<PAGE>
DEFINED ASSET FUNDS-SM-
------------------------------
----------------------
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES--412
(A UNIT INVESTMENT TRUST)
- CALIFORNIA, FLORIDA, NEW JERSEY AND NEW YORK
PORTFOLIOS
- PORTFOLIOS OF INSURED LONG-TERM MUNICIPAL BONDS
- DESIGNED TO BE FREE OF REGULAR FEDERAL INCOME TAX
- EXEMPT FROM SOME STATE TAXES
- DISTRIBUTIONS TWICE A YEAR
SPONSORS:
Merrill Lynch, -----------------------------------------------------
Pierce, Fenner & Smith The Securities and Exchange Commission has not
Incorporated approved or disapproved these Securities or passed
Salomon Smith Barney Inc. upon the adequacy of this prospectus. Any
PaineWebber Incorporated representation to the contrary is a criminal offense.
Dean Witter Reynolds Inc. Prospectus dated December 10, 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:
- Fixed portfolio: Defined Funds follow a buy and hold investment strategy;
funds are not managed and portfolio changes are limited.
- Defined Portfolios: We choose the stocks and bonds in advance, so you know
what you're investing in.
- Professional research: Our dedicated research team seeks out stocks or bonds
appropriate for a particular fund's objectives.
- 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.
<TABLE>
<S> <C>
CONTENTS
PAGE
--
California Insured Portfolio......... 3
Risk/Return Summary and
Portfolio.......................... 3
Florida Insured Portfolio............ 6
Risk/Return Summary and
Portfolio.......................... 6
New Jersey Insured Portfolio......... 9
Risk/Return Summary and
Portfolio.......................... 9
New York 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......... 22
Selling Units to the Trustee....... 22
Exchange Option.................... 23
How The Fund Works................... 23
Pricing............................ 23
Evaluations........................ 23
Income............................. 23
Expenses........................... 24
Portfolio Changes.................. 24
Fund Termination................... 25
Certificates....................... 25
Trust Indenture.................... 25
Legal Opinion...................... 26
Auditors........................... 26
Sponsors........................... 26
Trustee............................ 26
Underwriters' and Sponsors'
Profits.......................... 26
Public Distribution................ 27
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
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
CALIFORNIA INSURED PORTFOLIO--RISK/RETURN SUMMARY
<TABLE>
<C> <S>
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, healthcare 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?
- The Fund plans to hold to maturity 7
long-term municipal bonds with an
aggregate face amount of $4,250,000 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.
- The bonds are rated AAA or Aaa by
Standard & Poor's, Moody's or Fitch.
- 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.
- 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:
</TABLE>
<TABLE>
- Airports/Ports/Highways 15%
<C> <S>
- Lease Rental 25%
- Municipal Water/Sewer Utilities 13%
- Tax Allocation 31%
- Transit Authorities 16%
</TABLE>
<TABLE>
<C> <S>
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE
FUND. THIS CAN HAPPEN FOR VARIOUS
REASONS, INCLUDING:
- Rising interest rates, an issuer's
worsening financial condition or a drop
in bond ratings can reduce the price of
your units.
- Because the Portfolio is concentrated in
lease rental and tax allocation bonds,
adverse developments in these sectors
may affect the value of your units.
These risks are discussed later in this
prospectus under Concentration Risk.
- 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.
- 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
CALIFORNIA BONDS SO IT IS LESS
DIVERSIFIED THAN A NATIONAL FUND AND IS
SUBJECT TO RISKS PARTICULAR TO
CALIFORNIA, WHICH ARE BRIEFLY DESCRIBED
LATER IN THIS PROSPECTUS UNDER STATE
CONCENTRATION RISKS.
</TABLE>
<TABLE>
<C> <S>
DEFINING YOUR INCOME
AND ESTIMATING YOUR RETURN
</TABLE>
<TABLE>
<C> <S> <C>
WHAT YOU MAY EXPECT (Record Day: 10th day of
each June and December)
Regular Semi-Annual Income per 1,000 units
(each June and December beginning 6/25/00): $25.90
Annual Income per 1,000 units: $51.82
THESE FIGURES ARE ESTIMATES ON THE BUSINESS DAY BEFORE
THE INITIAL DATE OF DEPOSIT; ACTUAL PAYMENTS MAY VARY.
Estimated Current Return 5.42%
Estimated Long Term Return 5.57%
RETURNS WILL VARY (SEE PAGE 16).
</TABLE>
3
<PAGE>
- --------------------------------------------------------------------------------
CALIFORNIA INSURED PORTFOLIO
- ------------------------------------------------------------------------
Multistate Series--412
<TABLE>
<CAPTION>
RATING COST
PORTFOLIO TITLE COUPON MATURITY (1) OF ISSUES (2) TO FUND (3)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
</TABLE>
AIRPORTS/PORTS/HIGHWAYS (15%):
<TABLE>
<S> <C> <C> <C> <C>
1. $650,000 San Joaquin Hills Trans. 5.375% 1/15/29 AAA $ 598,546.00
Corridor Agy., CA, Toll Road Rfdg. Rev.
Bonds, Ser. 1997 A (MBIA Ins.)
</TABLE>
LEASE RENTAL (25%):
<TABLE>
<S> <C> <C> <C> <C>
2. $415,000 City of Salinas, CA, Salinas 5.70 10/1/28 AAA 406,338.95
Pub. Fin. Auth., Certs. of Part. (Cap
Imp. Proj.), Ser. 1997 A (MBIA Ins.)
3. $650,000 Travis Unified Sch. Dist., CA, 5.45 9/1/27 AAA 610,246.00
Certs. of Part. (Rfdg. and Cap. Imp.
Proj.), Ser. 1997 (Ambac Ins.)
</TABLE>
MUNICIPAL WATER/SEWER UTILITIES (13%):
<TABLE>
<S> <C> <C> <C> <C>
4. $500,000 Sacramento City Fin. Auth., CA, 5.875 12/1/29 AAA 500,000.00
Cap. Imp. Rev. Bonds (Solid Waste and
Redev. Proj.), Ser. 1999 (Ambac Ins.)
5. $80,000 California Spec. Dists. Assoc. 3.50-4.05 11/1/00- AAA 80,000.00
Fin. Corp., San Gabriel Cnty. Wtr. Dist. 11/1/02
Certs. of Part. (CA Spec. Dist. Fin.
Prog.), Ser. 1999 JJ (FSA Ins.)(4)
</TABLE>
TAX ALLOCATION (31%):
<TABLE>
<S> <C> <C> <C> <C>
6. $650,000 Redevelopment Agy. of the City 4.75 8/1/30 AAA 536,659.50
of San Jose Merged Area Redev. Proj., Tax
Alloc. Bonds, Ser. 1999 (Ambac Ins.)
7. $695,000 Palm Desert Fin. Auth., CA, Tax 5.625 4/1/23 AAA 675,171.65
Alloc. Rfdg. Rev. Bonds (Proj. Area No.
1, as Amended), Ser. 1997 (MBIA Ins.)
</TABLE>
TRANSIT AUTHORITIES (16%):
<TABLE>
<S> <C> <C> <C> <C>
8. $690,000 Los Angeles Cnty. Metro. Trans. 5.00 7/1/26 AAA 607,179.30
Auth., CA, Prop. A First Tier Sr. Sales
Tax Rev. Rfdg. Bonds, Ser. 1999 C (Ambac
Ins.)
--------------
$ 4,014,141.40
==============
</TABLE>
- ----------------------------
(1) Approximately 57% of the long-term bonds are callable beginning in 2007,
15% are callable in 2008 and 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 13% of the bonds were deposited at par and 87% at a discount
from par. Sponsors' profit on deposit was $27,795.05.
(4) The interest and principal on these bonds will be used to pay the deferred
sales charge obligations of the investors, and these amounts are not
included in the calculation of Estimated Current and Long Term Returns.
----------------------------
PLEASE NOTE THAT IF THIS PROSPECTUS IS USED AS A PRELIMINARY
PROSPECTUS
FOR A FUTURE FUND IN THIS SERIES, THE PORTFOLIO WILL CONTAIN
DIFFERENT
BONDS FROM THOSE DESCRIBED ABOVE.
<PAGE>
CALIFORNIA INSURED PORTFOLIO (CONTINUED)
<TABLE>
<C> <S>
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want income free from regular federal
tax. 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:
</TABLE>
<TABLE>
<CAPTION>
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
-------------- ------------
<C> <S> <C>
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%
</TABLE>
<TABLE>
<C> <S>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
</TABLE>
<TABLE>
<CAPTION>
AS A % OF AMOUNT
$1,000 PER 1,000
INVESTED UNITS
--------- ---------
<C> <S> <C> <C>
.067 % $0.63
Trustee's Fee
.048 % $0.46
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
.033 % $0.31
Evaluator's Fee
.041 % $0.39
Other Operating Expenses
------- -----
.189 % $1.79
TOTAL
</TABLE>
<TABLE>
<CAPTION>
AMOUNT
PER 1,000
UNITS
---------
<C> <S> <C>
$2.00
ORGANIZATION COSTS (deducted from
Fund assets at the close of the
initial offering period)
</TABLE>
<TABLE>
<C> <S>
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:
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
$329 $370 $415 $549
</TABLE>
<TABLE>
<C> <S>
You will pay the following expenses if you do
not sell your units:
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
$234 $370 $415 $549
</TABLE>
<TABLE>
<C> <S>
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.
</TABLE>
-------------------------------------------------------------------
<TABLE>
High 3.86% 6.69% 5.97% 4.25% 7.89% 6.57%
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
-----------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Average
Sales fee 1.97% 5.15% 5.82%
</TABLE>
-----------------------------------------------------------
NOTE: ALL RETURNS REPRESENT CHANGES IN UNIT PRICE WITH DISTRIBUTIONS REINVESTED
INTO THE MUNICIPAL FUND INVESTMENT ACCUMULATION PROGRAM.
4
<PAGE>
CALIFORNIA INSURED PORTFOLIO (CONTINUED)
<TABLE>
<C> <S>
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 $955.85
(as of December 9, 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.
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.
</TABLE>
5
<PAGE>
- --------------------------------------------------------------------------------
FLORIDA INSURED PORTFOLIO--RISK/RETURN SUMMARY
<TABLE>
<C> <S>
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, healthcare 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?
- The Fund plans to hold to maturity 7
long-term 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.
- The bonds are rated AAA or Aaa by
Standard & Poor's, Moody's or Fitch.
- 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.
- 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:
</TABLE>
<TABLE>
- Airports/Ports/Highways 1%
<C> <S>
- General Obligation 1%
- Hospitals/Health Care 30%
- Lease Rental 15%
- Municipal Electric/Gas Utilities 23%
- Municipal Water/Sewer Utilities 15%
- Stadiums/Convention Centers 15%
</TABLE>
<TABLE>
<C> <S>
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND.
THIS CAN HAPPEN FOR VARIOUS REASONS,
INCLUDING:
- Rising interest rates, an issuer's worsening
financial condition or a drop in bond
ratings can reduce the price of your units.
- Because the Portfolio 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.
- 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.
- 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
FLORIDA BONDS SO IT IS LESS DIVERSIFIED THAN
A NATIONAL FUND AND IS SUBJECT TO RISKS
PARTICULAR TO FLORIDA, WHICH ARE BRIEFLY
DESCRIBED LATER IN THIS PROSPECTUS UNDER
STATE CONCENTRATION RISKS.
</TABLE>
<TABLE>
<C> <S>
DEFINING YOUR INCOME
AND ESTIMATING YOUR RETURN
</TABLE>
<TABLE>
<C> <S> <C>
WHAT YOU MAY EXPECT (Record Day: 10th day of
each June and December)
Regular Semi-Annual Income per 1,000 units
(each June and December beginning 6/25/00): $25.14
Annual Income per 1,000 units: $50.30
THESE FIGURES ARE ESTIMATES ON THE BUSINESS DAY BEFORE
THE INITIAL DATE OF DEPOSIT; ACTUAL PAYMENTS MAY VARY.
Estimated Current Return 5.36%
Estimated Long Term Return 5.54%
RETURNS WILL VARY (SEE PAGE 16).
</TABLE>
6
<PAGE>
- --------------------------------------------------------------------------------
FLORIDA INSURED PORTFOLIO
- ------------------------------------------------------------------------
Multistate Series--412
<TABLE>
<CAPTION>
RATING COST
PORTFOLIO TITLE COUPON MATURITY (1) OF ISSUES (2) TO FUND (3)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
</TABLE>
AIRPORTS/PORTS/HIGHWAYS (1%):
<TABLE>
<S> <C> <C> <C> <C>
1. $30,000 State of Florida, Dept. of 5.90% 7/1/02 AAA $ 31,225.20
Trans., Tpke. Rev. Bonds, Ser. 1992 A
(Financial Guaranty Ins.) (4)
</TABLE>
GENERAL OBLIGATION (1%):
<TABLE>
<S> <C> <C> <C> <C>
2. $30,000 City of Palm Bay, FL, Ltd. Ad 3.90 3/1/01 AAA 29,927.10
Valorem Tax Bonds, Ser. 1996 (MBIA
Ins.) (4)
</TABLE>
HOSPITAL/HEALTH CARE (30%):
<TABLE>
<S> <C> <C> <C> <C>
3. $500,000 Sarasota Cnty. Pub. Hosp. Bd., 5.50 7/1/28 AAA 475,825.00
FL, Fixed Rate Hosp. Rev. Rfdg. Bonds
(Sarasota Mem. Hosp. Proj.), Ser. 1998 B
(MBIA Ins.)
4. $500,000 Orange Cnty. Hlth. Fac. Auth., 5.50 7/1/32 AAA 467,765.00
FL, Tax-Exempt Mtge. Rev. Bonds (South
Central Nursing Homes, Inc. Proj.), Ser.
1999 A (FSA Ins.)
</TABLE>
LEASE RENTAL (15%):
<TABLE>
<S> <C> <C> <C> <C>
5. $500,000 School Bd. of Hillsborough 5.375 7/1/21 AAA 471,090.00
Cnty., FL, Certs. of Part., Master Lease
Prog., Ser. 1998 A (MBIA Ins.)
</TABLE>
MUNICIPAL ELECTRIC/GAS UTILITIES (23%):
<TABLE>
<S> <C> <C> <C> <C>
6. $500,000 City of Tallahassee, FL, Energy 4.75 10/1/26 AAA 417,140.00
Sys. Rfdg. Rev. Bonds, Ser. 1998 A (FSA
Ins.)
7. $250,000 Guam Pwr. Auth., Rev. Bonds, 5.25 10/1/34 AAA 225,350.00
Ser. 1999 A (MBIA Ins.)
</TABLE>
MUNICIPAL WATER/SEWER UTILITIES (15%):
<TABLE>
<S> <C> <C> <C> <C>
8. $500,000 Miami-Dade Cnty., FL, Wtr. and 5.00 10/1/29 AAA 437,315.00
Swr. Sys. Rev. Bonds, Ser. 1999 A
(Financial Guaranty Ins.)
</TABLE>
STADIUMS/CONVENTION CENTERS (15%):
<TABLE>
<S> <C> <C> <C> <C>
9. $500,000 Tampa Sports Auth., FL, Sales 5.25 1/1/27 AAA 459,465.00
Tax Pmts. Rev. Bonds (Stadium Proj.),
Ser. 1997 (MBIA Ins.)
--------------
$ 3,015,102.30
==============
</TABLE>
- ----------------------------
(1) Approximately 15% of the long-term bonds are callable beginning in 2007;
31% are callable in 2008, and 38% are callable in 2009. 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 1% of the bonds were deposited at a premium and 99% at a
discount from par. Sponsors' profit on deposit was $23,646.50.
(4) The interest and principal on these bonds will be used to pay the deferred
sales charge obligations of the investors, and these amounts are not
included in the calculation of Estimated Current and Long Term Returns.
----------------------------
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>
FLORIDA INSURED PORTFOLIO (CONTINUED)
<TABLE>
<C> <S>
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want income free from regular federal
tax. 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:
</TABLE>
<TABLE>
<CAPTION>
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
-------------- ------------
<C> <S> <C>
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%
</TABLE>
<TABLE>
<C> <S>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
</TABLE>
<TABLE>
<CAPTION>
AS A % OF AMOUNT
$1,000 PER 1,000
INVESTED UNITS
--------- ---------
<C> <S> <C> <C>
.068 % $0.63
Trustee's Fee
.049 % $0.46
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
.043 % $0.40
Evaluator's Fee
.055 % $0.52
Other Operating Expenses
------- -----
.215 % $2.01
TOTAL
</TABLE>
<TABLE>
<CAPTION>
AMOUNT
PER 1,000
UNITS
---------
<C> <S> <C>
$2.00
ORGANIZATION COSTS (deducted from
Fund assets at the close of the
initial offering period)
</TABLE>
<TABLE>
<C> <S>
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:
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
$332 $379 $430 $581
</TABLE>
<TABLE>
<C> <S>
You will pay the following expenses if you do
not sell your units:
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
$237 $379 $430 $581
</TABLE>
<TABLE>
<C> <S>
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
IN THE FOLLOWING CHART WE SHOW PAST PERFORMANCE
OF PRIOR FLORIDA PORTFOLIOS, WHICH HAD
INVESTMENT OBJECTIVES, STRATEGIES AND TYPES OF
BONDS SUBSTANTIALLY SIMILAR TO THIS FUND. THESE
PRIOR SERIES DIFFERED IN THAT THEY CHARGED A
HIGHER SALES FEE. These prior Florida Series
were offered between August 25, 1988 and
December 6, 1996 and were outstanding on
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.
</TABLE>
-------------------------------------------------------------------
<TABLE>
High 4.33% 6.45% 6.04% 4.49% 7.65% 6.64%
<S> <C> <C> <C> <C> <C> <C>
Average -2.14 4.94 5.74 -0.21 5.98 6.32
Low -7.67 3.19 5.56 -4.96 3.95 6.15
</TABLE>
-----------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Average
Sales fee 2.01% 5.14% 5.70%
</TABLE>
-----------------------------------------------------------
NOTE: ALL RETURNS REPRESENT CHANGES IN UNIT PRICE WITH DISTRIBUTIONS REINVESTED
INTO THE MUNICIPAL FUND INVESTMENT ACCUMULATION PROGRAM.
7
<PAGE>
FLORIDA INSURED PORTFOLIO (CONTINUED)
<TABLE>
<C> <S>
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 $938.90
(as of December 9, 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.
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.
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.
</TABLE>
8
<PAGE>
- --------------------------------------------------------------------------------
NEW JERSEY INSURED PORTFOLIO--RISK/RETURN SUMMARY
<TABLE>
<C> <S>
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?
- 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 charge. The Fund is a unit
investment trust which means that, unlike
a mutual fund, the Fund's portfolio is not
managed.
- The bonds are rated AAA or Aaa by Standard
& Poor's, Moody's or Fitch.
- 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.
- 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:
</TABLE>
<TABLE>
- Airports/Ports/Highways 15%
<C> <S>
- Hospitals/Health Care 45%
- Municipal Electric Utilities 10%
- State/Local Government Supported 30%
</TABLE>
<TABLE>
<C> <S>
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE
FUND. THIS CAN HAPPEN FOR VARIOUS REASONS,
INCLUDING:
- Rising interest rates, an issuer's
worsening financial condition or a drop in
bond ratings can reduce the price of your
units.
- Because the Portfolio is concentrated in
hospital/health care and state/local
government supported bonds, adverse
development in these sectors may affect
the value of your units. These risks are
discussed later in this prospectus under
Concentration Risk.
- 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.
- 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 LATER IN THIS PROSPECTUS
UNDER STATE CONCENTRATION RISKS.
</TABLE>
<TABLE>
<C> <S>
DEFINING YOUR INCOME
AND ESTIMATING YOUR RETURN
</TABLE>
<TABLE>
<C> <S> <C>
WHAT YOU MAY EXPECT (Record Day: 10th day of
each June and December)
Regular Semi-Annual Income per 1,000 units
(each June and December beginning 6/25/00): $25.76
Annual Income per 1,000 units: $51.53
THESE FIGURES ARE ESTIMATES ON THE BUSINESS DAY BEFORE
THE INITIAL DATE OF DEPOSIT; ACTUAL PAYMENTS MAY VARY.
Estimated Current Return 5.41%
Estimated Long Term Return 5.56%
RETURNS WILL VARY (SEE PAGE 16).
</TABLE>
9
<PAGE>
- --------------------------------------------------------------------------------
NEW JERSEY INSURED PORTFOLIO
- ------------------------------------------------------------------------
Multistate Series--412
<TABLE>
<CAPTION>
RATING COST
PORTFOLIO TITLE COUPON MATURITY (1) OF ISSUES (2) TO FUND (3)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
</TABLE>
AIRPORTS/PORTS/HIGHWAYS (15%):
<TABLE>
<S> <C> <C> <C> <C>
1. $500,000 Delaware River Port Auth., NJ, 5.625% 1/01/26 AAA $ 480,505.00
Port Dist. Proj. Bonds, Ser. 1999 B (FSA
Ins.)
</TABLE>
HOSPITALS/HEALTH CARE (45%):
<TABLE>
<S> <C> <C> <C> <C>
2. $500,000 New Jersey Econ. Dev. Auth., 5.375 7/01/27 Aaa(m ) 461,260.00
Rev. Bonds (St. Barnabas Proj.), Ser.
1997 A (MBIA Ins.)
3. $500,000 New Jersey Hlth. Care Fac. Fin. 4.50 7/01/28 AAA 395,225.00
Auth., Rev. Bonds (CentraState Med. Ctr.
Oblig. Grp. Issue), Ser. 1998 (Ambac
Ins.)
4. $500,000 New Jersey Hlth. Care Fac. Fin. 5.20 1/01/28 AAA 449,115.00
Auth., Rev. Bonds (Hackensack Univ. Med.
Ctr. Issue), Ser. 1998 (MBIA Ins.)
</TABLE>
MUNICIPAL ELECTRIC UTILITIES (10%):
<TABLE>
<S> <C> <C> <C> <C>
5. $315,000 Guam Pwr. Auth., Rev. Bonds, 5.25 10/01/34 AAA 283,941.00
Ser. 1999 A (MBIA Ins.)
</TABLE>
STATE/LOCAL GOVERNMENT SUPPORTED (30%):
<TABLE>
<S> <C> <C> <C> <C>
6. $500,000 The Essex Cnty. Imp. Auth., NJ, 5.75 7/01/27 AAA 493,175.00
Util. Sys. Rev. Bonds (Orange Fran.
Acquisition Proj.), Ser. 1997 A (MBIA
Ins.)
7. $435,000 The Gloucester Cnty. Imp. Auth., 5.75-5.80 12/01/18-19 AAA 435,000.00
NJ, Cnty. Gtd. Lease Rev. Bonds, Ser.
1999 B & C (FSA Ins.)
8. $60,000 The Gloucester Cnty. Imp. Auth., 4.00-4.30 12/01/00-02 AAA 60,000.00
NJ, Cnty. Gtd. Lease Rev. Bonds, Ser.
1999 B & C (FSA Ins.)(4)
--------------
$ 3,058,221.00
==============
</TABLE>
- ----------------------------
(1) Approximately 31% of the long-term bonds are callable beginning in 2007;
31% are callable in 2008 and 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 85% of the bonds were deposited at a discount from par and
15% at par. Sponsors' profit on deposit was $18,323.75.
(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>
NEW JERSEY INSURED PORTFOLIO (CONTINUED)
<TABLE>
<C> <S>
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want income free from regular
federal tax. 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:
</TABLE>
<TABLE>
<CAPTION>
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
-------------- ------------
<C> <S> <C>
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%
</TABLE>
<TABLE>
<C> <S>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
</TABLE>
<TABLE>
<CAPTION>
AS A % OF AMOUNT
$1,000 PER 1,000
INVESTED UNITS
--------- ---------
<C> <S> <C> <C>
.067 % $0.63
Trustee's Fee
.048 % $0.46
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
.043 % $0.40
Evaluator's Fee
.054 % $0.52
Other Operating Expenses
------- -----
.212 % $2.01
TOTAL
</TABLE>
<TABLE>
<CAPTION>
AMOUNT
PER 1,000
UNITS
---------
<C> <S> <C>
$2.00
ORGANIZATION COSTS (deducted from
Fund assets at the close of the
initial offering period)
</TABLE>
<TABLE>
<C> <S>
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:
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
$331 $378 $428 $578
</TABLE>
<TABLE>
<C> <S>
You will pay the following expenses if you
do not sell your units:
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
$236 $378 $428 $578
</TABLE>
<TABLE>
<C> <S>
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
IN THE FOLLOWING CHART WE SHOW PAST PERFORMANCE
OF PRIOR NEW JERSEY PORTFOLIOS, WHICH HAD
INVESTMENT OBJECTIVES, STRATEGIES AND TYPES OF
BONDS SUBSTANTIALLY SIMILAR TO THIS FUND. THESE
PRIOR SERIES DIFFERED IN THAT THEY CHARGED A
HIGHER SALES FEE. These prior New Jersey Series
were offered between June 22, 1988 and September
19, 1996 and were outstanding on 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.
</TABLE>
-------------------------------------------------------------------
<TABLE>
High 1.38% 6.59% 6.12% 2.67% 7.78% 6.61%
<S> <C> <C> <C> <C> <C> <C>
Average -1.82 4.81 5.72 -0.04 5.86 6.29
Low -6.50 3.02 5.52 -3.75 3.75 6.10
</TABLE>
-----------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Average
Sales fee 1.85% 5.18% 5.66%
</TABLE>
-----------------------------------------------------------
NOTE: ALL RETURNS REPRESENT CHANGES IN UNIT PRICE WITH DISTRIBUTIONS REINVESTED
INTO THE MUNICIPAL FUND INVESTMENT ACCUMULATION PROGRAM.
10
<PAGE>
NEW JERSEY INSURED PORTFOLIO (CONTINUED)
<TABLE>
<C> <S>
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 $952.31
(as of December 9, 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.
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.
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.
</TABLE>
11
<PAGE>
- --------------------------------------------------------------------------------
NEW YORK INSURED PORTFOLIO--RISK/RETURN SUMMARY
<TABLE>
<C> <S>
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, healthcare 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?
- The Fund plans to hold to maturity 7
long-term municipal bonds with an
aggregate face amount of $4,500,000, 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.
- The bonds are rated AAA or Aaa by
Standard & Poor's, Moody's or Fitch.
- 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.
- 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:
</TABLE>
<TABLE>
- Airports/Ports/Highways 14%
<C> <S>
- Hospitals/Health Care 13%
- Industrial Development Revenue 15%
- Lease Rental 32%
- Municipal Water/Sewer Utilities 26%
</TABLE>
<TABLE>
<C> <S>
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE
FUND. THIS CAN HAPPEN FOR VARIOUS
REASONS, INCLUDING:
- Rising interest rates, an issuer's
worsening financial condition or a drop
in bond ratings can reduce the price of
your units.
- Because the Portfolio is concentrated in
municipal water/sewer utility and lease
rental bonds, adverse developments in
these sectors may affect the value of
your units.
- 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.
- 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 LATER IN THIS
PROSPECTUS UNDER STATE CONCENTRATION
RISKS.
</TABLE>
<TABLE>
<C> <S>
DEFINING YOUR INCOME
AND ESTIMATING YOUR RETURN
</TABLE>
<TABLE>
<C> <S> <C>
WHAT YOU MAY EXPECT (Record Day: 10th day of
each June and December)
Regular Semi-Annual Income per 1,000 units
(each June and December beginning 6/25/00): $26.43
Annual Income per 1,000 units: $52.86
THESE FIGURES ARE ESTIMATES ON THE BUSINESS DAY BEFORE
THE INITIAL DATE OF DEPOSIT; ACTUAL PAYMENTS MAY VARY.
Estimated Current Return 5.54%
Estimated Long Term Return 5.68%
RETURNS WILL VARY (SEE PAGE 16).
</TABLE>
12
<PAGE>
- --------------------------------------------------------------------------------
NEW YORK INSURED PORTFOLIO
- ------------------------------------------------------------------------
Multistate Series--412
<TABLE>
<CAPTION>
RATING COST
PORTFOLIO TITLE COUPON MATURITY (1) OF ISSUES (2) TO FUND (3)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
</TABLE>
AIRPORTS/PORTS/HIGHWAYS (14%):
<TABLE>
<S> <C> <C> <C> <C>
1. $650,000 New York Metro. Trans. Auth., 5.25% 7/1/28 AAA $ 583,732.50
Commuter Facs. Rev. Bonds, Ser. 1998 A
(Financial Guaranty Ins.)
</TABLE>
HOSPITALS/HEALTH CARE (13%):
<TABLE>
<S> <C> <C> <C> <C>
2. $500,000 Dormitory Auth. of the State of 6.00 7/1/24 AAA 500,000.00
New York, New Island Hosp. Ins. Rev.
Bonds, Ser. 1999 A (Ambac Ins.)
3. $80,000 Dormitory Auth. of the State of 4.00- 7/1/00-7/1/02 AAA 80,000.00
New York, New Island Hosp. Ins. Rev. 4.50
Bonds, Ser. 1999 A (Ambac Ins.)(4)
</TABLE>
INDUSTRIAL DEVELOPMENT REVENUE (15%):
<TABLE>
<S> <C> <C> <C> <C>
4. $700,000 New York State Energy Research 5.45 8/1/27 AAA 648,291.00
and Dev. Auth., Poll. Ctl. Rfdg. Rev.
Bonds (Central Hudson Gas & Elec. Corp.
Proj.), Ser. 1999 A (Ambac Ins.)
</TABLE>
LEASE RENTAL (32%):
<TABLE>
<S> <C> <C> <C> <C>
5. $700,000 Dormitory Auth. of the State of 5.75 5/15/30 AAA 675,619.00
New York, Court Facs. Lease Rev. Bonds
(The City of New York Issue), Ser. 1999
(Ambac Ins.)
6. $750,000 New York State Urban Dev. Corp., 4.75 1/1/28 AAA 614,730.00
Corr. Facs. Svc. Contract Rev. Bonds,
Ser. B (Ambac Ins.)
</TABLE>
MUNICIPAL WATER/SEWER UTILITIES (26%):
<TABLE>
<S> <C> <C> <C> <C>
7. $500,000 New York City Mun. Wtr. Fin. 5.125 6/15/30 AAA 437,820.00
Auth., Wtr. and Swr. Sys. Rev. Bonds,
Fiscal 1998 Ser. B (Financial Guaranty
Ins.)
8. $700,000 Buffalo Mun. Wtr. Fin. Auth., 6.00 7/1/26 AAA 702,856.00
NY, Wtr. Sys. Rev. Bonds, Ser. 1999 (FSA
Ins.)
--------------
$ 4,243,048.50
==============
</TABLE>
- ----------------------------
(1) Approximately 11% of the long-term bonds are callable beginning in 2007;
14% are callable in 2008, 59% are callable in 2009 and the remaining
long-term bonds are callable in 2010. 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 15% of the bonds were deposited at a premium, 13% at par and
72% at a discount from par. Sponsors' profit on deposit was $18,506.60.
(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>
NEW YORK INSURED PORTFOLIO (CONTINUED)
<TABLE>
<C> <S>
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want income free from regular federal
tax. 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:
</TABLE>
<TABLE>
<CAPTION>
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
-------------- ------------
<C> <S> <C>
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%
</TABLE>
<TABLE>
<C> <S>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
</TABLE>
<TABLE>
<CAPTION>
AS A % OF AMOUNT
$1,000 PER 1,000
INVESTED UNITS
--------- ---------
<C> <S> <C> <C>
.067 % $0.63
Trustee's Fee
.048 % $0.46
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
.031 % $0.29
Evaluator's Fee
.039 % $0.37
Other Operating Expenses
------- -----
.185 % $1.75
TOTAL
</TABLE>
<TABLE>
<CAPTION>
AMOUNT
PER 1,000
UNITS
---------
<C> <S> <C>
$2.00
ORGANIZATION COSTS (deducted from
Fund assets at the close of the
initial offering period)
</TABLE>
<TABLE>
<C> <S>
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:
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
$329 $369 $413 $544
</TABLE>
<TABLE>
<C> <S>
You will pay the following expenses if you do
not sell your units:
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
$234 $369 $413 $544
</TABLE>
<TABLE>
<C> <S>
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
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.
</TABLE>
-------------------------------------------------------------------
<TABLE>
High 2.66% 6.84% 6.28% 3.90% 8.04% 6.88%
<S> <C> <C> <C> <C> <C> <C>
Average -1.64 4.63 5.93 0.17 5.63 6.52
Low -7.50 2.83 5.67 -4.91 3.76 6.26
</TABLE>
-----------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Average
Sales fee 1.88% 4.94% 5.78%
</TABLE>
-----------------------------------------------------------
NOTE: ALL RETURNS REPRESENT CHANGES IN UNIT PRICE WITH DISTRIBUTIONS REINVESTED
INTO THE MUNICIPAL FUND INVESTMENT ACCUMULATION PROGRAM.
13
<PAGE>
NEW YORK INSURED PORTFOLIO (CONTINUED)
<TABLE>
<C> <S>
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 $954.24
(as of December 9, 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.
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 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.
</TABLE>
14
<PAGE>
- --------------------------------------------------------------------------------
TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS
FOR FLORIDA RESIDENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EFFECTIVE
TAXABLE INCOME 1999* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 3% 3.5% 4% 4.5% 5% 5.5%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IS EQUIVALENT TO A TAXABLE YIELD OF
<CAPTION>
TAXABLE INCOME 1999* TAX-FREE YIELD OF
SINGLE RETURN 6% 6.5% 7%
<S> <C> <C> <C>
IS EQUIVALENT TO A
TAXABLE YIELD OF
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 25,750 $ 0- 43,050 15.00 3.53 4.12 4.71 5.29 5.88 6.47 7.06
$ 27,751- 62,450 $ 43,051-104,050 28.00 4.17 4.86 5.56 6.25 6.94 7.64 8.33
$ 62,451-130,250 $104,051-158,550 31.00 4.35 5.07 5.80 6.52 7.25 7.97 8.70
$130,251-283,150 $158,551-283,150 36.00 4.69 5.47 6.25 7.03 7.81 8.59 9.38
OVER $283,151 OVER $283,151 39.60 4.97 5.79 6.62 7.45 8.28 9.11 9.93
<S> <C> <C>
$ 0- 25,750 7.65 8.24
$ 27,751- 62,450 9.03 9.72
$ 62,451-130,250 9.42 10.14
$130,251-283,150 10.16 10.94
OVER $283,151 10.76 11.59
</TABLE>
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%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IS EQUIVALENT TO A TAXABLE YIELD OF
<CAPTION>
TAXABLE INCOME 1999* TAX-FREE YIELD OF
SINGLE RETURN 7% 7.5% 8%
<S> <C> <C> <C>
IS EQUIVALENT TO A
TAXABLE YIELD OF
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 25,750 $ $0- 43,050 20.10 5.01 5.63 6.26 6.88 7.51 8.14 8.76
$ 25,751- 62,450 $ 43,051-104,050 34.70 6.13 6.89 7.66 8.42 9.19 9.95 10.72
$ 62,451-130,250 $104,051-158,550 37.42 6.39 7.19 7.99 8.79 9.59 10.39 11.19
$130,251-283,150 $158,551-283,150 41.95 6.89 7.75 8.61 9.47 10.34 11.20 12.06
OVER $283,151 OVER $283,151 45.22 7.30 8.21 9.13 10.04 10.95 11.87 12.78
<S> <C> <C>
$ 0- 25,750 9.39 10.01
$ 25,751- 62,450 11.48 12.25
$ 62,451-130,250 11.98 12.78
$130,251-283,150 12.92 13.78
OVER $283,151 13.69 14.60
</TABLE>
FOR NEW JERSEY RESIDENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 1999* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IS EQUIVALENT TO A TAXABLE YIELD OF
<CAPTION>
TAXABLE INCOME 1999* TAX-FREE YIELD OF
SINGLE RETURN 7% 7.5%
<S> <C> <C>
IS EQUIVALENT TO A
TAXABLE YIELD OF
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 25,750 $ $0- 43,050 16.49 4.79 5.39 5.99 6.59 7.18 7.78 8.38
$ 25,751- 62,450 $ 43,051-104,050 31.98 5.88 6.62 7.35 8.09 8.82 9.56 10.29
$ 62,451-130,250 $104,051-158,550 35.40 6.19 6.97 7.74 8.51 9.29 10.06 10.84
$130,251-283,150 $158,551-283,150 40.08 6.68 7.51 8.34 9.18 10.01 10.85 11.68
OVER $283,151 OVER $283,151 43.45 7.07 7.96 8.84 9.73 10.61 11.49 12.38
<S> <C>
$ 0- 25,750 8.98
$ 25,751- 62,450 11.03
$ 62,451-130,250 11.61
$130,251-283,150 12.52
OVER $283,151 13.26
</TABLE>
FOR NEW YORK CITY 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%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IS EQUIVALENT TO A TAXABLE YIELD OF
<CAPTION>
TAXABLE INCOME 1999* TAX-FREE YIELD OF
SINGLE RETURN 7% 7.5% 8%
<S> <C> <C> <C>
IS EQUIVALENT TO A
TAXABLE YIELD OF
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 43,060 23.59 5.24 5.89 6.54 7.20 7.85 8.51 9.16
$ 0-25,750- 23.63 5.24 5.89 6.55 7.20 7.86 8.51 9.17
$ 25,751- 62,450 $ 43,051-104,050 35.35 6.19 6.96 7.73 8.51 9.28 10.05 10.83
$ 62,451-130,250 $104,051-158,550 38.04 6.46 7.26 8.07 8.88 9.68 10.49 11.30
$130,251-283,150 $158,551-283,150 42.53 6.96 7.83 8.70 9.57 10.44 11.31 12.18
OVER $283,151 OVER $283,151 45.77 7.38 8.30 9.22 10.14 11.06 11.98 12.91
<S> <C> <C>
9.82 10.47
$ 0-25,750- 9.82 10.48
$ 25,751- 62,450 11.60 12.37
$ 62,451-130,250 12.11 12.91
$130,251-283,150 13.05 13.92
OVER $283,151 13.83 14.75
</TABLE>
FOR NEW YORK STATE 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%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IS EQUIVALENT TO A TAXABLE YIELD OF
<CAPTION>
TAXABLE INCOME 1999* TAX-FREE YIELD OF
SINGLE RETURN 7% 7.5% 8%
<S> <C> <C> <C>
IS EQUIVALENT TO A
TAXABLE YIELD OF
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 25,750 $ 0- 43,050 20.82 5.05 5.68 6.31 6.95 7.58 8.21 8.84
$ 25,751- 62,450 $ 43,051-104,050 32.93 6.71 6.71 7.46 8.20 8.95 9.69 10.44
$ 62,451-130,250 $104,051-158,550 35.73 6.22 7.00 7.78 8.56 9.34 10.11 10.89
$130,251-283,150 $158,551-283,150 40.38 6.71 7.55 8.39 9.23 10.06 10.90 11.74
OVER $283,151 OVER $283,151 43.74 7.11 8.00 8.89 9.78 10.66 11.55 12.44
<S> <C> <C>
$ 0- 25,750 9.47 10.10
$ 25,751- 62,450 11.18 11.93
$ 62,451-130,250 11.67 12.45
$130,251-283,150 12.58 13.42
OVER $283,151 13.33 14.22
</TABLE>
To compare the yield of a taxable security with the yield of a tax-free
security, find your taxable income and read across. The table incorporates 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:
- elimination of one or more bonds from the Fund's portfolio because of calls,
redemptions or sales;
- a change in the Fund's expenses; or
- 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):
<TABLE>
<S> <C> <C>
Estimated Annual Estimated
Interest Income - Annual Expenses
- -------------------------------------
Unit Price
</TABLE>
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:
- - a statement of income payments twice a year;
- - a notice from the Trustee when new bonds are deposited in exchange or
substitution for bonds originally deposited;
- - an annual report on Fund activity; and
- - 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:
- - copies of bond evaluations to enable you to comply with federal and state tax
reporting requirements; and
- - 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:
- - it no longer needs the money for the original purpose;
- - the project is condemned or sold;
- - the project is destroyed and insurance proceeds are used to redeem the bonds;
- - any related credit support expires and is not replaced; or
- - 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 a portfolio, it is said to
be "concentrated" in that bond type, which makes the portfolio less diversified.
Here is what you should know about the California Portfolio's concentration in
tax increment or tax allocation bonds.
- these bonds are secured by ad valorem taxes imposed on the incremental
increase of taxable assessed valuation of property within a jurisdiction
above an established base of assessed values.
- the issuers of these bonds do not have general taxing authority and the tax
assessments on which the taxes used to service the bonds are based may be
subject to devaluation due to market price declines or governmental action.
17
<PAGE>
STATE/LOCAL GOVERNMENT SUPPORTED
Here is what you should know about the New Jersey Portfolio's concentration in
state/local government supported bonds:
- state/local government supported bonds are ultimately guaranteed or
supported on a continuous basis by a state or local government having taxing
power;
- but the taxing power of any state/local government may be limited by
provisions of the state constitution or laws as well as political and
economic considerations;
- a state or local government'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.
LEASE RENTAL BONDS
Here is what you should know about each of the California and New York
Portfolio's concentration in lease rental bonds. Lease rental bonds are
generally issued by governmental financing authorities that cannot assess a tax
to cover the cost of equipment or construction of buildings that will be used by
a state or local government. The risks associated with these bonds include:
- the failure of the government to appropriate funds for the leasing rental
payments to service the bonds; and
- rental obligations, and therefore payments, may terminate in the event of
damages to or destruction or condemnation of the equipment or building.
Here is what you should know about each of the Florida and New Jersey
Portfolio's concentration in hospital and health care bonds:
- 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;
- hospitals face increasing competition resulting from hospital mergers and
affiliations;
- hospitals need to reduce costs as HMOs increase market penetration and
hospital supply and drug companies raise prices; and
- hospitals and health care providers are subject to various legal claims by
patients and others and are adversely affected by increasing costs of
insurance.
- 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.
- 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.
- 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.
18
<PAGE>
Here is what you should know about the New York Portfolio's concentration in
municipal water and sewer revenue bonds. The payment of interest and principal
of these bonds depends on the rates the utilities may charge, the demand for
their services and the cost of operating their business which includes the
expense of complying with environmental and other energy and licensing laws and
regulations. The operating results of utilities are particularly influenced by:
- increases in operating and construction costs; and
- unpredicability of future usage requirements.
STATE CONCENTRATION RISKS
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.
- As a result California experienced a period of sustained budget imbalance.
- 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 effect 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:
- 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.
- California faces constant fluctuations in other expenses (including health
and welfare caseloads, property tax receipts, federal funding and natural
disaster relief) that will undoubtedly create new budgetary pressure and
reduce ability to pay their debts.
- California's general obligation bonds are currently rated AA3 by Moody's and
AA- 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:
- Certain provisions of California's Constitution, laws and regulatory system
contain tax, spending and appropriations limits and prohibit certain new
taxes.
- Certain other California laws subject the users of bond proceeds to strict
rules and limits regarding revenue repayment.
- 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 that could be affected by these
provisions.
19
<PAGE>
FLORIDA RISKS
GENERALLY
Florida's financial condition is affected by numerous national, economic, social
and environmental policies and conditions. For example:
- south Florida is heavily involved with foreign tourism, trade and investment
capital. As a result, the region is susceptible to international trade and
currency imbalances and economic problems in Central and South America;
- central and northern Florida are more vulnerable to agricultural problems,
such as crop failures or severe weather conditions, especially in the citrus
and sugar industries; and
- the state as a whole is also very dependent on tourism and construction.
STATE AND LOCAL GOVERNMENT
The state of Florida and its local governments are restricted in their ability
to raise taxes and incur debts. These restrictions limit their ability to
generate revenue, and so could hurt their ability to pay debts.
General obligations of the state are rated Aa2 by Moody's, AA+ by Standard &
Poor's and AA by Fitch.
NEW JERSEY RISKS
STATE AND LOCAL GOVERNMENT
Certain features of New Jersey law could affect the repayment of debt:
- 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
- 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
- elementary and secondary education, and
- state agencies and programs, including police and corrections facilities,
higher education, and environmental protection.
The state's general obligations are rated Aa1 by Moody's and AA+ by Standard &
Poor's.
NEW YORK RISKS
GENERALLY
For decades, New York's economy has trailed the rest of the nation. Both the
state and New York City have experienced long-term structural imbalances between
revenues and expenses, and have repeatedly relied substantially on non-recurring
measures to achieve budget balance. The pressures that contribute to budgetary
problems at both the state and local level include:
- the high combined state and local tax burden;
- a decline in manufacturing jobs, leading to above-average unemployment;
- sensitivity to the financial services industry; and
- dependence on federal aid.
20
<PAGE>
STATE GOVERNMENT
The State government frequently has difficulty approving budgets on time. Budget
gaps of $3 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
nearly $2 billion are projected for the 2001, 2002, and 2003 fiscal years. New
York City faces fiscal pressures from:
- aging public facilities that need repair or replacement;
- welfare and medical costs;
- expiring labor contracts; and
- 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. $31.2 billion of combined City, MAC and PBC
debt is outstanding, and the City proposes $25.3 billion of financing over
fiscal 1999-2003. New York City is fast approaching its constitutional limits on
debt issuance.
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:
- limiting real property taxes,
- reducing tax rates,
- imposing a flat or other form of tax, or
- 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:
- ADDING the value of the bonds, net accrued interest, cash and any other Fund
assets;
- 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
- 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.
21
<PAGE>
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 28 years, but we
could discontinue it without prior notice for any business reason.
SELLING UNITS TO THE TRUSTEE
Regardless of whether we maintain a secondary market, you can sell your units to
the Trustee at any time by sending the Trustee a letter (with any outstanding
certificates if you hold Unit certificates). You must properly endorse your
certificates (or execute a written transfer instrument with signatures
guaranteed by an eligible institution). Sometimes, additional documents are
needed such as a trust document, certificate of corporate authority, certificate
of death or appointment as executor, administrator or guardian.
Within seven days after your request and the necessary documents are received,
the Trustee will mail a check to you. Contact the Trustee for additional
information.
As long as we are maintaining a secondary market, the Trustee will sell your
units to us at a price based on net asset value. If there is no secondary
market, the Trustee may sell your units in the over-the-counter market for a
higher price, but it is not obligated to do so. In that case, you will receive
the net proceeds of the sale.
If the Fund does not have cash available to pay you for units you are selling,
the agent for the Sponsors will select bonds to be sold. Bonds will be selected
based on market and credit factors. These sales could be made at times when the
bonds would not otherwise be sold and may result in your receiving less than the
unit par value and also reduce the size and diversity of the Fund.
If you acquire 25% or more of the outstanding units of the Fund and you sell
units with a value exceeding $250,000 the Trustee may choose to pay you "in
kind" by distributing bonds and cash with a total value equal to the price of
those units. The Trustee will try to distribute bonds in the portfolio pro rata,
but it reserves the right to distribute only one or a few bonds. The Trustee
will act as your agent in an in kind distribution and will either hold the bonds
for your account or sell them as you instruct. You must pay any transaction
costs as well as transfer and ongoing custodial fees on sales of bonds
distributed in kind.
There could be a delay in paying you for your units:
- if the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- 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
- for any other period permitted by SEC order.
22
<PAGE>
EXCHANGE OPTION
You may exchange units of certain Defined Asset Funds for units of this Fund at
a maximum exchange fee of 1.90%. You may exchange units of this Fund for units
of certain other Defined Asset Funds at a reduced sales fee if your investment
goals change. To exchange units, you should talk to your financial professional
about what funds are exchangeable, suitable and currently available.
Normally, an exchange is taxable and you must recognize any gain or loss on the
exchange. However, the IRS may try to disallow a loss if the portfolios of the
two funds are not materially different; you should consult your own tax adviser.
We may amend or terminate this exchange option at any time without notice.
HOW THE FUND WORKS
PRICING
The price of a unit includes interest accrued on the bonds, less expenses, from
the initial date of deposit up to, but not including, the settlement date, which
is usually three business days after the purchase date of the unit.
Bonds also carry accrued but unpaid interest up to the initial date of deposit.
To avoid having you pay this additional accrued interest (which earns no return)
when you buy, the Trustee advances this amount to the Sponsors. The Trustee
recovers this advance from interest received on the bonds.
In addition, a portion of the price of a unit also consists of cash to pay all
or some of the costs of organizing the Fund including:
- cost of initial preparation of legal documents;
- federal and state registration fees;
- initial fees and expenses of the Trustee;
- initial audit; and
- 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.
23
<PAGE>
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:
- to reimburse the Trustee for the Fund's operating expenses;
- for extraordinary services and costs of indemnifying the Trustee and the
Sponsors;
- costs of actions taken to protect the Fund and other legal fees and
expenses;
- expenses for keeping the Fund's registration statement current; and
- 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 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 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 may affect the
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:
- diversity of the portfolio;
- size of the Fund relative to its original size;
- ratio of Fund expenses to income;
- current and long-term returns;
- degree to which units may be selling at a premium over par; and
- cost of maintaining a current prospectus.
24
<PAGE>
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:
- to cure ambiguities;
- to correct or supplement any defective or inconsistent provision;
- to make any amendment required by any governmental agency; or
- 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:
- it fails to perform its duties and the Sponsors determine that its
replacement is in your best interest; or
- 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
25
<PAGE>
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:
- remove it and appoint a replacement Sponsor;
- liquidate the Fund; or
- 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 and their underwriting percentages are:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (a wholly-owned subsidiary of
Merrill Lynch & Co., Inc.)
P.O. Box 9051,
Princeton, NJ 08543-9051 61.64%
SALOMON SMITH BARNEY INC. (an indirectly wholly-owned subsidiary of Citigroup
Inc.)
388 Greenwich Street--23rd Floor,
New York, NY 10013 11.80%
DEAN WITTER REYNOLDS INC. (a principal operating subsidiary of Morgan Stanley
Dean Witter & Co.)
Two World Trade Center--59th Floor,
New York, NY 10048 10.17%
PAINEWEBBER INCORPORATED (a wholly-owned subsidiary of PaineWebber Group Inc.)
1285 Avenue of the Americas,
New York, NY 10019 16.39%
100.00%
Each Sponsor is a Delaware corporation and it, or its predecessor, has acted as
sponsor to many unit investment trusts. As a registered broker-dealer each
Sponsor buys and sells securities (including investment company shares) for
others (including investment companies) and participates as an underwriter in
various selling groups.
TRUSTEE
The Bank of New York, Unit Investment Trust Department, P.O. Box 974, Wall
Street Division, New York, New York 10268-0974, is the Trustee.
It is supervised by the Federal Deposit Insurance Corporation, the Board of
Governors of the Federal Reserve System and New York State banking authorities.
UNDERWRITERS' AND SPONSORS' PROFITS
Underwriters receive sales charges when they sell units. Sponsors also realize a
profit or loss on deposit of the bonds shown under Defined Portfolios. Any cash
made available by you to the Sponsors before the settlement date for those units
may be used in the Sponsors' businesses to the extent permitted by federal law
and may benefit the Sponsors.
A Sponsor or Underwriter may realize profits or sustain losses on bonds in the
Fund which were acquired from underwriting syndicates of
26
<PAGE>
which it was a member. 30% of the bonds in the New Jersey Portfolio and 30% of
the bonds in New York Portfolio were purchased from one or more of the Sponsors.
During the initial offering period, the Sponsors also may realize profits or
sustain losses on units they hold. In maintaining a secondary market, the
Sponsors will also realize profits or sustain losses in the amount of any
difference between the prices at which they buy units and the prices at which
they resell or redeem them.
PUBLIC DISTRIBUTION
During the initial offering period, units will be distributed to the public by
the Sponsors and dealers who are members of the National Association of
Securities Dealers, Inc. This period is 30 days or less if all units are sold.
The Sponsors may extend the initial period up to 120 days.
The Sponsors do not intend to qualify units for sale in any foreign countries.
This prospectus does not constitute an offer to sell units in any country where
units cannot lawfully be sold.
In the initial offering period, the concession to dealers will be $21 per 1,000
units. We may change the concession at any time. Dealers may resell units to
other dealers with a concession not in excess of the original concession to
dealers.
CODE OF ETHICS
Merrill Lynch, as agent for the Sponsors, has adopted a code of ethics requiring
preclearance and reporting of personal securities transactions by its employees
with access to information on portfolio transactions. The goal of the code is to
prevent fraud, deception or misconduct against the Fund and to provide
reasonable standards of conduct.
YEAR 2000 ISSUES
Many computer systems were designed in such a way that they may be unable to
distinguish between the year 2000 and the year 1900 (commonly known as the "Year
2000 Problem"). We do not expect that the computer system changes necessary to
prepare for the Year 2000 will cause any major operational difficulties for the
Fund. The Year 2000 Problem may adversely affect the issuers of the securities
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 and 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 counsel for the issuers. We
cannot assure you that the issuer (or other users of bond proceeds) 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
27
<PAGE>
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 in each bond for more than one year and short-term otherwise.
Because the deductibility of capital losses is subject to limitations, you may
not be able to deduct all of your capital losses.
YOUR BASIS IN THE BONDS
Your aggregate basis in the bonds will be equal to the cost of your units,
including any sales charges and the organizational expenses you pay, adjusted to
reflect any accruals of "original issue discount," "acquisition premium" and
"bond premium". You should consult your tax adviser in this regard.
EXPENSES
If you are not a corporate investor, you will not be entitled to a deduction for
your share of fees and expenses of the Fund. Also, if you borrowed money in
order to purchase or carry your units, you will not be able to deduct the
interest on this borrowing for federal income tax purposes. The IRS may treat
your purchase of units as made with borrowed money even if the money is not
directly traceable to the purchase of units.
FLORIDA TAXES
In the opinion of Greenberg, Traurig, P.A., Miami, Florida, special counsel on
Florida tax matters:
Under the income tax laws of the State of Florida, the Fund will not be taxed as
a corporation. Florida imposes an income tax on corporations but does not impose
a personal income tax. Accordingly, if you are an individual taxpayer your
income from the Fund will not be subject to tax in Florida. However, if you are
an entity that is normally taxed as a corporation, your income from the fund
will not be exempt from tax in Florida and special rules for taxation apply
depending on the type of entity. You should consult your tax adviser in this
regard.
Florida also imposes a tax on intangible personal property, such as stocks,
bonds, notes and units in trusts. The tax is imposed on Florida taxpayers as of
January 1st of each year. Florida exempts certain types of bonds and debt
obligations from this tax. Your units will be exempt from the intangible
personal
28
<PAGE>
property tax as long as at least 90% of the Fund is invested exclusively in
bonds and other debt obligations that are tax-exempt for Florida purposes.
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.
NEW JERSEY TAXES
In the opinion of Drinker Biddle & Reath LLP, Philadelphia, Pennsylvania,
special counsel on New Jersey tax matters:
The Fund will not be taxed as a corporation under the current income tax laws of
the State of New Jersey. Your income from the Fund may be subject to taxation
depending on where you live. If you are a New Jersey taxpayer your income from
the Fund (including gains on sales of bonds by the Fund) and gains on sales of
units by you will be tax-exempt to the extent that income and gains are earned
on bonds that are tax-exempt for New Jersey purposes. You should consult your
tax adviser as to the consequences to you with respect to any investment you
make in the Fund.
NEW YORK TAXES
Under the income tax laws of the State and City of New York, the Fund will not
be taxed as a corporation. If you are a New York taxpayer, your income from the
Fund will not be tax-exempt in New York except to the extent that the income is
earned on bonds that are tax-exempt for New York purposes. Depending on where
you live, your income from the Fund may be subject to state and local taxation.
You should consult your tax adviser in this regard.
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.
29
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders of Municipal Investment Trust Fund, Multistate
Series--412, Defined Asset Funds (California, Florida, New Jersey and New York
Insured Trusts) (the "Fund"):
We have audited the accompanying statements of condition and the related
portfolios included in the prospectus of the Fund as of December 10, 1999. These
financial statements are the responsibility of the Trustee. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of cash, securities and an irrevocable letter of credit deposited
for the purchase of securities, as described in the statements of condition,
with the Trustee. An audit also includes assessing the accounting principles
used and significant estimates made by the Trustee, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Fund as of December 10,
1999 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
December 10, 1999
STATEMENTS OF CONDITION AS OF DECEMBER 10, 1999
TRUST PROPERTY
<TABLE>
<CAPTION>
CALIFORNIA FLORIDA NEW JERSEY NEW YORK
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Investments--Bonds and
Contracts to purchase
Bonds(1) $ 4,014,141.40 $ 3,015,102.30 $ 3,058,221.00 4,243,048.50
Cash 8,500.00 6,500.00 6,500.00 9,000.00
Accrued interest to initial
date of deposit on
underlying Bonds 68,769.53 61,940.31 50,553.43 58,605.98
-------------------- -------------------- -------------------- --------------------
Total $ 4,091,410.93 $ 3,083,542.61 $ 3,115,274.43 $ 4,310,654.48
==================== ==================== ==================== ====================
LIABILITIES AND INTEREST OF
HOLDERS
Liabilities:
Advance by Trustee for
accrued interest(2) $ 68,769.53 $ 61,940.31 $ 50,553.43 $ 58,605.98
Reimbursement of Sponsors
for organization
expenses(3) 8,500.00 6,500.00 6,500.00 9,000.00
-------------------- -------------------- -------------------- --------------------
Subtotal 77,269.53 68,440.31 57,053.43 67,605.98
-------------------- -------------------- -------------------- --------------------
Interest of Holders of units
of fractional undivided
interest outstanding
(California
Portfolio--4,250,000;
Florida
Portfolio--3,250,000; New
Jersey
Portfolio--3,250,000; New
York Portfolio--4,500,000)
Cost to
investors(3)(4)(5) 4,062,378.90 3,051,437.30 3,095,011.00 4,294,078.50
Organization expenses(3)
and gross underwriting
commissions(4) (48,237.50) (36,335.00) (36,790.00) (51,030.00)
-------------------- -------------------- -------------------- --------------------
Subtotal 4,014,141.40 3,015,102.30 3,058,221.00 4,243,048.50
-------------------- -------------------- -------------------- --------------------
Total $ 4,091,410.93 $ 3,083,542.61 $ 3,115,274.43 $ 4,310,654.48
==================== ==================== ==================== ====================
</TABLE>
- ------------
(1) Aggregate cost to the Fund of the bonds listed under each portfolio is
based upon the offer side evaluation determined by the Evaluator at the
evaluation time on the business day prior to the initial date of deposit. The
contracts to purchase the bonds are collateralized by an irrevocable letter of
credit which has been issued by San Paolo Bank, New York Branch, in the amount
of $14,037,887.30 deposited with the Trustee. The amount of the letter of credit
includes $13,802,871.30 for the purchase of $15,030,000.00 face amount of the
bonds, plus $235,016.00 for accrued interest.
(2) Representing a special distribution to the Sponsors by the Trustee of an
amount equal to the accrued interest on the bonds.
(3) A portion of the Unit Price consists of cash in an amount sufficient to
pay for costs incurred in establishing the Fund. These costs have been estimated
at $2.00 per 1,000 Units. A distribution will be made at the close of the
initial offering period to an account maintained by the Trustee from which the
organizational expense obligation of the investors to the Sponsors will be
satisfied. If the actual organization costs exceed the estimated aggregate
amount shown above, the Sponsors will pay for this excess amount.
(4) Assumes the maximum up-front sales fee per 1,000 units of 1.00% of the
Public Offering Price. A deferred sales fee of $19.00 per 1,000 units is payable
over a two-year period ($2.38 per 1,000 units quarterly in the first year and
$2.37 per 1,000 units quarterly in the second year). Distributions will be made
to an account maintained by the Trustee from which the deferred sales fee
obligation of the investors will be satisfied. If units are redeemed prior to
the end of second anniversary of the Fund, the remaining portion of the deferred
sales fee applicable to such units will be transferred to the account on the
redemption date.
(5) Aggregate Unit Price (exclusive of interest) computed on the basis of
the offer side evaluation of the underlying bonds as of the evaluation time on
the business day prior to the Initial Date of Deposit.
30
<PAGE>
Defined
Asset Funds
- -SM-
<TABLE>
<S> <C>
HAVE QUESTIONS ? MUNICIPAL DEFINED FUND
Request the most MULTISTATE SERIES--412
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 Bank of New York investment company filed with the
1-800-221-7771 Securities and Exchange Commission in
Washington, D.C. under the:
- Securities Act of 1933 (file no.
333-90159) and
- 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.
</TABLE>
100460RR--12/99
