

PENNSYLVANIA 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 15-
to 30-year 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 long-term tax-exempt
municipal bonds with an aggregate face amount of
$5,000,000, and some short-term bonds reserved to pay the
deferred sales charge. The Fund is a unit investment trust
which means that, unlike a mutual fund, the Fund's
portfolio is not managed.
o The bonds are rated A or better by Standard & Poor's,
Moody's or Fitch or in the opinion of the agent for the
Sponsors have similar credit quality to other bonds in the
Portfolio.
o Most of the bonds cannot be called for several years, and
after that they can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 44% of the bonds are insured by AAA-rated 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

o Airports/Ports/Highways 16%
o General Obligation 17%
o Hospitals/Health Care 41%
o University/College 26%

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 ratings can reduce the price of your
units.
o Because the Fund is concentrated in Hospital/Health Care
and University/College bonds, adverse developments in these
sectors may affect the value of your units.
o Assuming no changes in interest rates, when you sell your
units, they will generally be worth less than your cost
because your cost included a sales fee.
o The Fund will receive early returns of principal if bonds
are called or sold before they mature. If this happens your
income will decline and you may not be able to reinvest the
money you receive at as high a yield or as long a maturity.

ALSO, THE PORTFOLIO IS CONCENTRATED IN PENNSYLVANIA BONDS,
SO IT IS LESS DIVERSIFIED THAN A NATIONAL FUND AND IS
SUBJECT TO RISKS PARTICULAR TO PENNSYLVANIA, WHICH ARE
BRIEFLY DESCRIBED ON PAGE 15.
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 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.

9
<PAGE>
- --------------------------------------------------------------------------------
DEFINED PENNSYLVANIA PORTFOLIO
- --------------------------------------------------------------------------------

Multistate Series--401

RATING COST
PORTFOLIO TITLE COUPON MATURITY (1) OF ISSUES (2) TO FUND (3)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIRPORT/PORTS/HIGHWAYS (16%):
1. $800,000 Pennsylvania Tpke. Comm., Oil 4.75% 12/1/27 AAA $ 775,376.00
Franchise Tax Sub. Rev. Bonds, Ser. 1998 B
(AMBAC Ins.)

GENERAL OBLIGATION (17%):

2. $90,000 City of Easton, Northampton Cnty., 3.55-3.70 12/1/99-00 Aaa(m) 90,000.00
PA, G.O. Bonds, Ser. 1998 (AMBAC Ins.)
3. $750,000 City of Philadelphia, PA, G.O. 5.00 5/15/25 AAA 750,000.00
Bonds, Ser. 1995 (MBIA Ins.)

HOSPITALS/HEALTH CARE (41%):

4. $500,000 Allegheny Cnty. Hosp. Dev. Auth., 4.875 11/15/26 AAA 486,900.00
PA, Hlth. Sys. Rev. Bonds (Catholic Hlth.
East Issue), Ser. 1998 A (AMBAC Ins.)
5. $750,000 Berks Cnty. Mun. Auth., PA, Hlth. 5.00 3/1/28 AA- 733,012.50
Care Rev. Bonds (Pooled Fin. Proj.), Ser.
1998
6. $100,000 Wayne Cnty. Hosp. and Hlth. Facs. 5.375 7/1/27 AAA 102,746.00
Auth., PA, Cnty. Guaranteed Hosp. Rev.
Bonds (Wayne Mem. Hosp. Proj.), Ser.
1997 B (MBIA Ins.)
7. $750,000 City of Pottsville Hosp. Auth., 5.625 7/1/24 A 774,105.00
PA, Hosp. Rev. Bonds (The Pottsville Hosp.
and Warne Clinic), Ser. 1998 (ACA Ins.)

UNIVERSITY/COLLEGE (26%):

8. $600,000 Chester Cnty. Hlth. and Educ. 5.625 10/15/27 AA 625,338.00
Facs. Auth., PA, Coll. Rev. Bonds
(Immaculata Coll.), Ser. 1998 (Asset
Guaranty Ins.)
9. $750,000 Pennsylvania Higher Educl. Facs. 5.375 4/1/23 A 764,512.50
Auth., Coll. Rev. Bonds (Geneva College),
Ser. 1998 (ACA Ins.)
--------------------
$ 5,101,990.00
--------------------
--------------------

</TABLE>

- ------------------------------------
(1) Approximately 15% of the bonds are callable beginning in 2006 and 83% of
the bonds are callable beginning in 2008.
(2) All ratings are by Standard & Poor's Ratings Group unless followed by
'(m)', which indiciates a Moody's Investors Service rating or by '(f)',
which indicates a Fitch IBCA rating. Ratings A through AAA indicate good to
highest quality bonds with a strong to very strong capacity to pay interest
and repay principal. Bonds designated by 'NR' are not rated but in the
opinion of the agent for the Sponsors have similar credit quality to other
bonds in the Portfolio.
(3) Approximately 43% of the bonds were deposited at a premium, 17% at par and
40% at a discount from par. Sponsors' profit on deposit was $49,186.50.
(4) The interest and principal on these bonds will be used to pay the deferred
sales charge obligations of the investors, and these amounts are not
included in the calculation of Estimated Current and Long Term Returns.

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

DEFINING YOUR INCOME
AND ESTIMATING YOUR RETURN

WHAT YOU MAY EXPECT (Record Day: 10th day of
each April and October)
First payment per 1,000 units (4/25/99): $ 27.15
Regular Semi-Annual Income per 1,000 units
(each April and October) beginning 10/25/99): $ 25.06
Annual Income per 1,000 units: $ 50.14
These figures are estimates on the business day before the
initial date of deposit; actual payments may vary.
Estimated Current Return 4.86%
Estimated Long Term Return 4.77%
Returns will vary (see page 12).

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
2.90%
Maximum Sales Fee (Load) on new purchases (as
a percentage of $1,000 invested)

You will pay an up-front sales fee of 1.00%, as well as a
total deferred sales fee of $19.00 ($2.38 per 1,000 units
quarterly in the first year and $2.37 per 1,000 units
quarterly in the second year). Employees of some of the
Sponsors and their affiliates may pay a reduced sales fee of
at least $5.00 per 1,000 units.
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

AS A % OF AMOUNT
$1,000 PER 1,000
INVESTED UNITS
--------- -----------
.062% $ 0.63
Trustee's Fee
.045% $ 0.46
Portfolio Supervision,
Bookkeeping and
Administrative Fees
.026% $ 0.26
Evaluator's Fee
.030% $ 0.31
Other Operating Expenses
--------- -----------
.163% $ 1.66
TOTAL

AMOUNT
PER 1,000
UNITS
---------------------
$ 2.00
ORGANIZATION COSTS (deducted from
Fund assets at the close of the
initial offering period)

1 Year 3 Years 5 Years 10 Years
$138 $173 $212 $327

You will pay the following expenses if you do not sell your
units:

1 Year 3 Years 5 Years 10 Years
$128 $173 $212 $327

7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
In the following chart we show past performance of prior
Pennsylvania 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 Pennsylvania Series were
offered between March 1, 1988 and September 30, 1996 and
were outstanding on June 30, 1998. OF COURSE, PAST
PERFORMANCE OF PRIOR SERIES IS NO GUARANTEE OF FUTURE
RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
Reflecting all expenses. For periods ended 6/30/98.

WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 1 YEAR 5 YEARS
- ---------------------------------------------------------------
High 6.53% 5.12% 12.65% 6.27%
Average 4.03 4.45 7.54 5.53
Low 2.21 3.90 4.07 4.83
- ---------------------------------------------------------------

Average
Sales fee 3.41% 5.37%

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

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

10
<PAGE>
PENNSYLVANIA PORTFOLIO (CONTINUED)

9. HOW DO I BUY UNITS?
The minimum investment is $250.
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 1,000 UNITS $1,032.52
(as of September 24, 1998)
Unit price is based on the net asset value of the Fund plus
the up-front 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. Unit price also
includes the estimated organization costs shown on the
previous page. 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.
UNIT PAR VALUE $1.00
Unit par value means the total amount of money you should
generally receive on each unit by the termination of the
Fund (other than interest and premium on the bonds). This
total amount assumes that all bonds in the Fund are either
paid at maturity or called by the issuer at par or are sold
by the Fund at par. If you sell your units before the Fund
terminates, you may receive more or less than the unit par
value.
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 twice a year.
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 Pennsylvania state and local personal income
taxes if you live in Pennsylvania.
You will also receive principal payments if bonds are sold
or called or mature, when the cash available is more than
$5.00 per 1,000 units. 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.

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

FOR PENNSYLVANIA RESIDENTS
- --------------------------------------------------------------------------------

COMBINED
EFFECTIVE
TAXABLE INCOME 1998* 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

- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 25,350 $ 0- 42,350 17.38 3.63 4.24 4.84 5.45 6.05 6.66 7.26 7.87 8.47
$ 25,350- 61,400 $ 42,350-102,300 30.02 4.29 5.00 5.72 6.43 7.14 7.86 8.57 9.29 10.00
$ 61,400-128,100 $102,300-155,950 32.93 4.47 5.22 5.96 6.71 7.46 8.20 8.95 9.69 10.44
$128,100-278,450 $155,940-278,450 37.79 4.82 5.63 6.43 7.23 8.04 8.84 9.65 10.45 11.25
OVER $278,450 OVER $278,450 41.29 5.11 5.96 6.81 7.66 8.52 9.37 10.22 11.07 11.92
</TABLE>

*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 or personal exemptions, the phase out
of exemptions, itemized deductions or the possible partial disallowance of
deduction. Consequently, you should consult your own tax advisers in this
regard.

11
<PAGE>
WHAT YOU CAN EXPECT FROM YOUR INVESTMENT

INCOME TWICE A YEAR

The Fund will pay you regular income twice a year. Your 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 statement of income payments twice a year;
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.

12
<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, an issuer might call its bonds if it no longer needs the money for
the original purpose or, during periods of falling interest rates, if the
issuer's bonds have a coupon higher than current market rates. 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 each Portfolio's concentration in hospital
and health care bonds.
o payment for these bonds depends on revenues from private third-party payors
and government programs, including Medicare and Medicaid, which have
generally undertaken cost containment measures to limit payments to health
care providers;
o hospitals face competition resulting from hospital mergers and
affiliations;
o hospitals need to reduce costs as HMOs increase market penetration and
hospital supply and drug companies raise prices; and
o hospitals and health care providers are subject to various legal claims by
patients and others and are adversely affected by increasing costs of
insurance.

Here is what you should know about the California Portfolio's concentration in
general obligation bonds.
o general obligation bonds are backed by the issuer's pledge of its full
faith, credit and taxing power;
o but the taxing power of any government issuer may be limited by provisions
of the state constitution or laws as well as political considerations; and
o an issuer's credit can be negatively affected by various factors, including

13
<PAGE>
population decline that erodes the tax base, natural disasters, decline in
industry, limited access to capital markets or heavy reliance on state or
federal aid.

Here is what you should know about the Pennsylvania Portfolio's concentration in
university/college bonds. Payment for these bonds depends on:
o size and diversity of sources of revenue;
o availability of endowments and other funds;
o enrollment;
o reputation; and
o for public institutions, the financial condition of the government and its
educational policies.

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

14
<PAGE>
are two of the types of bonds affected by these provisions.

OHIO RISKS

Generally

Overall, Ohio's economy is more cyclical than non-industrial states and the
nation as a whole:

o Manufacturing (especially auto-related manufacturing) is an important part
of Ohio's economy.

o Agriculture and related industries are also very important.

o Recent employment growth has been in non-manufacturing areas.

State Government

The Ohio general revenue fund for the current two-year period calls for
expenditures of over $36 billion:

o Because general fund receipts and payments do not match exactly, temporary
cash-flow deficiencies occur throughout the year. Ohio law permits the
state government to manage this problem by permitting the adjustment of
payment schedules and the use of the total operating fund.

o Ohio's general obligation bonds are currently rated Aa1 by Moody's; AA+ by
Standard & Poor's (except for the State's highway bonds which Standard &
Poor's rates AAA). Fitch rates Ohio's general obligation bonds and its
highway bonds AA+. Any of these ratings may be changed.

o Ohio voters have authorized the State to incur debt to which taxes or
excises are pledged for payment.

Education Financing

In March of 1997, the Ohio Supreme Court found major parts of the state's school
funding system to be unconstitutional. The Court ruled that, although property
taxes can play a role in school financing, they can no longer be the primary
means of school financing. The court stayed its ruling for one year to allow the
State to devise a system that complied with the State's constitution. During
that stay, repayment provisions of certain bonds issued for school funding will
remain valid.

PENNSYLVANIA RISKS

Generally

Pennsylvania and many of its municipalities (including Philadelphia) have
undergone an economic decline:

o coal, steel, railroads and other heavy industry historically associated
with the Commonwealth has given way to increased competition from foreign
producers.

o agriculture and related industries are still an important part of the
Commonwealth's economy.

o Recently, however, service sector industries (trade, medical and health
services, education and financial services) have provided new sources of
growth.

State and Local Governments

Historically, both the Commonwealth and the City of Philadelphia have
experienced serious

15
<PAGE>
revenue shortfalls. At the same time, rising demands for state and local
programs and services (particularly medical assistance and cash assistance
programs) have lead to increased spending.

o In recent years, both the Commonwealth and the City of Philadelphia have
tried to balance their budgets with a mix of tax increases and spending
cuts.

o Philadelphia has considered significant service cuts and privatization of
certain services which it has provided to date.

o In 1991, the Commonwealth created the Pennsylvania Inter-Governmental
Cooperation Authority ('PICA') which it authorized to issue debt to cover
Philadelphia's budget shortfalls, eliminate the City's projected deficits
and fund its capital spending. PICA issued approximately $1.76 billion of
Special Revenue Bonds on Philadelphia's behalf. Its power to issue bonds on
Philadelphia's behalf expired at the end of 1996; as of June 30, 1997,
approximately $1.1 billion in PICA Special Revenue Bonds were outstanding.

o Pennsylvania's general obligation bonds are currently rated A1 by Moody's
and AA-by Standard & Poor's. Philadelphia's general obligation bonds are
rated Baa by Moody's and BBB by Standard & Poor's. There can be no
assurance that these ratings will not be lowered.

BOND QUALITY RISK

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

INSURANCE RELATED RISK

Some bonds are backed by insurance companies (as shown under Defined
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 AAA by Standard & Poor's
or another nationally recognized rating organization. The insurance company
ratings are subject to change at any time at the discretion of the rating
agencies.

LITIGATION AND LEGISLATION RISKS

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

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

SELLING OR EXCHANGING UNITS

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

16
<PAGE>
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.

As of the close of the initial offering period, the price you receive will be
reduced to reflect estimated organization costs.

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.

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

17
<PAGE>
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 date of deposit up to, but not including, the settlement date, which
is usually three business days after the purchase date of the unit.

Bonds also carry accrued but unpaid interest up to the initial date of deposit.
To avoid having you pay this additional accrued interest (which earns no return)
when you buy, the Trustee advances this amount to the Sponsors. The Trustee
recovers this advance from interest received on the bonds.

In addition, a portion of the price of a unit also consists of cash to pay all
or some of the costs of organizing the Fund including:
o cost of initial preparation of legal documents;
o federal and state registration fees;
o initial fees and expenses of the Trustee;
o initial audit; and
o legal expenses and other out-of-pocket expenses.

EVALUATIONS

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

18
<PAGE>
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

Interest on any bonds purchased on a when-issued basis or for a delayed delivery
does not begin to accrue until the bonds are delivered to the Fund. The Trustee
may reduce its fee to provide you with tax-exempt income for this non-accrual
period. If a bond is not delivered on time and the Trustee's annual fee and
expenses do not cover the additional accrued interest, we will treat the
contract to buy the bond as failed.

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. 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.

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 fails in the first 90 days of the Fund, we generally
will deposit a replacement tax-exempt bond with a similar yield, maturity,
rating and price.

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

19
<PAGE>
other adverse financial circumstances occur. However, we may sell a bond in
certain cases if we believe that certain adverse credit conditions exist or if a
bond becomes taxable.

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

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

FUND TERMINATION

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

20
<PAGE>
consent to any amendment that changes the 51% requirement. No amendment may
reduce your interest in the Fund without your written consent.

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

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

21
<PAGE>
SPONSORS

The Sponsors and their underwriting percentages are:

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (a wholly-owned subsidiary of
Merrill Lynch & Co., Inc.)
P.O. Box 9051,
Princeton, NJ 08543-9051 74.34%

SALOMON SMITH BARNEY INC. (an indirectly wholly-owned subsidiary of The
Travelers Inc.)
388 Greenwich Street--23rd Floor,
New York, NY 10013 12.33%
DEAN WITTER REYNOLDS INC. (a principal operating subsidiary of Morgan Stanley
Dean Witter & Co.)
Two World Trade Center--59th Floor,
New York, NY 10048 5.00%
PAINEWEBBER INCORPORATED (a wholly-owned subsidiary of PaineWebber Group Inc.)
1285 Avenue of the Americas,
New York, NY 10019 8.33%
100.00%

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

TRUSTEE

The Chase Manhattan Bank, Unit Investment Trust Department, 4 New York
Plaza--6th Floor, New York, New York 10004, is the Trustee. It is supervised by
the Federal Deposit Insurance Corporation, the Board of Governors of the Federal
Reserve System and New York State banking authorities.

UNDERWRITERS' AND SPONSORS' PROFITS

Underwriters receive sales charges when they sell units. Sponsors also realize a
profit or loss on deposit of the bonds shown under Defined Portfolios. 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.
We bought approximately 17% of the bonds in the Ohio Portfolio and 2% of the
bonds in the Pennsylvania Portfolio from one or more of the Sponsors (as sole
underwriter, managing underwriter or member of an underwriting syndicate).

During the initial offering period, the Sponsors also may realize profits or
sustain losses on units they hold. 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

During the initial offering period, units will be distributed to the public by
the Sponsors and dealers who are members of the National Association of
Securities Dealers, Inc. This period is 30 days or less if all units are sold.
The Sponsors may extend the initial period up to 120 days.

The Sponsors do not intend to qualify units for sale in any foreign countries.
This prospectus

22
<PAGE>
does not constitute an offer to sell units in any country where units cannot
lawfully be sold.

In the initial offering period, the concession to dealers will be $21 per 1,000
units. We may change the concession at any time. Dealers may resell units to
other dealers with a concession not in excess of the original concession to
dealers.

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.

TAXES

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

At the date of issue of each bond, counsel for the issuer delivered an opinion
to the effect that interest on the bond is exempt from regular federal income
tax. However, interest may be subject to state and local taxes and federal
alternative minimum tax. Neither we nor our counsel have reviewed the issuance
of the bonds, related proceedings or the basis for the opinions of counsel for
the issuers. We cannot assure you that the issuer (or other users) have complied
or will comply with any requirements necessary for a bond to be tax-exempt. If
any of the bonds were determined not to be tax-exempt, you could be required to
pay income tax for current and prior years, and if the Fund were to sell the
bond, it might have to sell it at a substantial discount.

In the opinion of our counsel, under existing law:

GENERAL TREATMENT OF THE FUND AND YOUR INVESTMENT

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

INCOME OR LOSS UPON DISPOSITION

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

23
<PAGE>
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 12 months, you may be entitled to a 20% maximum
federal tax rate on any resulting gains. Consult your tax adviser in this
regard. Because the deductibility of capital losses is subject to limitations,
you may not be able to deduct all of your capital losses.

YOUR BASIS IN THE BONDS

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

EXPENSES

If you are not a corporate investor, you will not be entitled to a deduction for
your share of fees and expenses of the Fund. Also, if you borrowed money in
order to purchase or carry your units, you will not be able to deduct the
interest on this borrowing for federal income tax purposes. The IRS may treat
your purchase of units as made with borrowed money even if the money is not
directly traceable to the purchase of units.

STATE AND LOCAL TAXES

Under the income tax laws of the State and City of New York, the Fund will not
be taxed as a corporation. If you are a New York taxpayer, your income from the
Fund will not be tax-exempt in New York except to the extent that the income is
earned on bonds that are tax-exempt for New York purposes. Depending on where
you live, your income from the Fund may be subject to state and local taxation.
You should consult your tax adviser in this regard.

CALIFORNIA TAXES

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

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

OHIO TAXES

In the opinion of Vorys, Sater, Seymour and Pease LLP, Columbus, Ohio, special
counsel on Ohio tax matters:

24
<PAGE>
Under the laws of the State of Ohio, the Ohio Trust will not be subject to the
Ohio corporation franchise tax or the Ohio tax on dealers in intangibles. If you
are an Ohio taxpayer, your interest income from the Ohio Trust will be exempt
from Ohio personal income taxes and Ohio corporation franchise taxes to the
extent it relates to bonds held by the Ohio Trust that are exempt from taxation
under Ohio law. However, any gains and losses which must be recognized for
federal income tax purposes (whether upon the sale of your units in the Ohio
Trust or upon the sale of bonds by the Ohio Trust) also must be recognized for
Ohio personal income and corporation franchise tax purposes, except to the
extent the gains and losses are attributable to the sale of bonds by the Ohio
Trust that are exempt from such taxation under Ohio law. Your interest income
and your gains and losses generally are not subject to municipal income taxation
in Ohio. You should consult your tax adviser concerning the application of Ohio
taxes to you in connection with your investment in the Ohio Trust.

PENNSYLVANIA TAXES

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

The Pennsylvania Trust will not be taxed as a corporation under the current
income tax laws of Pennsylvania. Your inocme from the Trust may be subject to
taxation depending on where you live. If you are a Pennsylvania taxpayer your
interest income from the Trust will be tax exempt to the extent that income is
earned on bonds that are tax exempt for Pennsylvania purposes. However, gains on
the sale of bonds by the Trust or on the sale of your Units will be subject to
Pennsylvania income tax. If you are a Philadelphia resident you may be subject
to the Philadelphia school district tax on any gains realized from the sale of
bonds by the Trust or the sale of Units by you to the extent either the bonds or
Units have been held for six months or less. You should consult your tax adviser
as to the consequences to you with respect to any investment you make in the
Trust.

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.

25
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

The Sponsors, Trustee and Holders of Municipal Investment Trust Fund, Multistate
Series--401, Defined Asset Funds (California Insured, Ohio and Pennsylvania
Trusts) (the 'Fund'):

We have audited the accompanying statements of condition and the related defined
portfolios included in the prospectus of the Fund as of September 25, 1998.
These financial statements are the responsibility of the Trustee. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Fund as of September 25,
1998 in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP
New York, N.Y.
September 25, 1998

STATEMENTS OF CONDITION AS OF SEPTEMBER 25, 1998

TRUST PROPERTY

CALIFORNIA INSURED OHIO PENNSYLVANIA
PORTFOLIO PORTFOLIO PORTFOLIO
-------------------- -------------------- --------------------
<S> <C> <C> <C>
Investments--Bonds and Contracts to purchase Bonds(1) $ 5,072,213.25 $ 5,087,670.10 $ 5,101,990.00
Cash 10,000.00 10,000.00 10,000.00
Accrued interest to initial date of deposit on underlying
Bonds 56,417.94 49,653.58 74,716.67
-------------------- -------------------- --------------------
Total $ 5,138,631.19 $ 5,147,323.68 $ 5,186,706.67
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
LIABILITIES AND INTEREST OF HOLDERS
Liabilities:
Advance by Trustee for accrued interest(2) $ 56,417.94 $ 49,653.58 $ 74,716.67
Reimbursement of Sponsors for organization
expenses(3) 10,000.00 10,000.00 10,000.00
-------------------- -------------------- --------------------
Subtotal 66,417.94 59,653.58 84,716.67
-------------------- -------------------- --------------------
Interest of Holders of units of fractional undivided
interest outstanding
(California Insured Portfolio--5,000,000; Ohio
Portfolio--5,000,000; Pennsylvania
Portfolio--5,000,000)
Cost to investors(3)(4)(5) 5,132,513.25 5,148,170.10 5,162,590.00
Organization expenses(3) and gross underwriting
commissions(4) (60,300.00) (60,500.00) (60,600.00)
-------------------- -------------------- --------------------
Subtotal 5,072,213.25 5,087,670.10 5,101,990.00
-------------------- -------------------- --------------------
Total $ 5,138,631.19 $ 5,147,323.68 $ 5,186,706.67
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------

</TABLE>

- ---------------
(1) Aggregate cost to the Fund of the bonds listed under each portfolio
is based upon the offer side evaluation determined by the Evaluator at the
evaluation time on the business day prior to the initial date of deposit. The
contracts to purchase the bonds are collateralized by an irrevocable letter of
credit which has been issued by San Paolo Bank, New York Branch, in the amount
of $14,575,932.69 deposited with the Trustee. The amount of the letter of credit
includes $14,403,477.10 for the purchase of $14,520,000 face amount of the
bonds, plus $172,455.59 for accrued interest.
(2) Representing a special distribution to the Sponsors by the Trustee
of an amount equal to the accrued interest on the bonds.
(3) A portion of the Unit Price consists of cash in an amount
sufficient to pay for costs incurred in establishing the Fund. These costs have
been estimated at $2.00 per 1,000 Units. A distribution will be made at the
close of the initial offering period to an account maintained by the Trustee
from which the organizational expense obligation of the investors to the
Sponsors will be satisfied.
(4) Assumes the maximum up-front sales fee per 1,000 units of 1.00% of
the Public Offering Price. A deferred sales fee of $19.00 per 1,000 units is
payable over a two-year period ($2.38 per 1,000 units quarterly in the first
year and $2.37 per 1,000 units quarterly in the second year). Distributions will
be made to an account maintained by the Trustee from which the deferred sales
fee obligation of the investors will be satisfied. If units are redeemed prior
to the end of second anniversary of the Fund, the remaining portion of the
deferred sales fee applicable to such units will be transferred to the account
on the redemption date.
(5) Aggregate Unit Price (exclusive of interest) computed on the basis
of the offer side evaluation of the underlying bonds as of the evaluation time
on the business day prior to the Initial Date of Deposit.

26
<PAGE>
Defined
Asset FundsSM

HAVE QUESTIONS ? MUNICIPAL INVESTMENT TRUST FUND
Request the most MULTISTATE SERIES 401
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.
333-57375) 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.

70134--9/98