MUNICIPAL INVESTMENT TR FD MULTISTATE SER 401 DEF ASSET FDS, 497, 1999-12-30

MUNICIPAL INVESTMENT TR FD MULTISTATE SER 401 DEF ASSET FDS
497, 1999-12-30

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<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 INCOME FREE FROM REGULAR FEDERAL
INCOME TAX
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 December 30, 1999.

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

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

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

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

CONTENTS
PAGE
-----------
California Insured Portfolio--
Risk/Return Summary.................................. 3
Ohio Portfolio--Risk/Return Summary..................... 6
Pennsylvania Portfolio--Risk/Return Summary............. 9
What You Can Expect From Your Investment................ 13
Monthly Income....................................... 13
Return Figures....................................... 13
Records and Reports.................................. 13
The Risks You Face...................................... 14
Interest Rate Risk................................... 14
Call Risk............................................ 14
Reduced Diversification Risk......................... 14
Liquidity Risk....................................... 14
Concentration Risk................................... 14
State Concentration Risk............................. 15
Bond Quality Risk.................................... 17
Insurance Related Risk............................... 17
Litigation and Legislation Risks..................... 17
Selling or Exchanging Units............................. 18
Sponsors' Secondary Market........................... 18
Selling Units to the Trustee......................... 18
Exchange Option...................................... 19
How The Fund Works...................................... 19
Pricing.............................................. 19
Evaluations.......................................... 19
Income............................................... 20
Expenses............................................. 20
Portfolio Changes.................................... 20
Fund Termination..................................... 21
Certificates......................................... 21
Trust Indenture...................................... 21
Legal Opinion........................................ 22
Auditors............................................. 22
Sponsors............................................. 22
Trustee.............................................. 23
Underwriters' and Sponsors' Profits 23
Public Distribution.................................. 23
Code of Ethics....................................... 23
Year 2000 Issues..................................... 23
Taxes................................................... 23
Supplemental Information................................ 26
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 7 long-term tax-exempt
municipal bonds, and some short-term bonds reserved to pay
the deferred sales fee, with an aggregate face amount of
$4,990,000.
o The Fund is a unit investment trust which means that,
unlike a mutual fund, the Portfolio is not managed.
o The bonds are rated AAA or Aaa by Standard & Poor's,
Moody's or Fitch.
o Many of the bonds can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 100% of the bonds are insured by insurance companies that
guarantee timely payments of principal and interest on the
bonds (but not Fund units or the market value of the bonds
before they mature).

The Portfolio consists of municipal bonds of the following
types:

APPROXIMATE
PORTFOLIO
PERCENTAGE

/ / General Obligation 27%
/ / Hospital/Health Care 27%
/ / Lease Rental Appropriation 14%
/ / Municipal Water/Sewer Utilities 16%
/ / Special Tax Issues 1%
/ / 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 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 Semi-Annual Income Per 1,000 units $ 23.80
Annual Income per unit: $ 47.61
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 an up-front sales fee of 1.714%, as well as a
deferred sales fee of $3.75 per unit quarterly November,
February, May and August through November, 2000. 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
-----------
$ 0.63
Trustee's Fee
$ 0.56
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
$ 0.26
Evaluator's Fee
$ 0.33
Other Operating Expenses
-----------
$ 1.78
TOTAL

The Sponsors historically paid 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 September 30, 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 9/30/99.

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

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

High 3.86% 6.69% 5.97% 4.25% 7.89% 6.57%
Average -2.14 5.00 5.82 -0.25 6.05 6.41
Low -5.88 2.82 5.61 -3.20 3.65 6.20

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

Average
Sales fee 1.97% 5.15% 5.82%

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

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>

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>
- --------------------------------------------------------------------------------

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 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 7 long-term tax-exempt
municipal bonds, and some short-term bonds reserved to pay
the deferred sales fee, with an aggregate face amount of
$4,905,000.
o The Fund is a unit investment trust which means that,
unlike a mutual fund, the Portfolio is not managed.
o When the bonds were initially deposited they were rated A
or better by Standard & Poor's, Moody's or Fitch. The
quality of the bonds may currently be lower.
o Many of the bonds can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 73% of the bonds are insured by insurance companies that
guarantee timely payments of principal and interest on the
bonds (but not Fund units or the market value of the bonds
before they mature).

The Portfolio consists of municipal bonds of the following
types:

APPROXIMATE
PORTFOLIO
PERCENTAGE
/ / Airports/Ports/Highways 16%
/ / Hospital/Health Care 42%
/ / Municipal Water/Sewer Utilities 15%
/ / Parking/Stadiums/Recreational/
Facilities 12%
/ / Special Tax Issues 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.
In addition, 15% of the bonds are currently unrated.

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

6
<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 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 Semi-Annual Income per 1,000 units $ 24.80
Annual Income per unit: $ 49.60
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 an up-front sales fee of 1.714% as well as a
deferred sales fee of $3.75 per unit quarterly November,
February, May and August, through November, 2000.
Employees of some of the Sponsors and their affiliates may
be charged 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
-----------
$ 0.63
Trustee's Fee
$ 0.56
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
$ 0.27
Evaluator's Fee
$ 0.34
Other Operating Expenses
-----------
$ 1.80
TOTAL

The Sponsors historically paid updating expenses.
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 September 22, 1988 and September 13, 1996
and were outstanding on September 30, 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 9/30/99.

WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 1 YEAR 5 YEARS
- ---------------------------------------------------------------
High 1.80% 6.33% 3.00% 7.52%
Average -1.97 4.70 -0.20 5.80
Low -6.54 3.22 -3.94 4.02
- ---------------------------------------------------------------

Average
Sales fee 1.85% 5.45%

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

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 $933.65
(as of August 31, 1999)
Unit price is based on the net asset value of the Fund plus
the sales fee. An amount equal to any principal cash, as
well as net accrued but undistributed interest on the unit,
is added to the unit price. An independent evaluator prices
the bonds at 3:30 p.m. Eastern time every business day.
Unit price changes every day with changes in the prices of
the bonds in the Fund.
10. HOW DO I SELL UNITS?
You may sell your units at any time to any Sponsor or the
Trustee for the net asset value determined at the close of
business on the date of sale less any remaining deferred
sales fee. You will not pay any other fee when you sell
your units.
11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100% exempt
from regular federal income tax. Your income may also be
exempt from some Ohio state and local personal income 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 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>
- --------------------------------------------------------------------------------

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 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 8 long-term tax-exempt
municipal bonds, any some short-term bonds reserved to pay
the deferred sales fee, with an aggregate face amount of
$5,050,000.
o The Fund is a unit investment trust which means that,
unlike a mutual fund, the Portfolio is not managed.
o When the bonds were initially deposited they were rated A
or better by Standard & Poor's, Moody's or Fitch. The
quality of the bonds may currently be lower.
o Many of the bonds can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 85% of the bonds are insured by insurance companies that
guarantee timely payments of principal and interest on the
bonds (but not Fund units or the market value of the bonds
before they mature).

The Portfolio consists of municipal bonds of the following
types:

APPROXIMATE
PORTFOLIO
PERCENTAGE

/ / Airports/Ports/Highways 16%
/ / General Obligation 17%
/ / Hospital/Health Care 41%
/ / Universities/Colleges 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 bond 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 BONDS OF
PENNSYLVANIA SO IT IS LESS DIVERSIFIED THAN A NATIONAL FUND
AND IS SUBJECT TO RISKS PARTICULAR TO PENNSYLVANIA WHICH
ARE BRIEFLY DESCRIBED UNDER STATE CONCENTRATION RISKS LATER
IN THIS PROSPECTUS.

9
<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 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 Semi-Annual Income per 1,000 units $ 25.06
Annual Income per unit: $ 50.13
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 an up-front sales fee of 1.714%, as well as a
deferred sales fee of $3.75 per unit quarterly November,
February, May and August, through November, 2000. 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
-----------
$ 0.63
Trustee's Fee
$ 0.56
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
$ 0.26
Evaluator's Fee
$ 0.32
Other Operating Expenses
-----------
$ 1.77
TOTAL

The Sponsors historically paid updating expenses.
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 May 19, 1988 and September 13,
1996 and were outstanding on September 30, 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 9/30/99.

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

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

High 1.25% 6.52% 6.06% 2.44% 7.71% 6.55%
Average -2.01 4.96 5.78 -0.14 6.01 6.35
Low -6.76 3.04 5.65 -4.12 3.99 6.23

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

Average
Sales fee 1.94% 5.20% 5.63%

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

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

10
<PAGE>

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 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 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.

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

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

<TABLE>
<CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 1999* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
IS EQUIVALENT TO A TAXABLE YIELD OF

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

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

COMBINED
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

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

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.

13
<PAGE>
THE RISKS YOU FACE

INTEREST RATE RISK

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

CALL RISK

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

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

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

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

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

REDUCED DIVERSIFICATION RISK

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

LIQUIDITY RISK

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

CONCENTRATION RISK

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

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

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

Here is what you should know about the California 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
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 level or amount and diversity of sources of revenue;
o availability of endowments and other funds;
o enrollment;
o financial management;
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 markedly and the
extreme budgetary pressures have begun to lessen. However, the Asian
economic crisis is expected to continue to have some negative effectt on
the State's economy.

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)

15
<PAGE>
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.

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:

16
<PAGE>
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 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 Portfolios).
Insurance policies generally make payments only according to a bond's original
payment schedule and do not make early payments when a bond defaults or becomes
taxable. Although the federal government does not regulate the insurance
business, various state laws and federal initiatives and tax law changes could
significantly affect the insurance business. The claims-paying ability of the
insurance companies is generally rated A or better by Standard & Poor's or
another nationally recognized rating organization. The insurance company ratings
are subject to change at any time at the discretion of the rating agencies.

LITIGATION AND LEGISLATION RISKS

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

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

17
<PAGE>
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.

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

18
<PAGE>
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, 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

19
<PAGE>
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 55 cents per $1,000 face amount
annually for providing portfolio supervisory, bookkeeping and administrative
services and for any other expenses properly chargeable to the Fund. Legal,
typesetting, electronic filing and regulatory filing fees and expenses
associated with updating the Portfolio's registration statement yearly are also
now chargeable to the Portfolio. While this fee may exceed the amount of these
costs and expenses attributable to this Fund, the total of these fees for all
Series of Defined Asset Funds will not exceed the aggregate amount attributable
to all of these Series for any calendar year. The Fund also pays the Evaluator's
fees.

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

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

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

PORTFOLIO CHANGES

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

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

If we maintain a secondary market in units but are unable to sell the units that
we buy in the secondary market, we will redeem units, which may affect the
composition of the portfolio.

20
<PAGE>
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
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:

21
<PAGE>
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 securities (including investment company shares) for
others (including investment companies) and participates as an underwriter in
various selling groups.

22
<PAGE>
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 bonds
contained in a Portfolio, but we cannot predict whether any impact will be
material to the Fund as a whole.

TAXES

The following summary describes some of the important income tax consequences of
holding units. It assumes that you are not a dealer, financial institution,
insurance company or other investor with special circumstances or subject to
special rules. 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 may be taken into
account in determining your preference items for alternative minimum tax
purposes. Neither we nor our counsel have reviewed the issuance of the bonds,
related proceedings or the basis for the opinions of

23
<PAGE>
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.

GAIN 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 otherwise. 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. Because the deductibility of capital losses is subject to limitations,
you may not be able to deduct all of your capital losses. Consult your tax
adviser in this regard.

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

24
<PAGE>
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:

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 LLP, 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 income 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

25
<PAGE>
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.

<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (CALIFORNIA INSURED, OHIO,
PENNSYLVANIA TRUSTS),
DEFINED ASSET FUNDS

REPORT OF INDEPENDENT ACCOUNTANTS

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

We have audited the accompanying statements of condition of
Municipal Investment Trust Fund, Multistate Series - 401
(California Insured, Ohio and Pennsylvania Trusts), Defined
Asset Funds, including the portfolios, as of August 31, 1999
and the related statements of operations and of changes in
net assets for the period September 26, 1998 to August 31,
1999. These financial statements are the responsibility of
the Trustee. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the 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 August 31,
1999, as shown in such portfolios, were confirmed to us by
The Chase Manhattan Bank, the Trustee. An audit also includes
assessing the accounting principles used and significant
estimates made by the Trustee, as well as evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Municipal Investment Trust Fund,
Multistate Series - 401 (California Insured, Ohio and
Pennsylvania Trusts), Defined Asset Funds at August 31,
1999 and the results of their operations and changes in their
net assets for the above-stated period in conformity with
generally accepted accounting principles.

DELOITTE & TOUCHE LLP

New York, N.Y.
December 7, 1999

D - 1.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS
STATEMENT OF CONDITION
As of August 31, 1999

<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
at value (cost $ 4,973,618 )(Note 1)......... $ 4,481,824
Accrued interest ............................... 61,481
Accrued interest on Segregated Bonds (Note 5) .. 725
Income payments receivable (Segregated Bonds) .. 923
Cash - income .................................. 31,936
Cash - income on Segregated Bonds .............. 2,217
-----------
Total trust property ......................... 4,579,106

LESS LIABILITIES:
Principal advance from Trustee ................. $ 2,569
Deferred sales charge (Note 5) ................. 36,909
Principal payments payable ..................... 923
Trustee's fees and expenses payable ............ 505
Accrued Sponsors' fees ......................... 1,596 42,502
----------- -----------

NET ASSETS, REPRESENTED BY:
4,898,090 units of fractional undivided
interest outstanding (Note 3)................ 4,445,288

Undistributed net investment income ............ 91,316 $ 4,536,604
----------- ===========

UNIT VALUE ($ 4,536,604 / 4,898,090 units )....... $ .92620
===========

</TABLE>

See Notes to Financial Statements.

D - 2.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
September 26, 1998
to
August 31,
1999
----

<S> <C>
INVESTMENT INCOME:
Interest income ........................ $ 229,067
Interest income on Segregated
Bonds (Note 5) ....................... 3,865
Trustee's fees and expenses ............ (4,801)
Sponsors' fees ......................... (2,204)
------------
Net investment income .................. 225,927
------------

REALIZED AND UNREALIZED LOSS
ON INVESTMENTS:
Realized loss on
securities sold or redeemed .......... (12,109)
Unrealized depreciation
of investments ....................... (491,794)
------------
Net realized and unrealized
loss on investments ................. (503,903)
------------

NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ (277,976)
============

</TABLE>

See Notes to Financial Statements.

D - 3.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
September 26, 1998
to
August 31,
1999
----

<S> <C>
OPERATIONS:
Net investment income .................. $ 225,927
Realized loss on
securities sold or redeemed .......... (12,109)
Unrealized depreciation
of investments ....................... (491,794)
------------
Net decrease in net assets
resulting from operations ............ (277,976)
------------

INCOME DISTRIBUTIONS TO
HOLDERS (Note 2)....................... (128,900)
------------

SHARE TRANSACTIONS:
Deferred sales charge (Note 5):
Principal ............................ (36,909)

Redemption amounts:
Income ............................... (1,846)
Principal ............................ (89,978)
------------
Net share transactions ................. (128,733)
------------

NET DECREASE IN NET ASSETS ............... (535,609)

NET ASSETS AT BEGINNING OF PERIOD ........ 5,072,213
------------
NET ASSETS AT END OF PERIOD .............. $ 4,536,604
============
PER UNIT:
Income distributions during
period ............................... $ .02580
============
Net asset value at end of
period ............................... $ .92620
============
TRUST UNITS:
Redeemed during period ................. 101,910
Outstanding at end of period ........... 4,898,090
============
</TABLE>

See Notes to Financial Statements.

D - 4.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS

NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>

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 September 26, 1998 was based upon
offering side evaluations at September 24, 1998, the day
prior to the Date of Deposit. Cost of securities at
September 26, 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

Cost of 4,898,090 units at Date of Deposit ................. $ 4,968,831
Transfer to capital of interest on Segregated Bonds (Note 5) 3,865
Redemptions of units - net cost of 101,910 units redeemed
less redemption amounts (principal)....................... 13,404
Deferred sales charge (Note 5) ............................. (36,909)
Realized loss on securities sold or redeemed ............... (12,109)
Unrealized depreciation of investments ..................... (491,794)
-----------

Net capital applicable to Holders .......................... $ 4,445,288
===========
4. INCOME TAXES

As of August 31, 1999, unrealized depreciation of investments, based on cost
for Federal income tax purposes, aggregated $491,794, all of which related
to depreciated securities. The cost of investment securities for Federal income
tax purposes was $4,973,618 at August 31, 1999.
</TABLE>

D - 5.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (CALIFORNIA INSURED TRUST),
DEFINED ASSET FUNDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
NOTES TO FINANCIAL STATEMENTS

5. DEFERRED SALES CHARGE

$45,000 face amount of Alameda Cnty. Trans. Auth., CA, Sub. Sales Tax Rev.
Bonds (Limited Tax Bonds), Ser. 1997, $40,000 face amount of California
Statewide Cmntys. Dev. Auth., Certs. of Part. (Sutter Hlth. Oblig. Grp.) and
$5,000 face amount of the El Segundo Unified Sch. Dist., (Los Angeles Cnty.,
CA), G.O. Bonds, 1997 Election, Ser. 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 $2.38 per 1000 Units 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 $19.00 per 1000 Unit over the first two
years of the life of the Fund. Should a Holder redeem Units prior to the second
anniversary of the Fund, the remaining balance of the deferred sales charge will
be charged.

</TABLE>

D - 6.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (CALIFORNIA TRUST) (INSURED),
DEFINED ASSET FUNDS

PORTFOLIO
As of August 31, 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 South Whittier Elem. Sch. Dist., Los AAA $ 600,000 5.000 % 2023 08/01/08 $ 602,622 $ 548,418
Angeles Cnty., CA, Election of 1998 @ 101.000
G.O. Bonds, Ser. A (Financial
Guaranty Ins.)

2 State of California, G.O. Rfdg. Bonds AAA 750,000 5.000 2023 02/01/08 755,918 686,175
Ser. 1998 (Financial Guaranty Ins.) @ 101.000

3 El Segundo Unified Sch. Dist., (Los AAA 5,000 3.900 2001 None 5,040 4,990
Angeles Cnty., CA), G.O. Bonds, 1997
Election, Ser. A (FSA Ins.) (6)

4 California Statewide Cmntys. Dev. AAA 40,000 5.250 2000 None 41,271 40,568
Auth., Certs. of Part. (Sutter Hlth.
Oblig. Grp.) (AMBAC Ins.) (6)

5 County of Madera, CA, Certs. of Part. AAA 500,000 5.000 2023 03/15/08 500,000 456,145
(Valley Children's Hosp. Proj.), Ser. @ 101.000
1998 (MBIA Ins.)

6 California Hlth. Facs. Fin. Auth., AAA 800,000 5.000 2028 11/15/08 800,000 724,920
Rev. Bonds (USCF - Stanford Hlth. Care), @ 101.000
Ser. 1998 B (AMBAC Ins.)

7 City of La Habra, CA, Rfdg. Certs. of AAA 700,000 4.800 2022 09/01/08 690,172 617,372
Part. (Park La Habra and Viewpark @ 101.000
Refinancing Proj.) Ser. 1998 A (FSA
Ins.)

8 East Bay Mun. Util. Dist. (Alameda and AAA 800,000 4.750 2034 06/01/08 779,808 679,152
Contra Costa Cntys., CA), Wtr. Sys. Sub. @ 101.000
Rev. Bonds, Ser. 1998 (MBIA Ins.)

</TABLE>

D - 7.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (CALIFORNIA TRUST) (INSURED),
DEFINED ASSET FUNDS

PORTFOLIO
As of August 31, 1999

<S> <C> <C> <C> <C> <C> <C> <C>
9 Alameda Cnty. Trans. Auth., CA, Sub. AAA $ 45,000 4.100 % 1999 None $ 45,532 $ 45,041
Sales Tax Rev. Bonds (Limited Tax
Bonds), Ser. 1998 (AMBAC Ins.) (6)

10 City of Santa Clara, CA, Sub. Elec. AAA 750,000 5.000 2027 07/01/08 753,255 679,043
Rev. Rfdg. Bonds, Ser. 1998 A (AMBAC @ 102.000
Ins.)

--------- --------- ---------
TOTAL $ 4,990,000 $ 4,973,618 $ 4,481,824
========= ========= =========

See Notes to Portfolios on Page D - 21.
</TABLE>

D - 8.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (OHIO TRUST),
DEFINED ASSET FUNDS
STATEMENT OF CONDITION
As of August 31, 1999

<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
at value (cost $ 4,900,506 )(Note 1)......... $ 4,426,815
Accrued interest ............................... 42,689
Accrued interest on Segregated Bonds (Note 5) .. 151
Cash - income .................................. 52,448
Cash - income on Segregated Bonds .............. 3,020
Cash - principal ............................... 3,203
-----------
Total trust property ......................... 4,528,326

LESS LIABILITIES:
Deferred sales charge (Note 5) ................. $ 28,038
Principal payments payable (Segregated Bonds) .. 3,203
Accrued Sponsors' fees ......................... 1,587 32,828
----------- -----------

NET ASSETS, REPRESENTED BY:
4,824,076 units of fractional undivided
interest outstanding (Note 3)................ 4,401,948

Undistributed net investment income ............ 93,550 $ 4,495,498
----------- ===========

UNIT VALUE ($ 4,495,498 / 4,824,076 units )....... $ .93189
===========

</TABLE>

See Notes to Financial Statements.

D - 9.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (OHIO TRUST),
DEFINED ASSET FUNDS
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
September 26, 1998
to
August 31,
1999
----

<S> <C>
INVESTMENT INCOME:
Interest income ........................ $ 234,389
Interest income on Segregated
Bonds (Note 5) ....................... 3,171
Trustee's fees and expenses ............ (3,941)
Sponsors' fees ......................... (2,195)
------------
Net investment income .................. 231,424
------------

REALIZED AND UNREALIZED LOSS
ON INVESTMENTS:
Realized loss on
securities sold or redeemed .......... (7,223)
Unrealized depreciation
of investments ....................... (473,691)
------------
Net realized and unrealized
loss on investments ................. (480,914)
------------

NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ (249,490)
============

</TABLE>

See Notes to Financial Statements.

D - 10.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (OHIO TRUST),
DEFINED ASSET FUNDS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
September 26, 1998
to
August 31,
1999
----

<S> <C>
OPERATIONS:
Net investment income .................. $ 231,424
Realized loss on
securities sold or redeemed .......... (7,223)
Unrealized depreciation
of investments ....................... (473,691)
------------
Net decrease in net assets
resulting from operations ............ (249,490)
------------

INCOME DISTRIBUTIONS TO
HOLDERS (Note 2)....................... (132,245)
------------

SHARE TRANSACTIONS:
Deferred sales charge (Note 5):
Principal ............................ (37,786)

Redemption amounts:
Income ............................... (2,458)
Principal ............................ (170,193)
------------
Net share transactions ................. (210,437)
------------

NET DECREASE IN NET ASSETS ............... (592,172)

NET ASSETS AT BEGINNING OF PERIOD ........ 5,087,670
------------
NET ASSETS AT END OF PERIOD .............. $ 4,495,498
============
PER UNIT:
Income distributions during
period ............................... $ .02688
============
Net asset value at end of
period ............................... $ .93189
============
TRUST UNITS:
Redeemed during period ................. 175,924
Outstanding at end of period ........... 4,824,076
============
</TABLE>

See Notes to Financial Statements.

D - 11.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (OHIO TRUST),
DEFINED ASSET FUNDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

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

2. DISTRIBUTIONS

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

3. NET CAPITAL

Cost of 4,824,076 units at Date of Deposit ................. $ 4,908,661
Transfer to capital of interest on Segregated Bonds (Note 5) 3,171
Redemptions of units - net cost of 175,924 units redeemed
less redemption amounts (principal)....................... 8,816
Deferred sales charge (Note 5) ............................. (37,786)
Realized loss on securities sold or redeemed ............... (7,223)
Net unrealized depreciation of investments ................. (473,691)
-----------

Net capital applicable to Holders .......................... $ 4,401,948
===========
4. INCOME TAXES

As of August 31, 1999, net unrealized depreciation of investments, based on
cost for Federal income tax purposes, aggregated $473,691, of which $473,708
related to depreciated securities and $17 related to appreciated securities.
The cost of investment securities for Federal income tax purposes was $4,900,506
at August 31, 1999.
</TABLE>

D - 12.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (OHIO TRUST),
DEFINED ASSET FUNDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
NOTES TO FINANCIAL STATEMENTS

5. DEFERRED SALES CHARGE

$90,000 face amount of State of Ohio Tpke. Comm., Tpke. Rev. Bonds, Ser. 1998 B,
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 $2.38 per 1,000 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
$19.00 per 1,000 Unit over the first two years of the life of the Fund. Should a
Holder redeem Units prior to the second anniversary of the Fund, the remaining
balance of the deferred sales charge will be charged.

</TABLE>

D - 13.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (OHIO TRUST),
DEFINED ASSET FUNDS

PORTFOLIO
As of August 31, 1999

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

<S> <C> <C> <C> <C> <C> <C> <C>
1 State of Ohio Tpke. Comm., Tpke. Rev. AAA $ 695,000 4.750 % 2028 08/15/08 $ 673,552 $ 590,479
Bonds, Ser. 1998 B (Financial Guaranty @ 101.000
Ins.) (5)
45,000(6) 3.800 2001 None 45,000 44,773

2 State of Ohio Tpke. Comm., Tpke. Rev. AAA 45,000 3.750 2000 None 45,000 45,017
Bonds, Ser. 1998 B (6)

3 County of Butler, OH, Hosp. Fac. Rev. A2(m) 520,000 5.000 2028 11/15/08 508,087 450,622
Rfdg. and Imp. Bonds (Middletown Regl. @ 101.000
Hosp. Oblig. Grp.), Ser. 1998

4 County of Franklin, OH, Hlth. Care Facs. A 750,000 5.375 2028 08/15/08 754,868 692,707
Rev. Rfdg. and Imp. Bonds (Friendship @ 101.000
Village of Columbus, Ohio, Inc. Proj.),
Ser. 1998 (ACA Ins.) (5)

5 County of Franklin, OH, Hlth. Care Facs. NR 750,000 5.500 2021 07/01/08 750,000 687,577
Rfdg. Rev. Bonds (Ohio Presbyterian @ 101.000
Retirement Svcs.), Ser. 1998

6 City of Cleveland, OH, Wtrwks. Imp. and AAA 750,000 5.000 2028 01/01/08 753,150 674,633
Rfdg. Rev. Bonds, Ser. 1998 I (FSA Ins.) @ 101.000
(5)

7 City of Cleveland, OH, Certs. Of Part. AAA 600,000 5.250 2027 11/15/07 617,826 566,292
(Cleveland Stadium Proj.), Ser. 1997 @ 102.000
(AMBAC Ins.) (5)

8 County of Hamilton, OH, Sales Tax Bonds AAA 750,000 5.000 2027 06/01/08 753,023 674,715
(Hamilton Cnty. Football Proj.), Ser. @ 101.000
1998 B (MBIA Ins.) (5)

--------- --------- ---------
TOTAL $ 4,905,000 $ 4,900,506 $ 4,426,815
========= ========= =========

See Notes to Portfolios on Page D - 21.
</TABLE>

D - 14.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (PENNSYLVANIA TRUST),
DEFINED ASSET FUNDS
STATEMENT OF CONDITION
As of August 31, 1999

<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
at value (cost $ 5,060,302 )(Note 1)......... $ 4,562,877
Accrued interest ............................... 83,093
Accrued interest on Segregated Bonds (Note 5) .. 816
Income payments receivable ..................... 1,631
Cash - income .................................. 13,704
Cash - income on Segregated Bonds .............. 2,229
Cash - principal ............................... 3,158
Trustee's fees and expenses receivable ......... 453
-----------
Total trust property ......................... 4,667,961

LESS LIABILITIES:
Deferred sales charge (Note 5) ................. $ 34,649
Principal payments payable (Segregated Bonds)... 1,527
Principal payments payable ..................... 1,631
Accrued Sponsors' fees ......................... 1,595 39,402
----------- -----------

NET ASSETS, REPRESENTED BY:
4,959,904 units of fractional undivided
interest outstanding (Note 3)................ 4,531,273

Undistributed net investment income ............ 97,286 $ 4,628,559
----------- ===========

UNIT VALUE ($ 4,628,559 / 4,959,904 units )....... $ .93320
===========

</TABLE>

See Notes to Financial Statements.

D - 15.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (PENNSYLVANIA TRUST),
DEFINED ASSET FUNDS
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
September 26, 1998
to
August 31,
1999
----

<S> <C>
INVESTMENT INCOME:
Interest income ........................ $ 241,258
Interest income on Segregated
Bonds (Note 5) ....................... 3,045
Trustee's fees and expenses ............ (5,656)
Sponsors' fees ......................... (2,203)
------------
Net investment income .................. 236,444
------------

REALIZED AND UNREALIZED LOSS
ON INVESTMENTS:
Realized loss on
securities sold or redeemed .......... (1,864)
Unrealized depreciation
of investments ....................... (497,425)
------------
Net realized and unrealized
loss on investments ................. (499,289)
------------

NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ (262,845)
============

</TABLE>

See Notes to Financial Statements.

D - 16.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (PENNSYLVANIA TRUST),
DEFINED ASSET FUNDS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
September 26, 1998
to
August 31,
1999
----

<S> <C>
OPERATIONS:
Net investment income .................. $ 236,444
Realized loss on
securities sold or redeemed .......... (1,864)
Unrealized depreciation
of investments ....................... (497,425)
------------
Net decrease in net assets
resulting from operations ............ (262,845)
------------

INCOME DISTRIBUTIONS TO
HOLDERS (Note 2)....................... (135,750)
------------

SHARE TRANSACTIONS:
Deferred sales charge (Note 5):
Principal ............................ (36,176)

Redemption amounts:
Income ............................... (363)
Principal ............................ (38,297)
------------
Net share transactions ................. (74,836)
------------

NET DECREASE IN NET ASSETS ............... (473,431)

NET ASSETS AT BEGINNING OF PERIOD ........ 5,101,990
------------
NET ASSETS AT END OF PERIOD .............. $ 4,628,559
============
PER UNIT:
Income distributions during
period ............................... $ .02715
============
Net asset value at end of
period ............................... $ .93320
============
TRUST UNITS:
Redeemed during period ................. 40,096
Outstanding at end of period ........... 4,959,904
============
</TABLE>

See Notes to Financial Statements.

D - 17.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (PENNSYLVANIA TRUST),
DEFINED ASSET FUNDS

NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>

1. SIGNIFICANT ACCOUNTING POLICIES

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

2. DISTRIBUTIONS

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

3. NET CAPITAL

Cost of 4,959,904 units at Date of Deposit ................. $ 5,061,076
Transfer to capital of interest on Segregated Bonds (Note 5) 3,045
Redemptions of units - net cost of 40,096 units redeemed
less redemption amounts (principal)....................... 2,617
Deferred sales charge (Note 5) ............................. (36,176)
Realized loss on securities sold or redeemed ............... (1,864)
Unrealized depreciation of investments...................... (497,425)
-----------

Net capital applicable to Holders .......................... $ 4,531,273
===========
4. INCOME TAXES

As of August 31, 1999, unrealized depreciation of investments, based on cost
for Federal income tax purposes, aggregated $497,425, all of which was related
to depreciated securities. The cost of investment securities for Federal income
tax purposes was $5,060,302 at August 31, 1999.
</TABLE>

D - 18.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (PENNSYLVANIA TRUST),
DEFINED ASSET FUNDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
NOTES TO FINANCIAL STATEMENTS

5. DEFERRED SALES CHARGE

$90,000 face amount of the City of Easton, Northampton Cnty., PA, G.O. Bonds,
Ser. 1998, 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 $2.38 per 1,000 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 $19.00 per 1,000 Unit over the first two years of the life of the
Fund. Should a Holder redeem Units prior to the second anniversary of the Fund,
the remaining balance of the deferred sales charge will be charged.

</TABLE>
2

D - 19.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (PENNSYLVANIA TRUST),
DEFINED ASSET FUNDS

PORTFOLIO
As of August 31, 1999

<S> <C> <C> <C> <C> <C> <C> <C>
1 Pennsylvania Tpke. Comm., Oil AAA $ 800,000 4.750 % 2027 12/01/08 $ 775,376 $ 679,008
Franchise Tax Sub. Rev. Bonds, Ser. @ 100.000
1998 B (AMBAC Ins.) (5)

2 City of Easton, Northampton Cnty., PA, Aaa(m) 45,000 3.550 1999 None 45,000 44,987
G.O. Bonds, Ser. 1998 (AMBAC Ins.) (5)
(6) 45,000 3.700 2000 None 45,000 44,895

3 City of Philadelphia, PA, G.O. Bonds, AAA 750,000 5.000 2025 05/15/06 750,000 672,120
Ser. 1995 (MBIA Ins.) (5) @ 102.000

4 Allegheny Cnty. Hosp. Dev. Auth., PA, AAA 500,000 4.875 2026 11/15/08 486,900 428,545
Hlth. Sys. Rev. Bonds (Catholic Hlth. @ 102.000
East Issue), Ser. 1998 A (AMBAC Ins.)
(5)

5 Berks Cnty. Mun. Auth., PA, Hlth. Care AA- 750,000 5.000 2028 09/01/08 733,013 654,622
Rev. Bonds (Pooled Fin. Proj.), Ser. @ 101.000
1998

6 Wayne Cnty. Hosp. and Hlth. Facs. Auth., AAA 100,000 5.375 2027 01/01/08 102,746 93,633
PA, Cnty. Guaranteed Hosp. Rev. Bonds @ 100.000
(Wayne Mem. Hosp. Proj.), Ser. 1997 B
(MBIA Ins.) (5)

7 City of Pottsville Hosp. Auth., PA, Hosp. A 750,000 5.625 2024 07/01/08 774,105 710,152
Rev. Bonds (The Pottsville Hosp. and @ 100.000
Warne Clinic), Ser. 1998 (ACA Ins.) (5)

8 Chester Cnty. Hlth. and Educl. Facs. AA 560,000 5.625 2027 10/15/08 583,649 537,460
Auth., PA, Coll. Rev. Bonds (Immaculate @ 102.000
Coll.), Ser. 1998 (Asset Guaranty Ins.)
(5)

9 Pennsylvania Higher Educl. Facs. Auth., AAA 750,000 5.375 2023 04/01/08 764,513 697,455
Coll. Rev. Bonds (Geneva College), Ser. @ 102.000
1998 (ACA Ins.) (5)
--------- --------- ---------
TOTAL $ 5,050,000 $ 5,060,302 $ 4,562,877
========= ========= =========

See Notes to Portfolios on Page D - 21.
</TABLE>

D - 20.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 401 (CALIFORNIA INSURED, OHIO
PENNSYLVANIA TRUSTS),
DEFINED ASSET FUNDS
<TABLE>
<CAPTION>
NOTES TO PORTFOLIOS
As of August 31, 1999
<S> <C> <C> <C> <C> <C> <C>

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

(2) See Notes to Financial Statements.

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

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

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

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

</TABLE>

D - 21.

<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--12/99