<PAGE>
DEFINED ASSET FUNDSSM
- --------------------------------------------
- ----------------------------------
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES--9I
(A UNIT INVESTMENT TRUST)
O ARIZONA, COLORADO, MICHIGAN AND NEW YORK
PORTFOLIOS
O PORTFOLIOS OF INSURED, LONG TERM MUNICIPAL
BONDS
O DESIGNED FOR FEDERALLY TAX-FREE INCOME
O EXEMPT FROM SOME STATE TAXES
O MONTHLY DISTRIBUTIONS
SPONSORS:
Merrill Lynch,
Pierce, Fenner & Smith -------------------------------------------------
Incorporated The Securities and Exchange Commission has not
Salomon Smith Barney Inc. approved or disapproved these Securities or
Prudential Securities passed upon the adequacy of this prospectus. Any
Incorporated representation to the contrary is a criminal
PaineWebber Incorporated offense.
Dean Witter Reynolds Inc. Prospectus dated November 20, 1998.
<PAGE>
- --------------------------------------------------------------------------------
Defined Asset FundsSM
Defined Asset FundsSM is America's oldest and largest family of unit investment
trusts, with over $115 billion sponsored over the last 25 years. Defined Asset
Funds has been a leader in unit investment trust research and product
innovation. Our family of Funds helps investors work toward their financial
goals with a full range of quality investments, including municipal, corporate
and government bond portfolios, as well as domestic and international equity
portfolios.
Defined Asset Funds offer a number of advantages:
o A disciplined strategy of buying and holding with a long-term view is the
cornerstone of Defined Asset Funds.
o Fixed portfolio: Defined Funds follow a buy and hold investment strategy;
funds are not managed and portfolio changes are limited.
o Defined Portfolios: We choose the stocks and bonds in advance, so you know
what you're investing in.
o Professional research: Our dedicated research team seeks out stocks or bonds
appropriate for a particular fund's objectives.
o Ongoing supervision: We monitor each portfolio on an ongoing basis.
No matter what your investment goals, tolerance for risk or time horizon,
there's probably a Defined Asset Fund that suits your investment style. Your
financial professional can help you select a Defined Asset Fund that works best
for your investment portfolio.
THE FINANCIAL INFORMATION IN THIS PROSPECTUS IS AS OF AUGUST 31, 1998, THE
EVALUATION DATE.
CONTENTS
PAGE
-----------
Arizona Insured Portfolio--
Risk/Return Summary.................................. 3
Colorado Insured Portfolio-- Risk/Return Summary........ 6
Michigan Insured Portfolio-- Risk/Return Summary........ 9
New York Insured Portfolio--
Risk/Return Summary.................................. 12
What You Can Expect From Your Investment................ 17
Monthly Income....................................... 17
Return Figures....................................... 17
Records and Reports.................................. 17
The Risks You Face...................................... 18
Interest Rate Risk................................... 18
Call Risk............................................ 18
Reduced Diversification Risk......................... 18
Liquidity Risk....................................... 18
Concentration Risk................................... 18
State Concentration Risk............................. 19
Bond Quality Risk.................................... 22
Insurance Related Risk............................... 22
Litigation and Legislation Risks..................... 22
Selling or Exchanging Units............................. 22
Sponsors' Secondary Market........................... 23
Selling Units to the Trustee......................... 23
Exchange Option...................................... 23
How The Fund Works...................................... 24
Pricing.............................................. 24
Evaluations.......................................... 24
Income............................................... 24
Expenses............................................. 24
Portfolio Changes.................................... 25
Fund Termination..................................... 25
Certificates......................................... 25
Trust Indenture...................................... 25
Legal Opinion........................................ 26
Auditors............................................. 26
Sponsors............................................. 26
Trustee.............................................. 27
Underwriters' and Sponsors' Profits 27
Public Distribution.................................. 27
Code of Ethics....................................... 27
Year 2000 Issues..................................... 27
Taxes................................................... 28
Supplemental Information................................ 30
Financial Statements.................................... D-1
2
<PAGE>
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ARIZONA INSURED PORTFOLIO--RISK/RETURN SUMMARY
1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks interest income that is exempt from regular
federal income taxes and some state and local taxes by
investing in a fixed portfolio consisting primarily of
insured, long term municipal revenue bonds.
2. WHAT ARE MUNICIPAL REVENUE BONDS?
Municipal revenue bonds are bonds issued by states,
municipalities and public authorities to finance the cost
of buying, building or improving various projects intended
to generate revenue, such as airports, health care
facilities, housing and municipal electric, water and sewer
utilities. Generally, payments on these bonds depend solely
on the revenues generated by the projects, excise taxes or
state appropriations, and are not backed by the
government's taxing power.
3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
O The Fund plans to hold to maturity 8 long-term tax-exempt
municipal bonds with an aggregate face amount of
$2,335,000. The Fund is a unit investment trust which means
that, unlike a mutual fund, the Portfolio is not managed.
o The bonds are rated AAA or Aaa by Standard & Poor's,
Moody's or Fitch.
o The Fund is concentrated in refunded bonds.
o Many of the bonds can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 100% of the bonds are insured by insurance companies that
guarantee timely payments of principal and interest on the
bonds (but not Fund units or the market value of the bonds
before they mature).
The Portfolio consists of municipal bonds of the following
types:
APPROXIMATE
PORTFOLIO
PERCENTAGE
/ / General Obligation 33%
/ / Industrial Development Revenue 8%
/ / Municipal Water/Sewer Utilities 31%
/ / Refunded Bonds 28%
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN
HAPPEN FOR VARIOUS REASONS, INCLUDING:
o Rising interest rates, an issuer's worsening financial
condition or a drop in bond ratings can reduce the price of
your units.
o Because the Fund is concentrated in water and sewer utility
bonds and general obligation bonds, adverse developments in
these sectors may affect the value of your units.
o Assuming no changes in interest rates, when you sell your
units, they will generally be worth less than your cost
because your cost included a sales fee.
o The Fund will receive early returns of principal if bonds
are called or sold before they mature. If this happens your
income will decline and you may not be able to reinvest the
money you receive at as high a yield or as long a maturity.
ALSO, THE PORTFOLIO IS CONCENTRATED IN BONDS OF ARIZONA SO
IT IS LESS DIVERSIFIED THAN A NATIONAL FUND AND IS SUBJECT
TO RISKS PARTICULAR TO ARIZONA WHICH ARE BRIEFLY DESCRIBED
UNDER STATE CONCENTRATION RISKS LATER IN THIS PROSPECTUS.
3
<PAGE>
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want federally tax-free income. You will
benefit from a professionally selected and supervised
portfolio whose risk is reduced by investing in bonds of
several different issuers.
The Fund is not appropriate for you if you want a
speculative investment that changes to take advantage of
market movements, if you do not want a tax-advantaged
investment or if you cannot tolerate any risk.
DEFINING YOUR INCOME
WHAT YOU MAY EXPECT (Payable on the 25th day of
the month to holders of record on the 10th day
of the month):
Regular Monthly Income per unit $ 5.05
Annual Income per unit: $ 60.69
These figures are estimates determined on the evaluation
day; actual payments may vary.
6. WHAT ARE THE FUND'S FEES AND EXPENSES?
This table shows the costs and expenses you may pay,
directly or indirectly, when you invest in the Fund.
INVESTOR FEES
2.90%
Maximum Sales Fee (Load) on new purchases
(as a percentage of $1,000 invested)
Employees of some of the Sponsors and their affiliates may
pay a reduced sales fee of no less than $5.00 per unit.
The maximum sales fee is reduced if you invest at least
$100,000, as follows:
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
----------------------------------- -----------------
Less than $100,000 2.90%
$100,000 to $249,999 2.65%
$250,000 to $499,999 2.40%
$500,000 to $999,999 2.15%
$1,000,000 and over 1.90%
Maximum Exchange Fee 1.90%
ESTIMATED ANNUAL FUND OPERATING EXPENSES
AMOUNT
PER UNIT
-----------
$ 0.69
Trustee's Fee
$ 0.39
Portfolio Supervision,
Bookkeeping and
Administrative Fees
$ 0.38
Evaluator's Fee
$ 0.48
Other Operating Expenses
-----------
$ 1.94
TOTAL
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
In the following chart we show past performance of prior
Arizona Portfolios, which had investment objectives,
strategies and types of bonds substantially similar to this
Fund. These prior Series differed in that they charged a
higher sales fee. These prior Arizona Series were offered
between May 11, 1989 and July 11, 1996 and were outstanding
on September 30, 1998. OF COURSE, PAST PERFORMANCE OF PRIOR
SERIES IS NO GUARANTEE OF FUTURE RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
Reflecting all expenses. For periods ended 9/30/98.
WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 1 YEAR 5 YEARS
- ---------------------------------------------------------------
High 4.81% 4.64% 10.45% 5.82%
Average 3.72 4.18 6.64 5.27
Low 2.45 3.37 3.92 4.60
- ---------------------------------------------------------------
Average
Sales fee 2.85% 5.41%
- -------------------------------------------------------------------
Note: All returns represent changes in unit price with distributions reinvested
into the Municipal Fund Investment Accumulation Program.
8. IS THE FUND MANAGED?
Unlike a mutual fund, the Fund is not managed and bonds are
not sold because of market changes. Rather, experienced
Defined Asset Funds financial analysts regularly review the
bonds in the Fund. The Fund may sell a bond if certain
adverse credit or other conditions exist.
4
<PAGE>
9. HOW DO I BUY UNITS?
The minimum investment is $250.
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
UNIT PRICE PER UNIT $1,056.68
(as of August 31, 1998)
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.
UNIT PAR VALUE $1,000.00
Unit par value means the total amount of money you should
generally receive on each unit by the termination of the
Fund (other than interest and premium on the bonds). This
total amount assumes that all bonds in the Fund are either
paid at maturity or called by the issuer at par or are sold
by the Fund at par. If you sell your units before the Fund
terminates, you may receive more or less than the unit par
value.
10. HOW DO I SELL UNITS?
You may sell your units at any time to any Sponsor or the
Trustee for the net asset value determined at the close of
business on the date of sale, less any remaining deferred
sales fee. You will not pay any other fee when you sell
your units.
11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100% exempt
from regular federal income tax. Your income may also be
exempt from some Arizona state and local personal income
taxes if you live in Arizona.
You will also receive principal payments if bonds are sold
or called or mature, when the cash available is more than
$5.00 per unit. You will be subject to tax on any gain
realized by the Fund on the disposition of bonds.
12. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You will receive your income in cash unless you choose to
compound your income by reinvesting at no sales fee in the
Municipal Fund Investment Accumulation Program, Inc. This
program is an open-end mutual fund with a comparable
investment objective, but the bonds will generally not be
insured. Income from this program will generally be subject
to state and local income taxes. For more complete
information about the program, including charges and fees,
ask the Trustee for the program's prospectus. Read it
carefully before you invest. The Trustee must receive your
written election to reinvest at least 10 days before the
record day of an income payment.
EXCHANGE PRIVILEGES
You may exchange units of this Fund for units of certain
other Defined Asset Funds. You may also exchange into this
Fund from certain other funds. We charge a reduced sales fee
on exchanges.
5
<PAGE>
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COLORADO INSURED PORTFOLIO--RISK/RETURN SUMMARY
1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks interest income that is exempt from regular
federal income taxes and some state and local taxes by
investing in a fixed portfolio consisting primarily of
insured, long term municipal revenue bonds.
2. WHAT ARE MUNICIPAL REVENUE BONDS?
Municipal revenue bonds are bonds issued by states,
municipalities and public authorities to finance the cost
of buying, building or improving various projects intended
to generate revenue, such as airports, health care
facilities, housing and municipal electric, water and sewer
utilities. Generally, payments on these bonds depend solely
on the revenues generated by the projects, excise taxes or
state appropriations, and are not backed by the
government's taxing power.
3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
O The Fund plans to hold to maturity 9 long-term tax-exempt
municipal bonds with an aggregate face amount of
$2,425,000. The Fund is a unit investment trust which means
that, unlike a mutual fund, the Portfolio is not managed.
o The bonds are rated AAA or Aaa by Standard & Poor's,
Moody's or Fitch.
o The Fund is concentrated in refunded bonds.
o Many of the bonds can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 100% of the bonds are insured by insurance companies that
guarantee timely payments of principal and interest on the
bonds (but not Fund units or the market value of the bonds
before they mature).
The Portfolio consists of municipal bonds of the following
types:
APPROXIMATE
PORTFOLIO
PERCENTAGE
/ / Hospitals/Healthcare 10%
/ / Municipal Water/Sewer Utilities 11%
/ / Refunded Bonds 58%
/ / Special Tax Issues 21%
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN
HAPPEN FOR VARIOUS REASONS, INCLUDING:
o Rising interest rates, an issuer's worsening financial
condition or a drop in bond ratings can reduce the price of
your units.
o Assuming no changes in interest rates, when you sell your
units, they will generally be worth less than your cost
because your cost included a sales fee.
o The Fund will receive early returns of principal if bonds
are called or sold before they mature. If this happens your
income will decline and you may not be able to reinvest the
money you receive at as high a yield or as long a maturity.
ALSO, THE PORTFOLIO IS CONCENTRATED IN BONDS OF COLORADO SO
IT IS LESS DIVERSIFIED THAN A NATIONAL FUND AND IS SUBJECT
TO RISKS PARTICULAR TO COLORADO WHICH ARE BRIEFLY DESCRIBED
UNDER STATE CONCENTRATION RISKS LATER IN THIS PROSPECTUS.
6
<PAGE>
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want federally tax-free income. You will
benefit from a professionally selected and supervised
portfolio whose risk is reduced by investing in bonds of
several different issuers.
The Fund is not appropriate for you if you want a
speculative investment that changes to take advantage of
market movements, if you do not want a tax-advantaged
investment or if you cannot tolerate any risk.
DEFINING YOUR INCOME
WHAT YOU MAY EXPECT (Payable on the 25th day of
the month to holders of record on the 10th day
of the month):
Regular Monthly Income per unit $ 5.24
Annual Income per unit: $ 62.93
These figures are estimates determined on the evaluation
day; actual payments may vary.
6. WHAT ARE THE FUND'S FEES AND EXPENSES?
This table shows the costs and expenses you may pay,
directly or indirectly, when you invest in the Fund.
INVESTOR FEES
2.90%
Maximum Sales Fee (Load) on new purchases
(as a percentage of $1,000 invested)
Employees of some of the Sponsors and their affiliates may
pay a reduced sales fee of no less than $5.00 per unit.
The maximum sales fee is reduced if you invest at least
$100,000, as follows:
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
----------------------------------- -----------------
Less than $100,000 2.90%
$100,000 to $249,999 2.65%
$250,000 to $499,999 2.40%
$500,000 to $999,999 2.15%
$1,000,000 and over 1.90%
Maximum Exchange Fee 1.90%
ESTIMATED ANNUAL FUND OPERATING EXPENSES
AMOUNT
PER UNIT
-----------
$ 0.68
Trustee's Fee
$ 0.39
Portfolio Supervision,
Bookkeeping and
Administrative Fees
$ 0.37
Evaluator's Fee
$ 0.48
Other Operating Expenses
-----------
$ 1.92
TOTAL
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?
The minimum investment is $250.
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
UNIT PRICE PER UNIT $1,068.44
(as of August 31, 1998)
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.
7
<PAGE>
UNIT PAR VALUE $1,000.00
Unit par value means the total amount of money you should
generally receive on each unit by the termination of the
Fund (other than interest and premium on the bonds). This
total amount assumes that all bonds in the Fund are either
paid at maturity or called by the issuer at par or are sold
by the Fund at par. If you sell your units before the Fund
terminates, you may receive more or less than the unit par
value.
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. You will not pay any other
fee when you sell your units.
10. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100% exempt
from regular federal income tax. Your income may also be
exempt from some Colorado state and local personal income
taxes if you live in Colorado.
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.
11. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You will receive your income in cash unless you choose to
compound your income by reinvesting at no sales fee in the
Municipal Fund Investment Accumulation Program, Inc. This
program is an open-end mutual fund with a comparable
investment objective. Income from this program will
generally be subject to state and local income taxes. For
more complete information about the program, including
charges and fees, ask the Trustee for the program's
prospectus. Read it carefully before you invest. The Trustee
must receive your written election to reinvest at least 10
days before the record day of an income payment.
EXCHANGE PRIVILEGES
You may exchange units of this Fund for units of certain
other Defined Asset Funds. You may also exchange into this
Fund from certain other funds. We charge a reduced sales fee
on exchanges.
8
<PAGE>
- --------------------------------------------------------------------------------
MICHIGAN INSURED PORTFOLIO--RISK/RETURN SUMMARY
1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks interest income that is exempt from regular
federal income taxes and some state and local taxes by
investing in a fixed portfolio consisting primarily of
insured, long term municipal revenue bonds.
2. WHAT ARE MUNICIPAL REVENUE BONDS?
Municipal revenue bonds are bonds issued by states,
municipalities and public authorities to finance the cost
of buying, building or improving various projects intended
to generate revenue, such as airports, health care
facilities, housing and municipal electric, water and sewer
utilities. Generally, payments on these bonds depend solely
on the revenues generated by the projects, excise taxes or
state appropriations, and are not backed by the
government's taxing power.
3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
O The Fund plans to hold to maturity 8 long-term tax-exempt
municipal bonds with an aggregate face amount of
$3,920,000. The Fund is a unit investment trust which means
that, unlike a mutual fund, the Portfolio is not managed.
o The bonds are rated AAA or Aaa by Standard & Poor's,
Moody's or Fitch.
o The Fund is concentrated in refunded bonds.
o Many of the bonds can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 100% of the bonds are insured by insurance companies that
guarantee timely payments of principal and interest on the
bonds (but not Fund units or the market value of the bonds
before they mature).
The Portfolio consists of municipal bonds of the following
types:
APPROXIMATE
PORTFOLIO
PERCENTAGE
/ / Hospitals/Healthcare 19%
/ / Industrial Development Revenue 19%
/ / Refunded Bonds 62%
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN
HAPPEN FOR VARIOUS REASONS, INCLUDING:
o Rising interest rates, an issuer's worsening financial
condition or a drop in bond ratings can reduce the price of
your units.
o Assuming no changes in interest rates, when you sell your
units, they will generally be worth less than your cost
because your cost included a sales fee.
o The Fund will receive early returns of principal if bonds
are called or sold before they mature. If this happens your
income will decline and you may not be able to reinvest the
money you receive at as high a yield or as long a maturity.
ALSO, THE PORTFOLIO IS CONCENTRATED IN BONDS OF MICHIGAN SO
IT IS LESS DIVERSIFIED THAN A NATIONAL FUND AND IS SUBJECT
TO RISKS PARTICULAR TO MICHIGAN WHICH ARE BRIEFLY DESCRIBED
UNDER STATE CONCENTRATION RISKS LATER IN THIS PROSPECTUS.
9
<PAGE>
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want federally tax-free income. You will
benefit from a professionally selected and supervised
portfolio whose risk is reduced by investing in bonds of
several different issuers.
The Fund is not appropriate for you if you want a
speculative investment that changes to take advantage of
market movements, if you do not want a tax-advantaged
investment or if you cannot tolerate any risk.
DEFINING YOUR INCOME
WHAT YOU MAY EXPECT (Payable on the 25th day of
the month to holders of record on the 10th day
of the month):
Regular Monthly Income per unit $ 5.39
Annual Income per unit: $ 64.73
These figures are estimates determined on the evaluation
day; actual payments may vary.
6. WHAT ARE THE FUND'S FEES AND EXPENSES?
This table shows the costs and expenses you may pay,
directly or indirectly, when you invest in the Fund.
INVESTOR FEES
2.90%
Maximum Sales Fee (Load) on new purchases
(as a percentage of $1,000 invested)
Employees of some of the Sponsors and their affiliates may
pay a reduced sales fee of no less than $5.00 per unit.
The maximum sales fee is reduced if you invest at least
$100,000, as follows:
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
----------------------------------- -----------------
Less than $100,000 2.90%
$100,000 to $249,999 2.65%
$250,000 to $499,999 2.40%
$500,000 to $999,999 2.15%
$1,000,000 and over 1.90%
Maximum Exchange Fee 1.90%
ESTIMATED ANNUAL FUND OPERATING EXPENSES
AMOUNT
PER UNIT
-----------
$ 0.69
Trustee's Fee
$ 0.40
Portfolio Supervision,
Bookkeeping and
Administrative Fees
$ 0.23
Evaluator's Fee
$ 0.30
Other Operating Expenses
-----------
$ 1.62
TOTAL
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
In the following chart we show past performance of prior
Michigan Portfolios, which had investment objectives,
strategies and types of bonds substantially similar to this
Fund. These prior Series differed in that they charged a
higher sales fee. These prior Michigan Series were offered
between March 9, 1988 and February 15, 1996 and were
outstanding on September 30, 1998. OF COURSE, PAST
PERFORMANCE OF PRIOR SERIES IS NO GUARANTEE OF FUTURE
RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
Reflecting all expenses. For periods ended 9/30/98.
NO SALES
WITH SALES FEE FEE
1 YEAR 5 YEARS 1 YEAR 5 YEARS
- -------------------------------------------------------------------
High 6.08% 4.94% 10.14% 6.06%
Average 3.97 4.30 6.71 5.32
Low 2.39 3.78 3.37 4.69
- -------------------------------------------------------------------
Average
Sales fee 2.69% 5.06%
- ---------------------------------------------------------------
Note: All returns represent changes in unit price with distributions reinvested
into the Municipal Fund Investment Accumulation Program.
8. IS THE FUND MANAGED?
Unlike a mutual fund, the Fund is not managed and bonds are
not sold because of market changes. Rather, experienced
Defined Asset Funds financial analysts regularly review the
bonds in the Fund. The Fund may sell a bond if certain
adverse credit or other conditions exist.
10
<PAGE>
9. HOW DO I BUY UNITS?
The minimum investment is $250.
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
UNIT PRICE PER UNIT $1,090.27
(as of August 31, 1998)
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.
UNIT PAR VALUE $1,000.00
Unit par value means the total amount of money you should
generally receive on each unit by the termination of the
Fund (other than interest and premium on the bonds). This
total amount assumes that all bonds in the Fund are either
paid at maturity or called by the issuer at par or are sold
by the Fund at par. If you sell your units before the Fund
terminates, you may receive more or less than the unit par
value.
10. HOW DO I SELL UNITS?
You may sell your units at any time to any Sponsor or the
Trustee for the net asset value determined at the close of
business on the date of sale. You will not pay any other
fee when you sell your units.
11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100% exempt
from regular federal income tax. Your income may also be
exempt from some Michigan state and local personal income
taxes if you live in Michigan.
You will also receive principal payments if bonds are sold
or called or mature, when the cash available is more than
$5.00 per unit. You will be subject to tax on any gain
realized by the Fund on the disposition of bonds.
12. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You will receive your income in cash unless you choose to
compound your income by reinvesting at no sales fee in the
Municipal Fund Investment Accumulation Program, Inc. This
program is an open-end mutual fund with a comparable
investment objective, but the bonds 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.
11
<PAGE>
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO--RISK/RETURN SUMMARY
1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks interest income that is exempt from regular
federal income taxes and some state and local taxes by
investing in a fixed portfolio consisting primarily of
insured, long term municipal revenue bonds.
2. WHAT ARE MUNICIPAL REVENUE BONDS?
Municipal revenue bonds are bonds issued by states,
municipalities and public authorities to finance the cost
of buying, building or improving various projects intended
to generate revenue, such as airports, health care
facilities, housing and municipal electric, water and sewer
utilities. Generally, payments on these bonds depend solely
on the revenues generated by the projects, excise taxes or
state appropriations, and are not backed by the
government's taxing power.
3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
O The Fund plans to hold to maturity 10 long-term tax-exempt
municipal bonds with an aggregate face amount of
$8,735,000. The Fund is a unit investment trust which means
that, unlike a mutual fund, the Portfolio is not managed.
o The bonds are rated AAA or Aaa by Standard & Poor's,
Moody's or Fitch.
o The Fund is concentrated in refunded bonds.
o Many of the bonds can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons. 20% of the bonds are currently
callable.
o 100% of the bonds are insured by insurance companies that
guarantee timely payments of principal and interest on the
bonds (but not Fund units or the market value of the bonds
before they mature).
The Portfolio consists of municipal bonds of the following
types:
APPROXIMATE
PORTFOLIO
PERCENTAGE
/ / Airports/Ports/Highways 11%
/ / General Obligation 5%
/ / Hospitals/Healthcare 8%
/ / Refunded Bonds 37%
/ / Special Tax Issues 11%
/ / Transit/Transportation 15%
/ / Universities/Colleges 13%
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN
HAPPEN FOR VARIOUS REASONS, INCLUDING:
o Rising interest rates, an issuer's worsening financial
condition or a drop in bond ratings can reduce the price of
your units.
o Assuming no changes in interest rates, when you sell your
units, they will generally be worth less than your cost
because your cost included a sales fee.
o The Fund will receive early returns of principal if bonds
are called or sold before they mature. If this happens your
income will decline and you may not be able to reinvest the
money you receive at as high a yield or as long a maturity.
ALSO, THE PORTFOLIO IS CONCENTRATED IN BONDS OF NEW YORK SO
IT IS LESS DIVERSIFIED THAN A NATIONAL FUND AND IS SUBJECT
TO RISKS PARTICULAR TO NEW YORK WHICH ARE BRIEFLY DESCRIBED
UNDER STATE CONCENTRATION RISKS LATER IN THIS PROSPECTUS.
12
<PAGE>
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want federally tax-free income. You will
benefit from a professionally selected and supervised
portfolio whose risk is reduced by investing in bonds of
several different issuers.
The Fund is not appropriate for you if you want a
speculative investment that changes to take advantage of
market movements, if you do not want a tax-advantaged
investment or if you cannot tolerate any risk.
DEFINING YOUR INCOME
WHAT YOU MAY EXPECT (Payable on the 25th day of
the month to holders of record on the 10th day
of the month):
Regular Monthly Income per unit $ 4.89
Annual Income per unit: $ 58.71
These figures are estimates determined on the evaluation
day; actual payments may vary.
6. WHAT ARE THE FUND'S FEES AND EXPENSES?
This table shows the costs and expenses you may pay,
directly or indirectly, when you invest in the Fund.
INVESTOR FEES
2.90%
Maximum Sales Fee (Load) on new purchases
(as a percentage of $1,000 invested)
Employees of some of the Sponsors and their affiliates may
pay a reduced sales fee of no less than $5.00 per unit.
The maximum sales fee is reduced if you invest at least
$100,000, as follows:
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
----------------------------------- -----------------
Less than $100,000 2.90%
$100,000 to $249,999 2.65%
$250,000 to $499,999 2.40%
$500,000 to $999,999 2.15%
$1,000,000 and over 1.90%
Maximum Exchange Fee 1.90%
ESTIMATED ANNUAL FUND OPERATING EXPENSES
AMOUNT
PER UNIT
-----------
$ 0.62
Trustee's Fee
$ 0.37
Portfolio Supervision,
Bookkeeping and
Administrative Fees
$ 0.09
Evaluator's Fee
$ 0.18
Other Operating Expenses
-----------
$ 1.26
TOTAL
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
In the following chart we show past performance of prior New
York Portfolios, which had investment objectives, strategies
and types of bonds substantially similar to this Fund. These
prior Series differed in that they charged a higher sales
fee. These prior New York Series were offered between
January 14, 1988 and September 11, 1997 and were outstanding
on September 30, 1998. OF COURSE, PAST PERFORMANCE OF PRIOR
SERIES IS NO GUARANTEE OF FUTURE RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
Reflecting all expenses. For periods ended 9/30/98.
WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 10 YEARS 1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------
High 6.94% 5.26% 7.87% 11.62% 6.02% 8.47%
Average 4.47 4.41 7.51 7.72 5.44 8.10
Low 2.18 3.81 7.37 4.79 4.76 7.59
- -------------------------------------------------------------------
Average
Sales fee 3.17% 5.11% 5.73%
- -------------------------------------------------------------------
Note: All returns represent changes in unit price with distributions reinvested
into the Municipal Fund Investment Accumulation Program.
8. IS THE FUND MANAGED?
Unlike a mutual fund, the Fund is not managed and bonds are
not sold because of market changes. Rather, experienced
Defined Asset Funds financial analysts regularly review the
bonds in the Fund. The Fund may sell a bond if certain
adverse credit or other conditions exist.
13
<PAGE>
9. HOW DO I BUY UNITS?
The minimum investment is $250.
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
UNIT PRICE PER UNIT $958.69
(as of August 31, 1998)
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.
UNIT PAR VALUE $1,000.00
Unit par value means the total amount of money you should
generally receive on each unit by the termination of the
Fund (other than interest and premium on the bonds). This
total amount assumes that all bonds in the Fund are either
paid at maturity or called by the issuer at par or are sold
by the Fund at par. If you sell your units before the Fund
terminates, you may receive more or less than the unit par
value.
10. HOW DO I SELL UNITS?
You may sell your units at any time to any Sponsor or the
Trustee for the net asset value determined at the close of
business on the date of sale. You will not pay any other
fee when you sell your units.
11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100% exempt
from regular federal income tax. Your income may also be
exempt from some New York state and local personal income
taxes if you live in New York.
You will also receive principal payments if bonds are sold
or called or mature, when the cash available is more than
$5.00 per unit. You will be subject to tax on any gain
realized by the Fund on the disposition of bonds.
12. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You will receive your income in cash unless you choose to
compound your income by reinvesting at no sales fee in the
Municipal Fund Investment Accumulation Program, Inc. This
program is an open-end mutual fund with a comparable
investment objective, but the bonds will generally not be
insured. Income from this program will generally be subject
to state and local income taxes. For more complete
information about the program, including charges and fees,
ask the Trustee for the program's prospectus. Read it
carefully before you invest. The Trustee must receive your
written election to reinvest at least 10 days before the
record day of an income payment.
EXCHANGE PRIVILEGES
You may exchange units of this Fund for units of certain
other Defined Asset Funds. You may also exchange into this
Fund from certain other funds. We charge a reduced sales fee
on exchanges.
14
<PAGE>
- --------------------------------------------------------------------------------
TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS
FOR ARIZONA RESIDENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 1998* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 3% 3.5% 4% 4.5% 5% 5.5% 6% 6.5%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 42,350 17.81 3.65 4.26 4.87 5.47 6.08 6.59 7.30 7.91
$ 0- 25,350 18.32 3.67 4.28 4.90 5.51 6.12 6.73 7.35 7.96
$ 25,350- 81,400 $ 42,350-102,300 31.48 4.38 5.11 5.84 6.57 7.29 8.02 8.75 9.48
$ 81,400-128,100 $102,300-155,950 34.31 4.57 5.33 6.09 6.86 7.61 8.37 9.13 9.90
$155,950-278,450 39.07 4.92 5.74 6.57 7.39 8.21 9.03 9.85 10.67
$128,100-278,450 39.31 4.94 5.77 6.59 7.41 8.24 9.06 9.89 10.71
OVER $278,450 OVER $278,450 42.72 5.24 6.11 6.98 7.88 8.73 9.60 10.48 11.35
</TABLE>
FOR COLORADO RESIDENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 1998* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 3% 3.5% 4% 4.5% 5% 5.5% 6% 6.5%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 25,350 $ 0- 42,350 19.25 3.72 4.33 4.95 5.57 6.18 6.81 7.43 8.05
$ 25,350- 81,400 $ 42,350-102,300 31.60 4.39 5.12 5.85 6.58 7.31 8.04 8.77 9.50
$ 81,400-128,100 $102,300-155,950 34.45 4.58 5.34 6.10 6.86 7.83 8.39 9.15 9.92
$128,100-278,450 $155,950-278,450 38.20 4.93 5.76 6.58 7.40 8.22 9.05 9.87 10.69
OVER $278,450 OVER $278,450 42.62 5.23 6.10 6.97 7.84 8.71 9.59 10.46 11.33
</TABLE>
FOR MICHIGAN RESIDENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 1998* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 3% 3.5% 4% 4.5% 5% 5.5% 6% 6.5%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 25,350 $ 0- 42,350 18.74 3.89 4.31 4.92 5.64 6.15 6.77 7.38 8.00
$ 25,350- 61,400 $ 42,350-102,300 31.17 4.38 5.08 5.81 6.54 7.28 7.99 8.72 9.44
$ 61,400-128,100 $102,300-165,950 34.04 4.55 5.31 6.08 6.82 7.68 8.34 9.10 9.85
$128,100-278,450 $155,950-278,450 38.82 4.90 5.72 6.54 7.35 8.17 8.89 9.81 10.62
OVER $278,450 OVER $278,450 42.26 5.20 6.08 6.93 7.79 8.86 9.63 10.39 11.26
</TABLE>
To compare the yield of a taxable security with the yield of a tax-free
security, find your taxable income and read across. The table incorporates 1998
federal and applicable state income tax rates and assumes that all income would
otherwise be taxed at the investor's highest tax rate. Yield figures are for
example only.
*Based upon net amount subject to federal income tax after deductions and
exemptions. This table does not reflect the possible effect of other tax
factors, such as alternative minimum tax, personal exemptions, the phase out of
exemptions, itemized deductions or the possible partial disallowance of
deductions. Consequently, you should consult your own tax advisers in this
regard.
15
<PAGE>
- --------------------------------------------------------------------------------
TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS
FOR NEW YORK CITY RESIDENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 1998* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 3% 3.5% 4% 4.5% 5% 5.5% 6% 6.5%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 25,350 $ 0- 42,350 24.55 3.38 4.64 5.30 5.96 6.63 7.29 7.95 8.62
$ 25,351- 61,400 $ 42,351-102,300 36.14 4.70 5.48 6.28 7.05 7.83 8.61 9.40 10.18
$ 61,401-128,100 $102,301-155,950 38.80 4.90 5.72 6.54 7.35 8.17 8.99 9.80 10.62
$128,101-278,450 $155,951-278,450 43.24 5.29 6.17 7.05 7.83 8.81 9.69 10.57 11.45
OVER $278,450 OVER $278,450 46.43 5.60 6.53 7.47 8.40 9.33 10.27 11.20 12.13
</TABLE>
FOR NEW YORK STATE RESIDENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 1998* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 3% 3.5% 4% 4.5% 5% 5.5% 6% 6.5%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 25,350 $ 0- 42,350 20.82 3.79 4.42 5.05 5.68 6.31 6.95 7.58 8.21
$ 25,351- 61,400 $ 42,351-102,300 32.93 4.47 5.22 5.96 6.71 7.46 8.20 8.95 9.69
$ 61,401-128,100 $102,301-155,950 35.73 4.67 5.45 6.22 7.00 7.78 8.56 9.34 10.11
$128,101-278,450 $155,951-278,450 40.38 5.03 5.87 6.71 7.55 8.39 9.23 10.06 10.90
OVER $278,450 OVER $278,450 43.74 5.33 6.22 7.11 8.00 8.89 9.78 10.66 11.55
</TABLE>
To compare the yield of a taxable security with the yield of a tax-free
security, find your taxable income and read across. The table incorporates 1998
federal and applicable State (and City) income tax rates and assumes that all
income would otherwise be taxed at the investor's highest tax rate. Yield
figures are for example only.
*Based upon net amount subject to federal income tax after deductions and
exemptions. This table does not reflect the possible effect of other tax
factors, such as alternative minimum tax, personal exemptions, the phase out of
exemptions, itemized deductions or the possible partial disallowance of
deductions. Consequently, investors are urged to consult their own tax advisers
in this regard.
16
<PAGE>
WHAT YOU CAN EXPECT FROM YOUR INVESTMENT
MONTHLY INCOME
The Fund will pay you regular monthly income. Your monthly income may vary
because of:
o elimination of one or more bonds from the Fund's portfolio because of
calls, redemptions or sales;
o a change in the Fund's expenses; or
o the failure by a bond's issuer to pay interest.
Changes in interest rates generally will not affect your income because the
portfolio is fixed.
Along with your income, you will receive your share of any available bond
principal.
RETURN FIGURES
We cannot predict your actual return, which will vary with unit price, how long
you hold your investment and changes in the portfolio, interest income and
expenses.
Estimated Current Return equals the estimated annual cash to be received from
the bonds in the Fund less estimated annual Fund expenses, divided by the Unit
Price (including the maximum sales fee):
Estimated Annual Estimated
Interest Income - Annual Expenses
- -------------------------------------------------
Unit Price
Estimated Long Term Return is a measure of the estimated return over the
estimated life of the Fund. Unlike Estimated Current Return, Estimated Long Term
Return reflects maturities, discounts and premiums of the bonds in the Fund. It
is an average of the yields to maturity (or in certain cases, to an earlier call
date) of the individual bonds in the portfolio, adjusted to reflect the Fund's
maximum sales fee and estimated expenses. We calculate the average yield for the
portfolio by weighting each bond's yield by its market value and the time
remaining to the call or maturity date.
Yields on individual bonds depend on many factors including general conditions
of the bond markets, the size of a particular offering and the maturity and
quality rating of the particular issues. Yields can vary among bonds with
similar maturities, coupons and ratings.
These return quotations are designed to be comparative rather than predictive.
RECORDS AND REPORTS
You will receive:
o a monthly statement of income payments and any principal payments;
o a notice from the Trustee when new bonds are deposited in exchange or
substitution for bonds originally deposited;
o an annual report on Fund activity; and
o annual tax information. This will also be sent to the IRS. You must report the
amount of tax-exempt interest received during the year.
You may request:
o copies of bond evaluations to enable you to comply with federal and state tax
reporting requirements; and
o audited financial statements of the Fund.
You may inspect records of Fund transactions at the Trustee's office during
regular business hours.
17
<PAGE>
THE RISKS YOU FACE
INTEREST RATE RISK
Investing involves risks, including the risk that your investment will decline
in value if interest rates rise. Generally, bonds with longer maturities will
change in value more than bonds with shorter maturities. Bonds in the Fund are
more likely to be called when interest rates decline. This would result in early
returns of principal to you and may result in early termination of the Fund. Of
course, we cannot predict how interest rates may change.
CALL RISK
Many bonds can be prepaid or 'called' by the issuer before their stated
maturity.
For example, some bonds may be required to be called pursuant to mandatory
sinking fund provisions.
Also, an issuer might call its bonds during periods of falling interest rates,
if the issuer's bonds have a coupon higher than current market rates.
An issuer might call its bonds in extraordinary cases, including if:
o it no longer needs the money for the original purpose;
o the project is condemned or sold;
o the project is destroyed and insurance proceeds are used to redeem the
bonds;
o any related credit support expires and is not replaced; or
o interest on the bonds become taxable.
If the bonds are called, your inocme will decline and you may not be able to
reinvest the money you receive at as high a yield or as long a maturity. An
early call at par of a premium bond will reduce your return.
REDUCED DIVERSIFICATION RISK
If many investors sell their units, the Fund will have to sell bonds. This could
reduce the diversification of your investment and increase your share of Fund
expenses.
LIQUIDITY RISK
You can always sell back your units, but we cannot assure you that a liquid
trading market will always exist for the bonds in the portfolio, especially
since current law may restrict the Fund from selling bonds to any Sponsor. The
bonds will generally trade in the over-the-counter market. The value of the
bonds, and of your investment, may be reduced if trading in bonds is limited or
absent.
CONCENTRATION RISK
When a certain type of bond makes up 25% or more of the portfolio, it is said to
be 'concentrated' in that bond type, which makes the Portfolio less diversified.
Here is what you should know about the Arizona Portfolio's concentration in
general obligation bonds.
o general obligation bonds are backed by the issuer's pledge of its full
faith, credit and taxing power;
o but the taxing power of any government issuer may be limited by provisions
of the state constitution or laws as well as political considerations; and
o an issuer's credit can be negatively affected by various factors, including
population decline that erodes the tax base, natural disasters, decline in
industry, limited access to capital markets or heavy reliance on state or
federal aid.
Here is what you should know about the Arizona Portfolio's concentration in
municipal water and sewer revenue bonds. The payment of interest and principal
of these bonds depends on the rates the utilities may
18
<PAGE>
charge, the demand for their services and the cost of operating their business
which includes the expense of complying with environmental and other energy and
licensing laws and regulations. The operating results of utilities are
particularly influenced by:
o increases in operating and construction costs; and
o unpredicability of future usage requirements.
Here is what you should know about each Portfolio's concentration in refunded
bonds.
Refunded bonds are typically:
o backed by direct obligations of the U.S. government; or
o in some cases, backed by obligations guaranteed by the U.S. government and
placed in escrow with an independent trustee;
o noncallable prior to maturity; but
o sometimes called for redemption prior to maturity.
Changes to the portfolio from bond redemptions, maturities and sales may affect
the Fund's concentrations over time.
STATE CONCENTRATION RISK
ARIZONA RISKS
Generally
Arizona's economy is affected by several major factors, including:
o boom and bust cycles in key industries like real estate, construction and
tourism;
o the performance of other economic sectors such as manufacturing, mining,
services and the military;
o the savings and loan crisis;
o employment patterns of major employers within the state;
o consolidation and change in the healthcare market; and
o migration into the state, which causes higher than average population
growth.
State and Local Government
Most of the bonds in the Arizona Trust are not issued by the State of Arizona
itself; however, the financial condition of the state government could hurt the
value of the bonds. Also, both the State and its subdivisions are subject to
legal restrictions that could impair their ability to make payments on bonds,
including:
o certain state laws limit taxation and bond indebtedness;
o other state laws make it difficult to increase taxes, such as by requiring
a two-thirds vote of the state legislature for any increase; and
o Arizona's regulated utilities are limited in their ability to secure rate
increases. Any failure to secure a necessary rate increase could adversely
affect a utility's ability to service its debts.
Arizona voters have tried from time to time to further limit the amount of tax
increases that can be levied without voter approval.
Education Financing
In July, 1994 the Arizona Supreme Court found the state's school funding system
to be unconstitutional. The state's first attempt at a new funding program was
rejected by the courts. It is not yet clear how the judgment or any new attempt
to comply with it will affect state finances.
COLORADO RISKS
Generally
Colorado has experienced above-average economic growth for the last nine years,
and its unemployment rate has been below the
19
<PAGE>
national average. This has been due in large part to above-average population
growth, job growth and net migration into the state. However, both net migration
and job growth have slowed recently, and any further slowdown could hurt
Colorado's future economic performance.
The most important sectors of Colorado's economy, other than state government,
are:
o service;
o trade;
o manufacturing; and
o tourism.
State and Local Government
The 1992 TABOR amendment to the Colorado Constitution restricts the ability of
the state and its subdivisions to increase taxes, revenues, debt and spending in
the following ways:
o state and local spending is capped at the prior year's spending, with some
adjustments, unless voters approve an increase;
o excess revenues must be refunded;
o voter approval is required for any new tax, tax increase or, with some
exceptions, new debt;
o certain new taxes are prohibited entirely; and
o the state and local entities must establish emergency reserves, and can
reduce or end spending on any programs (other than public education) if
necessary.
These restrictions could hurt the financial condition of the state and its
subdivisions, especially in times of slow economic growth.
The effect of TABOR on government finance has been very significant, but it is
impossible to predict how it will affect the bonds held by the Fund.
Short-term notes issued by Colorado in 1997 received the highest possible
short-term ratings by Standard & Poor's and Fitch, but because of their term
they should not be considered indicative of the state's general financial
condition.
MICHIGAN RISKS
Because Michigan's leading sectors are closely integrated with the manufacturing
of durable goods, its economy is more cyclical than non-industrial states and
the nation as a whole. As a result:
o any substantial national economic downturn will likely hurt Michigan's
economy and its state and local governments;
o because the state is highly reliant on the auto industry, its economy could
be hurt by changes in that industry, expecially consolidation, plant
closings and labor disputes;
o while in the past the state's unemployment rate was higher than the
national average, for several years it has been near or below the national
average.
Certain tax changes have reduced or changed the mix of tax revenues of the state
and local governments. In recent years:
o the state sales tax rate was raised;
o the income tax rate was lowered;
o an annual cap was imposed on property tax assessment increases; and
o property taxes used for school funding were cut, and now schools are paid
for by a combination of property taxes and general state revenues.
In addition, certain state laws limit the overall amount of state revenues that
can be raised from taxes, which could affect State operations
20
<PAGE>
and restrict the sharing of revenue with local governments. This, combined with
the above tax changes, could hurt the value of Michigan bonds in the portfolio
or make it more difficult for Michigan's local governments to pay their debt
service.
The state's general obligation bonds are rated Aa by Moody's, AA+ by Standard &
Poor's and AA by Fitch.
NEW YORK RISKS
Generally
For decades, New York's economy has trailed the rest of the nation. Both the
state and New York City have experienced long-term structural imbalances between
revenues and expenses, and have repeatedly relied substantially on non-recurring
measures to achieve budget balance. The pressures that contribute to budgetary
problems at both the state and local level include:
o the high combined state and local tax burden;
o a decline in manufacturing jobs, leading to above-average unemployment;
o sensitivity to the financial services industry; and
o dependence on federal aid.
State Government
The State government frequently has difficulty approving budgets on time. Budget
gaps of $1 billion and $4 billion are projected for the next two years. The
State's general obligation bonds are rated A by Standard & Poor's and A2 by
Moody's. There is $37 billion of state-related debt outstanding.
New York City Government
Even though the City had budget surpluses each year from 1981, budget gaps of $2
billion are projected for each of the next three years. New York City faces
fiscal pressures from:
o aging public facilities that need repair or replacement;
o welfare and medical costs;
o expiring labor contracts; and
o a high and increasing debt burden.
The City requires substantial state aid, and its fiscal strength depends heavily
on the securities industry. Its general obligation bonds are rated A-by Standard
& Poor's and A3 by Moody's.
PENNSYLVANIA RISKS
Generally
Pennsylvania and many of its municipalities (including Philadelphia) have
undergone an economic decline:
o coal, steel, railroads and other heavy industry historically associated
with the Commonwealth has given way to increased competition from foreign
producers.
o agriculture and related industries are still an important part of the
Commonwealth's economy.
o Recently, however, service sector industries (trade, medical and health
services, education and financial services) have provided new sources of
growth.
State and Local Governments
Historically, both the Commonwealth and the City of Philadelphia have
experienced serious revenue shortfalls. At the same time, rising demands for
state and local programs and services (particularly medical assistance and cash
assistance programs) have lead to increased spending.
21
<PAGE>
o In recent years, both the Commonwealth and the City of Philadelphia have
tried to balance their budgets with a mix of tax increases and spending
cuts.
o Philadelphia has considered significant service cuts and privatization of
certain services which it has provided to date.
o In 1991, the Commonwealth created the Pennsylvania Inter-Governmental
Cooperation Authority ('PICA') which it authorized to issue debt to cover
Philadelphia's budget shortfalls, eliminate the City's projected deficits
and fund its capital spending. PICA issued approximately $1.76 billion of
Special Revenue Bonds on Philadelphia's behalf. Its power to issue bonds on
Philadelphia's behalf expired at the end of 1996; as of June 30, 1997,
approximately $1.1 billion in PICA Special Revenue Bonds were outstanding.
o Pennsylvania's general obligation bonds are currently rated A1 by Moody's
and AA-by Standard & Poor's. Philadelphia's general obligation bonds are
rated Baa by Moody's and BBB by Standard & Poor's. There can be no
assurance that these ratings will not be lowered.
BOND QUALITY RISK
A reduction in a bond's rating may decrease its value and, indirectly, the value
of your investment in the Fund.
INSURANCE RELATED RISK
The bonds are backed by insurance companies (as shown under Portfolios).
Insurance policies generally make payments only according to a bond's original
payment schedule and do not make early payments when a bond defaults or becomes
taxable. Although the federal government does not regulate the insurance
business, various state laws and federal initiatives and tax law changes could
significantly affect the insurance business. The claims-paying ability of the
insurance companies is generally rated A or better by Standard & Poor's or
another nationally recognized rating organization. The insurance company ratings
are subject to change at any time at the discretion of the rating agencies.
LITIGATION AND LEGISLATION RISKS
We do not know of any pending litigation that might have a material adverse
effect upon the Fund.
Future tax legislation could affect the value of the portfolio by:
o limiting real property taxes,
o reducing tax rates,
o imposing a flat or other form of tax, or
o exempting investment income from tax.
SELLING OR EXCHANGING UNITS
You can sell your units at any time for a price based on net asset value. Your
net asset value is calculated each business day by:
o adding the value of the bonds, net accrued interest, cash and any other
Fund assets;
o subtracting accrued but unpaid Fund expenses, unreimbursed Trustee
advances, cash held to buy back units or for distribution to investors and
any other Fund liabilities; and
o dividing the result by the number of outstanding units.
Your net asset value when you sell may be more or less than your cost because of
sales fees, market movements and changes in the portfolio.
22
<PAGE>
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 the secondary market continuously for over 25 years, but we
could discontinue it without prior notice for any business reason.
SELLING UNITS TO THE TRUSTEE
Regardless of whether we maintain a secondary market, you can sell your units to
the Trustee at any time by sending the Trustee a letter (with any outstanding
certificates if you hold Unit certificates). You must properly endorse your
certificates (or execute a written transfer instrument with signatures
guaranteed by an eligible institution). Sometimes, additional documents are
needed such as a trust document, certificate of corporate authority, certificate
of death or appointment as executor, administrator or guardian.
Within seven days after your request and the necessary documents are received,
the Trustee will mail a check to you. Contact the Trustee for additional
information.
As long as we are maintaining a secondary market, the Trustee will sell your
units to us at a price based on net asset value. If there is no secondary
market, the Trustee may sell your units in the over-the-counter market for a
higher price, but it is not obligated to do so. In that case, you will receive
the net proceeds of the sale.
If the Fund does not have cash available to pay you for units you are selling,
the agent for the Sponsors will select bonds to be sold. Bonds will be selected
based on market and credit factors. These sales could be made at times when the
bonds would not otherwise be sold and may result in your receiving less than the
unit par value and also reduce the size and diversity of the Fund.
There could be a delay in paying you for your units:
o if the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
o if the SEC determines that trading on the New York Stock Exchange is
restricted or that an emergency exists making sale or evaluation of the
bonds not reasonably practicable; and
o for any other period permitted by SEC order.
EXCHANGE OPTION
You may exchange units of certain Defined Asset Funds for units of this Fund at
a maximum exchange fee of 1.90%. You may exchange units of this Fund for units
of certain other Defined Asset Funds at a reduced sales fee if your investment
goals change. To exchange units, you should talk to your financial professional
about what funds are exchangeable, suitable and currently available.
Normally, an exchange is taxable and you must recognize any gain or loss on the
exchange. However, the IRS may try to disallow a loss if the portfolios of the
two funds are not materially different; you should consult your own tax adviser.
23
<PAGE>
We may amend or terminate this exchange option at any time without notice.
HOW THE FUND WORKS
PRICING
The price of a unit includes interest accrued on the bonds, less expenses, from
the initial most recent Record Day up to, but not including, the settlement
date, which is usually three business days after the purchase date of the unit.
A portion of the price of a unit consists of cash so that the Trustee can
provide you with regular monthly income. When you sell your units you will
receive your share of this cash.
EVALUATIONS
An independent Evaluator values the bonds on each business day (excluding
Saturdays, Sundays and the following holidays as observed by the New York Stock
Exchange: New Year's Day, Presidents' Day, Martin Luther King, Jr. Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas).
Bond values are based on current bid or offer prices for the bonds or comparable
bonds. In the past, the difference between bid and offer prices of publicly
offered tax-exempt bonds has ranged from 0.5% of face amount on actively traded
issues to 3.5% on inactively traded issues; the difference has averaged between
1 and 2%.
INCOME
The Trustee credits interest to an Income Account and other receipts to a
Capital Account. The Trustee may establish a Reserve Account by withdrawing from
these accounts amounts it considers appropriate to pay any material liability.
These accounts do not bear interest.
EXPENSES
The Trustee is paid monthly. It also benefits when it holds cash for the Fund in
non-interest bearing accounts. The Trustee may also receive additional amounts:
o to reimburse the Trustee for the Fund's operating expenses;
o for extraordinary services and costs of indemnifying the Trustee and the
Sponsors;
o costs of actions taken to protect the Fund and other legal fees and
expenses;
o expenses for keeping the Fund's registration statement current; and
o Fund termination expenses and any governmental charges.
The Sponsors are currently reimbursed up to 45 cents per $1,000 face amount
annually for providing portfolio supervisory, bookkeeping and administrative
services and for any other expenses properly chargeable to the Fund. 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
24
<PAGE>
Fund assets to secure reimbursement of Fund expenses and may sell bonds if cash
is not available.
PORTFOLIO CHANGES
The Sponsors and Trustee are not liable for any default or defect in a bond; if
a contract to buy any bond.
Unlike a mutual fund, the portfolio is designed to remain intact and we may keep
bonds in the portfolio even if their credit quality declines or other adverse
financial circumstances occur. However, we may sell a bond in certain cases if
we believe that certain adverse credit conditions exist or if a bond becomes
taxable.
If we maintain a secondary market in units but are unable to sell the units that
we buy in the secondary market, we will redeem units, which will affect the size
and composition of the portfolio. Units offered in the secondary market may not
represent the same face amount of bonds that they did originally.
We decide whether or not to offer units for sale that we acquire in the
secondary market after reviewing:
o diversity of the portfolio;
o size of the Fund relative to its original size;
o ratio of Fund expenses to income;
o current and long-term returns;
o degree to which units may be selling at a premium over par; and
o cost of maintaining a current prospectus.
FUND TERMINATION
The Fund will terminate following the stated maturity or sale of the last bond
in the portfolio. The Fund may also terminate earlier with the consent of
investors holding 51% of the units or if total assets of the Fund have fallen
below 40% of the face amount of bonds deposited. We will decide whether to
terminate the Fund early based on the same factors used in deciding whether or
not to offer units in the secondary market.
When the Fund is about to terminate you will receive a notice, and you will be
unable to sell your units after that time. On or shortly before termination, we
will sell any remaining bonds, and you will receive your final distribution. Any
bond that cannot be sold at a reasonable price may continue to be held by the
Trustee in a liquidating trust pending its final sale.
You will pay your share of the expenses associated with termination, including
brokerage costs in selling bonds. This may reduce the amount you receive as your
final distribution.
CERTIFICATES
Certificates for units are issued on request. You may transfer certificates by
complying with the requirements for redeeming certificates, described above. You
can replace lost or mutilated certificates by delivering satisfactory indemnity
and paying the associated costs.
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.
25
<PAGE>
The Sponsors and the Trustee may amend the Indenture without your consent:
o to cure ambiguities;
o to correct or supplement any defective or inconsistent provision;
o to make any amendment required by any governmental agency; or
o to make other changes determined not to be materially adverse to your best
interest (as determined by the Sponsors).
Investors holding 51% of the units may amend the Indenture. Every investor must
consent to any amendment that changes the 51% requirement. No amendment may
reduce your interest in the Fund without your written consent.
The Trustee may resign by notifying the Sponsors. The Sponsors may remove the
Trustee without your consent if:
o it fails to perform its duties and the Sponsors determine that its
replacement is in your best interest; or
o it becomes incapable of acting or bankrupt or its affairs are taken over by
public authorities.
Investors holding 51% of the units may remove the Trustee. The Evaluator may
resign or be removed by the Sponsors and the Trustee without the consent of
investors. The resignation or removal of either becomes effective when a
successor accepts appointment. The Sponsors will try to appoint a successor
promptly; however, if no successor has accepted within 30 days after notice of
resignation, the resigning Trustee or Evaluator may petition a court to appoint
a successor.
Any Sponsor may resign as long as one Sponsor with a net worth of $2 million
remains and agrees to the resignation. The remaining Sponsors and the Trustee
may appoint a replacement. If there is only one Sponsor and it fails to perform
its duties or becomes bankrupt the Trustee may:
o remove it and appoint a replacement Sponsor;
o liquidate the Fund; or
o continue to act as Trustee without a Sponsor.
Merrill Lynch, Pierce, Fenner & Smith Incorporated acts as agent for the
Sponsors.
The Trust Indenture contains customary provisions limiting the liability of the
Trustee, the Sponsors and the Evaluator.
LEGAL OPINION
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, as
counsel for the Sponsors, has given an opinion that the units are validly
issued. Special counsel located in the relevant states have given state and
local tax opinions.
AUDITORS
Deloitte & Touche LLP, 2 World Financial Center, New York, New York 10281,
independent accountants, audited the Statements of Condition included in this
prospectus.
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 The
Travelers Inc.)
26
<PAGE>
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.
TRUSTEE
The Chase Manhattan Bank, Unit Investment Trust Department, 4 New York
Plaza--6th Floor, New York, New York 10004, is the Trustee. It is supervised by
the Federal Deposit Insurance Corporation, the Board of Governors of the Federal
Reserve System and New York State banking authorities.
UNDERWRITERS' AND SPONSORS' PROFITS
Underwriters receive sales charges when they sell units. The Sponsors also
realized a profit or loss on the initial date of deposit of the bonds. Any cash
made available by you to the Sponsors before the settlement date for those units
may be used in the Sponsors' businesses to the extent permitted by federal law
and may benefit the Sponsors.
A Sponsor or Underwriter may realize profits or sustain losses on bonds in the
Fund which were acquired from underwriting syndicates of which it was a member.
In maintaining a secondary market, the Sponsors will also realize profits or
sustain losses in the amount of any difference between the prices at which they
buy units and the prices at which they resell or redeem them.
PUBLIC DISTRIBUTION
The Sponsors do not intend to qualify units for sale in any foreign countries.
This prospectus does not constitute an offer to sell units in any country where
units cannot lawfully be sold.
CODE OF ETHICS
Merrill Lynch, as agent for the Sponsors, has adopted a code of ethics requiring
preclearance and reporting of personal securities transactions by its employees
with access to information on portfolio transactions. The goal of the code is to
prevent fraud, deception or misconduct against the Fund and to provide
reasonable standards of conduct.
YEAR 2000 ISSUES
Many computer systems were designed in such a way that they may be unable to
distinguish between the year 2000 and the year 1900 (commonly known as the 'Year
2000 Problem'). We do not expect that the computer system changes necessary to
prepare for the Year 2000 will cause any major operational difficulties for the
Fund.
27
<PAGE>
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. You should
consult your own tax adviser about your particular circumstances.
At the date of issue of each bond, counsel for the issuer delivered an opinion
to the effect that interest on the bond is exempt from regular federal income
tax. However, interest may be subject to state and local taxes and federal
alternative minimum tax. 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.
INCOME 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 if you held
it for one year or less. 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 and the organizational expenses you pay, adjusted to
reflect any accruals of 'original issue discount,' 'acquisition
28
<PAGE>
premium' and 'bond premium'. You should consult your tax adviser in this regard.
EXPENSES
If you are not a corporate investor, you will not be entitled to a deduction for
your share of fees and expenses of the Fund. Also, if you borrowed money in
order to purchase or carry your units, you will not be able to deduct the
interest on this borrowing for federal income tax purposes. The IRS may treat
your purchase of units as made with borrowed money even if the money is not
directly traceable to the purchase of units.
STATE AND LOCAL TAXES
Under the income tax laws of the State and City of New York, the Fund will not
be taxed as a corporation. If you are a New York taxpayer, your income from the
Fund will not be tax-exempt in New York except to the 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.
ARIZONA TAXES
ARIZONA TAXES TO COME]
COLORADO TAXES
In the opinion of Becker Stowe & Lynch P.C., Denver, Colorado, special counsel
on Colorado tax matters:
1. The Colorado Trust will be treated as a trust and will not be taxable as a
corporation. Income of the Colorado Trust will be treated as income of its
investors in the same manner as for federal income tax purposes.
2. You will be treated as receiving your pro rata share of interest on each bond
in the Colorado Trust when it is received by the Colorado Trust. Interest on
bonds in the Colorado Trust that would be exempt from Colorado income tax if
paid directly to you will be treated as exempt from Colorado income tax when
received by the Colorado Trust and distributed to you.
3. You will be treated as recognizing gain or loss when the Colorado Trust
disposes of a bond or when you dispose of all or a portion of your units in the
Colorado Trust, whether by sale, exchange, redemption or payment at maturity, in
the same manner as for federal income tax purposes. The amount of such gain or
loss is determined by reference to the amount of such gain or loss for federal
income tax purposes.
4. Interest on indebtedness you incur or continue to purchase or carry units in
the Colorado Trust is not deductible for Colorado income tax purposes to the
extent it is not deductible for federal income tax purposes.
Under the income tax laws of Colorado, the Trust will not be taxed as a
corporation and the income of the Trust will be your income in proportion to
your ownership of units. Your interest income from bonds owned by the Trust is
exempt from Colorado income tax to the same extent as if it were paid directly
to you. If the Trust disposes of bonds, you will have a gain or loss in
proportion to your ownership of units in the Trust. If you borrow to purchase
units, you will probably not be able to deduct the interest you pay. You should
consult your tax adviser regarding these matters.
29
<PAGE>
MICHIGAN TAXES
In the opinion of Miller, Canfield, Paddock and Stone, P.L.C. Bloomfield Hills,
Michigan, special counsel on Michigan tax matters:
Under the income tax laws of the State of Michigan, the Fund will not be taxed
as a corporation. If you are a Michigan taxpayer, your interest income from the
Fund will not be tax-exempt in Michigan except to the extent that the interest
is earned on bonds that are tax-exempt for Michigan purposes. Capital gain
distributions and capital gain or loss on your Fund units themselves will be
subject to Michigan income tax. Depending on where you live, your income from
the Fund may be subject to state and local taxation. You should consult your tax
adviser in this regard.
SUPPLEMENTAL INFORMATION
You can receive at no cost supplemental information about the Fund by calling
the Trustee. The supplemental information includes more detailed risk disclosure
about the types of bonds that may be in the Fund's portfolios, general risk
disclosure concerning any insurance securing certain bonds, and general
information about the structure and operation of the Fund. The supplemental
information is also available from the SEC.
30
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 9I (ARIZONA, COLORADO,
MICHIGAN, AND NEW YORK TRUSTS)
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders
of Defined Asset Funds - Municipal Investment Trust Fund,
Multistate Series - 9I (Arizona, Colorado, Michigan and
New York Trusts):
We have audited the accompanying statements of condition of
Defined Asset Funds - Municipal Investment Trust Fund,
Multistate Series - 9I (Arizona, Colorado, Michigan and
New York Trusts), including the portfolios, as of August 31,
1998 and the related statements of operations and of changes
in net assets for the years ended August 31, 1998, 1997 and
1996. These financial statements are the responsibility of the
Trustee. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the financial statements. Securities owned at August 31,
1998, as shown in such portfolios, were confirmed to us by
The Chase Manhattan Bank, the Trustee. An audit also includes
assessing the accounting principles used and significant
estimates made by the Trustee, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Defined Asset Funds - Municipal
Investment Trust Fund, Multistate Series - 9I (Arizona,
Colorado, Michigan and New York Trusts) at August 31, 1998
and the results of their operations and changes in their
net assets for the above-stated years in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
October 12, 1998
D - 1.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (ARIZONA TRUST)
STATEMENT OF CONDITION
As of August 31, 1998
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
at value (cost $ 2,271,503 )(Note 1)......... $ 2,480,867
Accrued interest ............................... 28,284
Cash - income .................................. 4,635
Cash - principal ............................... 8,781
-----------
Total trust property ......................... 2,522,567
LESS LIABILITY - Accrued Sponsors' fees .......... 670
-----------
NET ASSETS, REPRESENTED BY:
2,386 units of fractional undivided
interest outstanding (Note 3)................$ 2,489,648
Undistributed net investment income ............ 32,249 $ 2,521,897
----------- ===========
UNIT VALUE ($ 2,521,897 / 2,386 units )........... $ 1,056.96
===========
</TABLE>
See Notes to Financial Statements.
D - 2.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (ARIZONA TRUST)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended August 31,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income ........................$ 156,476 $ 173,523 $ 201,210
Trustee's fees and expenses ............ (4,194) (4,460) (4,860)
Sponsors' fees ......................... (1,026) (1,110) (1,246)
------------------------------------------------
Net investment income .................. 151,256 167,953 195,104
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain on
securities sold or redeemed .......... 14,104 28,868 46,868
Unrealized depreciation
of investments ....................... (9,101) (23,412) (52,503)
------------------------------------------------
Net realized and unrealized
gain (loss) on investments ........... 5,003 5,456 (5,635)
------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ..............$ 156,259 $ 173,409 $ 189,469
================================================
</TABLE>
See Notes to Financial Statements.
D - 3.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (ARIZONA TRUST)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended August 31,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
Net investment income ..................$ 151,256 $ 167,953 $ 195,104
Realized gain on
securities sold or redeemed .......... 14,104 28,868 46,868
Unrealized depreciation
of investments ....................... (9,101) (23,412) (52,503)
------------------------------------------------
Net increase in net assets
resulting from operations ............ 156,259 173,409 189,469
------------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income ................................ (151,305) (168,368) (195,392)
Principal .............................. (10,829) (17,754) (35,186)
------------------------------------------------
Total distributions .................... (162,134) (186,122) (230,578)
------------------------------------------------
SHARE TRANSACTIONS:
Redemption amounts - income ............ (2,357) (4,544) (6,353)
Redemption amounts - principal ......... (182,075) (375,324) (509,882)
------------------------------------------------
Total share transactions ............... (184,432) (379,868) (516,235)
------------------------------------------------
NET DECREASE IN NET ASSETS ............... (190,307) (392,581) (557,344)
NET ASSETS AT BEGINNING OF YEAR .......... 2,712,204 3,104,785 3,662,129
------------------------------------------------
NET ASSETS AT END OF YEAR ................$ 2,521,897 $ 2,712,204 $ 3,104,785
================================================
PER UNIT:
Income distributions during
year .................................$ 60.80 $ 61.39 $ 62.22
================================================
Principal distributions during
year .................................$ 4.23 $ 6.35 $ 11.37
================================================
Net asset value at end of
year .................................$ 1,056.96 $ 1,059.45 $ 1,064.01
================================================
TRUST UNITS:
Redeemed during year ................... 174 358 478
Outstanding at end of year ............. 2,386 2,560 2,918
================================================
</TABLE>
See Notes to Financial Statements.
D - 4.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (ARIZONA TRUST)
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 conformity with generally
accepted accounting principles.
(A) Securities are stated at value as determined by the
Evaluator based on bid side evaluations for the securities.
See "How to Sell Units - Trustee's Redemption of Units"
in this Prospectus, Part B.
(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 distributed as explained in "Income, Distributions
and Reinvestment - Distributions" in this Prospectus, Part B.
3. NET CAPITAL
<TABLE>
<S> <C>
Cost of 2,386 units at Date of Deposit .....................$ 2,449,682
Less sales charge .......................................... 110,235
-----------
Net amount applicable to Holders ........................... 2,339,447
Redemptions of units - net cost of 1,314 units redeemed
less redemption amounts (principal)....................... (108,461)
Realized gain on securities sold or redeemed ............... 125,039
Principal distributions .................................... (75,741)
Unrealized appreciation of investments...................... 209,364
-----------
Net capital applicable to Holders ..........................$ 2,489,648
===========
</TABLE>
4. INCOME TAXES
As of August 31, 1998, unrealized appreciation of investments, based on
cost for Federal income tax purposes, aggregated $209,364, all of which
related to appreciated securities. The cost of investment securities for
Federal income tax purposes was $2,271,503 at August 31, 1998.
D - 5.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (ARIZONA TRUST) (INSURED)
PORTFOLIO
As of August 31, 1998
<TABLE>
<CAPTION>
Rating of Optional
Portfolio No. and Title of Issues Face Redemption
Securities (1) (4) Amount Coupon Maturities(3) Provisions(3) Cost Value(2)
---------- --------- ----------- ----------- ------------ ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 City of Chandler, AZ, G.O. Rfdg. Bonds, AAA $ 500,000 7.000 % 2012 07/01/01 $ 514,070 $ 544,515
Ser. 1991 (Financial Guaranty Ins.) @ 101.000
2 City of Chandler, AZ, Wtr. and Swr. AAA 500,000 7.000 2012 07/01/01 514,070 544,515
Rev. Rfdg. Bonds, Ser. 1991 @ 101.000
(Financial Guaranty Ins.)
3 The Indl. Dev. Auth. of the Cnty. of AAA 175,000 6.000 2019 12/01/00 160,577 182,042
Maricopa, AZ, Samaritan Hlth. Services, @ 100.000
Hosp. Sys. Rev. Rfdg. Bonds, Ser. B
(MBIA Ins.)
4 Pima Cnty., AZ, Swr. Rev. Rfdg. Bonds, AAA 90,000 6.750 2015(5) 07/01/01 90,350 98,049
Ser. 1991 (Financial Guaranty Ins.) @ 101.000
235,000 6.750 2015 07/01/01 235,914 254,035
@ 101.000
5 Price-Elliott Research Park, Inc., AZ, AAA 35,000 6.750 2011(5) 07/01/01 35,278 38,445
State Univ. Research Park Dev. Rfdg. @ 102.000
Bonds, Ser. 1991 (MBIA Ins.)
6 University Med. Ctr. Corp., Tucson, AZ, AAA 95,000 6.875 2021(5) 07/01/01 96,326 104,586
Hosp. Rev. Bonds, Ser. 1991 (MBIA Ins.) @ 102.000
7 Arizona Board of Regents, Univ. of AZ, AAA 435,000 6.900 2016(5) 06/01/00 444,844 467,147
Sys. Rev. Bonds, Ser. 1990 B (MBIA Ins.) @ 102.000
8 Commonwealth of Puerto Rico, Pub. Imp. AAA 270,000 3.000 2006 Currently 180,074 247,533
Rfdg. Bonds, Ser. 1987 (MBIA Ins.)
--------- --------- ---------
TOTAL $ 2,335,000 $ 2,271,503 $ 2,480,867
========= ========= =========
See Notes to Portfolios on page D - 22.
</TABLE>
D - 6.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (COLORADO TRUST)
STATEMENT OF CONDITION
As of August 31, 1998
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
at value (cost $ 2,409,217 )(Note 1)......... $ 2,612,084
Accrued interest ............................... 52,636
Cash - principal ............................... 9,999
-----------
Total trust property ......................... 2,674,719
LESS LIABILITIES:
Income advance from Trustee.....................$ 9,309
Accrued Sponsors' fees ......................... 698
Income payments payable ........................ 5,270 15,277
----------- -----------
NET ASSETS, REPRESENTED BY:
2,482 units of fractional undivided
interest outstanding (Note 3)................ 2,622,083
Undistributed net investment income ............ 37,359 $ 2,659,442
----------- ===========
UNIT VALUE ($ 2,659,442 / 2,482 units )........... $ 1,071.49
===========
</TABLE>
See Notes to Financial Statements.
D - 7.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (COLORADO TRUST)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended August 31,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income ........................$ 169,877 $ 188,886 $ 204,774
Trustee's fees and expenses ............ (4,335) (4,549) (4,870)
Sponsors' fees ......................... (1,080) (1,163) (1,240)
------------------------------------------------
Net investment income .................. 164,462 183,174 198,664
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain on
securities sold or redeemed .......... 25,929 26,818 30,560
Unrealized depreciation
of investments ....................... (22,593) (25,188) (14,798)
------------------------------------------------
Net realized and unrealized
gain on investments ................. 3,336 1,630 15,762
------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ..............$ 167,798 $ 184,804 $ 214,426
================================================
</TABLE>
See Notes to Financial Statements.
D - 8.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (COLORADO TRUST)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended August 31,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
Net investment income ..................$ 164,462 $ 183,174 $ 198,664
Realized gain on
securities sold or redeemed .......... 25,929 26,818 30,560
Unrealized depreciation
of investments ....................... (22,593) (25,188) (14,798)
------------------------------------------------
Net increase in net assets
resulting from operations ............ 167,798 184,804 214,426
------------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income ................................ (164,949) (183,098) (198,900)
Principal .............................. (21,628) (17,842) (21,912)
------------------------------------------------
Total distributions .................... (186,577) (200,940) (220,812)
------------------------------------------------
SHARE TRANSACTIONS:
Redemption amounts - income ............ (3,486) (4,800) (3,153)
Redemption amounts - principal ......... (277,232) (327,679) (241,097)
------------------------------------------------
Total share transactions ............... (280,718) (332,479) (244,250)
------------------------------------------------
NET DECREASE IN NET ASSETS ............... (299,497) (348,615) (250,636)
NET ASSETS AT BEGINNING OF YEAR .......... 2,958,939 3,307,554 3,558,190
------------------------------------------------
NET ASSETS AT END OF YEAR ................$ 2,659,442 $ 2,958,939 $ 3,307,554
================================================
PER UNIT:
Income distributions during
year .................................$ 63.04 $ 63.54 $ 63.73
================================================
Principal distributions during
year .................................$ 8.06 $ 5.97 $ 6.91
================================================
Net asset value at end of
year .................................$ 1,071.49 $ 1,078.33 $ 1,083.73
================================================
TRUST UNITS:
Redeemed during year ................... 262 308 223
Outstanding at end of year ............. 2,482 2,744 3,052
================================================
</TABLE>
See Notes to Financial Statements.
D - 9.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (COLORADO TRUST)
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 conformity with generally
accepted accounting principles.
(A) Securities are stated at value as determined by the
Evaluator based on bid side evaluations for the securities.
See "How to Sell Units - Trustee's Redemption of Units"
in this Prospectus, Part B.
(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 distributed as explained in "Income,
Distributions and Reinvestment - Distributions" in this Prospectus, Part B.
3. NET CAPITAL
<TABLE>
<S> <C>
Cost of 2,482 units at Date of Deposit .....................$ 2,569,590
Less sales charge .......................................... 115,620
-----------
Net amount applicable to Holders ........................... 2,453,970
Redemptions of units - net cost of 1,268 units redeemed
less redemption amounts (principal)....................... (89,542)
Realized gain on securities sold or redeemed ............... 117,584
Principal distributions .................................... (62,796)
Unrealized appreciation of investments...................... 202,867
-----------
Net capital applicable to Holders ..........................$ 2,622,083
===========
</TABLE>
4. INCOME TAXES
As of August 31, 1998, unrealized appreciation of investments, based on
cost for Federal income tax purposes, aggregated $202,867, all of which
related to appreciated securities. The cost of investment securities for
Federal income tax purposes was $2,409,217 at August 31, 1998.
D - 10.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (COLORADO TRUST) (INSURED)
PORTFOLIO
As of August 31, 1998
<TABLE>
<CAPTION>
Rating of Optional
Portfolio No. and Title of Issues Face Redemption
Securities (1) (4) Amount Coupon Maturities(3) Provisions(3) Cost Value(2)
---------- --------- ----------- ----------- ------------ ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Colorado Hlth. Fac. Auth., Ins. Hosp. AAA $ 120,000 6.250 % 2021(5) 02/15/01 $ 113,091 $ 129,076
Rev. Bonds (PSL Healthcare Sys. Proj.), @ 102.000
Ser. 1991 A (FSA Ins.)
2 Colorado Hlth. Fac. Auth., Rev. Bonds, AAA 400,000 6.000 2013(5) 05/15/01 370,336 422,608
Ser. 1991 A (Sisters of Charity Hlth. @ 100.000
Care Sys. Inc.) (MBIA Ins.)
3 City of Colorado Springs, CO, Util. AAA 260,000 6.750 2021 11/15/01 263,193 285,623
Sys. Rev. Bonds, Ser. 1991 C @ 102.000
(MBIA Ins.)
4 City and Cnty. of Denver, CO, Excise AAA 500,000 6.500 2014 09/01/99 494,105 513,005
Tax Rfdg. Rev. Bonds, Ser. 1989 @ 100.000
(MBIA Ins.)
5 School District No. 1 in the City and AAA 60,000 6.500 2011(5) 12/01/01 59,328 65,532
Cnty. of Denver, CO, Certs. of Part. @ 101.000
(CO Assoc. of Sch. Boards Lease
Purchase Fin. Prog.), Ser. 1991 B
(MBIA Ins.)
6 School Dist. No. RE 1, Douglas and AAA 155,000 6.800 2010(5) 12/15/01 156,685 169,488
Elbert Counties, CO, G.O. Bonds, @ 100.000
Ser. 1991 A (Financial Guaranty Ins.)
7 Douglas Cnty., CO, Douglas and Elbert AAA 300,000 6.800 2011(5) 12/01/01 303,474 330,387
Counties, Certs. of Part., Ser. D @ 101.000
(Financial Guaranty Ins.)
8 Certs. of Part., Jefferson Cnty., CO, AAA 380,000 7.125 2010(5) 12/01/01 393,262 422,172
Jefferson Cnty. Fin. Corp. (MBIA Ins.) @ 101.000
9 Cnty. of Pueblo, CO, Ins. Hosp. Rfdg. AAA 250,000 7.000 2009 09/01/01 255,743 274,193
Rev. Bonds (Parkview Episcopal Med. @ 101.000
Ctr., Inc. Proj.), Ser. 1991 A
(MBIA Ins.)
<S> <C> <C> <C> <C> <C> <C> <C>
--------- --------- ---------
TOTAL $ 2,425,000 $ 2,409,217 $ 2,612,084
========= ========= =========
See Notes to Portfolios on page D - 22.
</TABLE>
D - 11.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (MICHIGAN TRUST)
STATEMENT OF CONDITION
As of August 31, 1998
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
at value (cost $ 3,892,710 )(Note 1)......... $ 4,251,623
Accrued interest ............................... 69,053
Cash - income .................................. 522
Cash - principal ............................... 9,704
-----------
Total trust property ......................... 4,330,902
LESS LIABILITIES:
Income advance from Trustee.....................$ 9,360
Accrued Sponsors' fees ......................... 1,117 10,477
----------- -----------
NET ASSETS, REPRESENTED BY:
3,959 units of fractional undivided
interest outstanding (Note 3)................ 4,261,327
Undistributed net investment income ............ 59,098 $ 4,320,425
----------- ===========
UNIT VALUE ($ 4,320,425 / 3,959 units )........... $ 1,091.29
===========
</TABLE>
See Notes to Financial Statements.
D - 12.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (MICHIGAN TRUST)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended August 31,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income ........................$ 278,626 $ 295,646 $ 309,292
Trustee's fees and expenses ............ (5,442) (5,646) (5,931)
Sponsors' fees ......................... (1,706) (1,754) (1,778)
------------------------------------------------
Net investment income .................. 271,478 288,246 301,583
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain on
securities sold or redeemed .......... 23,016 29,079 48,031
Unrealized appreciation (depreciation)
of investments ....................... (43,592) 6,713 (72,457)
------------------------------------------------
Net realized and unrealized
gain (loss) on investments ........... (20,576) 35,792 (24,426)
------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ..............$ 250,902 $ 324,038 $ 277,157
================================================
</TABLE>
See Notes to Financial Statements.
D - 13.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (MICHIGAN TRUST)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended August 31,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
Net investment income ..................$ 271,478 $ 288,246 $ 301,583
Realized gain on
securities sold or redeemed .......... 23,016 29,079 48,031
Unrealized appreciation (depreciation)
of investments ....................... (43,592) 6,713 (72,457)
------------------------------------------------
Net increase in net assets
resulting from operations ............ 250,902 324,038 277,157
------------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income ................................ (272,163) (288,527) (302,243)
Principal .............................. (16,793) (3,056) (20,215)
------------------------------------------------
Total distributions .................... (288,956) (291,583) (322,458)
------------------------------------------------
SHARE TRANSACTIONS:
Redemption amounts - income ............ (3,386) (3,776) (5,118)
Redemption amounts - principal ......... (291,159) (286,568) (426,596)
------------------------------------------------
Total share transactions ............... (294,545) (290,344) (431,714)
------------------------------------------------
NET DECREASE IN NET ASSETS ............... (332,599) (257,889) (477,015)
NET ASSETS AT BEGINNING OF YEAR .......... 4,653,024 4,910,913 5,387,928
------------------------------------------------
NET ASSETS AT END OF YEAR ................$ 4,320,425 $ 4,653,024 $ 4,910,913
================================================
PER UNIT:
Income distributions during
year .................................$ 64.86 $ 65.08 $ 65.15
================================================
Principal distributions during
year .................................$ 3.97 $ 0.68 $ 4.33
================================================
Net asset value at end of
year .................................$ 1,091.29 $ 1,100.01 $ 1,092.77
================================================
TRUST UNITS:
Redeemed during year ................... 271 264 387
Outstanding at end of year ............. 3,959 4,230 4,494
================================================
</TABLE>
See Notes to Financial Statements.
D - 14.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (MICHIGAN TRUST)
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 conformity with generally
accepted accounting principles.
(A) Securities are stated at value as determined by the
Evaluator based on bid side evaluations for the securities.
See "How to Sell Units - Trustee's Redemption of Units"
in this Prospectus, Part B.
(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 distributed as explained in "Income,
Distributions and Reinvestment - Distributions" in this Prospectus, Part B.
3. NET CAPITAL
<TABLE>
<S> <C>
Cost of 3,959 units at Date of Deposit .....................$ 4,114,964
Less sales charge .......................................... 185,172
-----------
Net amount applicable to Holders ........................... 3,929,792
Redemptions of units - net cost of 1,041 units redeemed
less redemption amounts (principal)....................... (101,108)
Realized gain on securities sold or redeemed ............... 116,025
Principal distributions .................................... (42,295)
Unrealized appreciation of investments...................... 358,913
-----------
Net capital applicable to Holders ..........................$ 4,261,327
===========
</TABLE>
4. INCOME TAXES
As of August 31, 1998, unrealized appreciation of investments, based on
cost for Federal income tax purposes, aggregated $358,913, all of which
related to appreciated securities. The cost of investment securities for
Federal income tax purposes was $3,892,710 at August 31, 1998.
D - 15.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (MICHIGAN TRUST) (INSURED)
PORTFOLIO
As of August 31, 1998
<TABLE>
<CAPTION>
Rating of Optional
Portfolio No. and Title of Issues Face Redemption
Securities (1) (4) Amount Coupon Maturities(3) Provisions(3) Cost Value(2)
---------- --------- ----------- ----------- ------------ ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Dearborn, MI, Econ. Dev. Corp., Hosp. AAA $ 535,000 6.950 % 2021(5) 08/15/01 $ 541,431 $ 591,416
Rev. Bonds (Oakwood Obligated Grp.), @ 102.000
Ser. A (MBIA Ins.)
2 Michigan State Hosp. Fin. Auth., Hosp. AAA 515,000 6.625 2010(5) 06/01/00 510,844 540,554
Rev. Rdfg. Bonds (Mid Michigan @ 100.000
Obligated Grp.), Ser. 1989 (MBIA Ins.)
3 Michigan Strategic Fund Ltd. Oblig. AAA 750,000 6.950 2021 09/01/01 760,313 819,030
Rfdg. Rev. Bonds (The Detroit Edison @ 102.000
Co. Poll. Ctl. Bonds Proj.) Coll.
Ser. 1991 CC (Financial Guaranty Ins.)
4 Romulus Cmnty. Schools, Cnty. of Wayne, AAA 580,000 6.750 2020(5) 05/01/01 582,257 634,079
MI, 1991 School Bldg. and Site Bonds, @ 102.000
Ser. I (FSA Ins.)
5 City of Saginaw Hosp. Fin. Auth., MI, AAA 750,000 6.750 2017 07/01/01 750,000 813,233
Hosp. Rev. Bonds, Ser. 1991 D @ 102.000
(MBIA Ins.)
6 City of Warren Bldg. Auth., Cnty. of AAA 385,000 6.000 2016(5) 11/01/00 352,421 410,614
Macomb, MI, Bldg. Auth. Bonds (Sr. @ 102.000
Hsg.), Ser. 1990 (FSAM Ins.)
7 Charter Cnty. of Wayne, MI, Arpt. Rev. AAA 30,000 6.750 2019(5) 12/01/01 30,119 33,249
Bonds (Detroit Metro. Wayne Cnty. @ 102.000
Arpt.), Sub. Lien, Ser. 1991 A
(MBIA Ins.)
8 Board of Trustees of Western Michigan AAA 375,000 6.500 2021(5) 07/15/01 365,325 409,448
Univ., Gen. Rev. Bonds, Ser. 1991 A @ 102.000
(AMBAC INS.)
--------- --------- ---------
TOTAL $ 3,920,000 $ 3,892,710 $ 4,251,623
========= ========= =========
See Notes to Portfolios on page D - 22.
</TABLE>
D - 16.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (NEW YORK TRUST)
STATEMENT OF CONDITION
As of August 31, 1998
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
at value (cost $ 8,655,904 )(Note 1)......... $ 9,264,849
Accrued interest ............................... 113,587
Cash - income .................................. 31,938
Cash - principal ............................... 32,985
-----------
Total trust property ......................... 9,443,359
LESS LIABILITY - Accrued Sponsors' fees .......... 2,552
-----------
NET ASSETS, REPRESENTED BY:
9,794 units of fractional undivided
interest outstanding (Note 3)................$ 9,297,834
Undistributed net investment income ............ 142,973 $ 9,440,807
----------- ===========
UNIT VALUE ($ 9,440,807 / 9,794 units )........... $ 963.94
===========
</TABLE>
See Notes to Financial Statements.
D - 17.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (NEW YORK TRUST)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended August 31,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income ........................$ 619,225 $ 666,963 $ 780,448
Trustee's fees and expenses ............ (9,506) (10,044) (11,392)
Sponsors' fees ......................... (3,898) (4,027) (4,263)
------------------------------------------------
Net investment income .................. 605,821 652,892 764,793
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain on
securities sold or redeemed .......... 34,524 53,892 171,376
Unrealized depreciation
of investments ....................... (110,728) (22,887) (277,771)
------------------------------------------------
Net realized and unrealized
gain (loss) on investments ........... (76,204) 31,005 (106,395)
------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ..............$ 529,617 $ 683,897 $ 658,398
================================================
</TABLE>
See Notes to Financial Statements.
D - 18.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (NEW YORK TRUST)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended August 31,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
Net investment income ..................$ 605,821 $ 652,892 $ 764,793
Realized gain on
securities sold or redeemed .......... 34,524 53,892 171,376
Unrealized depreciation
of investments ....................... (110,728) (22,887) (277,771)
------------------------------------------------
Net increase in net assets
resulting from operations ............ 529,617 683,897 658,398
------------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income ................................ (606,650) (653,106) (769,686)
Principal .............................. (35,600) (27,691) (1,171,071)
------------------------------------------------
Total distributions .................... (642,250) (680,797) (1,940,757)
------------------------------------------------
SHARE TRANSACTIONS:
Redemption amounts - income ............ (10,511) (13,862) (12,068)
Redemption amounts - principal ......... (719,311) (912,576) (913,163)
------------------------------------------------
Total share transactions ............... (729,822) (926,438) (925,231)
------------------------------------------------
NET DECREASE IN NET ASSETS ............... (842,455) (923,338) (2,207,590)
NET ASSETS AT BEGINNING OF YEAR .......... 10,283,262 11,206,600 13,414,190
------------------------------------------------
NET ASSETS AT END OF YEAR ................$ 9,440,807 $10,283,262 $11,206,600
================================================
PER UNIT:
Income distributions during
year .................................$ 58.98 $ 59.35 $ 64.14
================================================
Principal distributions during
year .................................$ 3.41 $ 2.49 $ 99.28
================================================
Net asset value at end of
year .................................$ 963.94 $ 974.72 $ 974.49
================================================
TRUST UNITS:
Redeemed during year ................... 756 950 877
Outstanding at end of year ............. 9,794 10,550 11,500
================================================
</TABLE>
See Notes to Financial Statements.
D - 19.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (NEW YORK TRUST)
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 conformity with generally
accepted accounting principles.
(A) Securities are stated at value as determined by the
Evaluator based on bid side evaluations for the securities.
See "How to Sell Units - Trustee's Redemption of Units"
in this Prospectus, Part B.
(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 distributed as explained in "Income,
Distributions and Reinvestment - Distributions" in this Prospectus, Part B.
3. NET CAPITAL
<TABLE>
<S> <C>
Cost of 9,794 units at Date of Deposit .....................$10,155,043
Less sales charge .......................................... 456,976
-----------
Net amount applicable to Holders ........................... 9,698,067
Redemptions of units - net cost of 4,706 units redeemed
less redemption amounts (principal)....................... (184,636)
Realized gain on securities sold or redeemed ............... 471,197
Principal distributions .................................... (1,295,739)
Unrealized appreciation of investments...................... 608,945
-----------
Net capital applicable to Holders ..........................$ 9,297,834
===========
</TABLE>
4. INCOME TAXES
As of August 31, 1998, unrealized appreciation of investments, based on
cost for Federal income tax purposes, aggregated $608,945, all of which
related to appreciated securities. The cost of investment securities for
Federal income tax purposes was $8,655,904 at August 31, 1998.
D - 20.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES 9I (NEW YORK TRUST) (INSURED)
PORTFOLIO
As of August 31, 1998
<TABLE>
<CAPTION>
Rating of Optional
Portfolio No. and Title of Issues Face Redemption
Securities (1) (4) Amount Coupon Maturities(3) Provisions(3) Cost Value(2)
---------- --------- ----------- ----------- ------------ ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Metro. Trans. Auth., NY, Transit Fac. AAA $ 1,355,000 5.500 % 2015 Currently $ 1,162,766 $ 1,355,705
Rev. Bonds, Ser. G (MBIA Ins.)
2 The City of New York G.O. Bonds, Fiscal AAA 125,000 7.000 2014(5) 06/01/01 127,992 137,239
1991 Ser. B (AMBAC Ins.) @ 101.500
65,000 7.000 2014 06/01/01 66,555 70,846
@ 101.500
3 New York City Mun. Wtr. Fin. Auth., AAA 1,660,000 7.500 2019(5) 06/15/00 1,760,298 1,792,966
Wtr. and Swr. Sys. Rev. Bonds, Ser. A @ 101.500
(Financial Guaranty Ins.)
4 Dormitory Auth. of the State of New AAA 70,000 7.250 2015(5) 05/15/00 72,890 75,459
York, State Univ. Educl. Fac. Rev. @ 102.000
Bonds, Ser. 1989 B
(Financial Guaranty Ins.)
5 Triborough Bridge and Tunnel Auth., NY, AAA 955,000 6.875 2015 01/01/01 960,444 1,032,260
Spec. Oblig. Rfdg. Bonds, Ser. 1991 B @ 102.000
(Financial Guaranty Ins.)
6 Dormitory Auth. of the State of New AAA 1,110,000 6.750 2015 07/01/01 1,118,813 1,209,822
York (Mt. Sinai Sch. of Medicine), Ins. @ 102.000
Rev. Bonds, Ser. 1991 (MBIA Ins.)
7 New York State Med. Care Facs. Fin. Agy AAA 700,000 7.200 2020 11/01/00 727,055 757,288
(North Shore Univ. Hosp.), Mtge. Proj. @ 102.000
Rev. Bonds, 1990 Ser. A (MBIA Ins.)
8 New York State Urban Dev. Corp., Corr. AAA 1,270,000 7.500 2020(5) 01/01/00 1,344,461 1,357,528
Cap. Fac. Rev. Bonds, Ser. 1 (FSA Ins.) @ 102.000
9 Triborough Bridge and Tunnel Auth., NY, AAA 1,000,000 7.100 2010 01/01/01 1,031,180 1,086,100
Special Oblig. Rdfg. Bonds, Ser. 1991 B @ 102.000
(AMBAC Ins.)
10 Commonwealth of Puerto Rico, Pub. Imp. AAA 425,000 3.000 2006 Currently 283,450 389,636
Rfdg. Bonds, Ser. 1987 (MBIA Ins.)
<S> <C> <C> <C> <C> <C> <C> <C>
--------- --------- ---------
TOTAL $ 8,735,000 $ 8,655,904 $ 9,264,849
========= ========= =========
See Notes to Portfolios on page D - 22.
</TABLE>
D - 21.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 9I (ARIZONA, COLORADO,
MICHIGAN AND NEW YORK TRUSTS)
NOTES TO PORTFOLIOS
As of August 31, 1998
<TABLE><CAPTION>
<S> <C>
(1) The ratings of the bonds are by Standard & Poor's Ratings Group, or by Moody's
Investors Service, Inc. if followed by "(m)", or by Fitch Investors Service,
Inc. if followed by "(f)"; "NR" indicates that this bond is not currently rated
by any of the above-mentioned rating services. These ratings have been furnished
by the Evaluator but not confirmed with the rating agencies. See "Description of
Ratings" in Part B of this Prospectus.
(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. The tax effect on
Holders of redemptions and related distributions is described under "Taxes"
in this Prospectus, Part B.
(4) All securities are insured, either on an individual basis or by portfolio
insurance, by a municipal bond insurance company which has been assigned
"AAA" claims paying ability by Standard & Poor's. Accordingly, Standard &
Poor's has assigned a "AAA" rating to the securities. Securities covered by
portfolio insurance are rated "AAA" only as long as they remain in the Trust.
See "Risk Factors - Bonds Backed by Letters of Credit or Insurance" in this
Prospectus, Part B.
(5) Bonds with an aggregate face amount of $ 655,000 of the Arizonia Trust,
$ 1,415,000 of the Colorado Trust, $ 2,420,000 of the Michigan Trust and
$ 3,125,000 of the New York Trust have been pre-refunded and are expected
to be called for redemption on the optional redemption provision dates shown.
</TABLE>
D - 22.
<PAGE>
Defined
Asset FundsSM
HAVE QUESTIONS ? MUNICIPAL INVESTMENT TRUST FUND
Request the most MULTISTATE SERIES--9I
recent free Information (A Unit Investment Trust)
Supplement that gives more ---------------------------------------
details about the Fund, This Prospectus does not contain
by calling: complete information about the
The Chase Manhattan Bank investment company filed with the
1-800-323-1508 Securities and Exchange Commission in
Washington, D.C. under the:
o Securities Act of 1933 (file no.
33-42204) and
o Investment Company Act of 1940 (file
no. 811-1777).
TO OBTAIN COPIES AT PRESCRIBED RATES--
WRITE: Public Reference Section of the
Commission
450 Fifth Street, N.W., Washington,
D.C. 20549-6009
CALL: 1-800-SEC-0330.
VISIT: http://www.sec.gov.
---------------------------------------
No person is authorized to give any
information or representations about
this Fund not contained in this
Prospectus or the Information
Supplement, and you should not rely on
any other information.
---------------------------------------
When units of this Fund are no longer
available, this Prospectus may be used
as a preliminary prospectus for a
future series, but some of the
information in this Prospectus will be
changed for that series.
Units of any future series may not be
sold nor may offers to buy be accepted
until that series has become effective
with the Securities and Exchange
Commission. No units can be sold in any
State where a sale would be illegal.
14017--11/98
