DEFINED ASSET FUNDS-REGISTERED TRADEMARK-
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INSURED TAXABLE FUND SERIES 2
(A UNIT INVESTMENT TRUST)
- PORTFOLIO PRIMARILY COMPOSED OF INSURED LONG TERM
BONDS
- TAXABLE TO U.S. INVESTORS
- U.S. TAX EXEMPT FOR MANY FOREIGN INVESTORS
- INCOME 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 August 31, 2000.
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Defined Asset Funds-Registered Trademark-
Defined Asset Funds-Registered Trademark- is America's oldest and largest family
of unit investment trusts with over $160 billion sponsored in the last 28 years.
Our family of Defined Funds helps investors work toward their financial goals
with a full range of quality investments, including municipal, corporate and
government bond portfolios, equity portfolios and domestic and international
bond and 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.
- Preselected 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.
THE FINANCIAL INFORMATION IN THIS PROSPECTUS IS AS OF THE EVALUATION DATE, APRIL
30, 2000.
CONTENTS
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PAGE
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Risk/Return Summary and Portfolio................. 3
What You Can Expect From Your Investment.......... 6
Income Twice a Year............................. 6
Return Figures.................................. 6
Records and Reports............................. 6
The Risks You Face................................ 7
Interest Rate Risk.............................. 7
Call Risk....................................... 7
Reduced Diversification Risk.................... 7
Liquidity Risk.................................. 7
Concentration Risk.............................. 7
Insurance Related Risk.......................... 8
Litigation and Legislation Risks................ 8
Selling or Exchanging Units....................... 8
Sponsors' Secondary Market...................... 8
Selling Units to the Trustee.................... 8
Exchange Option................................. 9
How The Fund Works................................ 10
Pricing......................................... 10
Evaluations..................................... 10
Income.......................................... 10
Expenses........................................ 10
Portfolio Changes............................... 11
Fund Termination................................ 11
Certificates.................................... 12
Trust Indenture................................. 12
Legal Opinion................................... 13
Auditors........................................ 13
Sponsors........................................ 13
Trustee......................................... 13
Underwriters' and Sponsors' Profits............. 13
Public Distribution............................. 14
Code of Ethics.................................. 14
Year 2000 Issues................................ 14
Taxes............................................. 14
Supplemental Information.......................... 16
Financial Statements.............................. D-1
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RISK/RETURN SUMMARY
1. WHAT IS THE FUND'S OBJECTIVE?
To provide a high level of current taxable income by investing in a fixed
portfolio consisting primarily of insured long-term taxable municipal bonds.
2. WHAT ARE TAXABLE MUNICIPAL BONDS?
- Taxable municipal bonds are typically issued by municipalities or their
agencies for purposes which do not qualify for federal tax exemption, but may
qualify for state and local tax exemption. These bonds are issued to finance
the cost of buying, building or improving various projects, such as sporting
facilities, health care facilities, housing projects, electric, water and
sewer utilities, and colleges or universities.
- Generally, payments on these bonds depend on the revenues generated by the
projects, excise taxes or state appropriations, or the bonds can be backed by
the government's taxing power.
- Due to federal taxation, taxable municipal bonds offer yields more comparable
to other taxable sectors such as corporate bonds or agency bonds than to
other municipal bonds. These bonds are federally taxable to individuals but
may be exempt from state and local taxes, depending on where you live.
3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
- The Fund plans to hold to maturity 11 insured, long-term taxable municipal
bonds and some short-term U.S. Treasury bonds reserved to pay the deferred
sales charge, with an aggregate face amount of $3,570,000.
- 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.
- All of the long-term 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 taxable municipal bonds of the following types:
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APPROXIMATE
PORTFOLIO
PERCENTAGE
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Airports/Ports/Highways 10%
General Obligation 28%
Lease Rental 10%
Special Tax 19%
State/Local Government Supported 10%
Transit Authorities 10%
Universities/Colleges 10%
U.S. Government 2%
</TABLE>
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.
- The Fund is concentrated in general obligation bonds.
Here are some things you should know about the Fund's concentration in
general obligation bonds:
-- because these bonds are backed by the issuer's full faith and credit and
taxing power, any limitation on a government issuer's taxing power may
affect repayment of the bonds.
-- an issuer's credit can be adversely affected by, among other things,
natural
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disasters, a decline in industry and limited access to capital markets.
- 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.
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want taxable semiannual income. You will benefit from a
professionally selected and supervised portfolio whose risk is reduced by
investing in insured bonds of several different issuers.
The Fund is NOT appropriate for you if you want a speculative investment that
changes to take advantage of market movements, if you want a tax-advantaged
investment or if you cannot tolerate any risk.
DEFINING YOUR INCOME
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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): $32.50
Annual Income per 1,000 units: $65.00
THESE FIGURES ARE ESTIMATES ON THE BUSINESS DAY BEFORE THE
INITIAL DATE OF DEPOSIT; ACTUAL PAYMENTS MAY VARY.
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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.
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INVESTOR FEES
Maximum Sales Fee (Load) on new
purchases (as a percentage of
$1,000 invested) 2.90%
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You will pay an up-front sales fee of 1.476%, as well as a total deferred
sales fee of $2.37 per 1,000 Units (paid in quarterly installments through
November, 2000). Employees of some of the Sponsors and their affiliates may
be charged a reduced sales fee of no less than $5.00 per 1,000 Units.
The maximum sales fee is reduced if you invest at least $100,000, as follows:
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YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
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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%
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ESTIMATED ANNUAL FUND OPERATING EXPENSES
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AMOUNT
PER 1,000
UNITS
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Trustee's Fee $0.63
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses) $0.46
Organizational Costs
Evaluator's Fee $0.13
Other Operating Expenses $0.20
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TOTAL $1.42
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The Sponsors historically paid organization costs and updating expenses.
7. 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.
8. HOW DO I BUY UNITS?
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.
The minimum investment is $250.
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UNIT PRICE PER 1,000 UNITS $ 917.70
(as of April 30, 2000)
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Unit price is based on the net asset value of the Fund plus the sales fee. An
amount equal to any principal cash, as well as net
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accrued but undistributed interest on the unit, is added to the unit price.
An independent evaluator prices the bonds at 3:30 p.m. Eastern time every
business day. Unit price changes every day with changes in the prices of the
bonds in the Fund.
9. 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.
10. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income twice a year. Interest on the bonds in this fund is
subject to federal income taxes for U.S. investors, but if you are a non-U.S.
investor, your interest may be exempt from U.S. federal income taxes,
including withholding taxes. A portion of the income may be exempt from some
state and local taxes, depending on where you live. Interest on the U.S.
Treasury notes will be exempt from state and local personal income taxes.
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.
11. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You will receive your semiannual income in cash unless you choose to compound
your income by reinvesting at no sales fee in the Corporate Fund Investment
Accumulation Program, Inc. This program is an open-end mutual fund with a
comparable investment objective except that those bonds will generally not be
insured.
Income from this program will be subject to U.S. federal income taxes for
BOTH U.S. and foreign investors. 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.
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WHAT YOU CAN EXPECT FROM YOUR INVESTMENT
INCOME TWICE A YEAR
The Fund will pay you regular taxable 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):
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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.
The U.S. Treasury bonds held to satisfy payment of the deferred sales charge are
not included in the calculation of Estimated Current Return and Estimated Long
Term Return.
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 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.
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You may inspect records of Fund transactions at the Trustee's office during
regular business hours.
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; or
- any related credit support expires and is not replaced.
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
The bonds will generally trade in the over-the-counter market. We cannot assure
you that a liquid trading market will exist, especially since current law may
restrict the Fund from selling bonds to any Sponsor. The value of the bonds, and
of your investment, may be reduced if trading in bonds is limited or absent.
CONCENTRATION RISK
When a certain type of bond makes up 25% or more of the portfolio, the Fund is
said to be "concentrated" in that bond type, which makes the Fund less
diversified.
Here is what you should know about the Fund's concentration in general
obligation bonds:
- general obligation bonds are backed by the issuer's pledge of its full
faith, credit and taxing power;
- but the taxing power of any government issuer may be limited by provisions
of the state constitution or laws as well as political and economic
considerations; and
- an issuer's credit can be negatively affected by various factors, including
population decline that erodes the tax
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base, natural disasters, decline in industry, limited access to capital
markets or heavy reliance on state or federal aid.
Changes to the portfolio from bond redemptions, maturities and sales may affect
the Fund's concentration over time.
INSURANCE RELATED RISK
The bonds are backed by insurance companies (as shown under Defined Portfolio).
Insurance policies generally make payments only according to a bond's original
payment schedule and do not make early payments when a bond defaults. 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. The rating of a bond will be reduced if
the rating of its insurer is reduced. A reduction in a bond's rating may
decrease its value and, indirectly, the value of your investment in the Fund.
LITIGATION AND LEGISLATION RISKS
We do not know of any pending litigation that might have a material adverse
effect upon the Fund.
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.
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 a 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
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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.
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 funds at a reduced sales fee if your investment goals change.
In addition, you may exchange into this Fund from certain other Defined Asset
Funds and unit trusts. 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.
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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 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 taxable municipal 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. If a bond is
not delivered on time and the Trustee's annual fee and expenses do not cover the
additional accrued interest, we will treat the contract to buy the bond as
failed.
The Trustee credits interest to an Income Account and other receipts to a
Capital Account. The Trustee may establish a Reserve Account by withdrawing from
these accounts amounts it considers appropriate to pay any material liability.
These accounts do not bear interest.
EXPENSES
The Trustee is paid monthly. It also benefits when it holds cash for the Fund in
non-interest bearing accounts. The Trustee may also receive additional amounts:
- 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
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- Fund termination expenses and any governmental charges.
The Sponsors are currently reimbursed up to 55 CENTS per $1,000 face amount
annually for providing portfolio supervisory, bookkeeping and administrative
services and for any other expenses properly chargeable to the Fund. Legal,
typesetting, electronic filing and regulatory filing fees and expenses
associated with updating the Portfolio's registration statement yearly are now
chargeable to the Portfolio.While this fee may exceed the amount of these costs
and expenses attributable to this Fund, the total of these fees for all Series
of Defined Asset Funds will not exceed the aggregate amount attributable to all
of these Series for any calendar year. The Fund also pays the Evaluator's fees.
The Trustee's, Sponsors' and Evaluator's fees may be adjusted for inflation
without investors' approval.
Quarterly deferred sales fees you owe are paid with principal from certain
bonds. If these amounts are not enough, the rest will be paid out of
distributions 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 taxable insured municipal bond with a similar yield,
maturity, rating and price.
Unlike a mutual fund, the portfolio is designed to remain intact and we may keep
bonds in the portfolio even if their credit quality declines or other adverse
financial circumstances occur. However, we may sell a bond in certain cases if
we believe that certain adverse credit conditions exist or if a bond becomes
taxable.
If we maintain a secondary market in units but are unable to sell the units that
we buy in the secondary market, we will redeem units, which will affect the size
and composition of the portfolio. Units offered in the secondary market may not
represent the same face amount of bonds that they did originally.
We decide whether or not to offer units for sale that we acquire in the
secondary market after reviewing:
- 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.
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
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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
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remains and agrees to the resignation. The remaining Sponsors and the Trustee
may appoint a replacement. If there is only one Sponsor and it fails to perform
its duties or becomes bankrupt the Trustee may:
- 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
special counsel for the Sponsors, has given an opinion that the units are
validly issued.
AUDITORS
Deloitte & Touche LLP, 2 World Financial Center, New York, New York 10281,
independent accountants, audited the Statement of Condition included in this
prospectus.
SPONSORS
The Sponsors are:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (a wholly-owned subsidiary of
Merrill Lynch & Co., Inc.)
P.O. Box 9051,
Princeton, NJ 08543-9051
SALOMON SMITH BARNEY INC.
(an indirectly wholly-owned subsidiary of
Citigroup Inc.)
388 Greenwich Street--23rd Floor,
New York, NY 10013
DEAN WITTER REYNOLDS INC. (a principal operating subsidiary of Morgan Stanley
Dean Witter & Co.)
Two World Trade Center--59th Floor,
New York, NY 10048
PAINEWEBBER INCORPORATED (a wholly-owned subsidiary of PaineWebber Group Inc.)
1285 Avenue of the Americas,
New York, NY 10019
Each Sponsor is a Delaware corporation and it, or its predecessor, has acted as
sponsor to many unit investment trusts. As a registered broker-dealer each
Sponsor buys and sells securities (including investment company shares) for
others (including investment companies) and participates as an underwriter in
various selling groups.
TRUSTEE
The Chase Manhattan Bank, Unit Investment Trust Department, 4 New York
Plaza--6th Floor, New York, New York 10004, is the Trustee. It is supervised by
the Federal Deposit Insurance Corporation, the Board of Governors of the Federal
Reserve System and New York State banking authorities.
UNDERWRITERS' AND SPONSORS' PROFITS
Underwriters receive sales charges when they sell units. Sponsors also realized
a profit or loss on deposit of the bonds. Any cash made available by you to the
Sponsors before the settlement date for those units may be used in the Sponsors'
businesses to the extent permitted by federal law and may benefit the Sponsors.
13
<PAGE>
A Sponsor or Underwriter may realize profits or sustain losses on bonds in the
Fund which were acquired from underwriting syndicates of which it was a member.
In maintaining a secondary market, the Sponsors will also realize profits or
sustain losses in the amount of any difference between the prices at which they
buy units and the prices at which they resell or redeem them.
PUBLIC DISTRIBUTION
The Sponsors do not intend to qualify units for sale in any foreign countries.
This prospectus does not constitute an offer to sell units in any country where
units cannot lawfully be sold.
CODE OF ETHICS
The Fund and the Agent for the Sponsors have each adopted a code of ethics
requiring reporting of personal securities transactions by its employees with
access to information on Fund transactions. Subject to certain conditions, the
codes permit employees to invest in Fund securities for their own accounts. The
codes are designed to prevent fraud, deception and misconduct against the Fund
and to provide reasonable standards of conduct. These codes are on file with the
Commission and you may obtain a copy by contacting the Commission at the address
listed on the back cover of this prospectus.
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"). To date we are not aware of any major operational difficulties
resulting from the computer system changes necessary to prepare for the Year
2000. However, there can be no assurance that the Year 2000 Problem will not
adversely affect the issuers of the bonds contained in the Portfolio. 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.
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.
You will be considered to receive your share of any interest paid (or any
original issue discount accrued) when this interest is received (or this
original issue discount is accrued) by the Portfolio. Interest (and original
issued discount, if any) will be taxed at ordinary income rates. You should
consult your tax adviser in this regard.
14
<PAGE>
GAIN OR LOSS UPON DISPOSITION
When all or part of your share of a bond is disposed of (for example, when the
Fund sells, exchanges or redeems a bond or when you sell or exchange your
units), you will generally recognize capital gain or loss. Your gain, however,
will generally be ordinary income to the extent of any accrued "market
discount". Generally you will have market discount to the extent that your basis
in a bond when you purchase a unit is less than its stated redemption price at
maturity (or, if it is an original issue discount bond, the issue price
increased by original issue discount that has accrued on the bond before your
purchase). You should consult your tax adviser in this regard.
If your net long-term capital gains exceed your net short-term capital losses,
the excess may be subject to tax at a lower rate than ordinary income. Any
capital gain from the Fund will be long-term if you are considered to have held
your investment on each bond for more than one year and short-term otherwise.
Because the deductibility of capital losses is subject to limitations, you may
not be able to deduct all of your capital losses. You should consult your tax
adviser in this regard.
YOUR BASIS IN THE BONDS
Your aggregate basis in the bonds and the related insurance contracts 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 an individual who itemizes deductions, you may deduct your share of
Fund expenses, but only to the extent that such amount, together with your other
miscellaneous deductions, exceeds 2% of your adjusted gross income. Your ability
to deduct Fund expenses will be limited further if your adjusted gross income
exceeds a specified amount, currently $128,950 ($64,475 for a married person
filing separately).
FOREIGN INVESTORS
If you are a foreign investor and you are not engaged in a U.S. trade or
business, you generally will not be subject to U.S. federal income tax,
including withholding tax, on the interest or gain on a bond issued after July
18, 1984 if you meet certain requirements, including the certification of
foreign status and other matters. You should consult your tax adviser about the
possible application of federal, state and local, and foreign taxes.
NEW YORK TAXES
Depending on where you live, income on some of the bonds may be exempt from
state and local taxation. You should consult your tax adviser in this regard.
RETIREMENT PLANS
You may wish to purchase units for an Individual Retirement Account (IRA) or
other retirement plan. Generally, capital gains and income received in each of
these plans are exempt from federal taxation. All distributions from such plans
are generally treated as ordinary income but may, in some cases, be eligible for
tax-deferred rollover
15
<PAGE>
treatment. You should consult your attorney or tax adviser about the specific
tax rules relating to these plans are offered by brokerage firms, including the
Sponsors of this Fund, and other financial institutions. Fees and charges with
respect to such plans may vary.
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 portfolio, 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.
16
<PAGE>
INSURED TAXABLE FUND,
SERIES - 2,
DEFINED ASSET FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders
of Insured Taxable Fund,
Series - 2,
Defined Asset Funds:
We have audited the accompanying statement of condition of Insured
Taxable Fund, Series - 2, Defined Asset Funds, including the
portfolio, as of April 30, 2000 and the related statements of
operations and of changes in net assets for the period May 22, 1999 to
April 30, 2000. These financial statements are the responsibility of
the Trustee. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Securities owned
at April 30, 2000, as shown in such portfolio, were confirmed to us by
The Chase Manhattan Bank, the Trustee. An audit also includes
assessing the accounting principles used and significant estimates
made by the Trustee, as well as evaluating the overall financial
statement presentation. We believe that our audit provides 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 Insured
Taxable Fund, Series - 2, Defined Asset Funds at April 30, 2000 and
the results of its operations and changes in its net assets for the
above-stated period in accordance with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
New York, N.Y.
August 11, 2000
D - 1.
<PAGE>
INSURED TAXABLE FUND,
SERIES - 2,
DEFINED ASSET FUNDS
STATEMENT OF CONDITION
As of April 30, 2000
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
at value (cost $3,439,659 )(Note 1) ......... $ 3,164,546
Accrued interest ............................... 56,767
Accrued interest on Segregated Bonds(Note 5) ... 822
Principal payments receivable from Trustee ..... 123,500
Due from Trustee ............................... 17,727
Cash - income .................................. 15,060
Cash - income on Segregated Bonds .............. 1,202
-----------
Total trust property ......................... 3,379,624
LESS LIABILITIES:
Other advance from Trustee ..................... $ 551
Deferred sales charge payable (Note 5).......... 16,660
Principal advance from Trustee ................. 109,836
Trustee's fees and expenses payable ............ 189
Accrued Sponsors' fees ......................... 1,256 128,492
-------------- -----------
NET ASSETS, REPRESENTED BY:
3,500,000 units of fractional undivided
interest outstanding (Note 3)................ 3,163,023
Undistributed net investment income ............ 88,109 $ 3,251,132
----------- ===========
UNIT VALUE ($ 3,251,132 / 3,500,000 units) ...... $ .92889
===========
</TABLE>
See Notes to Financial Statements.
D - 2.
<PAGE>
INSURED TAXABLE FUND,
SERIES - 2,
DEFINED ASSET FUNDS
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
May 22, 1999
to
April 30,
2000
----
<S> <C>
INVESTMENT INCOME:
Interest income ........................ $ 511,088
Interest income on Segregated
Bonds (Note 5) ....................... 9,224
Trustee's fees and expenses ............ (7,991)
Sponsors' fees ......................... (3,913)
------------
Net investment income .................. 508,408
------------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS:
Realized loss on
securities sold or redeemed .......... (777,432)
Unrealized depreciation
of investments ....................... (275,113)
------------
Net realized and unrealized
loss on investments ................. (1,052,545)
------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ (544,137)
============
</TABLE>
See Notes to Financial Statements.
D - 3.
<PAGE>
INSURED TAXABLE FUND,
SERIES - 2,
DEFINED ASSET FUNDS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
May 22, 1999
to
April 30,
2000
----
<S> <C>
OPERATIONS:
Net investment income .................. $ 508,408
Realized loss on
securities sold or redeemed .......... (777,432)
Unrealized depreciation
of investments ....................... (275,113)
------------
Net decrease in net assets
resulting from operations ............ (544,137)
------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income ................................ (359,400)
Income on Segregated Bonds ............ (7,200)
------------
Total distributions ................... (366,600)
------------
SHARE TRANSACTIONS:
Deferred sales charge (Note 5):
Principal ............................ (140,160)
Redemption amounts:
Income ............................... (51,675)
Principal ............................ (5,463,705)
------------
Net share transactions ................. (5,655,540)
------------
NET DECREASE IN NET ASSETS ............... (6,566,277)
NET ASSETS AT BEGINNING OF PERIOD ........ 9,817,409
------------
NET ASSETS AT END OF PERIOD .............. $ 3,251,132
============
PER UNIT:
Income distributions during
period ............................... $ .03594
============
Income distributions on Segregated Bonds
during period ........................ $ .00072
============
Net asset value at end of
period ............................... $ .92889
============
TRUST UNITS:
Redeemed during period ................. 6,500,000
Outstanding at end of period ........... 3,500,000
============
</TABLE>
See Notes to Financial Statements.
D - 4.
<PAGE>
INSURED TAXABLE FUND,
SERIES - 2,
DEFINED ASSET FUNDS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a
Unit Investment Trust. The following is a summary of significant
accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in
accordance with accounting principles generally accepted in the United
States of America.
(A) Securities are stated at value as determined by the
Evaluator based on bid side evaluations for the securities,
except that value on May 22, 1999 was based upon offering
side evaluations at May 20, 1999, the day prior to the Date
of Deposit. Cost of securities at May 22, 1999 was also
based on such offering side evaluations.
(B) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.
(C) Interest income is recorded as earned.
2. DISTRIBUTIONS
Semi-annual distributions of net investment income are made to
Holders. Receipts other than interest, after deductions for
redemptions and applicable expenses, are also distributed
periodically.
3. NET CAPITAL
<TABLE>
<S> <C>
Cost of 3,500,000 units at Date of Deposit ................ $ 3,436,093
Transfer to capital of interest on Segregated Bonds (Note 5) 9,224
Redemptions of units - net cost of 6,500,000 units redeemed
less redemption amounts (principal)....................... 917,611
Income distributions on Segregated Bonds ................... (7,200)
Deferred sales charge (Note 5) ............................. (140,160)
Realized loss on securities sold or redeemed ............... (777,432)
Unrealized depreciation of investments ..................... (275,113)
-----------
Net capital applicable to Holders .......................... $ 3,163,023
===========
</TABLE>
4. INCOME TAXES
As of April 30, 2000, unrealized depreciation of investments, based on
cost for Federal income tax purposes, aggregated $275,113, all of
which related to depreciated securities. The cost of investment
securities for Federal income tax purposes was $3,439,659 at April 30,
2000.
D - 5.
<PAGE>
INSURED TAXABLE FUND,
SERIES - 2,
DEFINED ASSET FUNDS
NOTES TO FINANCIAL STATEMENTS
5. DEFERRED SALES CHARGE
$70,000 face amount of the United States Treasury Notes, have been
segregated to fund the deferred sales charges. The sales charges are
being paid for with the proceeds received and by periodic sales or
maturity of these bonds, as well as principal proceeds received in
conjunction with the disposition on the unsegregated bonds in the
portfolio. A deferred sales charge of $2.38 per 1,000 Units is charged
on a quarterly basis in the first year and $2.37 per 1,000 Units is
charged on a quarterly basis in the second year, and paid to the
Sponsors periodically by Trustee on behalf of the Holders, up to an
aggregate of $19 per 1,000 Units over the first two years of the life
of the Fund. Should a Holder redeem Units prior to the second
anniversary of the Fund, the remaining balance of the deferred sales
charge will be charged.
D - 6.
<PAGE>
INSURED TAXABLE FUND,
SERIES - 2,
DEFINED ASSET FUNDS
PORTFOLIO
As of April 30, 2000
<TABLE>
<CAPTION>
Rating of Optional
Portfolio No. and Title of Issues Face Redemption
Securities (1) (4) Amount Coupon Maturities(3) Provisions(3) Cost(2) Value(2)
---------- --------- ----------- ----------- ------------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Dallas-Fort Worth, TX, Intl. Arpt., Fac. AAA $ 350,000 7.070 % 2024 11/01/08 $ 351,887 $ 321,797
Imp. Corp., Rental Car Fac. Charge Rev. @ 102.000
Bonds, Taxable Ser. 1998 (MBIA Ins.)
2 City of Worcester, MA, G.O. Bonds AAA 350,000 6.250 2028 None 320,383 292,705
(Pension Funding Loan), Ser. 1998 (FSA
Ins.)
3 County of Monroe, NY, G.O. Pub. Stadium AAA 350,000 7.100 2023 06/01/08 351,313 320,443
Bonds, Ser. 1999 (MBIA Ins.) @ 101.000
4 City of Pittsburgh, PA, Taxable G.O. AAA 350,000 6.500 2015 None 338,247 309,796
Pension Bonds, Ser. 1998 A (Financial
Guaranty Ins.)
5 Public Fac. Fin. Auth., San Diego, CA, AAA 350,000 7.000 2012 02/01/07 353,626 333,309
Taxable Lease Rev. Bonds (San Diego Jack @ 102.000
Murphy Stadium), Ser. 1996 A (MBIA Ins.)
6 City of Phoenix, AZ, Civic Imp. Corp., AAA 350,000 6.000 2019 07/01/08 319,519 290,035
Mun. Multipurpose Arena, Sub. Excise Tax @ 101.000
Rev. Rfdg. Bonds, Taxable Ser. 1998 (MBIA
Ins.)
7 City of Dallas, TX, Taxable Spec. Tax and AAA 350,000 6.625 2027 08/15/08 331,832 299,110
Lease Rev. Bonds (Sports Arena Proj.), @ 101.000
Ser. 1998 B (AMBAC Ins.)
8 City of Philadelphia, PA, Auth. For Ind. AAA 350,000 6.350 2028 None 322,091 303,786
Dev., Pension Funding Bonds (City of
Philadelphia Retirement Sys.), Ser. 1999
A (FSA Ins.)
9 Alameda, CA, Corridor Trans. Auth., AAA 350,000 6.500 2019 None 329,959 304,532
Taxable Sr. Lien Rev. Bonds, Ser. 1999 C
(MBIA Ins.)
</TABLE>
D - 7.
<PAGE>
INSURED TAXABLE FUND,
SERIES - 2,
DEFINED ASSET FUNDS
PORTFOLIO
As of April 30, 2000
<TABLE>
<CAPTION>
Rating of Optional
Portfolio No. and Title of Issues Face Redemption
Securities (1) (4) Amount Coupon Maturities(3) Provisions(3) Cost(2) Value(2)
---------- --------- ----------- ----------- ------------ ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Northeastern Univ., MA, Taxable Rev. AAA $ 350,000 7.040 % 2028 10/01/08 $ 349,524 $ 319,116
Bonds, Ser. 1998 A (MBIA Ins.) @ 101.000
11 United States Treasury Notes (5) AAA 35,000 6.000 2000 None 35,404 34,991
35,000 6.500 2001 None 35,874 34,926
--------- --------- ---------
TOTAL $ 3,570,000 $ 3,439,659 $ 3,164,546
========= ========= =========
</TABLE>
See Notes to Portfolio.
D - 8.
<PAGE>
INSURED TAXABLE FUND,
SERIES - 2,
DEFINED ASSET FUNDS
NOTES TO PORTFOLIO
As of April 30, 2000
(1) The ratings of the bonds are by Standard & Poor's Ratings Group or by
Moody's Investors Service, Inc. if followed by "(m)", or by Fitch
Investors Service, Inc. if followed by "(f)"; "NR" indicates that this
bond is not currently rated by any of the above-mentioned rating
services. These ratings have been furnished by the Evaluator but not
confirmed with the rating agencies.
(2) See Notes to Financial Statements.
(3) Optional redemption provisions, which may be exercised in whole or in
part, are initially at prices of par plus a premium, then subsequently
at prices declining to par. Certain securities may provide for
redemption at par prior or in addition to any optional or mandatory
redemption dates or maturity, for example, through the operation of a
maintenance and replacement fund, if proceeds are not able to be used
as contemplated, the project is condemned or sold or the project is
destroyed and insurance proceeds are used to redeem the securities.
Many of the securities are also subject to mandatory sinking fund
redemption commencing on dates which may be prior to the date on which
securities may be optionally redeemed. Sinking fund redemptions are at
par and redeem only part of the issue. Some of the securities have
mandatory sinking funds which contain optional provisions permitting
the issuer to increase the principal amount of securities called on a
mandatory redemption date. The sinking fund redemptions with optional
provisions may, and optional refunding redemptions generally will,
occur at times when the redeemed securities have an offering side
evaluation which represents a premium over par. To the extent that the
securities were acquired at a price higher than the redemption price,
this will represent a loss of capital when compared with the Public
Offering Price of the Units when acquired. Distributions will
generally be reduced by the amount of the income which would otherwise
have been paid with respect to redeemed securities and there will be
distributed to Holders any principal amount and premium received on
such redemption after satisfying any redemption requests for Units
received by the Fund. The estimated current return may be affected by
redemptions.
(4) 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).
(5) These bonds have been segregated to fund the deferred sales charges.
D - 9.
<PAGE>
Defined
Asset Funds-Registered Trademark-
<TABLE>
<S> <C>
HAVE QUESTIONS ? INSURED TAXABLE FUND
Request the most recent free SERIES 2
Information Supplement (A Unit Investment Trust)
that gives more details about ---------------------------------------
the Fund, by calling: This Prospectus does not contain
The Chase Manhattan Bank complete information about the
1-800-323-1508 investment company filed with the
Securities and Exchange Commission in
Washington, D.C. under the:
- Securities Act of 1933 (file no.
333-70849) and
- Investment Company Act of 1940 (file
no. 811-2537).
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.
100168RR--8/00
</TABLE>