<PAGE>
DEFINED ASSET FUNDS-REGISTERED TRADEMARK-
----------------------------------------------------
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES--48
(A UNIT INVESTMENT TRUST)
- CALIFORNIA, CONNECTICUT, MASSACHUSETTS AND
VIRGINIA PORTFOLIOS
- PORTFOLIOS OF LONG-TERM MUNICIPAL BONDS
- DESIGNED TO BE FREE OF REGULAR FEDERAL INCOME TAX
- EXEMPT FROM SOME STATE TAXES
- MONTHLY DISTRIBUTIONS
SPONSORS:
MERRILL LYNCH,
PIERCE, FENNER & SMITH
INCORPORATED -----------------------------------------------------
SALOMON SMITH BARNEY INC. The Securities and Exchange Commission has not
PRUDENTIAL SECURITIES approved or disapproved these Securities or passed
INCORPORATED upon the adequacy of this prospectus. Any
PAINEWEBBER INCORPORATED representation to the contrary is a criminal offense.
DEAN WITTER REYNOLDS INC. Prospectus dated December 22, 2000.
<PAGE>
--------------------------------------------------------------------------------
Defined Asset Funds-Registered Trademark-
Defined Asset Funds-Registered Trademark- is America's oldest and largest family
of unit investment trusts, with over $160 billion sponsored over the last 28
years. Defined Asset Funds has been a leader in unit investment trust research
and product innovation. Our family of Funds helps investors work toward their
financial goals with a full range of quality investments, including municipal,
corporate and government bond portfolios, as well as domestic and international
equity portfolios.
Defined Asset Funds offer a number of advantages:
- A Disciplined strategy of buying and holding with a long-term view is the
cornerstone of Defined Asset Funds.
- Fixed portfolio: Defined Funds follow a buy and hold investment strategy;
funds are not managed and portfolio changes are limited.
- Defined Portfolios: We choose the stocks and bonds in advance, so you know
what you're investing in.
- Professional research: Our dedicated research team seeks out stocks or
bonds appropriate for a particular fund's objectives.
- Ongoing supervision: We monitor each portfolio on an ongoing basis.
No matter what your investment goals, tolerance for risk or time horizon,
there's probably a Defined Asset Fund that suits your investment style. Your
financial professional can help you select a Defined Asset Fund that works best
for your investment portfolio.
THE FINANCIAL INFORMATION IN THIS PROSPECTUS IS AS OF SEPTEMBER 30, 2000, THE
EVALUATION DATE.
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
California Insured Portfolio--
Risk/Return Summary............................. 3
Connecticut Portfolio--
Risk/Return Summary............................. 6
Massachusetts Portfolio--
Risk/Return Summary............................. 9
Virginia Portfolio--
Risk/Return Summary............................. 12
What You Can Expect From Your Investment.......... 16
Monthly Income.................................. 16
Return Figures.................................. 16
Records and Reports............................. 16
The Risks You Face................................ 17
Interest Rate Risk.............................. 17
Call Risk....................................... 17
Reduced Diversification Risk.................... 17
Liquidity Risk.................................. 17
Concentration Risk.............................. 17
State Concentration Risk........................ 18
Bond Quality Risk............................... 21
Insurance Related Risk.......................... 22
Litigation and Legislation Risks................ 22
Selling or Exchanging Units....................... 22
Sponsors' Secondary Market...................... 22
Selling Units to the Trustee.................... 22
Exchange Option................................. 23
How The Fund Works................................ 23
Pricing......................................... 23
Evaluations..................................... 23
Income.......................................... 24
Expenses........................................ 24
Portfolio Changes............................... 24
Fund Termination................................ 25
Certificates.................................... 25
Trust Indenture................................. 25
Legal Opinion................................... 26
Auditors........................................ 26
Sponsors........................................ 26
Trustee......................................... 27
Underwriters' and Sponsors' Profits............. 27
Public Distribution............................. 27
Code of Ethics.................................. 27
Taxes............................................. 27
Supplemental Information.......................... 30
Financial Statements.............................. D-1
</TABLE>
2
<PAGE>
--------------------------------------------------------------------------------
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?
- The Fund plans to hold to maturity 7 long-term tax-exempt municipal bonds
with an aggregate face amount of $4,515,000.
- The Fund is a unit investment trust which means that, unlike a mutual fund,
the Portfolio is not managed.
- The bonds are rated AAA or Aaa by Standard & Poor's, Moody's or Fitch.
- Many of the bonds can be called at a premium declining over time to par
value. Some bonds may be called earlier at par for extraordinary reasons.
- 100% of the bonds are insured by insurance companies that guarantee timely
payments of principal and interest on the bonds (but not Fund units or the
market value of the bonds before they mature).
The Portfolio consists of municipal bonds of the following types:
<TABLE>
<CAPTION>
APPROXIMATE
PORTFOLIO
PERCENTAGE
<S> <C>
/ /Housing 14%
/ /Lease Rental 17%
/ /Municipal Water/Sewer Utilities 33%
/ /Refunded Bonds 19%
/ /Municipal Electric Utilities 17%
</TABLE>
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN HAPPEN FOR VARIOUS
REASONS, INCLUDING:
- Rising interest rates, an issuer's worsening financial condition or a drop in
bond ratings can reduce the price of your units.
- Because the Portfolio is concentrated in municipal water/sewer utility bonds,
adverse developments in this sector may affect the value of your units.
- Assuming no changes in interest rates, when you sell your units, they will
generally be worth less than your cost because your cost included a sales
fee.
- The Fund will receive early returns of principal if bonds are called or sold
before they mature. If this happens your income will decline and you may not
be able to reinvest the money you receive at as high a yield or as long a
maturity.
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
<TABLE>
<S> <C>
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: $4.14
Annual Income per unit: $49.76
THESE FIGURES ARE ESTIMATES DETERMINED ON THE EVALUATION
DAY; ACTUAL PAYMENTS MAY VARY.
</TABLE>
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.
<TABLE>
<S> <C>
INVESTOR FEES
Maximum Sales Fee (Load) on new
purchases (as a percentage of
$1,000 invested) 2.90%
</TABLE>
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:
<TABLE>
<CAPTION>
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
-------------- ------------
<S> <C>
Less than $100,000 2.90%
$100,000 to $249,999 2.65%
$250,000 to $499,999 2.40%
$500,000 to $999,999 2.15%
$1,000,000 and over 1.90%
Maximum Exchange Fee 1.90%
</TABLE>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
AMOUNT
PER UNIT
--------
<S> <C>
Trustee's Fee $0.70
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses) $0.50
Evaluator's Fee $0.19
Other Operating Expenses $0.40
-----
TOTAL $1.79
</TABLE>
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 after
1987 and were outstanding on September 30, 2000. OF COURSE, PAST PERFORMANCE
OF PRIOR SERIES IS NO GUARANTEE OF FUTURE RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
REFLECTING ALL EXPENSES. FOR PERIODS ENDED 9/30/00.
<TABLE>
<CAPTION>
WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 10 YEARS 1 YEAR 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------
High 6.78% 5.72% 6.21% 9.54% 6.91% 6.80%
Average 4.09 4.58 5.97 6.38 5.65 6.55
Low 1.45 2.71 5.77 2.90 3.45 6.26
----------------------------------------------------------------------------
Average
Sales fee 2.20% 5.22% 5.66%
----------------------------------------------------------------------------
</TABLE>
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.
<TABLE>
<S> <C>
UNIT PRICE PER UNIT $983.81
(as of September 30, 2000)
</TABLE>
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>
--------------------------------------------------------------------------------
CONNECTICUT 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 long term municipal revenue bonds.
2. WHAT ARE MUNICIPAL REVENUE BONDS?
Municipal revenue bonds are bonds issued by states, municipalities and public
authorities to finance the cost of buying, building or improving various
projects intended to generate revenue, such as airports, health care
facilities, housing and municipal electric, water and sewer utilities.
Generally, payments on these bonds depend solely on the revenues generated by
the projects, excise taxes or state appropriations, and are not backed by the
government's taxing power.
3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
- The Fund plans to hold to maturity 8 long-term tax-exempt municipal bonds
with an aggregate face amount of $3,180,000.
- The Fund is a unit investment trust which means that, unlike a mutual fund,
the Portfolio is not managed.
- When the bonds were initially deposited they were rated A or better by
Standard & Poor's, Moody's or Fitch. THE QUALITY OF THE BONDS MAY CURRENTLY
BE LOWER.
- 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.
- 45% 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:
<TABLE>
<CAPTION>
APPROXIMATE
PORTFOLIO
PERCENTAGE
<S> <C>
/ /Airports/Ports/Highways 11%
/ /General Obligation 28%
/ /Hospitals/Health Care 16%
/ /Municipal Water/Sewer Utilities 13%
/ /Special Tax 16%
/ /Municipal Electric Utilities 16%
</TABLE>
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN HAPPEN FOR VARIOUS
REASONS, INCLUDING:
- Rising interest rates, an issuer's worsening financial condition or a drop in
bond ratings can reduce the price of your units.
- Because the Portfolio is concentrated in general obligation bonds, adverse
developments in this sector may affect the value of your units.
- Assuming no changes in interest rates, when you sell your units, they will
generally be worth less than your cost because your cost included a sales
fee.
- The Fund will receive early returns of principal if bonds are called or sold
before they mature. If this happens your income will decline and you may not
be able to reinvest the money you receive at as high a yield or as long a
maturity.
ALSO, THE PORTFOLIO IS CONCENTRATED IN BONDS OF CONNECTICUT SO IT IS LESS
DIVERSIFIED THAN A NATIONAL FUND AND IS SUBJECT TO RISKS PARTICULAR TO
CONNECTICUT WHICH ARE BRIEFLY DESCRIBED UNDER STATE CONCENTRATION RISKS LATER
IN THIS PROSPECTUS.
6
<PAGE>
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want federally tax-free income. You will benefit from a
professionally selected and supervised portfolio whose risk is reduced by
investing in bonds of several different issuers.
The Fund is NOT appropriate for you if you want a speculative investment that
changes to take advantage of market movements, if you do not want a
tax-advantaged investment or if you cannot tolerate any risk.
DEFINING YOUR INCOME
<TABLE>
<S> <C>
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: $4.03
Annual Income per unit: $48.44
THESE FIGURES ARE ESTIMATES DETERMINED ON THE EVALUATION
DAY; ACTUAL PAYMENTS MAY VARY.
</TABLE>
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.
<TABLE>
<S> <C>
INVESTOR FEES
Maximum Sales Fee (Load) on new
purchases (as a percentage of
$1,000 invested) 2.90%
</TABLE>
Employees of some of the Sponsors and their affiliates may be charged a
reduced sales fee of no less than $5.00 per unit.
The maximum sales fee is reduced if you invest at least $100,000, as follows:
<TABLE>
<CAPTION>
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
-------------- ------------
<S> <C>
Less than $100,000 2.90%
$100,000 to $249,999 2.65%
$250,000 to $499,999 2.40%
$500,000 to $999,999 2.15%
$1,000,000 and over 1.90%
Maximum Exchange Fee 1.90%
</TABLE>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
AMOUNT
PER UNIT
--------
<S> <C>
Trustee's Fee $0.70
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses) $0.50
Evaluator's Fee $0.29
Other Operating Expenses $0.49
-----
TOTAL $1.98
</TABLE>
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 CONNECTICUT
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 Connecticut Series were offered after
1987 and were outstanding on September 30, 2000. OF COURSE, PAST PERFORMANCE
OF PRIOR SERIES IS NO GUARANTEE OF FUTURE RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
REFLECTING ALL EXPENSES. FOR PERIODS ENDED 9/30/00.
<TABLE>
<CAPTION>
WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 1 YEAR 5 YEARS
<S> <C> <C> <C> <C>
--------------------------------------------------------
High 5.49% 4.91% 7.05% 6.09%
Average 3.53 3.93 5.39 4.92
Low 2.64 2.75 4.09 3.74
--------------------------------------------------------
Average
Sales fee 1.72% 4.94%
--------------------------------------------------------
</TABLE>
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.
<TABLE>
<S> <C>
UNIT PRICE PER UNIT $984.16
(as of September 30, 2000)
</TABLE>
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 Connecticut state and local personal
income taxes if you live in Connecticut.
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>
--------------------------------------------------------------------------------
MASSACHUSETTS 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 long term municipal revenue bonds.
2. WHAT ARE MUNICIPAL REVENUE BONDS?
Municipal revenue bonds are bonds issued by states, municipalities and public
authorities to finance the cost of buying, building or improving various
projects intended to generate revenue, such as airports, health care
facilities, housing and municipal electric, water and sewer utilities.
Generally, payments on these bonds depend solely on the revenues generated by
the projects, excise taxes or state appropriations, and are not backed by the
government's taxing power.
3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
- The Fund plans to hold to maturity 6 long-term tax-exempt municipal bonds
with an aggregate face amount of $2,500,000.
- The Fund is a unit investment trust which means that, unlike a mutual fund,
the Portfolio is not managed.
- When the bonds were initially deposited they were rated A or better by
Standard & Poor's, Moody's or Fitch. THE QUALITY OF THE BONDS MAY CURRENTLY
BE LOWER.
- 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.
- 60% 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:
<TABLE>
<CAPTION>
APPROXIMATE
PORTFOLIO
PERCENTAGE
<S> <C>
/ /Airports/Ports/Highways 12%
/ /General Obligation 20%
/ /Hospitals/Health Care 60%
/ /Housing 8%
</TABLE>
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN HAPPEN FOR VARIOUS
REASONS, INCLUDING:
- Rising interest rates, an issuer's worsening financial condition or a drop in
bond ratings can reduce the price of your units.
- Because the Portfolio is concentrated in hospital/health care bonds, adverse
developments in this sector may affect the value of your units.
- Assuming no changes in interest rates, when you sell your units, they will
generally be worth less than your cost because your cost included a sales
fee.
- The Fund will receive early returns of principal if bonds are called or sold
before they mature. If this happens your income will decline and you may not
be able to reinvest the money you receive at as high a yield or as long a
maturity.
ALSO, THE PORTFOLIO IS CONCENTRATED IN BONDS OF MASSACHUSETTS SO IT IS LESS
DIVERSIFIED THAN A NATIONAL FUND AND IS SUBJECT TO RISKS PARTICULAR TO
MASSACHUSETTS WHICH ARE BRIEFLY DESCRIBED UNDER STATE CONCENTRATION RISKS
LATER IN THIS PROSPECTUS.
9
<PAGE>
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want federally tax-free income. You will benefit from a
professionally selected and supervised portfolio whose risk is reduced by
investing in bonds of several different issuers.
The Fund is NOT appropriate for you if you want a speculative investment that
changes to take advantage of market movements, if you do not want a
tax-advantaged investment or if you cannot tolerate any risk.
DEFINING YOUR INCOME
<TABLE>
<S> <C>
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: $4.15
Annual Income per unit: $49.81
THESE FIGURES ARE ESTIMATES DETERMINED ON THE EVALUATION
DAY; ACTUAL PAYMENTS MAY VARY.
</TABLE>
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.
<TABLE>
<S> <C>
INVESTOR FEES
Maximum Sales Fee (Load) on new
purchases (as a percentage of
$1,000 invested) 2.90%
</TABLE>
Employees of some of the Sponsors and their affiliates may be charged a
reduced sales fee of no less than $5.00 per unit.
The maximum sales fee is reduced if you invest at least $100,000, as follows:
<TABLE>
<CAPTION>
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
-------------- ------------
<S> <C>
Less than $100,000 2.90%
$100,000 to $249,999 2.65%
$250,000 to $499,999 2.40%
$500,000 to $999,999 2.15%
$1,000,000 and over 1.90%
Maximum Exchange Fee 1.90%
</TABLE>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
AMOUNT
PER UNIT
--------
<S> <C>
Trustee's Fee $0.70
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses) $0.50
Evaluator's Fee $0.33
Other Operating Expenses $0.67
-----
TOTAL $2.20
</TABLE>
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 MASSACHUSETTS
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 Massachusetts Series were offered
between after 1987 and were outstanding on September 30, 2000. OF COURSE,
PAST PERFORMANCE OF PRIOR SERIES IS NO GUARANTEE OF FUTURE RESULTS OF THIS
FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
REFLECTING ALL EXPENSES. FOR PERIODS ENDED 9/30/00.
<TABLE>
<CAPTION>
WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 1 YEAR 5 YEARS
<S> <C> <C> <C> <C>
--------------------------------------------------------
High 5.67% 5.20% 7.88% 6.38%
Average 3.84 4.07 5.46 5.11
Low 2.45 2.68 3.23 3.45
--------------------------------------------------------
Average
Sales fee 1.58% 5.15%
--------------------------------------------------------
</TABLE>
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.
<TABLE>
<S> <C>
UNIT PRICE PER UNIT $964.23
(as of September 30, 2000)
</TABLE>
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 Massachusetts state and local
personal income taxes if you live in Massachusetts.
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.
11
<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 long term municipal revenue bonds.
2. WHAT ARE MUNICIPAL REVENUE BONDS?
Municipal revenue bonds are bonds issued by states, municipalities and public
authorities to finance the cost of buying, building or improving various
projects intended to generate revenue, such as airports, health care
facilities, housing and municipal electric, water and sewer utilities.
Generally, payments on these bonds depend solely on the revenues generated by
the projects, excise taxes or state appropriations, and are not backed by the
government's taxing power.
3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
- The Fund plans to hold to maturity 7 long-term tax-exempt municipal bonds
with an aggregate face amount of $2,875,000.
- The Fund is a unit investment trust which means that, unlike a mutual fund,
the Portfolio is not managed.
- When the bonds were initially deposited they were rated A or better by
Standard & Poor's, Moody's or Fitch. THE QUALITY OF THE BONDS MAY CURRENTLY
BE LOWER.
- 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.
- 17% 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:
<TABLE>
<CAPTION>
APPROXIMATE
PORTFOLIO
PERCENTAGE
<S> <C>
/ /Airports/Ports/Highways 11%
/ /Hospitals/Health Care 51%
/ /Housing 17%
/ /Lease Rental 4%
/ /Special Tax 17%
</TABLE>
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN HAPPEN FOR VARIOUS
REASONS, INCLUDING:
- Rising interest rates, an issuer's worsening financial condition or a drop in
bond ratings can reduce the price of your units.
- Because the Portfolio is concentrated in hospital/health care bonds, adverse
developments in this sector may affect the value of your units.
- Assuming no changes in interest rates, when you sell your units, they will
generally be worth less than your cost because your cost included a sales
fee.
- The Fund will receive early returns of principal if bonds are called or sold
before they mature. If this happens your income will decline and you may not
be able to reinvest the money you receive at as high a yield or as long a
maturity.
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.
12
<PAGE>
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want federally tax-free income. You will benefit from a
professionally selected and supervised portfolio whose risk is reduced by
investing in bonds of several different issuers.
The Fund is NOT appropriate for you if you want a speculative investment that
changes to take advantage of market movements, if you do not want a
tax-advantaged investment or if you cannot tolerate any risk.
DEFINING YOUR INCOME
<TABLE>
<S> <C>
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: $4.14
Annual Income per unit: $49.78
THESE FIGURES ARE ESTIMATES DETERMINED ON THE EVALUATION
DAY; ACTUAL PAYMENTS MAY VARY.
</TABLE>
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.
<TABLE>
<S> <C>
INVESTOR FEES
Maximum Sales Fee (Load) on new
purchases (as a percentage of
$1,000 invested) 2.90%
</TABLE>
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:
<TABLE>
<CAPTION>
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
-------------- ------------
<S> <C>
Less than $100,000 2.90%
$100,000 to $249,999 2.65%
$250,000 to $499,999 2.40%
$500,000 to $999,999 2.15%
$1,000,000 and over 1.90%
Maximum Exchange Fee 1.90%
</TABLE>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
AMOUNT
PER UNIT
--------
<S> <C>
Trustee's Fee $0.70
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses) $0.50
Evaluator's Fee $0.32
Other Operating Expenses $0.52
-----
TOTAL $2.04
</TABLE>
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 after 1987 and
were outstanding on September 30, 2000. OF COURSE, PAST PERFORMANCE OF PRIOR
SERIES IS NO GUARANTEE OF FUTURE RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
REFLECTING ALL EXPENSES. FOR PERIODS ENDED 9/30/00.
<TABLE>
<CAPTION>
WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 1 YEAR 5 YEARS
<S> <C> <C> <C> <C>
--------------------------------------------------------
High 5.98% 5.04% 7.68% 6.22%
Average 3.46 4.46 5.69 5.52
Low 2.26 3.65 3.80 4.53
--------------------------------------------------------
Average
Sales fee 2.08% 5.25%
--------------------------------------------------------
</TABLE>
NOTE: ALL RETURNS REPRESENT CHANGES IN UNIT PRICE WITH DISTRIBUTIONS REINVESTED
INTO THE MUNICIPAL FUND INVESTMENT ACCUMULATION PROGRAM.
8. IS THE FUND MANAGED?
Unlike a mutual fund, the Fund is not managed and bonds are not sold because
of market changes. Rather, experienced Defined Asset Funds financial analysts
regularly review the bonds in the Fund. The Fund may sell a bond if certain
adverse credit or other conditions exist.
13
<PAGE>
9. HOW DO I BUY UNITS?
The minimum investment is 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.
<TABLE>
<S> <C>
UNIT PRICE PER UNIT $970.74
(as of September 30, 2000)
</TABLE>
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. Income from this program will generally be
subject to state and local income taxes. FOR MORE COMPLETE INFORMATION ABOUT
THE PROGRAM, INCLUDING CHARGES AND FEES, ASK THE TRUSTEE FOR THE PROGRAM'S
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST. THE TRUSTEE MUST RECEIVE
YOUR WRITTEN ELECTION TO REINVEST AT LEAST 10 DAYS BEFORE THE RECORD DAY OF
AN INCOME PAYMENT.
EXCHANGE PRIVILEGES
You may exchange units of this Fund for units of certain other Defined Asset
Funds. You may also exchange into this Fund from certain other funds. We
charge a reduced sales fee on exchanges.
14
<PAGE>
--------------------------------------------------------------------------------
TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS
FOR CALIFORNIA RESIDENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 2000* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 3% 3.5% 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- 26,250 $ 0- 43,050 20.10 3.75 4.38 5.01 5.63 6.26 6.88 7.51 8.14 8.76 9.39 10.01
$ 26,251- 63,550 $ 43,851-105,950 34.70 4.59 5.36 6.13 6.89 7.66 8.42 9.19 9.95 10.72 11.48 12.25
$ 63,551-132,600 $105,951-161,450 37.42 4.79 5.59 6.39 7.19 7.99 8.79 9.59 10.39 11.19 11.98 12.78
$132,601-288,350 $161,451-288,350 41.95 5.17 6.03 6.89 7.75 8.61 9.47 10.34 11.20 12.06 12.92 13.78
OVER $288,350 OVER $288,350 45.22 5.48 6.39 7.30 8.21 9.13 10.04 10.95 11.87 12.78 13.69 14.60
</TABLE>
FOR CONNECTICUT RESIDENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 2000* 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>
$ 0- 25,750 $ 0- 43,050 18.83 4.93 5.54 6.16 6.78 7.39 8.01 8.62 9.24 9.86
$ 25,751- 62,450 $ 43,051-104,050 31.24 5.82 6.54 7.27 8.00 8.73 9.45 10.18 10.91 11.63
$ 62,451-130,250 $104,051-158,550 34.11 6.07 6.83 7.59 8.35 9.11 9.86 10.62 11.38 12.14
$130,251-283,150 $158,551-283,150 38.88 6.54 7.36 8.18 9.00 9.82 10.63 11.45 12.27 13.09
OVER $283,151 OVER $283,151 42.32 6.93 7.80 8.67 9.54 10.40 11.27 12.14 13.00 13.87
</TABLE>
FOR MASSACHUSETTS RESIDENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 2000* 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>
$ 0- 26,250 $ 0- 43,850 19.97 5.00 5.62 6.25 6.87 7.50 8.12 8.75 9.37 10.00
$ 26,251- 63,550 $ 43,851-105,950 32.21 5.90 6.64 7.38 8.11 8.85 9.59 10.33 11.06 11.80
$ 63,551-132,600 $105,951-161,450 35.04 6.16 6.93 7.70 8.47 9.24 10.01 10.78 11.54 12.31
$132,601-288,350 $161,451-288,350 39.74 6.64 7.47 8.30 9.13 9.96 10.79 11.62 12.45 13.28
OVER $288,350 OVER $288,350 43.13 7.03 7.91 8.79 9.67 10.55 11.43 12.31 13.19 14.07
</TABLE>
FOR VIRGINIA RESIDENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 2000* 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>
$ 0- 26,250 $ 0- 43,850 19.89 4.99 5.62 6.24 6.87 7.49 8.11 8.74 9.36 9.99
$ 26,251- 63,550 $ 43,851-105,950 32.14 5.89 6.63 7.37 8.10 8.84 9.58 10.32 11.05 11.79
$ 63,551-132,600 $105,951-161,450 34.97 6.15 6.92 7.69 8.46 9.23 10.00 10.76 11.53 12.30
$132,601-288,350 $161,451-288,350 39.68 6.63 7.46 8.29 9.12 9.95 10.78 11.60 12.43 13.26
OVER $288,350 OVER $288,350 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 2000
federal and applicable State income tax rates and assumes that all income would
otherwise be taxed at the investor's highest tax rate. Yield figures are for
example only.
*Based upon net amount subject to federal income tax after deductions and
exemptions. This table does not reflect the possible effect of other tax
factors, such as alternative minimum tax, personal exemptions, the phase out of
exemptions, itemized deductions or the possible partial disallowance of
deductions. Consequently, you should consult your own tax advisers in this
regard.
15
<PAGE>
WHAT YOU CAN EXPECT FROM YOUR INVESTMENT
MONTHLY INCOME
The Fund will pay you regular monthly income. Your monthly income may vary
because of:
- elimination of one or more bonds from the Fund's portfolio because of calls,
redemptions or sales;
- a change in the Fund's expenses; or
- the failure by a bond's issuer to pay interest.
Changes in interest rates generally will not affect your income because the
portfolio is fixed.
Along with your income, you will receive your share of any available bond
principal.
RETURN FIGURES
We cannot predict your actual return, which will vary with unit price, how long
you hold your investment and changes in the portfolio, interest income and
expenses.
ESTIMATED CURRENT RETURN equals the estimated annual cash to be received from
the bonds in the Fund less estimated annual Fund expenses, divided by the Unit
Price (including the maximum sales fee):
<TABLE>
<S> <C><C>
Estimated Annual - Estimated
Interest Income Annual Expenses
------------------------------------
Unit Price
</TABLE>
ESTIMATED LONG TERM RETURN is a measure of the estimated return over the
estimated life of the Fund. Unlike Estimated Current Return, Estimated Long Term
Return reflects maturities, discounts and premiums of the bonds in the Fund. It
is an average of the yields to maturity (or in certain cases, to an earlier call
date) of the individual bonds in the portfolio, adjusted to reflect the Fund's
maximum sales fee and estimated expenses. We calculate the average yield for the
portfolio by weighting each bond's yield by its market value and the time
remaining to the call or maturity date.
Yields on individual bonds depend on many factors including general conditions
of the bond markets, the size of a particular offering and the maturity and
quality rating of the particular issues. Yields can vary among bonds with
similar maturities, coupons and ratings.
These return quotations are designed to be comparative rather than predictive.
RECORDS AND REPORTS
You will receive:
- a monthly statement of income payments and any principal payments;
- a notice from the Trustee when new bonds are deposited in exchange or
substitution for bonds originally deposited;
- an annual report on Fund activity; and
- annual tax information. THIS WILL ALSO BE SENT TO THE IRS. YOU MUST REPORT THE
AMOUNT OF TAX-EXEMPT INTEREST RECEIVED DURING THE YEAR.
You may request:
- copies of bond evaluations to enable you to comply with federal and state tax
reporting requirements; and
- audited financial statements of the Fund.
You may inspect records of Fund transactions at the Trustee's office during
regular business hours.
16
<PAGE>
THE RISKS YOU FACE
INTEREST RATE RISK
Investing involves risks, including the risk that your investment will decline
in value if interest rates rise. Generally, bonds with longer maturities will
change in value more than bonds with shorter maturities. Bonds in the Fund are
more likely to be called when interest rates decline. This would result in early
returns of principal to you and may result in early termination of the Fund. Of
course, we cannot predict how interest rates may change.
CALL RISK
Many bonds can be prepaid or "called" by the issuer before their stated
maturity.
For example, some bonds may be required to be called pursuant to mandatory
sinking fund provisions.
Also, an issuer might call its bonds during periods of falling interest rates,
if the issuer's bonds have a coupon higher than current market rates.
An issuer might call its bonds in extraordinary cases, including if:
- it no longer needs the money for the original purpose;
- the project is condemned or sold;
- the project is destroyed and insurance proceeds are used to redeem the
bonds;
- any related credit support expires and is not replaced; or
- interest on the bonds become taxable.
If the bonds are called, your income will decline and you may not be able to
reinvest the money you receive at as high a yield or as long a maturity. An
early call at par of a premium bond will reduce your return.
REDUCED DIVERSIFICATION RISK
If many investors sell their units, the Fund will have to sell bonds. This could
reduce the diversification of your investment and increase your share of Fund
expenses.
LIQUIDITY RISK
You can always sell back your units, but we cannot assure you that a liquid
trading market will always exist for the bonds in the portfolio, especially
since current law may restrict the Fund from selling bonds to any Sponsor. The
bonds will generally trade in the over-the-counter market. The value of the
bonds, and of your investment, may be reduced if trading in bonds is limited or
absent.
CONCENTRATION RISK
When a certain type of bond makes up 25% or more of 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 Massachusetts and Viriginia Portfolios'
concentrations in hospital and health care bonds.
- payment for these bonds depends on revenues from private third-party payors
and government programs, including Medicare and Medicaid, which have
generally undertaken cost containment measures to limit payments to health
care providers;
- hospitals face increasing competition resulting from hospital mergers and
affiliations;
17
<PAGE>
- hospitals need to reduce costs as HMOs increase market penetration and
hospital supply and drug companies raise prices;
- hospitals and health care providers are subject to various legal claims by
patients and others and are adversely affected by increasing costs of
insurance; and
- many hospitals are aggressively buying physician practices and assuming risk
contracts to gain market share. If revenues do not increase accordingly,
this practice could reduce profits;
- Medicare is changing its reimbursement system for nursing homes. Many
nursing home providers are not sure how they will be treated. In many cases,
the providers may receive lower reimbursements and these would have to cut
expenses to maintain profitability; and
- most retirement/nursing home providers rely on entrance fees for operating
revenues. If people live longer than expected and turnover is lower than
budgeted, operating revenues would be adversely affected by less than
expected entrance fees.
Here is what you should know about the Connecticut Portfolio's concentration in
general obligation bonds.
- general obligation bonds are backed by the issuer's pledge of its full
faith, credit and taxing power;
- but the taxing power of any government issuer may be limited by provisions
of the state constitution or laws as well as political considerations; and
- an issuer's credit can be negatively affected by various factors, including
population decline that erodes the tax base, natural disasters, decline in
industry, limited access to capital markets or heavy reliance on state or
federal aid.
Here is what you should know about the California Portfolio's concentration in
municipal water and sewer revenue bonds. The payment of interest and principal
of these bonds depends on the rates the utilities may charge, the demand for
their services and the cost of operating their business which includes the
expense of complying with environmental and other energy and licensing laws and
regulations. The operating results of utilities are particularly influenced by:
- increases in operating and construction costs; and
- unpredicability of future usage requirements.
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.
- As a result California experienced a period of sustained budget imbalance.
- Since that time the California economy has improved markedly and the extreme
18
<PAGE>
budgetary pressures have begun to lessen.
STATE GOVERNMENT
The 1999-2000 Budget Act allocated a State budget of approximately $63.7 Billion
and contains no tax increases or reductions. Despite this somewhat improved
state, California's budget is still subject to certain unforeseeable events. For
example:
- In December, 1994, Orange County and its investment pool filed for
bankruptcy. While a settlement has been reached, the full impact on the
State and Orange County remains unknown.
- California faces constant fluctuations in other expenses (including health
and welfare caseloads, property tax receipts, federal funding and natural
disaster relief) that will undoubtedly create new budgetary pressure and
reduce ability to pay their debts.
- California's general obligation bonds are currently rated AA3 by Moody's and
AA- by Standard & Poor's.
OTHER RISKS
Issuers' ability to make payments on bonds (and the remedies available to
bondholders) could also be adversely affected by the following constraints:
- Certain provisions of California's Constitution, laws and regulatory system
contain tax, spending and appropriations limits and prohibit certain new
taxes.
- Certain other California laws subject the users of bond proceeds to strict
rules and limits regarding revenue repayment.
- Bonds of healthcare institutions which are subject to the strict rules and
limits regarding reimbursement payments of California's Medi-Cal program for
health care services to welfare recipients and bonds secured by liens on
real property are two of the types of bonds that could be affected by these
provisions.
CONNECTICUT RISKS
GENERALLY
Connecticut has experienced a variety of economic problems in the last several
years including:
- manufacturing, historically the state's most important activity, has
employed fewer and fewer people over the last 10 years;
- large cuts in defense spending threaten defense-related business, which has
traditionally represented a big part of the state's manufacturing activity;
and
- unemployment and poverty are high in certain parts of the state, even though
unemployment state-wide is below the national average.
STATE AND LOCAL GOVERNMENT
Connecticut's state and local governments have also experienced financial
difficulties for several years. For example:
- the state's General Fund had operating deficits for several years in the
late 1980s and early 1990s. Since 1991, however, the General Fund has had
operating surpluses;
- the state issued notes in 1991 to fund its accumulated deficit. The notes
were originally supposed to be paid by 1996,
19
<PAGE>
but they were rescheduled, so that they were repaid in 1999; and
- Connecticut has several of the nation's poorest and most financially
troubled cities, including Bridgeport, which filed for bankruptcy in 1991,
and its capital city of Hartford.
Local governments in Connecticut receive tax revenue only from taxes on real
estate and personal property, which makes it hard for them to raise additional
tax revenue. Both Connecticut and its cities depend heavily on federal aid, and
the cities also depend on a significant amount of state aid. Both the state and
its cities could be hurt by any future reduction in the amount of such aid.
Connecticut's general obligation bonds are rated AA by Standard & Poor's, Aa3 by
Moody's, and AA by Fitch.
MASSACHUSETTS RISKS
STATE BUDGET (JUNE 30 FISCAL)
By statute, the Legislature and the Governor must approve a balanced budget for
each fiscal year, and no supplementary appropriation bill may be approved by the
Governor if it will result in an unbalanced budget. However, this is a statutory
requirement that may be superseded by an appropriation act.
- Fiscal 1999 spending was approximately $21.151 billion and fiscal 2000
spending is estimated to be $21.259 billion.
- Tax revenues collected for fiscal year 1999 totaled approximately $14.291
billion and are estimated as of April 18, 2000, to be $15.458 billion for
fiscal year 2000.
- The Commonwealth of Massachusetts experienced budget surpluses for each of
fiscal years 1997, 1998 and 1999.
Certain legislation passed in recent years affects the taxing, spending and
borrowing power of Massachusetts and its local governments.
State law limits the rate at which tax revenue can grow, based on the average
growth of wages and salaries in the state:
- This limit could affect the State's ability to pay principal and interest on
its obligations, although the limit has not been reached from fiscal years
1994 to 1999, and it is not expected to be reached for fiscal 2000.
CAPITAL SPENDING
The State has maintained a five-year capital spending plan since 1992. The goal
is to limit the State's debt burden by controlling the relationship between
current capital spending and the issuance of debt.
- The plan is based on numerous assumptions including the level of third party
funding and federal funding for the Central Artery/Ted Williams Tunnel
project.
There is a limit on debt service in the Commonwealth requiring that no more than
10% of the total appropriations in any fiscal year may be expended for payment
of interest and principal on general obligation debt of the Commonwealth:
- This limit has not been reached from fiscal years 1994 to 1999 and is not
expected to be reached for fiscal 2000.
There is also a limit on the amount of outstanding direct bonds of the
20
<PAGE>
Commonwealth. The law provides that the limit for each subsequent fiscal year
shall be 105% of the previous fiscal year's limit. Since this law's inception in
1989, the limit has never been reached.
General obligations bonds of Massachusetts are currently rated Aa2 by Moody's,
AA-by Standard & Poor's and AA- by Fitch. There can be no assurance that such
ratings will continue.
OTHER CONSIDERATIONS
The Central Artery/Ted Williams Tunnel project has become the largest part of
the Commonwealth's capital spending, substantial funding for which is currently
being provided federally.
- The magnitude of the Central Artery/ Ted Williams Tunnel project has
resulted in the realignment of certain transportation assets in the
Commonwealth and the development of additional financing mechanisms to
support its completion.
- On February 1, 2000, the Massachusetts agency managing the Central Artery/
Ted Williams Tunnel project revised upward by approximately $1.4 billion its
estimate of the total expenditures to complete the project scheduled for
fiscal year 2005.
- A federal audit resulted which reported a current anticipated total cost of
the project of $13.4 to $13.6 billion versus the Commonwealth's revised
total of $13.1 billion. The Federal Highway Administration imposed limits on
the amount of federal funding of $8.549 billion as to which Congress has
concurred. All costs in excess of this amount must be met by other than
federal contributions. The Commonwealth adopted legislation providing
sources in the amount of $2.5 billion for funding the total estimated cost
overrun and also provided a revised finance plan for the project based on a
total cost of $13.513 billion.
- On May 8, 2000, the Commonwealth received notice that the Securities and
Exchange Commission is conducting a formal investigation of certain project
disclosures made in a 1999 bond prospectus.
- There can be no determination at this time as to any additional effects such
increased federal involvement may have on future federal funding of the
project, or the total expenditures which may be required ultimately to
complete the project.
VIRGINIA RISKS
Virginia's economy is highly dependent on defense spending:
- there are major concentrations of defense installations in Northern Virginia
and the Hampton Roads area; and
- 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.
21
<PAGE>
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:
- limiting real property taxes,
- reducing tax rates,
- imposing a flat or other form of tax, or
- exempting investment income from tax.
SELLING OR EXCHANGING UNITS
You can sell your units at any time for a price based on net asset value. Your
net asset value is calculated each business day by:
- ADDING the value of the bonds, net accrued interest, cash and any other Fund
assets;
- SUBTRACTING accrued but unpaid Fund expenses, unreimbursed Trustee advances,
cash held to buy back units or for distribution to investors and any other
Fund liabilities; and
- DIVIDING the result by the number of outstanding units.
Your net asset value when you sell may be more or less than your cost because of
sales fees, market movements and changes in the portfolio.
SPONSORS' SECONDARY MARKET
While we are not obligated to do so, we will buy back units at net asset value
without any other fee or charge. We may resell the units to other buyers or to
the Trustee. You should consult your financial professional for current market
prices to determine if other broker-dealers or banks are offering higher prices.
We have maintained the secondary market continuously for over 28 years, but we
could discontinue it without prior notice for any business reason.
SELLING UNITS TO THE TRUSTEE
Regardless of whether we maintain a secondary market, you can sell your units to
the Trustee at any time by sending the Trustee a letter (with any outstanding
certificates if you hold Unit certificates). You must properly endorse your
certificates (or execute a written transfer instrument with signatures
guaranteed by an eligible institution). Sometimes, additional documents are
needed such as a trust document, certificate of corporate authority, certificate
of death or appointment as executor, administrator or guardian.
Within seven days after your request and the necessary documents are received,
the
22
<PAGE>
Trustee will mail a check to you. Contact the Trustee for additional
information.
As long as we are maintaining a secondary market, the Trustee will sell your
units to us at a price based on net asset value. If there is no secondary
market, the Trustee may sell your units in the over-the-counter market for a
higher price, but it is not obligated to do so. In that case, you will receive
the net proceeds of the sale.
If the Fund does not have cash available to pay you for units you are selling,
the agent for the Sponsors will select bonds to be sold. Bonds will be selected
based on market and credit factors. These sales could be made at times when the
bonds would not otherwise be sold and may result in your receiving less than the
unit par value and also reduce the size and diversity of the Fund.
There could be a delay in paying you for your units:
- if the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- if the SEC determines that trading on the New York Stock Exchange is
restricted or that an emergency exists making sale or evaluation of the
bonds not reasonably practicable; and
- for any other period permitted by SEC order.
EXCHANGE OPTION
You may exchange units of certain Defined Asset Funds for units of this Fund at
a maximum exchange fee of 1.90%. You may exchange units of this Fund for units
of certain other Defined Asset Funds at a reduced sales fee if your investment
goals change. In addition, you may exchange into this Fund from certain other
Defined Asset Funds and unit trusts. To exchange units, you should talk to your
financial professional about what funds are exchangeable, suitable and currently
available.
Normally, an exchange is taxable and you must recognize any gain or loss on the
exchange. However, the IRS may try to disallow a loss if the portfolios of the
two funds are not materially different; you should consult your own tax adviser.
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
23
<PAGE>
prices for the bonds or comparable bonds. In the past, the difference between
bid and offer prices of publicly offered tax-exempt bonds has ranged from 0.5%
of face amount on actively traded issues to 3.5% on inactively traded issues;
the difference has averaged between 1 and 2%.
INCOME
The Trustee credits interest to an Income Account and other receipts to a
Capital Account. The Trustee may establish a Reserve Account by withdrawing from
these accounts amounts it considers appropriate to pay any material liability.
These accounts do not bear interest.
EXPENSES
The Trustee is paid monthly. It also benefits when it holds cash for the Fund in
non-interest bearing accounts. The Trustee may also receive additional amounts:
- to reimburse the Trustee for the Fund's operating expenses;
- for extraordinary services and costs of indemnifying the Trustee and the
Sponsors;
- costs of actions taken to protect the Fund and other legal fees and
expenses;
- expenses for keeping the Fund's registration statement current; and
- Fund termination expenses and any governmental charges.
The Sponsors are currently reimbursed up to 55 CENTS per $1,000 face amount
annually for providing portfolio supervisory, bookkeeping and administrative
services and for any other expenses properly chargeable to the Fund. Legal,
typesetting, electronic filing and regulatory filing fees and expenses
associated with updating the Portfolio's registration statement yearly are also
now chargeable to the Portfolio. While this fee may exceed the amount of these
costs and expenses attributable to this Fund, the total of these fees for all
Series of Defined Asset Funds will not exceed the aggregate amount attributable
to all of these Series for any calendar year. The Fund also pays the Evaluator's
fees.
The Trustee's, Sponsors' and Evaluator's fees may be adjusted for inflation
without investors' approval.
The Sponsors will pay advertising and selling expenses at no charge to the Fund.
If Fund expenses exceed initial estimates, the Fund will owe the excess. The
Trustee has a lien on Fund assets to secure reimbursement of Fund expenses and
may sell bonds if cash is not available.
PORTFOLIO CHANGES
The Sponsors and Trustee are not liable for any default or defect in a bond; 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 may affect the
composition of the portfolio. Units offered in the secondary
24
<PAGE>
market may not represent the same face amount of bonds that they did originally.
We decide whether or not to offer units for sale that we acquire in the
secondary market after reviewing:
- diversity of the portfolio;
- size of the Fund relative to its original size;
- ratio of Fund expenses to income;
- current and long-term returns;
- degree to which units may be selling at a premium over par; and
- cost of maintaining a current prospectus.
FUND TERMINATION
The Fund will terminate following the stated maturity or sale of the last bond
in the portfolio. The Fund may also terminate earlier with the consent of
investors holding 51% of the units or if total assets of the Fund have fallen
below 40% of the face amount of bonds deposited. We will decide whether to
terminate the Fund early based on the same factors used in deciding whether or
not to offer units in the secondary market.
When the Fund is about to terminate you will receive a notice, and you will be
unable to sell your units after that time. On or shortly before termination, we
will sell any remaining bonds, and you will receive your final distribution. Any
bond that cannot be sold at a reasonable price may continue to be held by the
Trustee in a liquidating trust pending its final sale.
You will pay your share of the expenses associated with termination, including
brokerage costs in selling bonds. This may reduce the amount you receive as your
final distribution.
CERTIFICATES
Certificates for units are issued on request. You may transfer certificates by
complying with the requirements for redeeming certificates, described above. You
can replace lost or mutilated certificates by delivering satisfactory indemnity
and paying the associated costs.
TRUST INDENTURE
The Fund is a "unit investment trust" governed by a Trust Indenture, a contract
among the Sponsors, the Trustee and the Evaluator, which sets forth their duties
and obligations and your rights. A copy of the Indenture is available to you on
request to the Trustee. The following summarizes certain provisions of the
Indenture.
The Sponsors and the Trustee may amend the Indenture without your consent:
- to cure ambiguities;
- to correct or supplement any defective or inconsistent provision;
- to make any amendment required by any governmental agency; or
- to make other changes determined not to be materially adverse to your best
interest (as determined by the Sponsors).
Investors holding 51% of the units may amend the Indenture. Every investor must
consent to any amendment that changes the 51% requirement. No amendment may
reduce your interest in the Fund without your written consent.
25
<PAGE>
The Trustee may resign by notifying the Sponsors. The Sponsors may remove the
Trustee without your consent if:
- it fails to perform its duties and the Sponsors determine that its
replacement is in your best interest; or
- it becomes incapable of acting or bankrupt or its affairs are taken over by
public authorities.
Investors holding 51% of the units may remove the Trustee. The Evaluator may
resign or be removed by the Sponsors and the Trustee without the consent of
investors. The resignation or removal of either becomes effective when a
successor accepts appointment. The Sponsors will try to appoint a successor
promptly; however, if no successor has accepted within 30 days after notice of
resignation, the resigning Trustee or Evaluator may petition a court to appoint
a successor.
Any Sponsor may resign as long as one Sponsor with a net worth of $2 million
remains and agrees to the resignation. The remaining Sponsors and the Trustee
may appoint a replacement. If there is only one Sponsor and it fails to perform
its duties or becomes bankrupt the Trustee may:
- remove it and appoint a replacement Sponsor;
- liquidate the Fund; or
- continue to act as Trustee without a Sponsor.
Merrill Lynch, Pierce, Fenner & Smith Incorporated acts as agent for the
Sponsors.
The Trust Indenture contains customary provisions limiting the liability of the
Trustee, the Sponsors and the Evaluator.
LEGAL OPINION
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, as
counsel for the Sponsors, has given an opinion that the units are validly
issued. Special counsel located in the relevant states have given state and
local tax opinions.
AUDITORS
Deloitte & Touche LLP, 2 World Financial Center, New York, New York 10281,
independent accountants, audited the Statements of Condition included in this
prospectus.
SPONSORS
The Sponsors 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
26
<PAGE>
Each Sponsor is a Delaware corporation and it, or its predecessor, has acted as
sponsor to many unit investment trusts. As a registered broker-dealer each
Sponsor buys and sells securities (including investment company shares) for
others (including investment companies) and participates as an underwriter in
various selling groups.
TRUSTEE
The Chase Manhattan Bank, Unit Investment Trust Department, 4 New York
Plaza--6th Floor, New York, New York 10004, is the Trustee. It is supervised by
the Federal Deposit Insurance Corporation, the Board of Governors of the Federal
Reserve System and New York State banking authorities.
UNDERWRITERS' AND SPONSORS' PROFITS
Underwriters receive sales charges when they sell units. The Sponsors also
realized a profit or loss on the initial date of deposit of the bonds. Any cash
made available by you to the Sponsors before the settlement date for those units
may be used in the Sponsors' businesses to the extent permitted by federal law
and may benefit the Sponsors.
A Sponsor or Underwriter may realize profits or sustain losses on bonds in the
Fund which were acquired from underwriting syndicates of which it was a member.
In maintaining a secondary market, the Sponsors will also realize profits or
sustain losses in the amount of any difference between the prices at which they
buy units and the prices at which they resell or redeem them.
PUBLIC DISTRIBUTION
The Sponsors do not intend to qualify units for sale in any foreign countries.
This prospectus does not constitute an offer to sell units in any country where
units cannot lawfully be sold.
CODE OF ETHICS
The Fund and the Agent for the Sponsors have each adopted a code of ethics
requiring reporting of personal securities transactions by its employees with
access to information on Fund transactions. Subject to certain conditions, the
codes permit employees to invest in Fund securities for their own accounts. The
codes are designed to prevent fraud, deception and misconduct against the Fund
and to provide reasonable standards of conduct. These codes are on file with the
Commission and you may obtain a copy by contacting the Commission at the address
listed on the back cover of this prospectus.
TAXES
The following summary describes some of the important income tax consequences of
holding units. It assumes that you are not a dealer, financial institution,
insurance company or other investor with special circumstances or subject to
special rules. You should consult your own tax adviser about your particular
circumstances.
At the date of issue of each bond, counsel for the issuer delivered an opinion
to the effect that interest on the bond is exempt from regular federal income
tax. However, interest may be subject to state and local taxes and may be taken
into account in determining your preference items for
27
<PAGE>
alternative minimum tax purposes. Neither we nor our counsel have reviewed the
issuance of the bonds, related proceedings or the basis for the opinions of
counsel for the issuers. We cannot assure you that the issuers (or other users
of bond proceeds) have complied or will comply with any requirements necessary
for a bond to be tax-exempt. If any of the bonds were determined not to be
tax-exempt, you could be required to pay income tax for current and prior years,
and if the Fund were to sell the bond, it might have to sell it at a substantial
discount.
In the opinion of our counsel, under existing law:
GENERAL TREATMENT OF THE FUND AND YOUR INVESTMENT
The Fund will not be taxed as a corporation for federal income tax purposes, and
you will be considered to own directly your share of each bond in the Fund.
GAIN OR LOSS UPON DISPOSITION
When all or part of your share of a bond is disposed of (for example, when the
Fund sells, exchanges or redeems a bond or when you sell or exchange your
units), you will generally recognize capital gain or loss. Your gain, however,
will generally be ordinary income to the extent of any accrued "market
discount". Generally you will have market discount to the extent that your basis
in a bond when you purchase a unit is less than its stated redemption price at
maturity (or, if it is an original issue discount bond, the issue price
increased by original issue discount that has accrued on the bond before your
purchase). You should consult your tax adviser in this regard.
If your net long-term capital gains exceed your net short-term capital losses,
the excess may be subject to tax at a lower rate than ordinary income. Any
capital gain from the Fund will be long-term if you are considered to have held
your investment on each bond for more than one year and short-term otherwise.
Because the deductibility of capital losses is subject to limitations, you may
not be able to deduct all of your capital losses.
YOUR BASIS IN THE BONDS
Your aggregate basis in the bonds will be equal to the cost of your units,
including any sales charges you pay, adjusted to reflect any accruals of
"original issue discount," "acquisition premium" and "bond premium". You should
consult your tax adviser in this regard.
EXPENSES
If you are not a corporate investor, you will not be entitled to a deduction for
your share of fees and expenses of the Fund. Also, if you borrowed money in
order to purchase or carry your units, you will not be able to deduct the
interest on this borrowing for federal income tax purposes. The IRS may treat
your purchase of units as made with borrowed money even if the money is not
directly traceable to the purchase of units.
NEW YORK TAXES
Under the income tax laws of the State and City of New York, the Fund will not
be taxed as a corporation. If you are a New York taxpayer, your income from the
Fund will not be tax-exempt in New York except to the extent that the income is
earned on bonds that are tax-exempt for New York
28
<PAGE>
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 adviser in this regard.
CONNECTICUT TAXES
In the opinion of Day, Berry & Howard LLP, Hartford, Connecticut, special
counsel on Connecticut tax matters:
Under the income tax laws of the State of Connecticut, the Fund will not be
taxed. If you are an individual, trust or estate that is subject to the
Connecticut income tax, you will not be taxed on your share of the interest
derived by the Fund from those bonds that are tax-exempt for Connecticut income
tax purposes. In addition, if you hold your units of the Fund as a capital
asset, you will not recognize either gain or loss if the Fund enters into a
transaction in which it is treated for federal income tax purposes as having
sold a bond that is issued by an issuer in Connecticut and is tax-exempt for
Connecticut income tax purposes, and you may not have to recognize gain or loss
to the extent attributable to a unit's share of any such bonds if you sell,
exchange or redeem the unit. You should consult your tax adviser in this regard.
In all other instances, you will recognize gain or loss in the event either the
Fund enters into a transaction involving a bond held by it or you sell, exchange
or redeem a unit of the Fund, to the same extent that you recognize gain or loss
therefrom for Federal income tax purposes.
In the case of an entity subject to the Connecticut corporation business tax,
its share of all income derived from units of the Fund or their ownership will
be subject to that Connecticut tax.
MASSACHUSETTS TAXES
In the opinion of Masterman, Culbert & Tully LLP, Boston, Massachusetts, special
counsel on Massachusetts tax matters:
This advice only applies to individual investors in the units who are subject to
Massachusetts income taxation and assumes the Fund is a Trust of the type
commonly known as a "fixed investment trust" for federal tax purposes.
1. The Massachusetts taxing authorities will not tax the Fund as an entity. They
will
29
<PAGE>
treat you as the owner of your share of each bond in the Fund.
2. If you are subject to Massachusetts income taxation, you need not include
your share of the Fund's earnings in your Massachusetts gross income to the
extent such earnings are derived by the Fund on tax-exempt bonds issued by
Massachusetts or its agencies or municipalities or by the governments of Puerto
Rico and Guam.
3. You must include gains and losses of the Fund as well as those resulting from
the sale or redemption of your Units in your Massachusetts gross income if you
are required to include such gains or losses in your federal gross income unless
these gains and losses are statutorily exempt from Massachusetts income
taxation. If gains from such bonds in the Fund are exempt from Massachusetts
income taxation, you will not be allowed to include losses in your Massachusetts
gross income to the extent such losses arise from the bonds for which the gains
are statutorily exempt. In each case, the taxability of the gains or losses
depends upon the particular bonds in the Fund.
4. Any distribution made to you by the Fund may be subject to Massachusetts
income tax to the same degree and in the same manner as income, gains and losses
of the Fund as are described in paragraphs 2 and 3 above.
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, (ii) profits from the sale of bonds of
Virginia or any political subdivision or instrumentality of Virginia, or (iii)
profits from the sale of bonds of the United States or any authority,
commission, or instrumentality of the United States. 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.
30
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (CALIFORNIA, CONNECTICUT,
MASSACHUSETTS AND VIRGINIA TRUSTS),
DEFINED ASSET FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders of Municipal Investment Trust Fund,
Multistate Series - 48 (California, Connecticut, Massachusetts and
Virginia Trusts), Defined Asset Funds:
We have audited the accompanying statement of condition of Municipal
Investment Trust Fund, Multistate Series - 48 (California,
Connecticut, Massachusetts and Virginia Trusts), Defined Asset Funds,
including the portfolio, as of September 30, 2000 and the related
statements of operations and of changes in net assets for the years
ended September 30, 2000, 1999 and 1998. These financial statements
are the responsibility of the Trustee. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Securities owned at September 30, 2000, as shown in such portfolio,
were confirmed to us by The Chase Manhattan Bank, the Trustee. An
audit also includes assessing the accounting principles used and
significant estimates made by the Trustee, as well as evaluating the
overall financial statement presentation. We believe that our 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 Municipal
Investment Trust Fund, Multistate Series - 48 (California,
Connecticut, Massachusetts and Virginia Trusts), Defined Asset Funds
at September 30, 2000 and the results of their its operations and
changes in their net assets for the above-stated years in conformity
with accounting principles generally accepted in the United States of
America.
DELOITTE & TOUCHE LLP
New York, N.Y.
November 10, 2000
D - 1.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (CALIFORNIA TRUST),
DEFINED ASSET FUNDS
STATEMENT OF CONDITION
As of September 30, 2000
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities
at value (cost $ 4,457,600)(Note 1) ......... $ 4,285,167
Accrued interest................................ 65,251
Cash - principal ............................... 17,094
-------------
Total trust property ......................... 4,367,512
LESS LIABILITIES:
Income advance from Trustee..................... $ 10,285
Accrued Sponsors' fees ......................... 1,772 12,057
------------- -------------
NET ASSETS, REPRESENTED BY:
4,484 units of fractional undivided
interest outstanding (Note 3) ............... 4,302,261
Undistributed net investment income ............ 53,194 $ 4,355,455
------------- =============
UNIT VALUE ($ 4,355,455 / 4,484 units)............ $ 971.33
=============
</TABLE>
See Notes To Financial Statements.
D - 2.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (CALIFORNIA TRUST),
DEFINED ASSET FUNDS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended September 30,
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income ........................ $ 243,391 $ 255,626 $ 258,462
Trustee's fees and expenses ............ (5,878) (5,818) (6,169)
Sponsors' fees ......................... (2,865) (1,537) (1,863)
----------------------------------------------
Net investment income .................. 234,648 248,271 250,430
----------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain (loss) on
securities sold or redeemed .......... (1,133) 93
Unrealized appreciation (depreciation)
of investments ....................... 126,042 (395,438) 259,054
----------------------------------------------
Net realized and unrealized
gain (loss) on investments ........... 124,909 (395,345) 259,054
----------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ 359,557 $ (147,074) $ 509,484
==============================================
</TABLE>
See Notes To Financial Statements.
D - 3.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (CALIFORNIA TRUST),
DEFINED ASSET FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended September 30,
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
Net investment income .................. $ 234,648 $ 248,271 $ 250,430
Realized gain (loss) on
securities sold or redeemed .......... (1,133) 93
Unrealized appreciation (depreciation)
of investments ....................... 126,042 (395,438) 259,054
----------------------------------------------
Net increase (decrease) in net assets
resulting from operations ............ 359,557 (147,074) 509,484
----------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income ................................ (235,907) (247,865) (250,400)
Principal .............................. (5,322)
----------------------------------------------
Total distributions .................... (241,229) (247,865) (250,400)
----------------------------------------------
SHARE TRANSACTIONS:
Redemption amounts - income ............ (4,503) (882)
Redemption amounts - principal ......... (403,949) (76,428)
----------------------------------------------
Total share transactions ............... (408,452) (77,310)
----------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS .... (290,124) (472,249) 259,084
NET ASSETS AT BEGINNING OF YEAR .......... 4,645,579 5,117,828 4,858,744
----------------------------------------------
NET ASSETS AT END OF YEAR ................ $ 4,355,455 $ 4,645,579 $ 5,117,828
==============================================
PER UNIT:
Income distributions during
year ................................. $ 49.88 $ 50.08 $ 50.08
==============================================
Principal distributions during
year ................................. $ 1.09
=================
Net asset value at end of
year ................................. $ 971.33 $ 943.46 $ 1,023.57
==============================================
TRUST UNITS:
Redeemed during year ................... 440 76
Outstanding at end of year ............. 4,484 4,924 5,000
==============================================
</TABLE>
See Notes To Financial Statements.
D - 4.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (CALIFORNIA TRUST),
DEFINED ASSET FUNDS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a
Unit Investment Trust. The following is a summary of significant
accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in
conformity with accounting principles generally accepted in the United
States of America.
(A) Securities are stated at value as determined by the Evaluator
based on bid side evaluations for the securities.
(B) The Fund was not subject to income taxes. Accordingly, no
provision for such taxes was required.
(C) Interest income is recorded as earned.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and
applicable expenses, are also distributed periodically.
3. NET CAPITAL
<TABLE>
<S> <C>
Cost of 4,484 units at Date of Deposit ..................... $ 4,659,040
Less sales charge .......................................... 209,627
-----------
Net amount applicable to Holders ........................... 4,449,413
Redemptions of units - net cost of 516 units redeemed
less redemption amounts (principal)....................... 31,643
Realized gain on securities sold or redeemed ............... (1,040)
Principal distributions .................................... (5,322)
Net unrealized appreciation of investments ................. (172,433)
-----------
Net capital applicable to Holders .......................... $ 4,302,261
===========
</TABLE>
4. INCOME TAXES
As of September 30, 2000, net unrealized appreciation of investments,
based on cost for Federal income tax purposes, aggregated $172,433, of
which $ 173,213 related to depreciated securities and $780 related to
appreciated securities. The cost of investment securities for Federal
income tax purposes was $4,457,600 at September 30, 2000.
D - 5.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (CALIFORNIA TRUST)(INSURED),
DEFINED ASSET FUNDS
PORTFOLIO
As of September 30, 2000
<TABLE>
<CAPTION>
Rating of Optional
Portfolio No. and Title of Issues Face Redemption
Securities (1) (4) Amount Coupon Maturities(3) Provisions(3) Cost Value(2)
---------- --------- ----------- ----------- ----------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 City of Anaheim, CA, Anaheim Mem. Hosp. AAA $ 750,000 5.125 % 2020 None $ 747,270 $ 704,453
Association, Certs. of Part.
(AMBAC Ins.)
2 Cnty. of San Joaquin, CA, San Joaquin AAA 750,000 4.750 2019 11/15/03 701,250 688,065
Cnty. Pub. Fac. Fin. Corporation @ 102.000
Ser. 93 (MBIA Ins.)
3 Jurupa Comm. Services Dist., CA, Rfdg. AAA 750,000 5.200 2023 09/01/03 750,000 724,448
Certificates of Participation @ 102.000
(Wastewater Capacity Refinancing)
(Financial Guaranty Ins.)
4 Southern California Pub. Pwr. Auth., AAA 750,000 5.000 2022 07/01/03 733,170 704,505
Trans. Proj. Rev. Bonds, 1993 @ 100.000
Subordinate Rfdg. Ser. (Southern Trans.
Proj.) (MBIA Ins.)
5 The City of Los Angeles, CA, Mtge. Rev. AAA 650,000 5.350 2022 01/01/03 653,250 603,441
Rfdg. Bonds, Ser. 1993 II-A @ 100.000
(FHA Ins. Mtge. Loans - Section 8
Assisted Projects) (MBIA Ins.)
6 The City of Riverside, CA, Redev. Agy. AAA 115,000 5.625 2023(6) 08/01/02 119,465 120,245
Tax Allocation Rfdg. Bonds, @ 102.000
Ser. 1993 A (Casa Blanca Redev.
Proj.) (MBIA Ins.)
7 The City of San Diego, CA, Swr. Rev. AAA 750,000 5.250 2020 05/15/03 753,195 740,010
Bonds, Ser. 1993 - A (AMBAC Ins.) @ 102.000
----------- ----------- -----------
$ 4,515,000 $ 4,457,600 $ 4,285,167
=========== =========== ===========
</TABLE>
See Notes To Portfolios on page D - 22.
D - 6.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (CONNECTICUT TRUST),
DEFINED ASSET FUNDS
STATEMENT OF CONDITION
As of September 30, 2000
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities
at value (cost $ 3,158,955)(Note 1) ......... $ 3,051,363
Accrued interest................................ 43,522
Cash - principal ............................... 1,952
-------------
Total trust property ......................... 3,096,837
LESS LIABILITIES:
Income advance from Trustee..................... $ 5,871
Accrued Sponsors' fees ......................... 1,193 7,064
------------- -------------
NET ASSETS, REPRESENTED BY:
3,190 units of fractional undivided
interest outstanding (Note 3) ............... 3,053,315
Undistributed net investment income ............ 36,458 3,089,773
------------- =============
UNIT VALUE ($ 3,089,773 / 3,190 units)............ $ 968.58
=============
</TABLE>
See Notes To Financial Statements.
D - 7.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (CONNECTICUT TRUST),
DEFINED ASSET FUNDS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended September 30,
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income ........................ $ 161,690 $ 170,941 $ 178,193
Trustee's fees and expenses ............ (4,721) (4,629) (5,007)
Sponsors' fees ......................... (1,606) (1,395) (1,301)
----------------------------------------------
Net investment income .................. 155,363 164,917 171,885
----------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized loss on
securities sold or redeemed .......... (4,443) (714) (875)
Unrealized appreciation (depreciation)
of investments ....................... 46,334 (254,168) 158,793
----------------------------------------------
Net realized and unrealized
gain (loss) on investments ........... 41,891 (254,882) 157,918
----------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ 197,254 $ (89,965) $ 329,803
==============================================
</TABLE>
See Notes To Financial Statements.
D - 8.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (CONNECTICUT TRUST),
DEFINED ASSET FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended September 30,
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
Net investment income .................. $ 155,363 $ 164,917 $ 171,885
Realized gain on
securities sold or redeemed .......... (4,443) (714) (875)
Unrealized appreciation (depreciation)
of investments ....................... 46,334 (254,168) 158,793
----------------------------------------------
Net increase (decrease) in net assets
resulting from operations ............ 197,254 (89,965) 329,803
----------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income ................................ (155,274) (165,232) (171,943)
Principal .............................. (10,406) (796)
----------------------------------------------
Total distributions .................... (165,680) (166,028) (171,943)
----------------------------------------------
SHARE TRANSACTIONS:
Redemption amounts - income ............ (779) (2,135) (399)
Redemption amounts - principal ......... (56,749) (205,165) (40,940)
----------------------------------------------
Total share transactions ............... (57,528) (207,300) (41,339)
----------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS .... (25,954) (463,293) 116,521
NET ASSETS AT BEGINNING OF YEAR .......... 3,115,727 3,579,020 3,462,499
----------------------------------------------
NET ASSETS AT END OF YEAR ................ $ 3,089,773 $ 3,115,727 $ 3,579,020
==============================================
PER UNIT:
Income distributions during
year ................................. $ 48.44 $ 48.74 $ 49.42
==============================================
Principal distributions during
year ................................. $ 3.20 $ 0.23
===================================
Net asset value at end of
year ................................. $ 968.58 $ 958.10 $ 1,034.70
==============================================
TRUST UNITS:
Redeemed during year ................... 62 207 41
Outstanding at end of year ............. 3,190 3,252 3,459
==============================================
</TABLE>
See Notes To Financial Statements.
D - 9.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (CONNECTICUT TRUST),
DEFINED ASSET FUNDS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a
Unit Investment Trust. The following is a summary of significant
accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in
conformity with accounting principles generally accepted in the United
States of America.
(A) Securities are stated at value as determined by the Evaluator
based on bid side evaluations for the securities.
(B) The Fund was not subject to income taxes. Accordingly, no
provision for such taxes was required.
(C) Interest income is recorded as earned.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and
applicable expenses, are also distributed periodically.
3. NET CAPITAL
<TABLE>
<S> <C>
Cost of 3,190 units at Date of Deposit ..................... $ 3,322,162
Less sales charge .......................................... 149,485
-----------
Net amount applicable to Holders ........................... 3,172,677
Redemptions of units - net cost of 310 units redeemed
less redemption amounts (principal)....................... 5,464
Realized loss on securities sold or redeemed ............... (6,032)
Principal distributions .................................... (11,202)
Net unrealized appreciation of investments.................. (107,592)
-----------
Net capital applicable to Holders .......................... $ 3,053,315
===========
</TABLE>
4. INCOME TAXES
As of September 30, 2000, net unrealized appreciation of investments,
based on cost for Federal income tax purposes, aggregated $107,592, of
which $115,289 related to depreciated securities and $7,697 related to
appreciated securities. The cost of investment securities for Federal
income tax purposes was $3,158,955 at September 30, 2000.
D - 10.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (CONNECTICUT TRUST),
DEFINED ASSET FUNDS
PORTFOLIO
As of September 30, 2000
<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 CT Mun. Electric Energy Coop., Pwr. AAA $ 510,000 5.000 % 2018 01/01/04 $ 502,916 $ 474,779
Supply Sys. Rev. Bonds, Ser. 1993 A @ 102.000
(MBIA Ins.)
2 City of Manchester, NH, General AA 130,000 4.800 2011 None 126,941 128,731
Obligation Bonds Ser. 1993
3 Puerto Rico Hgwy. and Trans. Auth., A 350,000 5.000 2022 07/01/03 337,071 320,254
Highway Rev. Rfdg. Bonds, Ser. 1993 X @ 101.500
4 South Central, CT, Regional Water Auth. AAA 410,000 5.750 2012 08/01/03 437,089 420,562
Water Sys. Rev. Bonds, Eleventh Ser. 1993 @ 102.000
(Financial Guaranty Ins.)
5 State of Connecticut Hlth. and Educl. AAA 500,000 5.000 2023 07/01/03 488,615 446,290
Fac. Auth. Rev. Bonds, Saint Francis @ 102.000
Hosp. and Med. Ctr. Iss., Ser. 1993 C
(Financial Guaranty Ins.)
6 State of Connecticut, Genl. Oblig. AA 10,000 4.750 2011(6) 03/15/04 9,711 10,192
Bonds, 1993 Ser. E @ 101.500
380,000 4.750 2011 03/15/04 369,026 374,452
@ 101.500
7 State of Connecticut, Spec. Tax Oblig. AA- 500,000 5.000 2011 10/01/03 500,000 497,490
Bonds, Transp. Infrastructure @ 101.500
Purposes, 1993 Ser. C
8 Town of East Haven, CT, G.O. Bonds A 145,000 5.000 2012 10/15/04 144,120 142,043
@ 102.000
245,000 5.000 2013 10/15/02 243,466 236,570
@ 102.000
----------- ----------- -----------
$ 3,180,000 $ 3,158,955 $ 3,051,363
=========== =========== ===========
</TABLE>
See Notes To Portfolios on page D - 22.
D - 11.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (MASSACHUSETTS TRUST),
DEFINED ASSET FUNDS
STATEMENT OF CONDITION
As of September 30, 2000
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities
at value (cost $ 2,487,663)(Note 1) ......... $ 2,351,978
Accrued interest................................ 39,627
Cash - principal ............................... 21
-------------
Total trust property ......................... 2,391,626
LESS LIABILITIES:
Income advance from Trustee..................... $ 10,076
Accrued Sponsors' fees ......................... 1,000 11,076
------------- -------------
NET ASSETS, REPRESENTED BY:
2,511 units of fractional undivided
interest outstanding (Note 3) ............... 2,351,999
Undistributed net investment income ............ 28,551 $ 2,380,550
------------- =============
UNIT VALUE ($ 2,380,550 / 2,511 units)............ $ 948.05
=============
</TABLE>
See Notes To Financial Statements.
D - 12.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (MASSACHUSETTS TRUST),
DEFINED ASSET FUNDS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended September 30,
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income ........................ $ 138,811 $ 155,890 $ 164,210
Trustee's fees and expenses ............ (4,324) (4,322) (4,763)
Sponsors' fees ......................... (1,368) (1,246) (1,163)
----------------------------------------------
Net investment income .................. 133,119 150,322 158,284
----------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain (loss) on
securities sold or redeemed .......... (2,298) 6,290
Unrealized appreciation (depreciation)
of investments ....................... 38,132 (252,428) 167,520
----------------------------------------------
Net realized and unrealized
gain (loss) on investments ........... 35,834 (246,138) 167,520
----------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ 168,953 $ (95,816) $ 325,804
==============================================
</TABLE>
See Notes To Financial Statements.
D - 13.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (MASSACHUSETTS TRUST),
DEFINED ASSET FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended September 30,
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
Net investment income .................. $ 133,119 $ 150,322 $ 158,284
Realized gain (loss) on
securities sold or redeemed .......... (2,298) 6,290
Unrealized appreciation (depreciation)
of investments ....................... 38,132 (252,428) 167,520
----------------------------------------------
Net increase (decrease) in net assets
resulting from operations ............ 168,953 (95,816) 325,804
----------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income ................................ (133,155) (150,630) (158,253)
Principal .............................. (23,709) (14,832)
----------------------------------------------
Total distributions .................... (156,864) (165,462) (158,253)
----------------------------------------------
SHARE TRANSACTIONS:
Redemption amounts - income ............ (4,201) (2,692)
Redemption amounts - principal ......... (335,377) (252,548)
----------------------------------------------
Total share transactions ............... (339,578) (255,240)
----------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS .... (327,489) (516,518) 167,551
NET ASSETS AT BEGINNING OF YEAR .......... 2,708,039 3,224,557 3,057,006
----------------------------------------------
NET ASSETS AT END OF YEAR ................ $ 2,380,550 $ 2,708,039 $ 3,224,557
==============================================
PER UNIT:
Income distributions during
year ................................. $ 49.92 $ 50.49 $ 50.56
==============================================
Principal distributions during
year ................................. $ 9.06 $ 5.15
===================================
Net asset value at end of
year ................................. $ 948.05 $ 940.29 $ 1,030.21
==============================================
TRUST UNITS:
Redeemed during year ................... 369 250 0
Outstanding at end of year ............. 2,511 2,880 3,130
==============================================
</TABLE>
See Notes To Financial Statements.
D - 14.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (MASSACHUSETTS TRUST),,
DEFINED ASSET FUNDS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a
Unit Investment Trust. The following is a summary of significant
accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in
conformity with accounting principles generally accepted in the United
States of America.
(A) Securities are stated at value as determined by the Evaluator
based on bid side evaluations for the securities.
(B) The Fund was not subject to income taxes. Accordingly, no
provision for such taxes was required.
(C) Interest income is recorded as earned.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and
applicable expenses, are also distributed periodically.
3. NET CAPITAL
<TABLE>
<S> <C>
Cost of 2,511 units at Date of Deposit ..................... $ 2,622,017
Less sales charge .......................................... 117,992
-----------
Net amount applicable to Holders ........................... 2,504,025
Redemptions of units - net cost of 789 units redeemed
less redemption amounts (principal)....................... 59,978
Realized loss on securities sold or redeemed ............... (32,906)
Principal distributions .................................... (43,413)
Unrealized depreciation of investments...................... (135,685)
-----------
Net capital applicable to Holders .......................... $ 2,351,999
===========
</TABLE>
4. INCOME TAXES
As of September 30, 2000, unrealized depreciation of investments,
based on cost for Federal income tax purposes, aggregated $135,685,
all of which related to depreciated securities. The cost of investment
securities for Federal income tax purposes was $2,487,663 at September
30, 2000.
D - 15.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (MASSACHUSETTS TRUST),
DEFINED ASSET FUNDS
PORTFOLIO
As of September 30, 2000
<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 Massachusetts Hlth. and Educl. AAA $ 500,000 5.375 % 2023 07/01/03 $ 505,365 $ 471,485
Facilities Auth., Rev. Bonds, Lahey @ 102.000
Clinic Med. Center Issue, Ser. 1993 B
(MBIA Ins.)
2 Massachusetts Hlth. and Educl. Fac. AAA 500,000 5.250 2023 07/01/03 502,130 459,535
Auth., Rev. Bonds, Massachusetts Gen. @ 102.000
Hosp. Iss., Ser. 1993 G (AMBAC Ins.)
3 Massachusetts Hlth. and Educl. Facs. AAA 500,000 5.500 2023 07/01/03 504,250 476,885
Auth., Rev. Bonds, Morton Hosp. and @ 102.000
Med. Ctr. Issue Ser. 1993 B
(Connie Lee Ins.)
4 Massachusetts Hsg. Fin. Agency, Single- Aa(m) 200,000 5.300 2012 12/01/03 201,000 191,170
Family Hsg. Rev. Bonds, Ser. 28 - 1993 @ 102.000
5 Puerto Rico Hgwy. and Trans. Auth., A 300,000 5.000 2022 07/01/03 288,918 274,503
Highway Rev. Rfdg. Bonds, Ser. 1993 X @ 101.500
6 The Commonwealth of Massachusetts, Aa2(m) 500,000 4.875 2013 10/01/03 486,000 478,400
Genl. Oblig. Bonds, Consol. Loan @ 102.000
Ser. 1993 B
----------- ----------- -----------
$ 2,500,000 $ 2,487,663 $ 2,351,978
=========== =========== ===========
</TABLE>
See Notes To Portfolios on page D - 22.
D - 16.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (VIRGINIA TRUST),
DEFINED ASSET FUNDS
STATEMENT OF CONDITION
As of September 30, 2000
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities
at value (cost $ 2,859,726)(Note 1) ......... $ 2,724,787
Accrued interest................................ 33,049
Prepaid Trustee's fees and expenses ............ 497
Cash - income .................................. 1,167
Cash - principal ............................... 4,091
-------------
Total trust property ......................... 2,763,591
LESS LIABILITY:
Accrued Sponsors' fees ......................... 1,086
-------------
NET ASSETS, REPRESENTED BY:
2,889 units of fractional undivided
interest outstanding (Note 3) ............... $ 2,728,878
Undistributed net investment income ............ 33,627 $ 2,762,505
------------- =============
UNIT VALUE ($ 2,762,505 / 2,889 units)............ $ 956.21
=============
</TABLE>
See Notes To Financial Statements.
D - 17.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (VIRGINIA TRUST),
DEFINED ASSET FUNDS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended September 30,
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income ........................ $ 152,692 $ 161,951 $ 169,531
Trustee's fees and expenses ............ (4,502) (4,414) (4,820)
Sponsors' fees ......................... (1,467) (1,287) (1,209)
----------------------------------------------
Net investment income .................. 146,723 156,250 163,502
----------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized loss on
securities sold or redeemed .......... (4,629) (830)
Unrealized appreciation (depreciation)
of investments ....................... 57,154 (272,428) 132,563
----------------------------------------------
Net realized and unrealized
gain (loss) on investments ........... 52,525 (273,258) 132,563
----------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ 199,248 $ (117,008) $ 296,065
==============================================
</TABLE>
See Notes To Financial Statements.
D - 18.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (VIRGINIA TRUST),
DEFINED ASSET FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended September 30,
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
Net investment income .................. $ 146,723 $ 156,250 $ 163,502
Realized loss on
securities sold or redeemed .......... (4,629) (830)
Unrealized appreciation (depreciation)
of investments ....................... 57,154 (272,428) 132,563
----------------------------------------------
Net increase (decrease) in net assets
resulting from operations ............ 199,248 (117,008) 296,065
----------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income ................................ (146,768) (156,405) (163,475)
Principal .............................. (11,373) (1,604)
----------------------------------------------
Total distributions .................... (158,141) (158,009) (163,475)
----------------------------------------------
SHARE TRANSACTIONS:
Redemption amounts - income ............ (1,136) (3,024)
Redemption amounts - principal ......... (92,396) (262,245)
----------------------------------------------
Total share transactions ............... (93,532) (265,269)
----------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS .... (52,425) (540,286) 132,590
NET ASSETS AT BEGINNING OF YEAR .......... 2,814,930 3,355,216 3,222,626
----------------------------------------------
NET ASSETS AT END OF YEAR ................ $ 2,762,505 $ 2,814,930 $ 3,355,216
==============================================
PER UNIT:
Income distributions during
year ................................. $ 49.86 $ 50.27 $ 50.30
==============================================
Principal distributions during
year ................................. $ 3.85 $ 0.50
===================================
Net asset value at end of
year ................................. $ 956.21 $ 941.76 $ 1,032.37
==============================================
TRUST UNITS:
Redeemed during year ................... 100 261
Outstanding at end of year ............. 2,889 2,989 3,250
==============================================
</TABLE>
See Notes To Financial Statements.
D - 19.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (VIRGINIA TRUST),
DEFINED ASSET FUNDS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a
Unit Investment Trust. The following is a summary of significant
accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in
conformity with accounting principles generally accepted in the United
States of America.
(A) Securities are stated at value as determined by the Evaluator
based on bid side evaluations for the securities.
(B) The Fund was not subject to income taxes. Accordingly, no
provision for such taxes was required.
(C) Interest income is recorded as earned.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and
applicable expenses, are also distributed periodically.
3. NET CAPITAL
<TABLE>
<S> <C>
Cost of 2,889 units at Date of Deposit ..................... $ 3,019,004
Less sales charge .......................................... 135,841
-----------
Net amount applicable to Holders ........................... 2,883,163
Redemptions of units - net cost of 411 units redeemed
less redemption amounts (principal)....................... 16,430
Realized loss on securities sold or redeemed ............... (17,729)
Principal distributions .................................... (18,047)
Unrealized depreciation of investments...................... (134,939)
-----------
Net capital applicable to Holders .......................... $ 2,728,878
===========
</TABLE>
4. INCOME TAXES
As of September 30, 2000, unrealized depreciation of investments,
based on cost for Federal income tax purposes, aggregated $134,939,
all of which related to depreciated securities. The cost of investment
securities for Federal income tax purposes was $2,859,726 at September
30, 2000.
D - 20.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES - 48 (VIRGINIA TRUST),
DEFINED ASSET FUNDS
PORTFOLIO
As of September 30, 2000
<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 Arlington Heights, IL, Multifamily Hsg. A1(m) $ 500,000 5.300 % 2015 09/01/03 $ 502,150 $ 471,995
Rev. Bonds, Ser. 1993 @ 102.000
2 Chesapeake Hosp. Auth., VA, Hosp. Fac. AAA 500,000 5.250 2018 07/01/03 502,130 474,495
Rfdg. Rev. Bonds (Chesapeake Gen. @ 102.000
Hosp.), Ser. 1993 (MBIA Ins.) (5)
3 Commonwealth of Virginia, Transp. Rev. AA 500,000 5.250 2019 05/15/03 502,130 478,215
Bonds, Ser. 1993C (Northern Virginia @ 102.000
Transp. Dist. Prog.)
4 Indl. Dev. Auth. of Fairfax Cnty., VA, AA 455,000 5.000 2023 None 441,250 411,311
Hosp. Rev. Rfdg. Bonds (Inova Hlth.
Sys. Hosp. Proj.), Ser. 1993 A
5 Puerto Rico Hgwy. and Trans. Auth., A 300,000 5.000 2022 07/01/03 288,918 274,503
Highway Rev. Rfdg. Bonds, Ser. 1993 X @ 101.500
6 Virginia Hsg. Dev. Auth., Commonwealth AA+ 500,000 5.300 2015 01/01/02 500,000 493,465
Mtge. Bonds, 1992 Ser. C, Subser. C-3 @ 102.000
7 Virginia Pub. Bldg. Auth., State Bldg. AA+ 120,000 5.400 2013 08/01/02 123,148 120,803
Rev. Bonds, Ser. 1993A @ 101.000
----------- ----------- -----------
$ 2,875,000 $ 2,859,726 $ 2,724,787
=========== =========== ===========
</TABLE>
See Notes To Portfolios on page D - 22.
D - 21.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 48 (CALIFORNIA, CONNECTICUT,
MASSACHUSETTS AND VIRGINIA TRUSTS),
DEFINED ASSET FUNDS
NOTES TO PORTFOLIOS
As of September 30, 2000
(1) The ratings of the bonds are by Standard & Poor's Ratings Group, or by
Moody's Investors Service, Inc. if followed by "(m)", or by Fitch
Investors Service, Inc. if followed by "(f)"; "NR" indicates that this
bond is not currently rated by any of the above-mentioned rating
services. These ratings have been furnished by the Evaluator but not
confirmed with the rating agencies.
(2) See Notes to Financial Statements.
(3) Optional redemption provisions, which may be exercised in whole or in
part, are initially at prices of par plus a premium, then subsequently
at prices declining to par. Certain securities may provide for
redemption at par prior or in addition to any optional or mandatory
redemption dates or maturity, for example, through the operation of a
maintenance and replacement fund, if proceeds are not able to be used
as contemplated,the project is condemned or sold or the project is
destroyed and insurance proceeds are used to redeem the securities.
Many of the securities are also subject to mandatory sinking fund
redemption commencing on dates which may be prior to the date on which
securities may be optionally redeemed. Sinking fund redemptions are at
par and redeem only part of the issue. Some of the securities have
mandatory sinking funds which contain optional provisions permitting
the issuer to increase the principal amount of securities called on a
mandatory redemption date. The sinking fund redemptions with optional
provisions may, and optional refunding redemptions generally will,
occur at times when the redeemed securities have an offering side
evaluation which represents a premium over par. To the extent that the
securities were acquired at a price higher than the redemption price,
this will represent a loss of capital when compared with the Public
Offering Price of the Units when acquired. Distributions will
generally be reduced by the amount of the income which would otherwise
have been paid with respect to redeemed securities and there will be
distributed to Holders any principal amount and premium received on
such redemption after satisfying any redemption requests for Units
received by the Fund. The estimated current return may be affected by
redemptions.
(4) Insured by AAA-rated insurance companies that guarantee timely
payments of principal and interest on the bonds (but not Fund units or
the market value of the bonds before they mature).
(5) Insured by the indicated municipal bond insurance company.
(6) Bonds with an aggregate face amount of $115,000 of the California
Trust and $10,000 of the Connecticut Trust have been pre-refunded and
are expected to be called for redemption on the optional redemption
provision dates shown.
D - 22.
<PAGE>
Defined
Asset Funds-Registered Trademark-
<TABLE>
<S> <C>
HAVE QUESTIONS ? MUNICIPAL INVESTMENT TRUST FUND
Request the most MULTISTATE SERIES--48
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:
- Securities Act of 1933 (file no.
33-50247) and
- Investment Company Act of 1940 (file
no. 811-1777).
TO OBTAIN COPIES AT PRESCRIBED RATES--
WRITE: Public Reference Section of the
Commission
450 Fifth Street, N.W., Washington,
D.C. 20549-6009
CALL: 1-800-SEC-0330.
VISIT: http://www.sec.gov.
---------------------------------------
No person is authorized to give any
information or representations about
this Fund not contained in this
Prospectus or the Information
Supplement, and you should not rely on
any other information.
---------------------------------------
When units of this Fund are no longer
available, this Prospectus may be used
as a preliminary prospectus for a
future series, but some of the
information in this Prospectus will be
changed for that series.
UNITS OF ANY FUTURE SERIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED
UNTIL THAT SERIES HAS BECOME EFFECTIVE
WITH THE SECURITIES AND EXCHANGE
COMMISSION. NO UNITS CAN BE SOLD IN ANY
STATE WHERE A SALE WOULD BE ILLEGAL.
14626--12/00
</TABLE>
