DEFINED ASSET FUNDS--REGISTERED TRADEMARK--
----------------------------------------------------
MUNICIPAL INVESTMENT TRUST FUND
INSURED SERIES--188
(A UNIT INVESTMENT TRUST)
- PORTFOLIO OF INSURED LONG TERM MUNICIPAL BONDS
- DESIGNED TO BE FREE OF REGULAR FEDERAL INCOME TAX
- MONTHLY INCOME DISTRIBUTIONS
SPONSORS:
MERRILL LYNCH,
PIERCE, FENNER & SMITH
INCORPORATED -----------------------------------------------------
SALOMON SMITH BARNEY INC. The Securities and Exchange Commission has not
PRUDENTIAL SECURITIES approved or disapproved these Securities or passed
INCORPORATED upon the adequacy of this prospectus. Any
PAINEWEBBER INCORPORATED representation to the contrary is a criminal offense.
DEAN WITTER REYNOLDS INC. Prospectus dated May 26, 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 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:
- A disciplined strategy of buying and holding with a long-term view is the
cornerstone of Defined Asset Funds.
- 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.
THE FINANCIAL INFORMATION IN THIS PROSPECTUS IS AS OF THE EVALUATION DATE,
FEBRUARY 29, 2000.
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CONTENTS
PAGE
----
Risk/Return Summary.................. 3
What You Can Expect From Your
Investment......................... 7
Monthly Income..................... 7
Return Figures..................... 7
Records and Reports................ 7
The Risks You Face................... 8
Interest Rate Risk................. 8
Call Risk.......................... 8
Reduced Diversification Risk....... 8
Liquidity Risk..................... 8
Concentration Risk................. 8
Bond Quality Risk.................. 9
Insurance Related Risk............. 9
Litigation and Legislation Risks... 9
Selling or Exchanging Units.......... 9
Sponsors' Secondary Market......... 9
Selling Units to the Trustee....... 9
Exchange Option.................... 10
How The Fund Works................... 10
Pricing............................ 10
Evaluations........................ 10
Income............................. 11
Expenses........................... 11
Portfolio Changes.................. 11
Fund Termination................... 12
Certificates....................... 12
Trust Indenture.................... 12
Legal Opinion...................... 13
Auditors........................... 13
Sponsors........................... 13
Trustee............................ 14
Underwriters' and Sponsors'
Profits.......................... 14
Public Distribution................ 14
Code of Ethics..................... 14
Year 2000 Issues................... 14
Taxes................................ 14
Supplemental Information............. 14
Financial Statements................. D-1
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2
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RISK/RETURN SUMMARY
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1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks interest income that is
exempt from regular federal income taxes
by investing in a fixed portfolio
consisting primarily of insured
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 13
insured long-term tax-exempt municipal
bonds with a current aggregate face
amount of $7,770,000.
- 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.
- Many of the bonds can be called at a
premium declining over time to par
value. Some bonds may be called earlier
at par for extraordinary reasons.
- 100% of the bonds are insured by
insurance companies. Insurance
guarantees 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:
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- Airports/Ports/Highways 1%
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- General Obligation 13%
- Hospitals/Health Care 36%
- Municipal Water/Sewer Utilities 9%
- Refunded Bonds 11%
- Municipal Electric Utilities 24%
- Universities/Colleges 6%
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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 Fund is concentrated in
hospital/health care bonds, adverse
developments in this sector 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.
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5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want monthly income free
from regular federal income 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.
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3
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DEFINING YOUR INCOME
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WHAT YOU MAY EXPECT (PAYABLE ON THE 25TH DAY
OF EACH MONTH):
Regular Monthly Income per unit $ 4.50
Annual Income per unit $54.03
RECORD DAY: 10th day of each month
THESE FIGURES ARE ESTIMATES ON THE EVALUATION DATE;
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.
INVESTOR FEES
Maximum Sales Fee (Load) on new
purchases (as a percentage of
$1,000 invested) 2.90%
Employees of some of the Sponsors and their affiliates
may be charged a reduced sales fee of no less than
$5.00 per unit.
The maximum sales fee is reduced if you invest at
least $100,000, as follows:
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<CAPTION>
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%
$1,000,000 and over 1.90%
Maximum Exchange Fee 1.90%
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ESTIMATED ANNUAL FUND OPERATING EXPENSES
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<CAPTION>
AMOUNT
PER UNIT
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$ 0.70
Trustee's Fee
$ 0.49
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
$ 0.34
Evaluator's Fee
$ 0.35
Other Operating Expenses
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$ 1.88
TOTAL
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The Sponsors historically paid updating
expenses.
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7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE
PAST?
IN THE FOLLOWING CHART WE SHOW PAST
PERFORMANCE OF PRIOR MUNICIPAL INSURED
SERIES, WHICH HAD THE SAME INVESTMENT
OBJECTIVES, STRATEGIES AND TYPES OF
BONDS AS THIS FUND. These prior Insured
Series were offered after 1987 and were
outstanding on March 31, 2000. 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 3/31/00.
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High 4.66% 5.52% 6.04% 4.85 6.71% 6.63%
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Average -2.09 4.45 5.70 -0.05 5.53 6.28
Low -8.22 2.83 5.34 -5.16 3.77 5.93
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Average
Sales fee 2.11% 5.35% 5.72%
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NOTE: ALL RETURNS REPRESENT CHANGES IN UNIT PRICE WITH DISTRIBUTIONS REINVESTED
INTO THE MUNICIPAL FUND INVESTMENT ACCUMULATION PROGRAM.
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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
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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 one unit.
You can buy units from any of the
Sponsors and other broker-dealers. The
Sponsors are listed later in this
prospectus. Some banks may offer units
for sale through special arrangements
with the Sponsors, although certain
legal restrictions may apply.
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UNIT PRICE PER UNIT $989.10
(as of February 29, 2000)
Unit price is based on the net asset
value of the Fund plus the sales fee. An
amount equal to any principal cash, as
well as net accrued but undistributed
interest on the unit, is added to the
unit price. An independent evaluator
prices the bonds at 3:30 p.m. Eastern
time every business day. Unit price
changes every day with changes in the
prices of the bonds in the Fund.
10. HOW DO I SELL UNITS?
You may sell your units at any time to
any Sponsor or the Trustee for the net
asset value determined at the close of
business on the date of sale. You will
not pay any other fee when you sell your
units.
11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly. In the
opinion of bond counsel when each bond
was issued, interest on the bonds in
this Fund is generally 100% exempt from
regular federal income tax.
A portion of the income may also be
exempt from state and local personal
income taxes, depending on where you
live.
You will also receive principal payments
if bonds are sold or called or mature,
when the cash available is more than
$5.00 per unit. You will be subject to
tax on any gain realized by the Fund on
the disposition of bonds.
12. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You will receive your monthly income in
cash unless you choose to compound your
income by reinvesting with no sales fee
in the Municipal Fund Investment
Accumulation Program, Inc. This program
is an open-end mutual fund with a
comparable investment objective, but
those bonds generally will not be
insured. Income from this program will
generally be subject to state and local
income taxes. FOR MORE COMPLETE
INFORMATION ABOUT THE PROGRAM, INCLUDING
CHARGES AND FEES, ASK THE TRUSTEE FOR
THE PROGRAM'S PROSPECTUS. READ IT
CAREFULLY BEFORE YOU INVEST. THE TRUSTEE
MUST RECEIVE YOUR WRITTEN ELECTION TO
REINVEST AT LEAST 10 DAYS BEFORE THE
RECORD DAY OF AN INCOME PAYMENT.
EXCHANGE PRIVILEGES
You may exchange units of this Fund for
units of certain other Defined Asset
Funds. You may also exchange into this
Fund from certain other funds. We charge
a reduced sales fee on exchanges.
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5
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TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS
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EFFECTIVE
TAXABLE INCOME 2000* % TAX TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN BRACKET 3% 3.5% 4% 4.5% 5% 5.5% 6%
IS EQUIVALENT TO A TAXABLE YIELD OF
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$ 0- 26,250 $ 0- 43,850 15.00 3.53 4.12 4.71 5.29 5.88 6.47 7.06
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$ 26,251- 63,550 $ 43,851-105,950 28.00 4.17 4.86 5.56 6.25 6.94 7.64 8.33
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$ 63,551-132,600 $105,951-161,450 31.00 4.35 5.07 5.80 6.52 7.25 7.97 8.70
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$132,601-288,350 $161,451-288,350 36.00 4.69 5.47 6.25 7.03 7.81 8.59 9.38
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OVER $288,350 OVER $288,350 39.60 4.97 5.79 6.62 7.45 8.28 9.11 9.93
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TAXABLE INCOME 20
SINGLE RETURN 6.5%
IS
EQUIVALENT
TO A
TAXABLE
YIELD OF
- -----------------
$ 0- 26,250 7.65
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$ 26,251- 63,550 9.03
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$ 63,551-132,600 9.42
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$132,601-288,350 10.16
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OVER $288,350 10.76
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To compare the yield of a taxable security with the yield of a federally
tax-free security, find your taxable income and read across. The table
incorporates 2000 federal income tax rates and assumes that all income would
otherwise be taxed at a U.S. 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, the possible partial disallowance of deductions
or state and local taxation. Consequently, investors are urged to consult their
own tax advisers in this regard.
6
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WHAT YOU CAN EXPECT FROM YOUR INVESTMENT
MONTHLY INCOME
The Fund will pay you regular monthly income. Your monthly 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 monthly income because
the portfolio is fixed.
Along with your monthly 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
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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 monthly statement of income payments and any principal payments;
- - 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.
7
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THE RISKS YOU FACE
INTEREST RATE RISK
Investing involves risks, including the risk that your investment will decline
in value if interest rates rise. Generally, bonds with longer maturities will
change in value more than bonds with shorter maturities. Bonds in the Fund are
more likely to be called when interest rates decline. This would result in early
returns of principal to you and may result in early termination of the Fund. Of
course, we cannot predict how interest rates may change.
CALL RISK
Many bonds can be prepaid or "called" by the issuer before their stated
maturity.
For example, an issuer might call its bonds if it no longer needs the money for
the original purpose or, during periods of falling interest rates, if the
issuer's bonds have a coupon higher than current market rates. If the bonds are
called, your income will decline and you may not be able to reinvest the money
you receive at as high a yield or as long a maturity. An early call at par of a
premium bond will reduce your return.
REDUCED DIVERSIFICATION RISK
If many investors sell their units, the Fund will have to sell bonds. This could
reduce the diversification of your investment and increase your share of Fund
expenses.
LIQUIDITY RISK
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 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
healthcare 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;
- 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; and
8
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- 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.
Changes to the portfolio from bond redemptions, maturities and sales may affect
the Fund's concentration over time.
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
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 or becomes
taxable. Although the federal government does not regulate the insurance
business, various state laws and federal initiatives and tax law changes could
significantly affect the insurance business. The claims-paying ability of the
insurance companies is generally rated A or better by Standard & Poor's or
another nationally recognized rating organization. The insurance company ratings
are subject to change at any time at the discretion of the rating agencies.
LITIGATION AND LEGISLATION RISKS
We do not know of any pending litigation that might have a material adverse
effect upon the Fund.
Future tax legislation could affect the value of the portfolio by:
- 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.
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. 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.
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.
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 most recent Record Day up to, but not including, the settlement date, which
is usually three business days after the purchase date of the unit.
A portion of the price of a unit consists of cash so that the Trustee can
provide you with regular monthly income. When you sell your units you will
receive your share of this cash.
EVALUATIONS
An independent Evaluator values the bonds on each business day (excluding
Saturdays,
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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
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
- Fund termination expenses and any governmental charges.
The Sponsors are currently reimbursed up to 55 CENTS per $1,000 face amount
annually for providing portfolio supervisory, bookkeeping and administrative
services and for any other expenses properly chargeable to the Fund. Legal,
typesetting, electronic filing and regulatory filing fees and expenses
associated with updating the Portfolio's registration statement yearly are also
now chargeable to the Portfolio. While this fee may exceed the amount of these
costs and expenses attributable to this Fund, the total of these fees for all
Series of Defined Asset Funds will not exceed the aggregate amount attributable
to all of these Series for any calendar year. The Fund also pays the Evaluator's
fees.
The Trustee's, Sponsors' and Evaluator's fees may be adjusted for inflation
without investors' approval.
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.
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
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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 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
12
<PAGE>
- it becomes incapable of acting or bankrupt or its affairs are taken over by
public authorities.
Investors holding 51% of the units may remove the Trustee. The Evaluator may
resign or be removed by the Sponsors and the Trustee without the consent of
investors. The resignation or removal of either becomes effective when a
successor accepts appointment. The Sponsors will try to appoint a successor
promptly; however, if no successor has accepted within 30 days after notice of
resignation, the resigning Trustee or Evaluator may petition a court to appoint
a successor.
Any Sponsor may resign as long as one Sponsor with a net worth of $2 million
remains and agrees to the resignation. The remaining Sponsors and the Trustee
may appoint a replacement. If there is only one Sponsor and it fails to perform
its duties or becomes bankrupt the Trustee may:
- 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
PRUDENTIAL SECURITIES INCORPORATED (an indirect wholly-owned subsidiary of the
Prudential Insurance Company of America)
One New York Plaza
New York, NY 10292
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.
13
<PAGE>
TRUSTEE
The Bank of New York, 101 Barclay Street,
17 W, New York, New York 10268, is the Trustee. It is supervised by the Federal
Deposit Insurance Corporation, the Board of Governors of the Federal Reserve
System and New York State banking authorities.
UNDERWRITERS' AND SPONSORS' PROFITS
Underwriters receive sales charges when they sell units. The Sponsors also
realized a profit or loss on the initial deposit of the bonds. Any cash made
available by you to the Sponsors before the settlement date for those units may
be used in the Sponsors' businesses to the extent permitted by federal law and
may benefit the Sponsors.
A Sponsor or Underwriter may realize profits or sustain losses on bonds in the
Fund which were acquired from underwriting syndicates of which it was a member.
In maintaining a secondary market, the Sponsors will also realize profits or
sustain losses in the amount of any difference between the prices at which they
buy units and the prices at which they resell or redeem them.
PUBLIC DISTRIBUTION
The Sponsors do not intend to qualify units for sale in any foreign countries.
This prospectus does not constitute an offer to sell units in any country where
units cannot lawfully be sold.
CODE OF ETHICS
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.
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
14
<PAGE>
taxes and may be taken into account in determining your preference items for
alternative minumum 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)
have complied or will comply with any requirements necessary for a bond to be
tax-exempt. If any of the bonds were determined not to be tax-exempt, you could
be required to pay income tax for current and prior years, and if the Fund were
to sell the bond, it might have to sell it at a substantial discount.
In the opinion of our counsel, under existing law:
GENERAL TREATMENT OF THE FUND AND YOUR INVESTMENT
The Fund will not be taxed as a corporation for federal income tax purposes, and
you will be considered to own directly your share of each bond in the Fund.
GAIN OR LOSS UPON DISPOSITION
When all or part of your share of a bond is disposed of (for example, when the
Fund sells, exchanges or redeems a bond or when you sell or exchange your
units), you will generally recognize capital gain or loss. Your gain, however,
will generally be ordinary income to the extent of any accrued "market
discount". Generally you will have market discount to the extent that your basis
in a bond when you purchase a unit is less than its stated redemption price at
maturity (or, if it is an original issue discount bond, the issue price
increased by original issue discount that has accrued on the bond before your
purchase). You should consult your tax adviser in this regard.
If your net long-term capital gains exceed your net short-term capital losses,
the excess may be subject to tax at a lower rate than ordinary income. Any
capital gain from the Fund will be long-term if you are considered to have held
your investment on each bond for more than one year and short-term otherwise. If
you are an individual and sell your units after holding them for more than one
year, you may be entitled to a 20% maximum federal tax rate on any resulting
gains. Consult your tax adviser in this regard. Because the deductibility of
capital losses is subject to limitations, you may not be able to deduct all of
your capital losses.
YOUR BASIS IN THE BONDS
Your aggregate basis in the bonds will be equal to the cost of your units,
including any sales charges you pay, adjusted to reflect any accruals of
"original issue discount," "acquisition premium" and "bond premium". You should
consult your tax adviser in this regard.
EXPENSES
If you are not a corporate investor, you will not be entitled to a deduction for
your share of fees and expenses of the Fund. Also, if you borrowed money in
order to purchase or carry your units, you will not be able to deduct the
interest on this borrowing for federal income tax purposes. The IRS may treat
your purchase of units as made with borrowed money even if the money is not
directly traceable to the purchase of units.
STATE AND LOCAL TAXES
Under the income tax laws of the State and City of New York, the Fund will not
be taxed as a corporation. If you are a New York taxpayer, your income from the
Fund will not be tax-exempt in New York except
15
<PAGE>
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 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>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES - 188
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders
of Defined Asset Funds - Municipal Investment Trust Fund,
Insured Series - 188:
We have audited the accompanying statement of condition of Defined Asset Funds -
Municipal Investment Trust Fund, Insured Series - 188, including the portfolio,
as of February 29, 2000 and the related statements of operations and of changes
in net assets for the years ended February 29, 2000 and February 28, 1999 and
1998. These financial statements are the responsibility of the Trustee. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with 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 February 29, 2000, as shown in such portfolio,
were confirmed to us by The Bank of New York, 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 Defined Asset Funds - Municipal
Investment Trust Fund, Insured Series - 188 at February 29, 2000 and the results
of its operations and changes in its net assets for the above-stated years in
accordance with accounting principles generally accepted in the United States of
America.
DELOITTE & TOUCHE LLP
New York, N.Y.
May 2, 2000
D - 1
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES - 188
STATEMENT OF CONDITION
AS OF FEBRUARY 29, 2000
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities - at value
(cost $7,764,290)(Note 1)...................... $7,499,204
Accrued interest receivable...................... 129,155
-------------
Total trust property................. 7,628,359
LESS LIABILITIES:
Advance from Trustee............................. $ 8,635
Accrued expenses................................. 6,039 14,674
------------- -------------
NET ASSETS, REPRESENTED BY:
7,801 units of fractional undivided
interest outstanding (Note 3).................. 7,513,470
Undistributed net investment income.............. 100,215
-------------
$7,613,685
=============
UNIT VALUE ($7,613,685/7,801 units)................ $975.99
=============
</TABLE>
See Notes to Financial Statements.
D - 2
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES - 188
STATEMENTS OF OPERATIONS
Year Ended
<TABLE>
<CAPTION>
February 29, Years Ended February 28,
2000 1999 1998
-----------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income........................... $ 475,470 $518,173 $ 578,202
Trustee's fees and expenses............... (11,492) (10,938) (13,854)
Sponsors' fees............................ (3,387) (3,554) (3,930)
-----------------------------------------
Net investment income..................... 460,591 503,681 560,418
-----------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain on securities sold
or redeemed............................. 11,758 47,156 7,088
Unrealized appreciation (depreciation)
of investments.......................... (676,561) 44,686 544,022
-----------------------------------------
Net realized and unrealized gain (loss)
on investments.......................... (664,803) 91,842 551,110
-----------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................. $(204,212) $595,523 $1,111,528
=========================================
</TABLE>
See Notes to Financial Statements.
D - 3
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES - 188
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended
<TABLE>
<CAPTION>
February 29, Years Ended February 28,
2000 1999 1998
-----------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income....................... $ 460,591 $ 503,681 $ 560,418
Realized gain on securities sold
or redeemed............................... 11,758 47,156 7,088
Unrealized appreciation (depreciation)
of investments............................ (676,561) 44,686 544,022
-----------------------------------------
Net increase (decrease) in net assets
resulting from operations................. (204,212) 595,523 1,111,528
-----------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income...................................... (460,841) (503,930) (562,873)
Principal................................... (16,440) (35,307) (33,616)
-----------------------------------------
Total distributions......................... (477,281) (539,237) (596,489)
-----------------------------------------
CAPITAL SHARE TRANSACTIONS - Redemptions of
1,126, 829 and 907 units, respectively...... (1,118,348) (870,510) (926,170)
-----------------------------------------
NET DECREASE IN NET ASSETS.................... (1,799,841) (814,224) (411,131)
NET ASSETS AT BEGINNING OF YEAR............... 9,413,526 10,227,750 10,638,881
-----------------------------------------
NET ASSETS AT END OF YEAR..................... $7,613,685 $9,413,526 $10,227,750
=========================================
PER UNIT:
Income distributions during year............ $54.16 $54.37 $54.73
=========================================
Principal distributions during year......... $1.97 $3.91 $3.40
=========================================
Net asset value at end of year.............. $975.99 $1,054.50 $1,048.35
=========================================
TRUST UNITS OUTSTANDING AT END OF YEAR........ 7,801 8,927 9,756
=========================================
</TABLE>
See Notes to Financial Statements.
D - 4
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES - 188
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.
(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
A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and
applicable expenses, are also distributed periodically.
3. NET CAPITAL
<TABLE>
<S> <C>
Cost of 7,801 units at Date of Deposit.............. $8,188,915
Less sales charge................................... 368,519
--------------
Net amount applicable to Holders.................... 7,820,396
Redemptions of units - net cost of 3,199 units
redeemed less redemption amounts.................. (8,121)
Realized gain on securities sold or redeemed........ 57,861
Principal distributions............................. (91,580)
Net unrealized depreciation of investments.......... (265,086)
--------------
Net capital applicable to Holders................... $7,513,470
==============
</TABLE>
4. INCOME TAXES
As of February 29, 2000, net unrealized depreciation of investments, based
on cost for Federal income tax purposes, aggregated $265,086, of which
$21,234 related to appreciated securities and $286,320 related to
depreciated securities. The cost of investment securities for Federal
income tax purposes was $7,764,290 at February 29, 2000.
D - 5
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES - 188
PORTFOLIO
AS OF FEBRUARY 29, 2000
<TABLE>
<CAPTION>
Rating Optional
Portfolio No. and Title of of Face Redemption
Securities(4) Issues(1) Amount Coupon Maturities(3) Provisions(3) Cost Value(2)
------------- --------- ------ ------ ------------- ------------- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Alachua County, FL, Hlth. Fac. AAA $ 265,000 5.750% 2015 12/01/02 $ 269,919 $ 265,106
Auth. Hlth. Fac. Rev. Bonds, Ser. @ 100.000
1992 R (Shands Hosp. at the Univ.
of FL Proj.) (MBIA Ins.)
2 City of Ames, Iowa, Hospital AAA 885,000 5.750 2022 08/15/03 892,797 845,281
Revenue Bonds (Mary Greeley Medical @ 102.000
Center Project) Ser. 1993 (AMBAC
Ins.)
3 Garnet Valley School District, AAA 970,000 5.750 2015 04/01/02 983,629 970,126
Delaware County, Pennsylvania, @ 100.000
General Obligation Bonds, Ser. 1993
(AMBAC Ins.)
4 Illinois Municipal Electric Agency AAA 220,000 5.750 2021(5) 02/01/01 223,305 227,313
Power Supply System Revenue Bonds, @ 102.000
Ser. 1991 A (AMBAC Ins.)
5 Indiana Hlth. Fac. Fin. Auth. Hosp. AAA 945,000 5.750 2015 03/01/03 953,136 934,709
Rev. Rfdg. Bonds, Ser. 1993 @ 102.000
(Deaconess Hosp., Inc.)
(MBIA Ins.)
6 City of Indianapolis, Indiana, Gas AAA 1,000,000 5.375 2021 06/01/03 982,090 914,180
Utility System Revenue Refunding @ 102.000
Bonds, Ser. 1993 A (Financial
Guaranty Ins.)
7 Michigan State Hospital Finance AAA 710,000 5.750 2017 09/01/02 718,932 702,282
Authority, Hospital Revenue and @ 102.000
Refunding Bonds (Henry Ford Health
System), Ser. 1992 A. (FSA Ins.)
</TABLE>
D - 6
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES - 188
PORTFOLIO
AS OF FEBRUARY 29, 2000
<TABLE>
<CAPTION>
Rating Optional
Portfolio No. and Title of of Face Redemption
Securities(4) Issues(1) Amount Coupon Maturities(3) Provisions(3) Cost Value(2)
------------- --------- ------ ------ ------------- ------------- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C>
8 Northwest Suburban Municipal Joint AAA $ 580,000 5.900% 2015 05/01/03 $ 597,725 $ 582,349
Action Water Agency (Cook Dupage @ 102.000
and Kane Counties, Illinois), Water
Supply System Revenue Bonds, Ser.
1993 A (MBIA Ins.)
9 Pennsylvania Tpke. Comm., AAA 35,000 5.500 2017 12/01/01 35,000 33,617
Pennsylvania Tpke. Rev. Bonds, Ser. @ 100.000
1991 M (Financial Guaranty Ins.)
10 Piedmont Municipal Power Agency AAA 895,000 5.000 2022 01/01/01 842,902 762,603
South Carolina, Electric Revenue @ 100.000
Bonds, Refunding Ser. 1991
(Financial Guaranty Ins.)
11 Rhode Island Depositors Economic AAA 670,000 5.250 2021(5) 02/01/11 642,362 659,588
Protection Corporation Special @ 100.000
Obligation Refunding Bonds, Ser.
1992 B (MBIA Ins.)
12 Rhode Island Health and Educational AAA 295,000 6.250 2013 03/15/03 310,293 302,405
Building Corporation Higher @ 102.000
Education Facilities Revenue Bonds, 185,000 6.300 2020 03/15/03 194,565 187,699
Salve Regina University Issue, Ser. @ 102.000
1993 (Connie Lee Ins.)
13 Suffolk County Water Authority, New AAA 115,000 5.625 2016 06/01/02 117,635 111,946
York, Water System Revenue Bonds, @ 102.000
Ser. 1992 B Refunding (AMBAC Ins.)
-------------- -------------- --------------
TOTAL $7,770,000 $7,764,290 $7,499,204
============== ============== ==============
</TABLE>
See Notes to Portfolio.
D - 7
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES - 188
NOTES TO PORTFOLIO
AS OF FEBRUARY 29, 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 they mature).
(5) Bonds with aggregate face amounts of $890,000 have been pre-refunded and
are expected to be called for redemption on the optional redemption
provision dates shown.
D - 8
<PAGE>
DEFINED ASSET FUNDS-SM-
<TABLE>
<S> <C>
HAVE QUESTIONS ? MUNICIPAL INVESTMENT TRUST FUND
Request the most recent free INSURED SERIES--188
Information Supplement (A Unit Investment Trust)
that gives more details about ---------------------------------------
the Fund, by calling: This Prospectus does not contain
The Bank of New York complete information about the
1-800-221-7771 investment company filed with the
Securities and Exchange Commission in
Washington, D.C. under the:
- Securities Act of 1933 (file no.
33-49277) 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.
14430--5/00
</TABLE>
