<PAGE>
DEFINED ASSET FUNDSSM
- --------------------------------------------
- ----------------------------------
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES--27
(A UNIT INVESTMENT TRUST)
O CALIFORNIA, NEW YORK AND VIRGINIA PORTFOLIOS
O PORTFOLIOS OF 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 April 30, 1999.
<PAGE>
- --------------------------------------------------------------------------------
Def ined Asset FundsSM
Defined Asset FundsSM is America's oldest and largest family of unit investment
trusts, with over $160 billion sponsored over the last 28 years. Defined Asset
Funds has been a leader in unit investment trust research and product
innovation. Our family of Funds helps investors work toward their financial
goals with a full range of quality investments, including municipal, corporate
and government bond portfolios, as well as domestic and international equity
portfolios.
Defined Asset Funds offer a number of advantages:
o 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 JANUARY 31, 1999, THE
EVALUATION DATE.
CONTENTS
PAGE
-----------
California Insured Portfolio--
Risk/Return Summary.................................. 3
New York Insured Portfolio-- Risk/Return Summary........ 6
Virginia Portfolio--Risk/Return Summary................. 9
What You Can Expect From Your Investment................ 13
Monthly Income....................................... 13
Return Figures....................................... 13
Records and Reports.................................. 13
The Risks You Face...................................... 14
Interest Rate Risk................................... 14
Call Risk............................................ 14
Reduced Diversification Risk......................... 14
Liquidity Risk....................................... 14
Concentration Risk................................... 14
State Concentration Risk............................. 15
Bond Quality Risk.................................... 16
Insurance Related Risk............................... 16
Litigation and Legislation Risks..................... 16
Selling or Exchanging Units............................. 16
Sponsors' Secondary Market........................... 17
Selling Units to the Trustee......................... 17
Exchange Option...................................... 17
How The Fund Works...................................... 18
Pricing.............................................. 18
Evaluations.......................................... 18
Income............................................... 18
Expenses............................................. 18
Portfolio Changes.................................... 19
Fund Termination..................................... 19
Certificates......................................... 19
Trust Indenture...................................... 20
Legal Opinion........................................ 20
Auditors............................................. 21
Sponsors............................................. 21
Trustee.............................................. 21
Underwriters' and Sponsors' Profits 21
Public Distribution.................................. 21
Code of Ethics....................................... 21
Year 2000 Issues..................................... 22
Taxes................................................... 22
Supplemental Information................................ 24
Financial Statements.................................... D-1
2
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CALIFORNIA 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 11 long-term tax-exempt
municipal bonds with an aggregate face amount of
$7,645,000.
o 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 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 12%
/ / Hospital/Health Care 16%
/ / Lease Rental Appropriation 9%
/ / Municipal Water/Sewer Utilities 24%
/ / Special Tax 13%
/ / Municipal Electric Utilities 14%
/ / Miscellaneous 12%
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 CALIFORNIA
SO IT IS LESS DIVERSIFIED THAN A NATIONAL FUND AND IS
SUBJECT TO RISKS PARTICULAR TO CALIFORNIA 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 insured
bonds of several different issuers.
The Fund is not appropriate for you if you want a
speculative investment that changes to take advantage of
market movements, if you 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 $ 4.30
Annual Income per unit: $ 51.71
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
Maximum Sales Fee (Load) on new
purchases (as a percentage of
$1,000 invested) 2.90%
Employees of some of the Sponsors and their affiliates may
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
-----------
$ 0.70
Trustee's Fee
$ 0.38
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
$ 0.17
Evaluator's Fee
$ 0.17
Other Operating Expenses
-----------
$ 1.42
TOTAL
The Sponsors historically paid updating expenses.
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
In the following chart we show past performance of prior
California Portfolios, which had investment objectives,
strategies and types of bonds substantially similar to
this Fund. These prior Series differed in that they
charged a higher sales fee. These prior California Series
were offered between June 22, 1988 and September 27, 1996
and were outstanding on March 31, 1999. OF COURSE, PAST
PERFORMANCE OF PRIOR SERIES IS NO GUARANTEE OF FUTURE
RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
Reflecting all expenses. For periods ended 3/31/99.
NO SALES
WITH SALES FEE FEE
1 YEAR 5 YEARS 1 YEAR 5 YEARS
- -------------------------------------------------------------------
High 4.57% 7.62% 7.61% 8.82%
Average 2.32 5.66 5.52 6.70
Low 0.40 4.27 3.11 5.10
- -------------------------------------------------------------------
Average
Sales fee 3.18% 5.10%
- -------------------------------------------------------------------
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 one unit.
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
UNIT PRICE PER UNIT $1,057.12
(as of January 31, 1999)
Unit price is based on the net asset value of the Fund plus
the sales fee. An amount equal to any principal cash, as
well as net accrued but undistributed interest on the unit,
is added to the unit price. An independent evaluator prices
the bonds at 3:30 p.m. Eastern time every business day.
Unit price changes every day with changes in the prices of
the bonds in the Fund.
10. HOW DO I SELL UNITS?
You may sell your units at any time to any Sponsor or the
Trustee for the net asset value determined at the close of
business on the date of sale. You will not pay any other
fee when you sell your units.
11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100% exempt
from regular federal income tax. Your income may also be
exempt from some California state and local personal income
taxes if you live in California.
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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NEW YORK 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
$7,680,000.
o 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 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 The Fund is concentrated in refunded bonds.
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 3%
/ / Hospital/Health Care 17%
/ / Lease Rental Appropriation 13%
/ / Municipal Water/Sewer Utilities 29%
/ / Refunded Bonds 26%
/ / Transit Authorities 12%
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN
HAPPEN FOR VARIOUS REASONS, INCLUDING:
o Rising interest rates, an issuer's worsening financial
condition or a drop in bond ratings can reduce the price of
your units.
o Because the Fund is concentrated in municipal water/sewer
utility bonds, adverse developments in 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 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.
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 insured
bonds of several different issuers.
The Fund is not appropriate for you if you want a
speculative investment that changes to take advantage of
market movements, if you 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 $ 4.49
Annual Income per unit: $ 53.95
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
Maximum Sales Fee (Load) on new
purchases (as a percentage of
$1,000 invested) 2.90%
Employees of some of the Sponsors and their affiliates may
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
$ 0.38
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
$ 0.17
Evaluator's Fee
$ 0.20
Other Operating Expenses
-----------
$ 1.44
TOTAL
The Sponsors historically paid updating expenses.
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
In the following chart we show past performance of prior
New York Portfolios, which had investment objectives,
strategies and types of bonds substantially similar to
this Fund. These prior Series differed in that they
charged a higher sales fee. These prior New York Series
were offered between January 14, 1988 and October 16, 1996
and were outstanding on March 31, 1999. OF COURSE, PAST
PERFORMANCE OF PRIOR SERIES IS NO GUARANTEE OF FUTURE
RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
Reflecting all expenses. For periods ended 3/31/99.
WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 10 YEARS 1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------
High 5.38% 7.23% 7.44% 7.65% 8.43% 8.04%
Average 2.37 5.33 7.17 5.49 6.33 7.76
Low -0.98 4.23 7.00 3.37 5.12 7.59
- -------------------------------------------------------------------
Average
Sales fee 3.11% 4.90% 5.77%
- -------------------------------------------------------------------
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.
7
<PAGE>
9. HOW DO I BUY UNITS?
The minimum investment is one unit.
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
UNIT PRICE PER UNIT $1,057.33
(as of Janury 31, 1999)
Unit price is based on the net asset value of the Fund plus
the sales fee. An amount equal to any principal cash, as
well as net accrued but undistributed interest on the unit,
is added to the unit price. An independent evaluator prices
the bonds at 3:30 p.m. Eastern time every business day.
Unit price changes every day with changes in the prices of
the bonds in the Fund.
10. HOW DO I SELL UNITS?
You may sell your units at any time to any Sponsor or the
Trustee for the net asset value determined at the close of
business on the date of sale. You will not pay any other
fee when you sell your units.
11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100% exempt
from regular federal income tax. 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. 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>
- --------------------------------------------------------------------------------
VIRGINIA 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
$3,030,000.
o 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 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 The Fund is concentrated in refunded bonds.
o 71% 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
/ / Hospital/Health Care 13%
/ / Municipal Water/Sewer Utilities 17%
/ / Refunded Bonds 51%
/ / Municipal Electric Utilities 12%
/ / Universities/Colleges 7%
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 VIRGINIA SO
IT IS LESS DIVERSIFIED THAN A NATIONAL FUND AND IS SUBJECT
TO RISKS PARTICULAR TO VIRGINIA 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 insured
bonds of several different issuers.
The Fund is not appropriate for you if you want a
speculative investment that changes to take advantage of
market movements, if you 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 $ 4.59
Annual Income per unit: $ 55.13
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
Maximum Sales Fee (Load) on new
purchases (as a percentage of
$1,000 invested) 2.90%
Employees of some of the Sponsors and their affiliates may
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
-----------
$ 0.70
Trustee's Fee
$ 0.38
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
$ 0.43
Evaluator's Fee
$ 0.37
Other Operating Expenses
-----------
$ 1.88
TOTAL
The Sponsors historically paid updating expenses.
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
In the following chart we show past performance of prior
Virginia 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 Virginia Series
were offered between October 26, 1988 and September 19,
1996 and were outstanding on March 31, 1999. OF COURSE,
PAST PERFORMANCE OF PRIOR SERIES IS NO GUARANTEE OF FUTURE
RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
Reflecting all expenses. For periods ended 3/31/99.
WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 1 YEAR 5 YEARS
- ---------------------------------------------------------------
High 4.15% 7.32% 6.85% 8.52%
Average 2.43 5.53 5.09 6.50
Low -0.04 4.33 3.32 5.13
- ---------------------------------------------------------------
Average
Sales fee 2.64% 4.77%
- -------------------------------------------------------------
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 one unit.
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
UNIT PRICE PER UNIT $1,062.76
(as of January 31, 1999)
Unit price is based on the net asset value of the Fund plus
the sales fee. An amount equal to any principal cash, as
well as net accrued but undistributed interest on the unit,
is added to the unit price. An independent evaluator prices
the bonds at 3:30 p.m. Eastern time every business day.
Unit price changes every day with changes in the prices of
the bonds in the Fund.
10. HOW DO I SELL UNITS?
You may sell your units at any time to any Sponsor or the
Trustee for the net asset value determined at the close of
business on the date of sale. You will not pay any other
fee when you sell your units.
11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100% exempt
from regular federal income tax. Your income may also be
exempt from some Virginia state and local personal income
taxes if you live in Virginia.
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>
- --------------------------------------------------------------------------------
TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS
FOR CALIFORNIA RESIDENTS
- --------------------------------------------------------------------------------
<TABLE><CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 1999* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 25,750 $ 0- 43,050 20.10 5.01 5.63 6.26 6.88 7.51 8.14 8.76 9.39 10.01
$ 25,751- 62,450 $ 43,051-104,050 34.70 6.13 6.89 7.66 8.42 9.19 9.95 10.72 11.48 12.25
$ 62,451-130,250 $104,051-158,550 37.42 6.39 7.19 7.99 8.79 9.59 10.39 11.19 11.98 12.78
$130,251-283,150 $158,551-283,150 41.95 6.89 7.75 8.61 9.47 10.34 11.20 12.06 12.92 13.78
OVER $283,151 OVER $283,151 45.22 7.30 8.21 9.13 10.04 10.95 11.87 12.78 13.69 14.60
</TABLE>
FOR NEW YORK CITY RESIDENTS
- --------------------------------------------------------------------------------
<TABLE><CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 1999* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 43,060 23.59 5.24 5.89 6.54 7.20 7.85 8.51 9.16 9.82 10.47
$ 0-25,750- 23.63 5.24 5.89 6.55 7.20 7.86 8.51 9.17 9.82 10.48
$ 25,751- 62,450 $ 43,051-104,050 35.35 6.19 6.96 7.73 8.51 9.28 10.05 10.83 11.60 12.37
$ 62,451-130,250 $104,051-158,550 38.04 6.46 7.26 8.07 8.88 9.68 10.49 11.30 12.11 12.91
$130,251-283,150 $158,551-283,150 42.53 6.96 7.83 8.70 9.57 10.44 11.31 12.18 13.05 13.92
OVER $283,151 OVER $283,151 45.77 7.38 8.30 9.22 10.14 11.06 11.98 12.91 13.83 14.75
</TABLE>
FOR NEW YORK STATE RESIDENTS
- --------------------------------------------------------------------------------
<TABLE><CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 1999* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 25,750 $ 0- 43,050 20.82 5.05 5.68 6.31 6.95 7.58 8.21 8.84 9.47 10.10
$ 25,751- 62,450 $ 43,051-104,050 32.93 5.96 6.71 7.46 8.20 8.95 9.69 10.44 11.18 11.93
$ 62,451-130,250 $104,051-158,550 35.73 6.22 7.00 7.78 8.56 9.34 10.11 10.69 11.67 12.45
$130,251-283,150 $158,551-283,150 40.38 6.71 7.55 8.39 9.23 10.06 10.90 11.74 12.58 13.42
OVER $283,151 OVER $283,151 43.74 7.11 8.00 8.89 9.78 10.66 11.55 12.44 13.33 14.22
</TABLE>
FOR VIRGINIA RESIDENTS
- --------------------------------------------------------------------------------
<TABLE><CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 1999* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 25,750 $ 0- 43,050 19.89 4.99 5.62 6.24 6.87 7.49 8.11 8.74 9.36 9.99
$ 25,751- 62,450 $ 43,051-104,050 32.14 5.89 6.63 7.37 8.10 8.84 9.58 10.32 11.05 11.79
$ 62,451-130,250 $104,051-158,550 34.97 6.15 6.92 7.69 8.46 9.23 10.00 10.76 11.53 12.30
$130,251-283,150 $158,551-283,150 39.68 6.63 7.46 8.29 9.12 9.95 10.78 11.60 12.43 13.26
OVER $283,151 OVER $283,151 43.07 7.03 7.90 8.78 9.66 10.54 11.42 12.30 13.17 14.05
</TABLE>
To compare the yield of a taxable security with the yield of a tax-free
security, find your taxable income and read across. The table incorporates 1999
federal and applicable State (and City) income tax rates and assumes that all
income would otherwise be taxed at the investor's highest tax rate. Yield
figures are for example only.
*Based upon net amount subject to federal income tax after deductions and
exemptions. This table does not reflect the possible effect of other tax
factors, such as alternative minimum tax, personal exemptions, the phase out of
exemptions, itemized deductions or the possible partial disallowance of
deductions. Consequently, investors are urged to consult their own tax advisers
in this regard.
12
<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.
13
<PAGE>
THE RISKS YOU FACE
INTEREST RATE RISK
Investing involves risks, including the risk that your investment will decline
in value if interest rates rise. Generally, bonds with longer maturities will
change in value more than bonds with shorter maturities. Bonds in the Fund are
more likely to be called when interest rates decline. This would result in early
returns of principal to you and may result in early termination of the Fund. Of
course, we cannot predict how interest rates may change.
CALL RISK
Many bonds can be prepaid or 'called' by the issuer before their stated
maturity.
For example, some bonds may be required to be called pursuant to mandatory
sinking fund provisions.
Also, an issuer might call its bonds during periods of falling interest rates,
if the issuer's bonds have a coupon higher than current market rates.
An issuer might call its bonds in extraordinary cases, including if:
o it no longer needs the money for the original purpose;
o the project is condemned or sold;
o the project is destroyed and insurance proceeds are used to redeem the
bonds;
o any related credit support expires and is not replaced; or
o interest on the bonds become taxable.
If the bonds are called, your income will decline and you may not be able to
reinvest the money you receive at as high a yield or as long a maturity. An
early call at par of a premium bond will reduce your return.
REDUCED DIVERSIFICATION RISK
If many investors sell their units, the Fund will have to sell bonds. This could
reduce the diversification of your investment and increase your share of Fund
expenses.
LIQUIDITY RISK
You can always sell back your units, but we cannot assure you that a liquid
trading market will always exist for the bonds in the portfolio, especially
since current law may restrict the Fund from selling bonds to any Sponsor. The
bonds will generally trade in the over-the-counter market. The value of the
bonds, and of your investment, may be reduced if trading in bonds is limited or
absent.
CONCENTRATION RISK
When a certain type of bond makes up 25% or more of the portfolio, it is said to
be 'concentrated' in that bond type, which makes the Portfolio less diversified.
Here is what you should know about the New York and Virginia Portfolios'
concentrations 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.
Here is what you should know about the New York Portfolio's concentration in
municipal water and sewer revenue bonds. The payment of interest and principal
of these bonds depends on the rates the utilities may charge, the demand for
their services and the cost of operating their business which includes the
expense of complying with environmental and
14
<PAGE>
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.
Changes to the portfolio from bond redemptions, maturities and sales may affect
the Fund's concentrations over time.
STATE CONCENTRATION RISK
CALIFORNIA RISKS
Generally
From the late 1980s through the early 1990s, an economic recession eroded
California's revenue base. At the same time rapid population growth caused State
expenditures to exceed budget appropriations.
o As a result California experienced a period of sustained budget imbalance.
o Since that time the California economy has improved and the extreme
budgetary pressures have begun to lessen.
State Government
The 1997-98 Budget Act allocated a State budget of approximately $66.9 Billion
and contains no tax increases or reductions. Despite this somewhat improved
state, California's budget is still subject to certain unforeseeable events. For
example:
o In December, 1994, Orange County and its investment pool filed for
bankruptcy. While a settlement has been reached, the full impact on the
State and Orange County is still unknown.
o California faces constant fluctuations in other expenses (including health
and welfare caseloads, property tax receipts, federal funding and natural
disaster relief) that will undoubtedly create new budgetary pressure and
reduce issuers' ability to pay their debts.
o California's general obligation bonds are currently rated A1 by Moody's and
A+ by Standard & Poor's.
Other Risks
Issuers' ability to make payments on bonds (and the remedies available to
bondholders) could also be adversely affected by the following constraints:
o Certain provisions of California's Constitution, laws and regulatory system
contain tax, spending and appropriations limits and prohibit certain new
taxes.
o Certain other California laws subject the users of bond proceeds to strict
rules and limits regarding revenue repayment.
o Bonds of healthcare institutions which are subject to the strict rules and
limits regarding reimbursement payments of California's Medi-Cal program
for health care services to welfare recipients and bonds secured by liens
on real property are two of the types of bonds affected by these
provisions.
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;
15
<PAGE>
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.
VIRGINIA RISKS
Virginia's economy is highly dependent on defense spending:
o there are major concentrations of defense installations in Northern
Virginia and the Hampton Roads area; and
o any substantial reductions in military spending, including base closings,
could hurt both the state and local economies.
The state's general obligations are rated AAA by Standard & Poor's and Aaa by
Moody's.
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
Some 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:
16
<PAGE>
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.
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.
17
<PAGE>
EXCHANGE OPTION
You may exchange units of certain Defined Asset Funds for units of this Fund at
a maximum exchange fee of 1.90%. You may exchange units of this Fund for units
of certain other Defined Asset Funds at a reduced sales fee if your investment
goals change. To exchange units, you should talk to your financial professional
about what funds are exchangeable, suitable and currently available.
Normally, an exchange is taxable and you must recognize any gain or loss on the
exchange. However, the IRS may try to disallow a loss if the portfolios of the
two funds are not materially different; you should consult your own tax adviser.
We may amend or terminate this exchange option at any time without notice.
HOW THE FUND WORKS
PRICING
The price of a unit includes interest accrued on the bonds, less expenses, from
the initial 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
18
<PAGE>
and administrative services and for any other expenses properly chargeable to
the Fund. Legal, typesetting, electronic filing and regulatory filing fees and
expenses associated with updating the Portfolio's registration statement yearly
are also now chargeable to the Portfolio. While this fee may exceed the amount
of these costs and expenses attributable to this Fund, the total of these fees
for all Series of Defined Asset Funds will not exceed the aggregate amount
attributable to all of these Series for any calendar year. The Fund also pays
the Evaluator's fees.
The Trustee's, Sponsors' and Evaluator's fees may be adjusted for inflation
without investors' approval.
The Sponsors will pay advertising and selling expenses at no charge to the Fund.
If Fund expenses exceed initial estimates, the Fund will owe the excess. The
Trustee has a lien on Fund assets to secure reimbursement of Fund expenses and
may sell bonds if cash is not available.
PORTFOLIO CHANGES
The Sponsors and Trustee are not liable for any default or defect in a bond; 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
19
<PAGE>
reduce the amount you receive as your final distribution.
CERTIFICATES
Certificates for units are issued on request. You may transfer certificates by
complying with the requirements for redeeming certificates, described above. You
can replace lost or mutilated certificates by delivering satisfactory indemnity
and paying the associated costs.
TRUST INDENTURE
The Fund is a 'unit investment trust' governed by a Trust Indenture, a contract
among the Sponsors, the Trustee and the Evaluator, which sets forth their duties
and obligations and your rights. A copy of the Indenture is available to you on
request to the Trustee. The following summarizes certain provisions of the
Indenture.
The Sponsors and the Trustee may amend the Indenture without your consent:
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.
20
<PAGE>
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 Citigroup
Inc.)
388 Greenwich Street--23rd Floor,
New York, NY 10013
DEAN WITTER REYNOLDS INC. (a principal operating subsidiary of Morgan Stanley
Dean Witter & Co.)
Two World Trade Center--59th Floor,
New York, NY 10048
PRUDENTIAL SECURITIES INCORPORATED (an
indirect wholly-owned subsidiary of the
Prudential Insurance Company of America)
One New York Plaza
New York, NY 10292
PAINEWEBBER INCORPORATED (a wholly-owned subsidiary of PaineWebber Group Inc.)
1285 Avenue of the Americas,
New York, NY 10019
Each Sponsor is a Delaware corporation and it, or its predecessor, has acted as
sponsor to many unit investment trusts. As a registered broker-dealer each
Sponsor buys and sells securities (including investment company shares) for
others (including investment companies) and participates as an underwriter in
various selling groups.
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.
21
<PAGE>
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. The Year 2000 Problem may adversely affect the issuers of the securities
contained in the Portfolio, but we cannot predict whether any impact will be
material to the Portfolio as a whole.
TAXES
The following summary describes some of the important income tax consequences of
holding units. It assumes that you are not a dealer, financial institution,
insurance company or other investor with special circumstances. 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
22
<PAGE>
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 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.
CALIFORNIA TAXES
In the opinion of O'Melveny & Myers LLP, Los Angeles, California, special
counsel on California tax matters:
Under the income tax laws of the State of California, the Trust will not be
taxed as a corporation and you will be considered to own directly your share of
each bond of the Trust. If you are a California taxpayer, your share of the
income from the bonds of the Trust will not be tax-exempt in California except
for California personal income tax purposes and only to the extent that the
income is earned on bonds that are exempt for such purposes. If you are a
California taxpayer and all or part of your share of a bond is disposed of (for
example, when a bond is sold, exchanged or redeemed at maturity or you sell or
exchange your units), you will recognize gain or loss for California tax
purposes. Depending on where you live, your income from the Trust may be subject
to state and local taxation. You should consult your tax advisor in this regard.
23
<PAGE>
VIRGINIA TAXES
In the opinion of Hunton & Williams, Richmond, Virginia, special counsel on
Virginia tax matters:
Under the income tax laws of the State of Virginia, the Virginia Trust will not
be taxed as a corporation. If you are a Virginia taxpayer, your income from the
Virginia Trust will not be tax-exempt in Virginia except to the extent that the
income is attributable to either (i) interest earned on bonds that are tax-
exempt for Virginia purposes or (ii) profits from the sale of certain Virginia
bonds that have been issued under Virginia legislation specifically exempting
all income from those bonds. If, at the time of your death, you either are a
Virginia resident or, in certain cases, are not a resident of the United States,
your units may be subject to Virginia estate tax. You should consult your tax
adviser in these matters.
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.
24
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (CALIFORNIA, NEW YORK AND
VIRGINIA TRUSTS)
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders
of Defined Asset Funds - Municipal Investment Trust Fund,
Multistate Series - 27 (California, New York and Virginia
Trusts):
We have audited the accompanying statements of condition of
Defined Asset Funds - Municipal Investment Trust Fund,
Multistate Series - 27 (California, New York and Virginia
Trusts), including the portfolios, as of January 31, 1999
and the related statements of operations and of changes in
net assets for the years ended January 31, 1999, 1998 and
1997. 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 January
31, 1999, 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 - 27 (California,
New York and Virginia Trusts) at January 31, 1999 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.
March 10, 1999
D - 1.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (CALIFORNIA TRUST)
STATEMENT OF CONDITION
As of January 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
{ 20} at value (cost $ 7,552,123 )(Note 1)......... $ 7,917,245
{ 36} Accrued interest ............................... 128,440
{ 32} Cash - income .................................. 33,088
{ 34} Cash - principal ............................... 12
-----------
{ 40} Total trust property ......................... 8,078,785
LESS LIABILITIES:
{ 50} Income advance from Trustee..................... $ 75,130
{143} Accrued Sponsors' fees ......................... 299 75,429
----------- -----------
NET ASSETS, REPRESENTED BY:
{ 80} 7,677 units of fractional undivided
{ 80} interest outstanding (Note 3)................ 7,917,257
{105} Undistributed net investment income ............ 86,099 $ 8,003,356
----------- ===========
{130}UNIT VALUE ($ 8,003,356 / 7,677 units )........... $ 1,042.51
===========
</TABLE>
See Notes to Financial Statements.
D - 2.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (CALIFORNIA TRUST)
STATEMENTS OF OPERATIONS
<TABLE><CAPTION>
Years Ended January 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
{ 10} Interest income ........................ $ 421,629 $ 437,046 $ 440,026
{ 20} Trustee's fees and expenses ............ (8,422) (9,081) (8,870)
{ 30} Sponsors' fees ......................... (3,066) (3,006) (2,967)
------------------------------------------------
{ 40} Net investment income .................. 410,141 424,959 428,189
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain (loss) on
{ 50} securities sold or redeemed .......... 11,116 (378)
Unrealized appreciation (depreciation)
{ 60} of investments ....................... 126,167 509,564 (152,298)
------------------------------------------------
Net realized and unrealized
{ 70} gain (loss) on investments ........... 137,283 509,186 (152,298)
------------------------------------------------
NET INCREASE IN NET ASSETS
{ 80} RESULTING FROM OPERATIONS .............. $ 547,424 $ 934,145 $ 275,891
================================================
</TABLE>
See Notes to Financial Statements.
{PAGE} D - 3.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (CALIFORNIA TRUST)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
Years Ended January 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
{ 10} Net investment income .................. $ 410,141 $ 424,959 $ 428,189
Realized gain (loss) on
{ 20} securities sold or redeemed .......... 11,116 (378)
Unrealized appreciation (depreciation)
{ 30} of investments ....................... 126,167 509,564 (152,298)
------------------------------------------------
Net increase in net assets
{ 40} resulting from operations ............ 547,424 934,145 275,891
------------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
{ 50} Income ................................ (410,657) (425,112) (428,206)
{ 60} Principal .............................. (15,135) (7,687)
------------------------------------------------
{ 70} Total distributions .................... (425,792) (432,799) (428,206)
------------------------------------------------
SHARE TRANSACTIONS:
{ 82} Redemption amounts - income ............ (3,799) (2,175)
{ 83} Redemption amounts - principal ......... (380,256) (199,426)
------------------------------------------------
{ 84} Total share transactions ............... (384,055) (201,601)
------------------------------------------------
{ 90}NET INCREASE (DECREASE) IN NET ASSETS..... (262,423) 299,745 (152,315)
{100}NET ASSETS AT BEGINNING OF YEAR .......... 8,265,779 7,966,034 8,118,349
------------------------------------------------
{110}NET ASSETS AT END OF YEAR ................ $ 8,003,356 $ 8,265,779 $ 7,966,034
================================================
PER UNIT:
Income distributions during
{120} year ................................. $ 51.79 $ 51.86 $ 51.91
================================================
Principal distributions during
{130} year ................................. $ 1.96 $ 0.95
=====================================
Net asset value at end of
{140} year ................................. $ 1,042.51 $ 1,026.93 $ 965.70
================================================
TRUST UNITS:
{ 83} Redeemed during year ................... 372 200
{150} Outstanding at end of year ............. 7,677 8,049 8,249
================================================
</TABLE>
See Notes to Financial Statements.
D - 4.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (CALIFORNIA 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.
(B) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.
(C) Interest income is recorded as earned.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and applicable
expenses, are also distributed periodically.
3. NET CAPITAL
<TABLE>
<CAPTION>
<S> <C>
{ 8} {Original Units and Unit Cost at Date of Deposit ........... 8,500 8,794,455 }
{ 10} Cost of 7,677 units at Date of Deposit ..................... $ 7,942,945
{ 20} Less sales charge .......................................... 357,441
-----------
{ 25} Net amount applicable to Holders ........................... { 988.0818028} 7,585,504
{ 31} Redemptions of units - net cost of 823 units redeemed
{143} less redemption amounts (principal)....................... (15,563)
{ 40} Realized gain on securities sold or redeemed ............... 8,944
{ 50} Principal distributions .................................... (26,750)
{ 70} Unrealized appreciation of investments...................... 365,122
-----------
{ 80} Net capital applicable to Holders .......................... $ 7,917,257
===========
</TABLE>
4. INCOME TAXES
As of January 31, 1999, unrealized appreciation of investments, based on
cost for Federal income tax purposes, aggregated $365,122, all of which related
to appreciated securities. The cost of investment securities for Federal income
tax purposes was $7,552,123 at January 31, 1999.
D - 5.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (CALIFORNIA TRUST) (INSURED)
PORTFOLIO
As of January 31, 1999
<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 Anaheim, CA, Community Ctr. AAA $ 300,000 5.500 % 2014 08/01/02 $ 302,520 $ 321,234
Auth., Cert. of Participation (1992 {032540HK5 } @ 102.000
Convention Ctr. Financing Proj.)
(MBIA Ins.)
2 Cnty. of Orange, CA, Orange Cnty. Pub. AAA 385,000 5.500 2019 06/01/02 386,348 396,789
Fac. Corp., Rfdg. Cert. of Participa- {684228HK8 } @ 100.000
tion (Juvenile Justice Ctr. Fac.)
(AMBAC Ins.)
3 City and Cnty. of San Francisco, CA, AAA 405,000 5.500 2015 10/01/02 408,430 421,143
Swr. Rev. Rfdg. Bonds, Ser. 1992 {797654HS2 } @ 102.000
(AMBAC Ins.)
4 California Statewide Comm. Dev. Auth., AAA 905,000 5.500 2014 10/01/02 911,652 958,169
Lease Rev. Bonds (City of Oakland Conv. {13077LAM6 } @ 100.000
Centers Proj.), Ser. 1992 (AMBAC Ins.)
5 Three Valleys Mun. Wtr. Dist., Los AAA 1,085,000 5.000 2014 11/01/03 1,036,522 1,104,205
Angeles Cnty., CA, Rfdg. Rev. Cert. of {885763AM4 } @ 102.000
Participation (Three Valleys Mun. Wtr.
Dist. Fin. Corp.), Ser. 1993
(Financial Guaranty Ins.)
6 State of California, Var. Purpose G.O. AAA 945,000 5.000 2022 11/01/02 889,321 945,397
Bonds (MBIA Ins.) {130627BH4 } @ 102.000
7 California Health Facs. Fin. Auth., AAA 1,250,000 5.500 2014 08/01/03 1,259,813 1,319,750
Hosp. Rev. Bonds (Marin General {13033JY30 } @ 100.000
Hospital Ser. 1993A (FSA Ins.)
8 Redevelopment Agy. of the City of AAA 915,000 5.500 2022 12/01/02 918,843 950,045
Indian Wells, CA, Consolidated {45455CBY3 } @ 102.000
Whitewater Proj., Area Rfdg. Tax
Allocation Bonds, Ser. 1992
(MBIA Ins.)
</TABLE>
D - 6.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (CALIFORNIA TRUST) (INSURED)
PORTFOLIO
As of January 31, 1999
<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>
9 Transmission Agency of Northern AAA $ 940,000 5.250 % 2020 05/01/03 $ 919,940 $ 957,973
California, California-Oregon {664850CY8 } @ 102.000
Transmission Proj., Rev. Rfdg. Bonds,
Ser. 1993 A (MBIA Ins.)
145,000 5.500 2014 05/01/03 145,626 155,224
{664850CX0 } @ 102.000
10 West Sacramento Fin. Auth., CA, Rev. AAA 370,000 5.500 2015 08/01/02 373,108 387,316
Bonds (W. Sys. Imp. Proj.), Ser. 1992 {955639AY5 } @ 102.000
(Financial Guaranty Ins.)
--------- --------- ---------
TOTAL $ 7,645,000 $ 7,552,123 $ 7,917,245
========= ========= =========
See Notes to Portfolios on page D - 19.
</TABLE>
D - 7.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (NEW YORK TRUST)
STATEMENT OF CONDITION
As of January 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
{ 20} at value (cost $ 7,763,425 )(Note 1)......... $ 8,041,049
{ 36} Accrued interest ............................... 70,640
{ 32} Cash - income .................................. 53,865
{ 34} Cash - principal ............................... 5,994
-----------
{ 40} Total trust property ......................... 8,171,548
LESS LIABILITIES:
{ 50} Income advance from Trustee..................... $ 28,239
{143} Accrued Sponsors' fees ......................... 301 28,540
----------- -----------
NET ASSETS, REPRESENTED BY:
{ 80} 7,746 units of fractional undivided
{ 80} interest outstanding (Note 3)................ 8,047,043
{105} Undistributed net investment income ............ 95,965 $ 8,143,008
----------- ===========
{130}UNIT VALUE ($ 8,143,008 / 7,746 units )........... $ 1,051.25
===========
</TABLE>
See Notes to Financial Statements.
D - 8.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (NEW YORK TRUST)
STATEMENTS OF OPERATIONS
<TABLE><CAPTION>
Years Ended January 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
{ 10} Interest income ........................ $ 452,824 $ 492,052 $ 495,910
{ 20} Trustee's fees and expenses ............ (8,752) (9,767) (9,544)
{ 30} Sponsors' fees ......................... (3,253) (3,229) (3,199)
------------------------------------------------
{ 40} Net investment income .................. 440,819 479,056 483,167
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain (loss) on
{ 50} securities sold or redeemed .......... 18,755 281 (2,535)
Unrealized appreciation (depreciation)
{ 60} of investments ....................... 87,475 543,862 (262,076)
------------------------------------------------
Net realized and unrealized
{ 70} gain (loss) on investments ........... 106,230 544,143 (264,611)
------------------------------------------------
NET INCREASE IN NET ASSETS
{ 80} RESULTING FROM OPERATIONS .............. $ 547,049 $ 1,023,199 $ 218,556
================================================
</TABLE>
See Notes to Financial Statements.
D - 9.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (NEW YORK TRUST)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
Years Ended January 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
{ 10} Net investment income .................. $ 440,819 $ 479,056 $ 483,167
Realized gain (loss) on
{ 20} securities sold or redeemed .......... 18,755 281 (2,535)
Unrealized appreciation (depreciation)
{ 30} of investments ....................... 87,475 543,862 (262,076)
------------------------------------------------
Net increase in net assets
{ 40} resulting from operations ............ 547,049 1,023,199 218,556
------------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
{ 50} Income ................................ (442,583) (479,118) (483,041)
{ 60} Principal .............................. (41,960) (5,158) (3,276)
------------------------------------------------
{ 70} Total distributions .................... (484,543) (484,276) (486,317)
------------------------------------------------
SHARE TRANSACTIONS:
{ 82} Redemption amounts - income ............ (10,123) (2,278) (528)
{ 83} Redemption amounts - principal ......... (956,865) (182,390) (44,331)
------------------------------------------------
{ 84} Total share transactions ............... (966,988) (184,668) (44,859)
------------------------------------------------
{ 90}NET INCREASE (DECREASE) IN NET ASSETS..... (904,482) 354,255 (312,620)
{100}NET ASSETS AT BEGINNING OF YEAR .......... 9,047,490 8,693,235 9,005,855
------------------------------------------------
{110}NET ASSETS AT END OF YEAR ................ $ 8,143,008 $ 9,047,490 $ 8,693,235
================================================
PER UNIT:
Income distributions during
{120} year ................................. $ 54.10 $ 54.28 $ 54.32
================================================
Principal distributions during
{130} year ................................. $ 5.27 $ 0.59 $ 0.37
================================================
Net asset value at end of
{140} year ................................. $ 1,051.25 $ 1,042.82 $ 981.73
================================================
TRUST UNITS:
{ 83} Redeemed during year ................... 930 179 45
{150} Outstanding at end of year ............. 7,746 8,676 8,855
================================================
</TABLE>
See Notes to Financial Statements.
D - 10.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (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.
(B) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.
(C) Interest income is recorded as earned.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and applicable
expenses, are also distributed periodically.
3. NET CAPITAL
<TABLE>
<CAPTION>
<S> <C>
{ 8} {Original Units and Unit Cost at Date of Deposit ........... 9,000 9,526,863 }
{ 10} Cost of 7,746 units at Date of Deposit ..................... $ 8,199,453
{ 20} Less sales charge .......................................... 368,942
-----------
{ 25} Net amount applicable to Holders ........................... {1,010.9102763} 7,830,511
{ 31} Redemptions of units - net cost of 1,254 units redeemed
{143} less redemption amounts (principal)....................... (14,052)
{ 40} Realized gain on securities sold or redeemed ............... 9,771
{ 50} Principal distributions .................................... (56,811)
{ 70} Unrealized appreciation of investments...................... 277,624
-----------
{ 80} Net capital applicable to Holders .......................... $ 8,047,043
===========
</TABLE>
4. INCOME TAXES
As of January 31, 1999, unrealized appreciation of investments, based on
cost for Federal income tax purposes, aggregated $277,624, all of which related
to appreciated securities. The cost of investment securities for Federal income
tax purposes was $7,763,425 at January 31, 1999.
D - 11.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (NEW YORK TRUST) (INSURED)
PORTFOLIO
As of January 31, 1999
<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 New York State Thruway Auth., Gen. Rev. AAA $ 1,145,000 5.500 % 2023(6) 01/01/02 $ 1,152,878 $ 1,210,666
Bonds, Ser. A (Financial Guaranty Ins.) {650009DS9 } @ 100.000
2 New York City, NY, Mun. Wtr. Fin. AAA 295,000 5.750 2018 06/15/02 299,876 308,712
Auth., Wtr. and Swr. Sys. Rev. Bonds, {649706XG8 } @ 101.500
Fiscal 1993, Ser. A (AMBAC Ins.)
3 Albany Mun. Water Fin. Auth., NY, Wtr. AAA 30,000 5.500 2022 12/01/03 30,271 31,316
& Swr. Sys. Rev. Bonds, Ser. 1993 A {012443CK1 } @ 102.000
(Financial Guaranty Ins.)
4 Metro. Trans. Auth., NY, Trans. Fac. AAA 910,000 5.500 2011 07/01/03 918,054 977,786
Rev. Bonds, Ser. M {592598TK2 } @ 101.500
(Financial Guaranty Ins.)
5 New York City, NY, Mun. Fin. Auth., AAA 835,000 5.750 2018 06/15/02 848,803 873,811
Wtr. and Swr. Sys. Rev. Bonds, Fiscal {649706XJ2 } @ 101.500
1993 Ser. A (Financial Guaranty Ins.)
6 Suffolk Cnty. Water Auth., NY, Water AAA 1,035,000 5.625 2016 06/01/02 1,054,365 1,085,146
Sys. Rev. Bonds, Ser. 1992 B Rfdg. {864779J61 } @ 102.000
(AMBAC Ins.)
7 Dorm. Auth. of the State of New York, AAA 1,000,000 5.750 2022 07/01/02 1,020,810 1,041,450
Ins. Rev. Bonds, Upstate Cmnty. {649832T36 } @ 102.000
Colleges, 1992 A Issue
(Connie Lee Ins.)
8 Triborough Bridge and Tunnel Auth., NY, AAA 895,000 5.500 2017(6) 01/01/02 898,034 946,328
Spec. Oblig. Bonds, Ser. 1992 {896033NT0 } @ 100.000
(AMBAC Ins.)
AAA 235,000 5.500 2017 01/01/02 235,797 240,003
{896033PC5 } @ 100.000
</TABLE>
D - 12.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (NEW YORK TRUST) (INSURED)
PORTFOLIO
As of January 31, 1999
<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>
9 New York State Med. Care Fac. Fin. AAA $ 1,300,000 5.500 % 2021 02/01/02 $ 1,304,537 $ 1,325,831
Agy., Mental Hlth. Svcs. Fac. Imp. Rev. {64988KXS1 } @ 100.000
Bonds, Ser. 1992 A
(Financial Guaranty Ins.)
--------- --------- ---------
TOTAL $ 7,680,000 $ 7,763,425 $ 8,041,049
========= ========= =========
See Notes to Portfolios on page D - 19.
</TABLE>
D - 13.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (VIRGINIA TRUST)
STATEMENT OF CONDITION
As of January 31, 1999
<TABLE><CAPTION>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
{ 20} at value (cost $ 3,022,752 )(Note 1)......... $ 3,178,774
{ 36} Accrued interest ............................... 22,410
{ 32} Cash - income .................................. 16,170
{ 34} Cash - principal ............................... 3,331
-----------
{ 40} Total trust property ......................... 3,220,685
{ 51}LESS LIABILITY - Accrued Sponsors' fees .......... 102
-----------
NET ASSETS, REPRESENTED BY:
{ 80} 3,034 units of fractional undivided
{ 80} interest outstanding (Note 3)................ $ 3,182,105
{105} Undistributed net investment income ............ 38,478 $ 3,220,583
----------- ===========
{130}UNIT VALUE ($ 3,220,583 / 3,034 units )........... $ 1,061.50
===========
</TABLE>
See Notes to Financial Statements.
D - 14.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (VIRGINIA TRUST)
STATEMENTS OF OPERATIONS
<TABLE><CAPTION>
Years Ended January 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
{ 10} Interest income ........................ $ 187,676 $ 188,961 $ 192,550
{ 20} Trustee's fees and expenses ............ (4,866) (5,336) (5,039)
{ 30} Sponsors' fees ......................... (1,222) (1,218) (1,206)
------------------------------------------------
{ 40} Net investment income .................. 181,588 182,407 186,305
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain (loss) on
{ 50} securities sold or redeemed .......... 9,377 (1,901)
Unrealized appreciation (depreciation)
{ 60} of investments ....................... 49,786 159,384 (79,484)
------------------------------------------------
Net realized and unrealized
{ 70} gain (loss) on investments ........... 59,163 157,483 (79,484)
------------------------------------------------
NET INCREASE IN NET ASSETS
{ 80} RESULTING FROM OPERATIONS .............. $ 240,751 $ 339,890 $ 106,821
================================================
</TABLE>
See Notes to Financial Statements.
D - 15.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (VIRGINIA TRUST)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
Years Ended January 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
{ 10} Net investment income .................. $ 181,588 $ 182,407 $ 186,305
Realized gain (loss) on
{ 20} securities sold or redeemed .......... 9,377 (1,901)
Unrealized appreciation (depreciation)
{ 30} of investments ....................... 49,786 159,384 (79,484)
------------------------------------------------
Net increase in net assets
{ 40} resulting from operations ............ 240,751 339,890 106,821
------------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
{ 50} Income ................................ (181,730) (182,380) (186,271)
{ 60} Principal .............................. (1,491) (1,806)
------------------------------------------------
{ 70} Total distributions .................... (183,221) (184,186) (186,271)
------------------------------------------------
SHARE TRANSACTIONS:
{ 82} Redemption amounts - income ............ (3,012) (962)
{ 83} Redemption amounts - principal ......... (262,173) (67,057)
------------------------------------------------
{ 84} Total share transactions ............... (265,185) (68,019)
------------------------------------------------
{ 90}NET INCREASE (DECREASE) IN NET ASSETS..... (207,655) 87,685 (79,450)
{100}NET ASSETS AT BEGINNING OF YEAR .......... 3,428,238 3,340,553 3,420,003
------------------------------------------------
{110}NET ASSETS AT END OF YEAR ................ $ 3,220,583 $ 3,428,238 $ 3,340,553
================================================
PER UNIT:
Income distributions during
{120} year ................................. $ 55.52 $ 55.44 $ 55.57
================================================
Principal distributions during
{130} year ................................. $ 0.46 $ 0.55
=====================================
Net asset value at end of
{140} year ................................. $ 1,061.50 $ 1,043.92 $ 996.59
================================================
TRUST UNITS:
{ 83} Redeemed during year ................... 250 68
{150} Outstanding at end of year ............. 3,034 3,284 3,352
================================================
</TABLE>
See Notes to Financial Statements.
D - 16.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (VIRGINIA 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.
(B) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.
(C) Interest income is recorded as earned.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and applicable
expenses, are also distributed periodically.
3. NET CAPITAL
<TABLE>
<CAPTION>
<S> <C>
{ 8} {Original Units and Unit Cost at Date of Deposit ........... 3,400 3,563,496 }
{ 10} Cost of 3,034 units at Date of Deposit ..................... $ 3,179,896
{ 20} Less sales charge .......................................... 143,083
-----------
{ 25} Net amount applicable to Holders ........................... {1,000.9271589} 3,036,813
{ 31} Redemptions of units - net cost of 366 units redeemed
{143} less redemption amounts (principal)....................... (6,612)
{ 40} Realized gain on securities sold or redeemed ............... 3,470
{ 50} Principal distributions .................................... (7,588)
{ 70} Unrealized appreciation of investments...................... 156,022
-----------
{ 80} Net capital applicable to Holders .......................... $ 3,182,105
===========
</TABLE>
4. INCOME TAXES
As of January 31, 1999, unrealized appreciation of investments, based on
cost for Federal income tax purposes, aggregated $156,022, all of which related
to appreciated securities. The cost of investment securities for Federal income
tax purposes was $3,022,752 at January 31, 1999.
D - 17.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (VIRGINIA TRUST)
PORTFOLIO
As of January 31, 1999
<TABLE><CAPTION>
Rating Optional
Portfolio No. and Title of of Face Redemption
Securities Issues(1) Amount Coupon Maturities(3) Provisions(3) Cost Value(2)
---------- --------- ----------- ----------- ------------ ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Chesapeake Bay Bridge and Tunnel Dist., AAA $ 455,000 5.750 % 2025(6) 07/01/01 $ 457,958 $ 480,735
VA, Gen. Resolution Rev. Bonds, Rfdg. {165141AK8 } @ 100.000
Ser. 1991 (MBIA Ins.) (5)
2 Chesapeake Hosp. Auth., VA, Hosp. Fac. AAA 400,000 5.250 2018 07/01/03 383,744 405,640
Rfdg. Rev. Bonds (Chesapeake Gen. {165324CE2 } @ 102.000
Hosp.), Ser. 1993 (MBIA Ins.) (5)
3 Ind. Dev. Auth. of Loudoun Cnty., VA, A1(m) 220,000 6.250 2022 05/15/02 228,978 236,150
Univ. Fac. Rev. Rfdg. Bonds (The George {545907AN7 } @ 102.000
Washington Univ.), Ser. 1992
4 Fairfax Cnty., VA, Wtr. Auth., Wtr. AA 500,000 5.750 2029 04/01/02 501,720 519,750
Rfdg. Rev. Bonds, Ser. 1992 {303891MB8 } @ 100.000
(MBIA Ins.) (5)
5 Peninsula Ports Auth. of Virginia, Aa2(m) 295,000 6.250 2021(6) 07/01/02 305,526 320,346
Hlth. Sys. Rev. and Rfdg. Bonds (River- {707164BB4 } @ 100.000
side Hlth. Sys. Proj.), Ser. 1992 A
6 Prince William Cnty., VA, Service AAA 380,000 6.000 2029(6) 07/01/01 388,721 403,685
Auth., Wtr. & Ser. Sys. Rev. Bonds {741765AS0 } @ 100.000
Ser. 1991 (Financial Guaranty Ins.)(5)
7 Richmond Metro. Auth. VA, Expwy. Rev. AAA 430,000 5.750 2022(6) 07/15/02 434,627 461,708
and Rfdg. Bonds, VA, Ser. 1992 A {765418CC0 } @ 100.000
(Financial Guaranty Ins.) (5)
8 Puerto Rico Elec. Pwr. Auth., Pwr. Rev. BBB+ 350,000 5.000 2012 07/01/99 321,478 350,760
Rfdg. Bonds, Ser. N {745268JR4 } @ 100.000
--------- --------- ---------
TOTAL $ 3,030,000 $ 3,022,752 $ 3,178,774
========= ========= =========
See Notes to Portfolios on page D - 19
</TABLE>
D - 18.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 27 (CALIFORNIA,
NEW YORK AND VIRGINIA TRUSTS)
NOTES TO PORTFOLIOS
As of January 31, 1999
<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.
(2) See Notes to Financial Statements.
(3) Optional redemption provisions, which may be exercised in whole or in part,
are initially at prices of par plus a premium, then subsequently at prices
declining to par. Certain securities may provide for redemption at par prior
or in addition to any optional or mandatory redemption dates or maturity, for
example, through the operation of a maintenance and replacement fund, if
proceeds are not able to be used as contemplated, the project is condemned or
sold or the project is destroyed and insurance proceeds are used to redeem
the securities. Many of the securities are also subject to mandatory sinking
fund redemption commencing on dates which may be prior to the date on which
securities may be optionally redeemed. Sinking fund redemptions are at par
and redeem only part of the issue. Some of the securities have mandatory
sinking funds which contain optional provisions permitting the issuer to
increase the principal amount of securities called on a mandatory redemption
date. The sinking fund redemptions with optional provisions may, and optional
refunding redemptions generally will, occur at times when the redeemed
securities have an offering side evaluation which represents a premium over
par. To the extent that the securities were acquired at a price higher than
the redemption price, this will represent a loss of capital when compared
with the Public Offering Price of the Units when acquired. Distributions will
generally be reduced by the amount of the income which would otherwise have
been paid with respect to redeemed securities and there will be distributed
to Holders any principal amount and premium received on such redemption after
satisfying any redemption requests for Units received by the Fund. The estimated
current return may be affected by redemptions.
(4) 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 "AAA" ratings to the securities. Securities covered by
portfolio insurance are rated "AAA" only as long as they remain in this Trust.
(5) Insured by the indicated municipal bond insurance company.
(6) Bonds with aggregate face amount of $ 2,040,000 in the New York Trust and
$ 1,560,000 in the Virginia Trust have been pre-refunded and are expected to be
called for redemption on the optional redemption provision dates shown.
</TABLE>
D - 19.
<PAGE>
Defined
Asset FundsSM
HAVE QUESTIONS ? MUNICIPAL INVESTMENT TRUST FUND
Request the most MULTISTATE SERIES--27
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.
333-49297) 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.
14420--4/99
