MUNICIPAL INVESTMENT TR FD MULTISTATE SER 407 DEF ASSET FDS, 497, 1999-03-29

MUNICIPAL INVESTMENT TR FD MULTISTATE SER 407 DEF ASSET FDS
497, 1999-03-29

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<PAGE>
Defined Asset FundsSM
- --------------------------------------------
- ----------------------------------

Municipal Investment Trust Fund
Multistate Series 407
(A Unit Investment Trust)
o Michigan, New Jersey, New York and Ohio
Portfolios
o Portfolios of Insured Long Term Municipal
Bonds
o Designed for Federally Tax-Free Income
o Exempt from Some State Taxes
o Distributions Twice a Year

Sponsors: -------------------------------------------------
Merrill Lynch, The Securities and Exchange Commission has not
Pierce, Fenner & Smith approved or disapproved these Securities or
Incorporated passed upon the adequacy of this prospectus. Any
Salomon Smith Barney Inc. representation to the contrary is a criminal
PaineWebber Incorporated offense.
Dean Witter Reynolds Inc. Prospectus dated March 26, 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 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.

Contents
Page
-----------
Michigan Insured Portfolio.............................. 3
Risk/Return Summary and Portfolio.................... 3
New Jersey Insured Portfolio............................ 6
Risk/Return Summary and Portfolio.................... 6
New York Insured Portfolio.............................. 9
Risk/Return Summary and Portfolio.................... 9
Ohio Insured Portfolio.................................. 12
Risk/Return Summary and Portfolio.................... 12
What You Can Expect From Your Investment................ 16
Income Twice A Year.................................. 16
Return Figures....................................... 16
Records and Reports.................................. 16
The Risks You Face...................................... 17
Interest Rate Risk................................... 17
Call Risk............................................ 17
Reduced Diversification Risk......................... 17
Liquidity Risk....................................... 17
Concentration Risk................................... 17
State Concentration Risks............................ 19
Bond Quality Risk.................................... 21
Insurance Related Risk............................... 21
Litigation and Legislation Risks..................... 21
Selling or Exchanging Units............................. 21
Sponsors' Secondary Market........................... 21
Selling Units to the Trustee......................... 22
Exchange Option...................................... 22
How The Fund Works...................................... 23
Pricing.............................................. 23
Evaluations.......................................... 23
Income............................................... 23
Expenses............................................. 23
Portfolio Changes.................................... 24
Fund Termination..................................... 24
Certificates......................................... 25
Trust Indenture...................................... 25
Legal Opinion........................................ 26
Auditors............................................. 26
Sponsors............................................. 26
Trustee.............................................. 26
Underwriters' and Sponsors' Profits.................. 26
Public Distribution.................................. 26
Code of Ethics....................................... 27
Year 2000 Issues..................................... 27
Taxes................................................... 27
Supplemental Information................................ 29
Financial Statements.................................... 30
Report of Independent Accountants.................... 30
Statements of Condition.............................. 30

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

Michigan Insured Portfolio--Risk/Return Summary

3. What is the Fund's Investment Strategy?
o The Fund plans to hold to maturity 7 long-term tax-exempt
municipal bonds with an aggregate face amount of
$3,250,000, and some short-term bonds reserved to pay the
deferred sales fee. The Fund is a unit investment trust
which means that, unlike a mutual fund, the Fund's
portfolio is not managed.
o The bonds are rated AAA or Aaa by Standard & Poor's,
Moody's or Fitch.
o Most of the bonds cannot be called for several years, and
after that they can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 100% of the bonds are insured by AAA-rated insurance
companies that guarantee timely payments of principal and
interest on the bonds (but not Fund units or the market
value of the bonds before they mature).

The Portfolio consists of municipal bonds of the following
types:

Approximate
Portfolio
Percentage

o Airports/Ports/Highways 15%
o General Obligation 37%
o Hospital/Health Care 32%
o Municipal Water/Sewer Utilities 16%

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 these sectors may affect the
value of your units. The fund is also concentrated in
general obligation bonds. These risks are discussed later
in this prospectus under Concentration Risk.
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 Michigan bonds so it
is less diversified than a national fund and is subject to
risks particular to Michigan which are briefly described on
page 19.

Defining Your Income
and Estimating Your Return

What You May Expect (Record Day: 10th day of
each April and October)
First payment per 1,000 units (10/25/99): $ 26.28
Regular Semi-Annual Income per 1,000 units
(each April and October beginning 4/25/00): $ 24.38
Annual Income per 1,000 units: $ 48.77
These figures are estimates on the business day before the
initial date of deposit; actual payments may vary.
Estimated Current Return 4.75%
Estimated Long Term Return 4.72%
Returns will vary (see page 16).

<PAGE>
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Michigan Insured Portfolio (Continued)
- --------------------------------------------------------------------------------

Multistate Series--407
<TABLE>
<CAPTION>

Rating Cost
Portfolio Title Coupon Maturity (1) of Issues (2) To Fund (3)
- --------------------------------------------------------------------------------------------------------------
Airports/Ports/Highways (15%):
<S> <C> <C> <C> <C> <C>
1. $500,000 Charter Cnty. of Wayne, MI, Arpt. 4.875% 12/1/23 AAA $ 487,695.00
Rev. Bonds (Detroit Metro. Wayne Cnty.
Arpt.) Ser. 1998 B (MBIA Ins.)

General Obligation (37%):

2. $40,000 Montrose Cmnty. Schools, Cntys. of 4.50 5/1/00 AAA 40,578.00
Genesee and Saginaw, MI, 1997 Sch. Bldg.
and Site Bonds (MBIA Ins.)(4)
3. $200,000 Brandon Sch. Dist., Cntys. of 5.00 5/1/26 AAA 198,522.00
Oakland and Lapeer, MI, G.O. Unlimited Tax
Bonds, Rfdg. Bonds, Ser. 1998 (AMBAC
Ins.)
4. $500,000 Fruitport Cmnty. Schools, Cntys. 5.30 5/1/22 Aaa(m) 511,535.00
of Muskegon and Ottawa, MI, G.O. Unlimited
Tax Bonds, 1997 Sch. Bldg. and Site
Bonds (Financial Guaranty Ins.)
5. $500,000 Chelsea Sch. Dist., Cntys. of 5.00 5/1/25 AAA 496,370.00
Washtenaw and Jackson, MI, G.O. Unlimited
Tax Bonds, Rfdg. Bonds, Ser. 1998
(Financial Guaranty Ins.)

Hospitals/Health Care (32%):

6. $500,000 Michigan State Hosp. Fin. Auth., 5.25 11/15/25 AAA 507,215.00
Hosp. Rev. and Rfdg. Bonds (Henry Ford
Hlth. Sys.), Ser. 1995 A (MBIA Ins.)
7. $550,000 County of Lenawee, MI, Hosp. Fin. 5.00 7/1/28 AAA 541,640.00
Auth., Hosp. Rev. and Rfdg. Bonds (Lenawee
Hlth. Alliance Oblig. Grp.), Ser. 1999 A
(AMBAC Ins.)

Municipal Water/Sewer Utilities (16%):

8. $20,000 County of Livingston, MI, 5.00 6/1/01 AAA 20,666.80
Livingston Cnty.-- Marion Sanitary Swr.
Sys. No. 1 Bonds, Ser. 1997 A (MBIA
Ins.)(4)
9. $500,000 City of Detroit, MI, Wtr. Supply 5.00 7/1/21 AAA 496,640.00
Sys. Rev. Bonds, Ser. 1997 A (MBIA Ins.)
--------------------
$ 3,300,861.80
--------------------
--------------------

</TABLE>

- ------------------------------------
(1) Approximately 15% of the long-term bonds are callable beginning in 2006;
30% are callable in 2007; the remaining long-term bonds are callable in
2008 and later. Some bonds could be called earlier under extraordinary
circumstances.
(2) All ratings are by Standard & Poor's Ratings Group unless followed by
'(m)', which indiciates a Moody's Investors Service rating or by '(f)',
which indicates a Fitch IBCA, Inc. rating. An AAA rating indicates highest
quality bonds with a very strong capacity to pay interest and repay
principal.
(3) Approximately 32% of the bonds were deposited at a premium and 68% at a
discount from par. Sponsors' profit on deposit was $32,020.00.
(4) The interest and principal on these bonds will be used to pay the deferred
sales charge obligations of the investors, and these amounts are not
included in the calculation of Estimated Current and Long Term Returns.
------------------------------------

Please note that if this prospectus is used as a preliminary
prospectus
for a future fund in this Series, the Portfolio will contain
different
bonds from those described above.
<PAGE>
Michigan Insured Portfolio (Continued)

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 1.00%, as well as a
total deferred sales fee of $19.00 per 1,000 units ($2.38
per 1,000 units quarterly in the first year and $2.37 per
1,000 units quarterly in the second year). Employees of some
of the Sponsors and their affiliates may pay a reduced sales
fee of at least $5.00 per 1,000 units.
The maximum sales fee is reduced if you invest at least
$100,000, as follows:

Your maximum
sales fee
If you invest: will be:
----------------------------------- -----------------
Less than $100,000 2.90%
$100,000 to $249,999 2.65%
$250,000 to $499,999 2.40%
$500,000 to $999,999 2.15%
$1,000,000 and over 1.90%

Maximum Exchange Fee 1.90%

Estimated Annual Fund Operating Expenses

As a % of Amount
$1,000 Per 1,000
Invested Units
--------- -----------
.062% $ 0.63
Trustee's Fee
.035% $ 0.36
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
.039% $ 0.40
Evaluator's Fee
.048% $ 0.49
Other Operating Expenses
--------- -----------
.184% $ 1.88
Total

Amount
Per 1,000
Units
---------------------
$ 2.00
Organization Costs (deducted from
Fund assets at the close of the
initial offering period)

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

1 Year 3 Years 5 Years 10 Years
$329 $369 $413 $543

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

1 Year 3 Years 5 Years 10 Years
$234 $369 $413 $543

7. How have Similar Funds Performed in the Past?
In the following chart we show past performance of prior
Michigan 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 Michigan Series were offered
between March 9, 1988 and September 19, 1996 and were
outstanding on December 31, 1998. Of course, past
performance of prior Series is no guarantee of future
results of this Fund.
Average Annual Compound Total Returns
for Prior Series
Reflecting all expenses. For periods ended 12/31/98.

With Sales Fee No Sales Fee
1 Year 5 Years 1 Year 5 Years
- ---------------------------------------------------------------
High 5.48% 4.92% 2.97% 6.10%
Average 2.66 4.21 5.37 5.19
Low 0.86 3.66 7.72 4.46
- ---------------------------------------------------------------

Average
Sales fee 2.68% 4.88%

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

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

4
<PAGE>
Michigan Insured Portfolio (continued)

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.
9. How do I Buy Units?
The minimum investment is $250.
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
Unit Price per 1,000 Units $1,027.72
(as of March 25, 1999)
Unit price is based on the net asset value of the Fund plus
the up-front sales fee. An amount equal to any principal
cash, as well as net accrued but undistributed interest on
the unit, is added to the unit price. Unit price also
includes the estimated organization costs shown on page 4,
to which no sales fee has been applied. An independent
evaluator prices the bonds at 3:30 p.m. Eastern time every
business day. Unit price changes every day with changes in
the prices of the bonds in the Fund.
Unit Par Value $1.00
Unit par value means the total amount of money you should
generally receive on each unit by the termination of the
Fund (other than interest and premium on the bonds). This
total amount assumes that all bonds in the Fund are either
paid at maturity or called by the issuer at par or are sold
by the Fund at par. If you sell your units before the Fund
terminates, you may receive more or less than the unit par
value.

10. How do I Sell Units?
You may sell your units at any time to any Sponsor or the
Trustee for the net asset value determined at the close of
business on the date of sale, less any remaining deferred
sales fee. You will not pay any other fee when you sell your
units.

11. How are Distributions Made and Taxed?
The Fund pays income twice a year.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100% exempt
from regular federal income tax. Your income may also be
exempt from some Michigan state and local personal income
taxes if you live in Michigan.
You will also receive principal payments if bonds are sold
or called or mature, when the cash available is more than
$10.00 per 1,000 units. You will be subject to tax on any
gain realized by the Fund on the disposition of bonds.
12. What Other Services are Available?
Reinvestment
You will receive your income in cash unless you choose to
compound your income by reinvesting with 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.

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

New Jersey 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 20-
to 30-year municipal revenue bonds.
2. What are Municipal Revenue Bonds?
Municipal revenue bonds are bonds issued by states,
municipalities and public authorities to finance the cost
of buying, building or improving various projects intended
to generate revenue, such as airports, health care
facilities, housing and municipal electric, water and sewer
utilities. Generally, payments on these bonds depend solely
on the revenues generated by the projects, excise taxes or
state appropriations, and are not backed by the
government's taxing power.
3. What is the Fund's Investment Strategy?
o The Fund plans to hold to maturity 8 long-term tax-exempt
municipal bonds with an aggregate face amount of
$3,250,000, and some short-term bonds reserved to pay the
deferred sales charge. The Fund is a unit investment trust
which means that, unlike a mutual fund, the Fund's
portfolio is not managed.
o The bonds are rated AAA or Aaa by Standard & Poor's,
Moody's or Fitch.
o Most of the bonds cannot be called for several years, and
after that they can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 100% of the bonds are insured by AAA-rated insurance
companies that guarantee timely payments of principal and
interest on the bonds (but not Fund units or the market
value of the bonds before they mature).

The Portfolio consists of municipal bonds of the following
types:

Approximate
Portfolio
Percentage

o Airports/Ports/Highways 16%
o General Obligation 15%
o Hospitals/Health Care 15%
o Lease Rental 15%
o Municipal Water/Sewer Utilities 31%
o Universities/Colleges 3%
o Miscellaneous 5%

4. What are the Significant Risks?
You can lose money by investing in the Fund. This can
happen for various reasons, including:
o Rising interest rates, an issuer's worsening financial
condition or a drop in bond ratings can reduce the price of
your units.
o Because the Fund is concentrated in municipal water/sewer
utility bonds, adverse developments in this sector may
affect the value of your units. These risks are discussed
later in this prospectus under Concentration Risk.
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 New Jersey bonds, so
it is less diversified than a national fund and is subject
to risks particular to New Jersey, which are briefly
described on page 20.

Defining Your Income
and Estimating Your Return

What You May Expect (Record Day: 10th day of
each April and October)
First payment per 1,000 units (10/25/99): $ 25.43
Regular Semi-Annual Income per 1,000 units
(each April and October beginning 4/25/00): $ 23.59
Annual Income per 1,000 units: $ 47.20
These figures are estimates on the business day before the
initial date of deposit; actual payments may vary.
Estimated Current Return 4.63%
Estimated Long Term Return 4.63%
Returns will vary (see page 16).

<PAGE>
- --------------------------------------------------------------------------------
New Jersey Insured Portfolio
- --------------------------------------------------------------------------------

Multistate Series--407
<TABLE>
<CAPTION>

Rating Cost
Portfolio Title Coupon Maturity (1) of Issues (2) To Fund (3)
- ------------------------------------------------------------------------------------------------------------------
Airports/Ports/Highways (16%):
<S> <C> <C> <C> <C> <C>
1. $20,000 New Jersey Transit Corp., Certs. 3.625% 9/15/01 AAA $ 20,105.60
of Part., Ser. 1999 A (AMBAC Ins.)(4)
2. $500,000 The Port Auth. of New York and 4.75 1/15/26 AAA 485,210.00
New Jersey, Consol. Bonds, One Hundred
Fourth Ser. (AMBAC Ins.)

General Obligation (15%):

3. $500,000 The Board of Educ. of the City of 5.00 8/1/26 AAA 501,970.00
Plainfield, Union Cnty., NJ, School
Rfdg. Bonds (FSA Ins.)

Hospitals/Health Care (15%):

4. $500,000 New Jersey Hlth. Care Fac. Fin. 4.75 7/1/28 AAA 480,855.00
Auth., Rev. and Rfdg. Bonds (St. Barnabas
Hlth. Care Sys. Issue), Ser. 1998 B
(MBIA Ins.)

Lease Rental (15%):

5. $500,000 County of Middlesex, NJ, Certs. 4.85 6/15/28 AAA 492,280.00
of Part. (Civic Square III Redev. Assoc.,
L.L.C.), Ser. 1998 (MBIA Ins.)

Municipal Water/Sewer Utilities (31%):

6. $500,000 The Essex Cnty. Util. Auth., NJ, 5.00 4/1/22 Aaa(m) 501,950.00
Solid Waste Sys. Rev. Bonds, Ser. 1999 A
(FSA Ins.)
7. $500,000 North Jersey Dist. Wtr. Supply 5.125 11/15/21 AAA 507,135.00
Comm., NJ, Rev. Rfdg. Bonds (Wanaque North
Proj.), Ser. 1997 (MBIA Ins.)
8. $40,000 The Rockaway Valley Regl. Sewerage 5.55 12/15/00 AAA 41,594.80
Auth., Morris Cnty., NJ, Swr. Rev. Rfdg.
Bonds, Ser. 1992 (MBIA Ins.)(4)

Universities/Colleges (3%):

9. $100,000 New Jersey Educl. Fac. Auth., 5.00 7/1/25 AAA 100,391.00
Rev. Bonds (New Jersey City Univ. Iss.),
Ser. 1999 B (AMBAC Ins.)

Miscellaneous (5%):

10. $150,000 New Jersey Econ. Dev. Auth., 4.75 5/15/25 AAA 145,618.50
Ins. Rev. Rfdg. Bonds (Educl. Testing
Svc. Issue), Ser. 1998 (MBIA Ins.)
--------------------
$ 3,277,109.90
--------------------
--------------------

</TABLE>

- ------------------------------------
(1) Approximately 15% of the long-term bonds are callable beginning in 2006,
30% are callable in 2007; 5% are callable in 2008; the remaining long-term
bonds are callable in 2009 and later. Some bonds could be called earlier
under extraordinary circumstances.
(2) All ratings are by Standard & Poor's Ratings Group unless followed by
'(m)', which indicates a Moody's Investors Service rating or by '(f)',
which indicates a Fitch IBCA, Inc. rating. An AAA rating indicates highest
quality bonds with a very strong capacity to pay interest and repay
principal.
(3) Approximately 50% of the bonds were deposited at a premium and 50% at a
discount from par. Sponsors' profit on deposit was $26,529.10.
(4) The interest and principal on these bonds will be used to pay the deferred
sales charge obligations of the investors, and these amounts are not
included in the calculation of Estimated Current and Long Term Returns.

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

5. Is this Fund Appropriate for You?
Yes, if you want federally tax-free income. You will benefit
from a professionally selected and supervised portfolio
whose risk is reduced by investing in bonds of several
different issuers.
The Fund is not appropriate for you if you want a
speculative investment that changes to take advantage of
market movements, if you do not want a tax-advantaged
investment or if you cannot tolerate any risk.
6. 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 1.00%, as well as a
total deferred sales fee of $19.00 per 1,000 units ($2.38
per 1,000 units quarterly in the first year and $2.37 per
1,000 units quarterly in the second year). Employees of some
of the Sponsors and their affiliates may pay a reduced sales
fee of at least $5.00 per 1,000 units.
The maximum sales fee is reduced if you invest at least
$100,000, as follows:

Your maximum
sales fee
If you invest: will be:
----------------------------------- ---------------
Less than $100,000 2.90%
$100,000 to $249,999 2.65%
$250,000 to $499,999 2.40%
$500,000 to $999,999 2.15%
$1,000,000 and over 1.90%

Maximum Exchange Fee 1.90%

Estimated Annual Fund Operating Expenses

As a % of Amount
$1,000 Per 1,000
Invested Units
--------- -----------
.063% $ 0.63
Trustee's Fee
.035% $ 0.36
Portfolio Supervision,
Bookkeeping and
Administrative Fees (including
updating
expenses)
.040% $ 0.40
Evaluator's Fee
.047% $ 0.49
Other Operating Expenses
--------- -----------
.185% $ 1.88
Total

Amount
Per 1,000
Units
---------------------
$ 2.00
Organization Costs (deducted from
Fund assets at the close of the
initial offering period)

1 Year 3 Years 5 Years 10 Years
$329 $369 $413 $544

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

1 Year 3 Years 5 Years 10 Years
$234 $369 $413 $544

7. How have Similar Funds Performed in the Past?
In the following chart we show past performance of prior New
Jersey Portfolios, which had investment objectives,
strategies and types of bonds substantially similar to this
Fund. These prior Series differed in that they charged a
higher sales fee. These prior New Jersey Series were offered
between March 30, 1988 and September 19, 1996 and were
outstanding on December 31, 1998. Of course, past
performance of prior Series is no guarantee of future
results of this Fund.
Average Annual Compound Total Returns
for Prior Series
Reflecting all expenses. For periods ended 12/31/98.

With Sales Fee No Sales Fee
1 Year 5 Years 10 Years 1 Year 5 Years 10 Years

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

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

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

Average
Sales fee 2.86% 5.11% 5.70%

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

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

7
<PAGE>
New Jersey Insured Portfolio (continued)

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.
9. How do I Buy Units?
The minimum investment is $250.
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
Unit Price per 1,000 Units $1,020.33
(as of March 25, 1999)
Unit price is based on the net asset value of the Fund
plus the up-front sales fee. An amount equal to any
principal cash, as well as net accrued but undistributed
interest on the unit, is added to the unit price. Unit
price also includes the estimated organization costs shown
on page 7, to which no sales fee has been applied. An
independent evaluator prices the bonds at 3:30 p.m.
Eastern time every business day. Unit price changes every
day with changes in the prices of the bonds in the Fund.
Unit Par Value $1.00
Unit par value means the total amount of money you should
generally receive on each unit by the termination of the
Fund (other than interest and premium on the bonds). This
total amount assumes that all bonds in the Fund are either
paid at maturity or called by the issuer at par or are
sold by the Fund at par. If you sell your units before the
Fund terminates, you may receive more or less than the
unit par value.

11. How are Distributions Made and Taxed?
The Fund pays income twice a year.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100% exempt
from regular federal income tax. Your income may also be
exempt from New Jersey state and local taxes if you live in
New Jersey.
You will also receive principal payments if bonds are sold
or called or mature, when the cash available is more than
$10.00 per 1,000 units. You will be subject to tax on any
gain realized by the Fund on the disposition of bonds.
12. What Other Services are Available?
Reinvestment
You will receive your income in cash unless you choose to
compound your income by reinvesting at no sales fee in the
Municipal Fund Investment Accumulation Program, Inc. This
Program is an open-end mutual fund with a comparable
investment objective. Income from this Program will
generally be subject to state and local income taxes. For
more complete information about the Program, including
charges and fees, ask the Trustee for the Program's
prospectus. Read it carefully before you invest. The Trustee
must receive your written election to reinvest at least 10
days before the record day of an income payment.
Exchange Privileges
You may exchange units of this Fund for units of certain
other Defined Asset Funds. You may also exchange into this
Fund from certain other funds. We charge a reduced sales fee
on exchanges.

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

New York Insured Portfolio--Risk/Return Summary

3. What is the Fund's Investment Strategy?
o The Fund plans to hold to maturity 9 long-term tax-exempt
municipal bonds with an aggregate face amount of
$5,000,000, and some short-term bonds reserved to pay the
deferred sales fee. The Fund is a unit investment trust
which means that, unlike a mutual fund, the Fund's
portfolio is not managed.
o The bonds are rated AAA or Aaa by Standard & Poor's,
Moody's or Fitch.
o Most of the bonds cannot be called for several years, and
after that they can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 100% of the bonds are insured by AAA-rated insurance
companies that guarantee timely payments of principal and
interest on the bonds (but not Fund units or the market
value of the bonds before they mature).

The Portfolio consists of municipal bonds of the following
types:

Approximate
Portfolio
Percentage

o Airports/Ports/Highways 15%
o General Obligation 5%
o Hospitals/Health Care 26%
o Lease Rental 7%
o Municipal Water/Sewer Utilities 15%
o Special Tax 17%
o Universities/Colleges 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. These risks are discussed later in
this prospectus under Concentration Risk.
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 New York bonds so it
is less diversified than a national fund and is subject to
risks particular to New York which are briefly described on
page 19.

Defining Your Income
and Estimating Your Return

What You May Expect (Record Day: 10th day of
each April and October)
First payment per 1,000 units (10/25/99): $ 26.24
Regular Semi-Annual Income per 1,000 units
(each April and October beginning 4/25/00): $ 24.34
Annual Income per 1,000 units: $ 48.69
These figures are estimates on the business day before the
initial date of deposit; actual payments may vary.
Estimated Current Return 4.76%
Estimated Long Term Return 4.74%
Returns will vary (see page 16).

<PAGE>
- --------------------------------------------------------------------------------
New York Insured Portfolio (Continued)
- --------------------------------------------------------------------------------

Multistate Series--407
<TABLE>
<CAPTION>

General Obligation (5%):

2. $40,000 Dormitory Auth. of the State of 3.50 7/1/01 AAA 39,912.00
New York, Green Chimneys Sch. for Little
Folk, Ins. Rev. Bonds, Ser. 1999 A
(AMBAC Ins.)(4)
3. $50,000 City of Rome, Oneida Cnty., NY, 4.30 9/15/00 Aaa(m) 50,784.00
G.O. Pub. Imp. Bonds, Ser. 1998 (AMBAC
Ins.)(4)
4. $145,000 Town of North Hempstead, Nassau 5.40 2/15/21 AAA 150,044.55
Cnty., NY, Various Purp. Serial Bonds,
Ser. 1997 A (Financial Guaranty Ins.)

Hospitals/Health Care (26%):

5. $170,000 Dormitory Auth. of the State of 5.15 2/1/29 Aaa(m) 172,247.40
New York, The Brooklyn Hosp. Ctr.,
FHA-Ins. Mtge. Hosp. Rev. Bonds, Ser.
1999 (AMBAC Ins.)
6. $435,000 Dormitory Auth. of the State of 5.00 2/15/29 AAA 431,637.45
New York, Mental Hlth. Svcs. Fac. Imp.
Rev. Bonds, Ser. 1999 B (MBIA Ins.)
7. $750,000 Dormitory Auth. of the State of 4.75 8/1/27 AAA 716,227.50
New York, The New York and Presbyterian
Hosp., FHA-Ins. Mtge. Hosp. Rev. Bonds,
Ser. 1998 (AMBAC Ins.)

Lease Rental (7%):

8. $400,000 Dormitory Auth. of the State of 5.125 7/1/27 AAA 404,092.00
New York, City Univ. Sys. Consol. Rev.
Bonds, Ser. 1998 A (MBIA Ins.)

Municipal Water/Sewer Utilities (15%):

9. $750,000 New York City, NY, Muni. Wtr. 5.25 6/15/29 AAA 766,432.50
Fin. Auth., Wtr. and Swr. Sys. Rev. Bonds,
Fiscal 1998 Ser. B (AMBAC Ins.)

Special Tax (17%):

10. $850,000 New York City, NY, Transitional 5.00 8/15/27 AAA 843,574.00
Fin. Auth., Future Tax Secured Bonds,
Fiscal 1998 Ser. A (Financial Guaranty
Ins.)

Universities/Colleges (15%):

11. $750,000 Dormitory Auth. of the State of 5.25 7/1/26 AAA 767,880.00
New York, Ithaca Coll., Ins. Rev. Bonds,
Ser. 1997 (AMBAC Ins.)
--------------------
$ 5,059,651.40
--------------------
--------------------

</TABLE>

- ------------------------------------
(1) Approximately 48% of the long-term bonds are callable beginning in 2007,
and the remaining long-term bonds are callable in 2008 and later. Some
bonds could be called earlier under extraordinary circumstances.
(2) All ratings are by Standard & Poor's Ratings Group unless followed by
'(m)', which indicates a Moody's Investors Service rating or by '(f)',
which indicates a Fitch IBCA, Inc. rating. An AAA rating indicates highest
quality bonds with a very strong capacity to pay interest and repay
principal.
(3) Approximately 44% of the bonds were deposited at a premium and 56% at a
discount from par. Sponsors' profit on deposit was $49,003.70.
(4) The interest and principal on these bonds will be used to pay the deferred
sales charge obligations of the investors, and these amounts are not
included in the calculation of Estimated Current and Long Term Returns.
------------------------------------

Maximum Exchange Fee 1.90%

Estimated Annual Fund Operating Expenses

As a % of Amount
$1,000 Per 1,000
Invested Units
--------- -----------
.062% $ 0.63
Trustee's Fee
.035% $ 0.36
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
.026% $ 0.26
Evaluator's Fee
.031% $ 0.32
Other Operating Expenses
--------- -----------
.154% $ 1.57
Total

Amount
Per 1,000
Units
---------------------
$ 2.00
Organization Costs (deducted from
Fund assets at the close of the
initial offering period)

1 Year 3 Years 5 Years 10 Years
$326 $359 $396 $505

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

1 Year 3 Years 5 Years 10 Years
$231 $359 $396 $505

7. How have Similar Funds Performed in the Past?
In the following chart we show past performance of prior New
York Portfolios, which had investment objectives, strategies
and types of bonds substantially similar to this Fund. These
prior Series differed in that they charged a higher sales
fee. These prior New York Series were offered between
January 14, 1988 and October 16, 1996 and were outstanding
on December 31, 1998. Of course, past performance of prior
Series is no guarantee of future results of this Fund.
Average Annual Compound Total Returns
for Prior Series
Reflecting all expenses. For periods ended 12/31/98.

With Sales Fee No Sales Fee
1 Year 5 Years 10 Years 1 Year 5 Years 10 Years

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

High 5.93% 5.02% 7.53% 8.20% 6.09% 8.13%
Average 2.83 4.25 7.23 6.01 5.27 7.83
Low 0.35 3.61 7.04 4.11 4.59 7.64

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

Average
Sales fee 3.15% 5.04% 5.82%

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

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

10
<PAGE>
New York Insured Portfolio (continued)

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.
9. How do I Buy Units?
The minimum investment is $250.
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
Unit Price per 1,000 Units $1,023.97
(as of March 25, 1999)
Unit price is based on the net asset value of the Fund plus
the up-front sales fee. An amount equal to any principal
cash, as well as net accrued but undistributed interest on
the unit, is added to the unit price. Unit price also
includes the estimated organization costs shown on page 10,
to which no sales fee has been applied. An independent
evaluator prices the bonds at 3:30 p.m. Eastern time every
business day. Unit price changes every day with changes in
the prices of the bonds in the Fund.
Unit Par Value $1.00
Unit par value means the total amount of money you should
generally receive on each unit by the termination of the
Fund (other than interest and premium on the bonds). This
total amount assumes that all bonds in the Fund are either
paid at maturity or called by the issuer at par or are sold
by the Fund at par. If you sell your units before the Fund
terminates, you may receive more or less than the unit par
value.

11. How are Distributions Made and Taxed?
The Fund pays income twice a year.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100% exempt
from regular federal income tax. Your income may also be
exempt from some New York state and local personal income
taxes if you live in New York.
You will also receive principal payments if bonds are sold
or called or mature, when the cash available is more than
$10.00 per 1,000 units. You will be subject to tax on any
gain realized by the Fund on the disposition of bonds.
12. What Other Services are Available?
Reinvestment
You will receive your income in cash unless you choose to
compound your income by reinvesting with 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>
- --------------------------------------------------------------------------------

Ohio Insured Portfolio--Risk/Return Summary

The Portfolio consists of municipal bonds of the following
types:

Approximate
Portfolio
Percentage

o General Obligation 23%
o Hospitals/Health Care 15%
o Municipal Electric Utilities 15%
o Special Tax 15%
o Universities/Colleges 32%

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 university/college
bonds, adverse developments in this sector may affect the
value of your units. These risks are discussed later in
this Prospectus under Concentration Risk.
o Assuming no changes in interest rates, when you sell your
units, they will generally be worth less than your cost
because your cost included a sales fee.
o The Fund will receive early returns of principal if bonds
are called or sold before they mature. If this happens your
income will decline and you may not be able to reinvest the
money you receive at as high a yield or as long a maturity.

Also, the Portfolio is concentrated in Ohio bonds so it is
less diversified than a national fund and is subject to
risks particular to Ohio which are briefly described on
page 20.

Defining Your Income
and Estimating Your Return

What You May Expect (Record Day: 10th day of
each April and October)
First payment per 1,000 units (10/25/99): $ 25.85
Regular Semi-Annual Income per 1,000 units
(each April and October beginning 4/25/00): $ 23.98
Annual Income per 1,000 units: $ 47.97
These figures are estimates on the business day before the
initial date of deposit; actual payments may vary.
Estimated Current Return 4.68%
Estimated Long Term Return 4.67%
Returns will vary (see page 16).

<PAGE>
- --------------------------------------------------------------------------------
Ohio Insured Portfolio (Continued)
- --------------------------------------------------------------------------------

Multistate Series--407
<TABLE>
<CAPTION>

Rating Cost
Portfolio Title Coupon Maturity (1) of Issues (2) To Fund (3)
- --------------------------------------------------------------------------------------------------------------
General Obligaton (23%):
<S> <C> <C> <C> <C> <C>
1. $250,000 Wyoming City Sch. Dist., Cnty. of 5.00% 12/1/23 AAA $ 250,000.00
Hamilton, OH, Sch. Imp. Bonds (Bd. of
Educ.), Ser. 1998 B (Financial Guaranty
Ins.)
2. $500,000 Licking Valley Local Sch. Dist., 5.00 12/1/25 Aaa(m) 500,000.00
Licking and Muskingum Cntys., OH, Sch.
Bldg. Construction Bonds, Ser. 1999
(MBIA Ins.)

Hospitals/Health Care (15%):

3. $500,000 County of Washington, OH, Hosp. 4.50 9/1/23 Aaa(m) 461,625.00
Fac. Rev. Rfdg. and Imp. Bonds (Marietta
Area Hlth. Care, Inc. Proj.), Ser. 1998
(FSA Ins.)

Municipal Electric Utilities (15%):

4. $500,000 City of Cleveland, OH, Pub. Pwr. 5.00 11/15/24 AAA 500,000.00
Sys., First Mtge. Rev. Rfdg. Bonds, Ser.
1996-1 (MBIA Ins.)

Special Tax (15%):

5. $500,000 County of Hamilton, OH, Sales Tax 5.00 12/1/27 AAA 500,000.00
Bonds (Hamilton Cnty. Football Proj.),
Ser. 1998 B (MBIA Ins.)

Universities/Colleges (32%):

6. $500,000 The Ohio Univ., Gen. Receipts 5.00 12/1/24 AAA 500,000.00
Bonds (State Univ. of Ohio), Ser. 1999
(FSA Ins.)
7. $60,000 The Ohio Univ., Gen. Receipts 3.40-3.60 12/1/00-01 AAA 60,060.00
Bonds (State Univ. of Ohio), Ser. 1999
(FSA Ins.)(4)
8. $500,000 Ohio Higher Educl. Fac. Comm., 5.40 12/1/22 AAA 519,055.00
Higher Educl. Fac. Rev. Bonds (Univ. of
Dayton 1997 Proj.) (AMBAC Ins.)
--------------------
$ 3,290,740.00
--------------------
--------------------

</TABLE>

- ------------------------------------
(1) Approximately 15% of the long-term bonds are callable beginning in 2006;
15% are callable in 2007; and the remaining long-term bonds are callable in
2008 and later. Some bonds could be called earlier under extraordinary
circumstances.
(2) All ratings are by Standard & Poor's Ratings Group unless followed by
'(m)', which indicates a Moody's Investors Service rating or by '(f)',
which indicates a Fitch IBCA, Inc. rating. An AAA rating indicates highest
quality bonds with a very strong capacity to pay interest and repay
principal.
(3) Approximately 17% of the bonds were deposited at a premium, 68% at par and
15% at a discount from par. Sponsors' profit on deposit was $34,590.00.
(4) The interest and principal on these bonds will be used to pay the deferred
sales charge obligations of the investors, and these amounts are not
included in the calculation of Estimated Current and Long Term Returns.
------------------------------------

Maximum Exchange Fee 1.90%

Estimated Annual Fund Operating Expenses

As a % of Amount
$1,000 Per 1,000
Invested Units
--------- -----------
.062% $ 0.63
Trustee's Fee
.035% $ 0.36
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
.040% $ 0.40
Evaluator's Fee
.048% $ 0.49
Other Operating Expenses
--------- -----------
.185% $ 1.88
Total

Amount
Per 1,000
Units
---------------------
$ 2.00
Organization Costs (deducted from
Fund assets at the close of the
initial offering period)

1 Year 3 Years 5 Years 10 Years
$329 $369 $413 $544

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

1 Year 3 Years 5 Years 10 Years
$234 $369 $413 $544

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 July 28,
1988 and September 13, 1996 and were outstanding on December
31, 1998. Of course, past performance of prior Series is no
guarantee of future results of this Fund.
Average Annual Compound Total Returns
for Prior Series
Reflecting all expenses. For periods ended 12/31/98.

With Sales Fee No Sales Fee
1 Year 5 Years 1 Year 5 Years
- ---------------------------------------------------------------
High 3.88% 4.62% 8.53% 5.79%
Average 2.58 4.11 5.46 5.18
Low -0.33 3.58 3.09 4.58
- ---------------------------------------------------------------

Average
Sales fee 2.86% 5.31%

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

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

13
<PAGE>
Ohio Insured Portfolio (continued)

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.
9. How do I Buy Units?
The minimum investment is $250.
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
Unit Price per 1,000 Units $1,024.58
(as of March 25, 1999)
Unit price is based on the net asset value of the Fund plus
the up-front sales fee. An amount equal to any principal
cash, as well as net accrued but undistributed interest on
the unit, is added to the unit price. Unit price also
includes the estimated organization costs shown on page 13,
to which no sales fee has been applied. An independent
evaluator prices the bonds at 3:30 p.m. Eastern time every
business day. Unit price changes every day with changes in
the prices of the bonds in the Fund.
Unit Par Value $1.00
Unit par value means the total amount of money you should
generally receive on each unit by the termination of the
Fund (other than interest and premium on the bonds). This
total amount assumes that all bonds in the Fund are either
paid at maturity or called by the issuer at par or are sold
by the Fund at par. If you sell your units before the Fund
terminates, you may receive more or less than the unit par
value.

11. How are Distributions Made and Taxed?
The Fund pays income twice a year.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100% exempt
from regular federal income tax. Your income may also be
exempt from some Ohio state and local 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
$10.00 per 1,000 units. You will be subject to tax on any
gain realized by the Fund on the disposition of bonds.
12. What Other Services are Available?
Reinvestment
You will receive your income in cash unless you choose to
compound your income by reinvesting with 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.

14
<PAGE>
- --------------------------------------------------------------------------------
Tax-Free vs. Taxable Income: A Comparison Of Taxable and Tax-Free Yields

FOR MICHIGAN RESIDENTS

Combined
Effective
Taxable Income 1999* Tax Rate Tax-Free Yield of
Single Return Joint Return % 4% 4.5% 5% 5.5% 6% 6.5% 7.% 7.5% 8%
Is Equivalent to a Taxable Yield of

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

FOR NEW JERSEY RESIDENTS

Combined
Effective
Taxable Income 1999* Tax Rate Tax-Free Yield of
Single Return Joint Return % 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
Is Equivalent to a Taxable Yield of

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

FOR NEW YORK CITY RESIDENTS

Combined
Effective
Taxable Income 1999* Tax Rate Tax-Free Yield of
Single Return Joint Return % 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
Is Equivalent to a Taxable Yield of

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

FOR NEW YORK STATE RESIDENTS

Combined
Effective
Taxable Income 1999* Tax Rate Tax-Free Yield of
Single Return Joint Return % 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
Is Equivalent to a Taxable Yield of

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

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

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

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 (and City) income tax rates and assumes that all
income would otherwise be taxed at the investor's highest tax rate. Yield
figures are for example only.

*Based upon net amount subject to federal income tax after deductions and
exemptions. This table does not reflect the possible effect of other tax
factors, such as alternative minimum tax, personal exemptions, the phase out of
exemptions, itemized deductions or the possible partial disallowance of
deductions. Consequently, investors are urged to consult their own tax advisers
in this regard.

15
<PAGE>
What You Can Expect From Your Investment

Income Twice A Year

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

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

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

Return Figures

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

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

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

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

Yields on individual bonds depend on many factors including general conditions
of the bond markets, the size of a particular offering and the maturity and
quality rating of the particular issues. Yields can vary among bonds with
similar maturities, coupons and ratings.

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

Records and Reports

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

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

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

16
<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 Michigan Fund'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 and economic
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 New Jersey Fund's concentration in
municipal

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water and sewer revenue bonds. The payment of interest and principal of these
bonds depends on the rates the utilities may charge, the demand for their
services and the cost of operating their business which includes the expense of
complying with environmental and other energy and licensing laws and
regulations. The operating results of utilities are particularly influenced by:
o increases in operating and construction costs; and
o unpredicability of future usage requirements.

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

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State Concentration Risks

Michigan Risks

Because Michigan's leading sectors are closely integrated with the manufacturing
of durable goods, its economy is more cyclical than non-industrial states and
the nation as a whole. As a result:

o any substantial national economic downturn will likely hurt Michigan's
economy and its state and local governments;

o because the state is highly reliant on the auto industry, its economy could
be hurt by changes in that industry, expecially consolidation, plant
closings and labor disputes;

o while in the past the state's unemployment rate was higher than the
national average, for several years it has been near or below the national
average.

Certain tax changes have reduced or changed the mix of tax revenues of the state
and local governments. In recent years:

o the state sales tax rate was raised;

o the income tax rate was lowered;

o an annual cap was imposed on property tax assessment increases; and

o property taxes used for school funding were cut, and now schools are paid
for by a combination of property taxes and general and restricted state
revenues.

In addition, certain state laws limit the overall amount of state revenues that
can be raised from taxes, which could affect State operations and restrict the
sharing of revenue with local governments. This, combined with the above tax
changes, could hurt the value of Michigan bonds in the portfolio or make it more
difficult for Michigan's local governments to pay their debt service.

The state's general obligation bonds are rated Aa1 by Moody's, AA+ by Standard &
Poor's and AA+ by Fitch.

New Jersey Risks

State and Local Government

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

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

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

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

o elementary and secondary education, and

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

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

New York Risks

Generally

For decades, New York's economy has trailed the rest of the nation. Both the
state and New York City have experienced long-term structural

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imbalances between revenues and expenses, and have repeatedly relied
substantially on non-recurring measures to achieve budget balance. The pressures
that contribute to budgetary problems at both the state and local level include:

o the high combined state and local tax burden;

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

o sensitivity to the financial services industry; and

o dependence on federal aid.

State Government

The State government frequently has difficulty approving budgets on time. Budget
gaps of $25 billion and $5 billion are projected for the next two years. The
State's general obligation bonds are rated A by Standard & Poor's and A2 by
Moody's. There is $37 billion of state-related debt outstanding.

New York City Government

Even though the City had budget surpluses each year from 1981, budget gaps of
about $2 billion are projected for the 2001 and 2002 fiscal years. New York City
faces fiscal pressures from:

o aging public facilities that need repair or replacement;

o welfare and medical costs;

o expiring labor contracts; and

o a high and increasing debt burden.

The City requires substantial state aid, and its fiscal strength depends heavily
on the securities industry. Its general obligation bonds are rated A-by Standard
& Poor's and A3 by Moody's. $30.7 billion of combined City, MAC and PBC debt is
outstanding, and the City proposes $23 billion of financing over fiscal
1999-2003.

Ohio Risks

Generally

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

o manufacturing (including 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+. Other bonds issued by other State agencies may have
lower ratings. 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 1997, the Ohio Supreme Court found major aspects of the State's school
funding system to be

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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 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.

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

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

Litigation and Legislation Risks

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

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

Selling or Exchanging Units

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

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

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

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

Sponsors' Secondary Market

While we are not obligated to do so, we will buy back units at net asset value
without any other fee or charge other than any remaining deferred sales charge.
We may resell the units to other buyers or to the Trustee. You should consult
your financial professional for current market prices to determine if other
broker-dealers or banks are offering higher prices.

We have maintained the secondary market continuously for over 25 years, but we
could discontinue it without prior notice for any business reason.

Selling Units to the Trustee

Regardless of whether we maintain a secondary market, you can sell your units to
the Trustee at

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<PAGE>
any time by sending the Trustee a letter (with any outstanding certificates if
you hold Unit certificates). You must properly endorse your certificates (or
execute a written transfer instrument with signatures guaranteed by an eligible
institution). Sometimes, additional documents are needed such as a trust
document, certificate of corporate authority, certificate of death or
appointment as executor, administrator or guardian.

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

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

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

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

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

Exchange Option

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

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

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

How The Fund Works

Pricing

The price of a unit includes interest accrued on the bonds, less expenses, from
the initial date of deposit up to, but not including, the settlement

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<PAGE>
date, which is usually three business days after the purchase date of the unit.

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

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

Evaluations

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

Income

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

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

Expenses

The Trustee is paid monthly. It also benefits when it holds cash for the Fund in
non-interest bearing accounts. The Trustee may also receive additional amounts:
o to reimburse the Trustee for the Fund's operating expenses;
o for extraordinary services and costs of indemnifying the Trustee and the
Sponsors;
o costs of actions taken to protect the Fund and other legal fees and
expenses;
o expenses for keeping the Fund's registration statement current; and
o Fund termination expenses and any governmental charges.

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

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<PAGE>
Sponsors. The Fund also pays the Evaluator's fees.

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

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

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

Portfolio Changes

The Sponsors and Trustee are not liable for any default or defect in a bond; if
a contract to buy any bond fails in the first 90 days of the Fund, we generally
will deposit a replacement tax-exempt bond with a similar yield, maturity,
rating and price.

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

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

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

Fund Termination

The Fund will terminate following the stated maturity or sale of the last bond
in the portfolio. The Fund may also terminate earlier with the consent of
investors holding 51% of the units or if total assets of the Fund have fallen
below 40% of the face amount of bonds deposited. We will decide whether to
terminate the Fund early based on the same factors used in deciding whether or
not to offer units in the secondary market.

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

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

Certificates

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

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<PAGE>
Trust Indenture

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

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

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

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

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