MUNICIPAL INVESTMENT TRUST FD INSURED SER 196 DEF ASSET FD, 485BPOS, 2000-01-19

MUNICIPAL INVESTMENT TRUST FD INSURED SER 196 DEF ASSET FD
485BPOS, 2000-01-19

Previous: NORTH BANCSHARES INC, 8-K, 2000-01-19

Next: REAL GOODS TRADING CORP, 8-K, 2000-01-19

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 19, 2000

REGISTRATION NO. 33-50437
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
-------------------------------------

POST-EFFECTIVE AMENDMENT NO. 6
TO
FORM S-6
-------------------------------------

FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2

-------------------------------------

A. EXACT NAME OF TRUST:
MUNICIPAL INVESTMENT TRUST FUND
INSURED SERIES--196
DEFINED ASSET FUNDS

B. NAME OF DEPOSITOR:

MERRILL LYNCH, PIERCE, FENNER & SMITH INC.
SALOMON SMITH BARNEY INC.
PRUDENTIAL SECURITIES INCORPORATED
PAINEWEBBER INCORPORATED
DEAN WITTER REYNOLDS INC.

C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:

<TABLE>
<S> <C> <C>
MERRILL LYNCH, PIERCE,
FENNER & SMITH
INCORPORATED
DEFINED ASSET FUNDS
POST OFFICE BOX 9051
PRINCETON, NJ 08543-9051 SALOMON SMITH BARNEY INC.
388 GREENWICH
STREET--23RD FLOOR
NEW YORK, NY 10013
</TABLE>

<TABLE>
<S> <C> <C>
PRUDENTIAL SECURITIES PAINEWEBBER INCORPORATED DEAN WITTER REYNOLDS INC.
INCORPORATED 1285 AVENUE OF THE TWO WORLD TRADE
ONE NEW YORK PLAZA AMERICAS CENTER--59TH FLOOR
NEW YORK, NY 10292 NEW YORK, NY 10019 NEW YORK, NY 10048
</TABLE>

D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:

<S> <C> <C>
TERESA KONCICK, ESQ. ROBERT E. HOLLEY MICHAEL KOCHMANN
P.O. BOX 9051 1200 HARBOR BLVD. 388 GREENWICH STREET
PRINCETON, NJ 08543-9051 WEEHAWKEN, NJ 07087 NEW YORK, NY 10013

COPIES TO: DOUGLAS LOWE, ESQ.
PIERRE DE SAINT PHALLE, DEAN WITTER REYNOLDS INC.
LEE B. SPENCER, JR. ESQ. TWO WORLD TRADE
ONE NEW YORK PLAZA 450 LEXINGTON AVENUE CENTER--59TH FLOOR
NEW YORK, NY 10292 NEW YORK, NY 10017 NEW YORK, NY 10048
</TABLE>

The issuer has registered an indefinite number of Units under the Securities Act
of 1933 pursuant to Rule 24f-2 and filed the Rule 24f-2 Notice for the most
recent fiscal year on March 16, 1999.

Check box if it is proposed that this filing will become effective on January
28, 2000 pursuant to paragraph (b) of Rule 485. /X/

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
DEFINED ASSET FUNDS-SM-
----------------------------------------------------

MUNICIPAL INVESTMENT TRUST FUND
INSURED SERIES--196
(A UNIT INVESTMENT TRUST)
- PORTFOLIO OF INSURED LONG TERM MUNICIPAL BONDS
- DESIGNED TO BE FREE OF REGULAR FEDERAL INCOME TAX
- MONTHLY INCOME DISTRIBUTIONS

SPONSORS:
MERRILL LYNCH,
PIERCE, FENNER & SMITH
INCORPORATED -----------------------------------------------------
SALOMON SMITH BARNEY INC. The Securities and Exchange Commission has not
PRUDENTIAL SECURITIES approved or disapproved these Securities or passed
INCORPORATED upon the adequacy of this prospectus. Any
PAINEWEBBER INCORPORATED representation to the contrary is a criminal offense.
DEAN WITTER REYNOLDS INC. Prospectus dated January 28, 2000.

<PAGE>
- --------------------------------------------------------------------------------

Defined Asset Funds-SM-
Defined Asset FundsSM is America's oldest and largest family of unit investment
trusts, with over $160 billion sponsored over the last 28 years. Defined Asset
Funds has been a leader in unit investment trust research and product
innovation. Our family of Funds helps investors work toward their financial
goals with a full range of quality investments, including municipal, corporate
and government bond portfolios, as well as domestic and international equity
portfolios.

Defined Asset Funds offer a number of advantages:
- A disciplined strategy of buying and holding with a long-term view is the
cornerstone of Defined Asset Funds.
- Fixed portfolio: Defined Funds follow a buy and hold investment strategy;
funds are not managed and portfolio changes are limited.
- Defined Portfolios: We choose the stocks and bonds in advance, so you know
what you're investing in.
- Professional research: Our dedicated research team seeks out stocks or bonds
appropriate for a particular fund's objectives.
- Ongoing supervision: We monitor each portfolio on an ongoing basis.
No matter what your investment goals, tolerance for risk or time horizon,
there's probably a Defined Asset Fund that suits your investment style. Your
financial professional can help you select a Defined Asset Fund that works best
for your investment portfolio.

THE FINANCIAL INFORMATION IN THIS PROSPECTUS IS AS OF THE EVALUATION DATE,
OCTOBER 29, 1999.

<TABLE>
<S> <C>
CONTENTS
PAGE
----
Risk/Return Summary.................. 3
What You Can Expect From Your
Investment......................... 7
Monthly Income..................... 7
Return Figures..................... 7
Records and Reports................ 7
The Risks You Face................... 8
Interest Rate Risk................. 8
Call Risk.......................... 8
Reduced Diversification Risk....... 8
Liquidity Risk..................... 8
Concentration Risk................. 8
Bond Quality Risk.................. 9
Insurance Related Risk............. 9
Litigation and Legislation Risks... 9
Selling or Exchanging Units.......... 9
Sponsors' Secondary Market......... 9
Selling Units to the Trustee....... 10
Exchange Option.................... 10
How The Fund Works................... 10
Pricing............................ 10
Evaluations........................ 11
Income............................. 11
Expenses........................... 11
Portfolio Changes.................. 12
Fund Termination................... 12
Certificates....................... 12
Trust Indenture.................... 12
Legal Opinion...................... 13
Auditors........................... 13
Sponsors........................... 14
Trustee............................ 14
Underwriters' and Sponsors'
Profits.......................... 14
Public Distribution................ 14
Code of Ethics..................... 15
Year 2000 Issues................... 15
Taxes................................ 15
Supplemental Information............. 17
Financial Statements................. D-1
</TABLE>

2
<PAGE>
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY

<TABLE>
<C> <S>
1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks interest income that is
exempt from regular federal income taxes
by investing in a fixed portfolio
consisting primarily of insured
municipal revenue bonds.

2. WHAT ARE MUNICIPAL REVENUE BONDS?
Municipal revenue bonds are bonds issued
by states, municipalities and public
authorities to finance the cost of
buying, building or improving various
projects intended to generate revenue,
such as airports, health care
facilities, housing and municipal
electric, water and sewer utilities.
Generally, payments on these bonds
depend solely on the revenues generated
by the projects, excise taxes or state
appropriations, and are not backed by
the government's taxing power.

3. WHAT IS THE FUND'S INVESTMENT STRATEGY?

- The Fund plans to hold to maturity 9
insured long-term tax-exempt municipal
bonds with a current aggregate face
amount of $8,055,000.

- The Fund is a unit investment trust
which means that, unlike a mutual fund,
the Fund's portfolio is not managed.
- The bonds are rated AAA or Aaa by
Standard & Poor's, Moody's or Fitch.
- Many of the bonds can be called at a
premium declining over time to par
value. Some bonds may be called earlier
at par for extraordinary reasons.
- 100% of the bonds are insured by
insurance companies. Insurance
guarantees timely payments of principal
and interest on the bonds (but not Fund
units or the market value of the bonds
before they mature).

The Portfolio consists of municipal
bonds of the following types:
</TABLE>

<TABLE>
- Hospital/Health Care 47%
<C> <S>
- Industrial Development Revenue 12%
- Lease Rental Appropriation 10%
- Refunded Bonds 19%
- Municipal Electric Utilities 12%
</TABLE>

<TABLE>
<C> <S>
4. WHAT ARE THE SIGNIFICANT RISKS?

YOU CAN LOSE MONEY BY INVESTING IN THE
FUND. THIS CAN HAPPEN FOR VARIOUS
REASONS, INCLUDING:
- Rising interest rates, an issuer's
worsening financial condition or a drop
in bond ratings can reduce the price of
your units.
- Because the Fund is concentrated in
hospital/health care bonds, adverse
developments in this sector may affect
the value of your units.
- Assuming no changes in interest rates,
when you sell your units, they will
generally be worth less than your cost
because your cost included a sales fee.
- The Fund will receive early returns of
principal if bonds are called or sold
before they mature. If this happens your
income will decline and you may not be
able to reinvest the money you receive
at as high a yield or as long a
maturity.
</TABLE>

<TABLE>
<C> <S>
5. IS THIS FUND APPROPRIATE FOR YOU?

Yes, if you want monthly income free
from regular federal income tax. You
will benefit from a professionally
selected and supervised portfolio whose
risk is reduced by investing in bonds of
several different issuers.
The Fund is NOT appropriate for you if
you want a speculative investment that
changes to take advantage of market
movements, if you do not want a
tax-advantaged investment or if you
cannot tolerate any risk.
</TABLE>

3
<PAGE>

<TABLE>
<C> <S>
DEFINING YOUR INCOME
</TABLE>

<TABLE>
<C> <S> <C>
WHAT YOU MAY EXPECT (PAYABLE ON THE 25TH DAY
OF EACH MONTH):
Regular Monthly Income per unit $ 3.91
Annual Income per unit $46.95
RECORD DAY: 10th day of each month

THESE FIGURES ARE ESTIMATES ON THE EVALUATION DATE;
ACTUAL PAYMENTS MAY VARY.
</TABLE>

<TABLE>
<C> <S>
6. WHAT ARE THE FUND'S FEES AND EXPENSES?

This table shows the costs and expenses you may pay,
directly or indirectly, when you invest in the Fund.

INVESTOR FEES

Maximum Sales Fee (Load) on new
purchases (as a percentage of
$1,000 invested) 2.90%

Employees of some of the Sponsors and their affiliates
may be charged a reduced sales fee of no less than
$5.00 per unit.

The maximum sales fee is reduced if you invest at
least $100,000, as follows:
</TABLE>

<TABLE>
<CAPTION>
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
-------------- ------------
<C> <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>

<TABLE>
<C> <S>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
</TABLE>

<TABLE>
<CAPTION>
AMOUNT
PER UNIT
--------
<C> <S> <C>
$ 0.63
Trustee's Fee
$ 0.46
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
$ 0.31
Evaluator's Fee
$ 0.34
Other Operating Expenses
------
$ 1.74
TOTAL
</TABLE>

<TABLE>
<C> <S>
The Sponsors historically paid updating
expenses.
</TABLE>

<TABLE>
<C> <S>
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE
PAST?

IN THE FOLLOWING CHART WE SHOW PAST
PERFORMANCE OF PRIOR MUNICIPAL INSURED
SERIES, WHICH HAD THE SAME INVESTMENT
OBJECTIVES, STRATEGIES AND TYPES OF
BONDS AS THIS FUND. These prior Insured
Series were offered between January 5,
1988 and October 17, 1996 and were
outstanding on September 30, 1999. OF
COURSE, PAST PERFORMANCE OF PRIOR SERIES
IS NO GUARANTEE OF FUTURE RESULTS OF
THIS FUND.

AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
REFLECTING ALL EXPENSES. FOR PERIODS
ENDED 9/30/99.
</TABLE>

-------------------------------------------------------------------

<TABLE>
High 1.40% 6.67% 6.01% 2.72 7.86% 6.60%
<S> <C> <C> <C> <C> <C> <C>
Average -2.36 5.05 5.72 -0.41 6.11 6.31
Low -7.31 2.86 5.55 -4.69 3.63 6.14
</TABLE>

-----------------------------------------------------------

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Average
Sales fee 2.04% 5.22% 5.82%
</TABLE>

-----------------------------------------------------

NOTE: ALL RETURNS REPRESENT CHANGES IN UNIT PRICE WITH DISTRIBUTIONS REINVESTED
INTO THE MUNICIPAL FUND INVESTMENT ACCUMULATION PROGRAM.

<TABLE>
<C> <S>
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
</TABLE>

<TABLE>
<C> <S>
Defined Asset Funds financial analysts
regularly review the bonds in the Fund.
The Fund may sell a bond if certain
adverse credit or other conditions
exist.
9. HOW DO I BUY UNITS?

The minimum investment is one unit.

You can buy units from any of the
Sponsors and other broker-dealers. The
Sponsors are listed later in this
prospectus. Some banks may offer units
for sale through special arrangements
with the Sponsors, although certain
legal restrictions may apply.
</TABLE>

4
<PAGE>

<TABLE>
<C> <S>
UNIT PRICE PER UNIT $861.78
(as of October 29, 1999)

Unit price is based on the net asset
value of the Fund plus the sales fee. An
amount equal to any principal cash, as
well as net accrued but undistributed
interest on the unit, is added to the
unit price. An independent evaluator
prices the bonds at 3:30 p.m. Eastern
time every business day. Unit price
changes every day with changes in the
prices of the bonds in the Fund.

10. HOW DO I SELL UNITS?

You may sell your units at any time to
any Sponsor or the Trustee for the net
asset value determined at the close of
business on the date of sale. You will
not pay any other fee when you sell your
units.

11. HOW ARE DISTRIBUTIONS MADE AND TAXED?

The Fund pays income monthly. In the
opinion of bond counsel when each bond
was issued, interest on the bonds in
this Fund is generally 100% exempt from
regular federal income tax.
A portion of the income may also be
exempt from state and local personal
income taxes, depending on where you
live.

You will also receive principal payments
if bonds are sold or called or mature,
when the cash available is more than
$5.00 per unit. You will be subject to
tax on any gain realized by the Fund on
the disposition of bonds.

12. WHAT OTHER SERVICES ARE AVAILABLE?

REINVESTMENT
You will receive your monthly income in
cash unless you choose to compound your
income by reinvesting with no sales fee
in the Municipal Fund Investment
Accumulation Program, Inc. This program
is an open-end mutual fund with a
comparable investment objective, but
those bonds generally will not be
insured. Income from this program will
generally be subject to state and local
income taxes. FOR MORE COMPLETE
INFORMATION ABOUT THE PROGRAM, INCLUDING
CHARGES AND FEES, ASK THE TRUSTEE FOR
THE PROGRAM'S PROSPECTUS. READ IT
CAREFULLY BEFORE YOU INVEST. THE TRUSTEE
MUST RECEIVE YOUR WRITTEN ELECTION TO
REINVEST AT LEAST 10 DAYS BEFORE THE
RECORD DAY OF AN INCOME PAYMENT.

EXCHANGE PRIVILEGES
You may exchange units of this Fund for
units of certain other Defined Asset
Funds. You may also exchange into this
Fund from certain other funds. We charge
a reduced sales fee on exchanges.
</TABLE>

5
<PAGE>
- --------------------------------------------------------------------------------
TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS

<TABLE>
EFFECTIVE
TAXABLE INCOME 1999* % TAX TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN BRACKET 3% 3.5% 4% 4.5% 5% 5.5% 6%
IS EQUIVALENT TO A TAXABLE YIELD OF

<S> <C>

TAXABLE INCOME 19
SINGLE RETURN 6.5%
IS
EQUIVALENT
TO A
TAXABLE
YIELD OF
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
$ 0- 25,750 $ 0- 43,050 15.00 3.53 4.12 4.71 5.29 5.88 6.47 7.06
- ---------------------------------------------------------------------------------------------------------------------------
$ 25,751- 62,450 $ 43,051-104,050 28.00 4.17 4.86 5.56 6.25 6.94 7.64 8.33
- ---------------------------------------------------------------------------------------------------------------------------
$ 62,451-130,250 $104,051-158,550 31.00 4.35 5.07 5.80 6.52 7.25 7.97 8.70
- ---------------------------------------------------------------------------------------------------------------------------
$130,251-283,150 $158,551-283,150 36.00 4.69 5.47 6.25 7.03 7.81 8.59 9.38
- ---------------------------------------------------------------------------------------------------------------------------
OVER $283,151 OVER $283,151 39.60 4.97 5.79 6.62 7.45 8.28 9.11 9.93
- ---------------------------------------------------------------------------------------------------------------------------

To compare the yield of a taxable security with the yield of a federally
tax-free security, find your taxable income and read across. The table
incorporates 1999 federal income tax rates and assumes that all income would
otherwise be taxed at a U.S. investor's highest tax rate. Yield figures are for
example only.

*Based upon net amount subject to federal income tax after deductions and
exemptions. This table does not reflect the possible effect of other tax
factors, such as alternative minimum tax, personal exemptions, the phase-out of
exemptions, itemized deductions, the possible partial disallowance of deductions
or state and local taxation. Consequently, investors are urged to consult their
own tax advisers in this regard.

6
<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 monthly income because
the portfolio is fixed.

Along with your monthly income, you will receive your share of any available
bond principal.

RETURN FIGURES

We cannot predict your actual return, which will vary with unit price, how long
you hold your investment and changes in the portfolio, interest income and
expenses.

ESTIMATED CURRENT RETURN equals the estimated annual cash to be received from
the bonds in the Fund less estimated annual Fund expenses, divided by the Unit
Price (including the maximum sales fee):

<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.

7
<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, an issuer might call its bonds if it no longer needs the money for
the original purpose or, during periods of falling interest rates, if the
issuer's bonds have a coupon higher than current market rates. If the bonds are
called, your income will decline and you may not be able to reinvest the money
you receive at as high a yield or as long a maturity. An early call at par of a
premium bond will reduce your return.

REDUCED DIVERSIFICATION RISK

If many investors sell their units, the Fund will have to sell bonds. This could
reduce the diversification of your investment and increase your share of Fund
expenses.

LIQUIDITY RISK

The bonds will generally trade in the over-the-counter market. We cannot assure
you that a liquid trading market will exist, especially since current law may
restrict the Fund from selling bonds to any Sponsor. The value of the bonds, and
of your investment, may be reduced if trading in bonds is limited or absent.

CONCENTRATION RISK

When a certain type of bond makes up 25% or more of the portfolio, the Fund is
said to be "concentrated" in that bond type, which makes the Fund less
diversified.

Here is what you should know about the Fund's concentration in hospital and
health care bonds:
- payment for these bonds depends on revenues from private third-party payors
and government programs, including Medicare and Medicaid, which have
generally undertaken cost containment measures to limit payments to
healthcare providers;
- hospitals face increasing competition resulting from hospital mergers and
affiliations;
- hospitals need to reduce costs as HMOs increase market penetration and
hospital supply and drug companies raise prices;
- hospitals and health care providers are subject to various legal claims by
patients and others and are adversely affected by increasing costs of
insurance;
- many hospitals are aggressively buying physician practices and assuming risk
contracts to gain market share. If revenues do not increase accordingly,
this practice could reduce profits;
- Medicare is changing its reimbursement system for nursing homes. Many
nursing home providers are not sure how they will be treated. In many cases,
the providers may receive lower reimbursements and these would have to cut
expenses to maintain profitability; and

8
<PAGE>
- most retirement/nursing home providers rely on entrance fees for operating
revenues. If people live longer than expected and turnover is lower than
budgeted, operating revenues would be adversely affected by less than
expected entrance fees.

Changes to the portfolio from bond redemptions, maturities and sales may affect
the Fund's concentration over time.

BOND QUALITY RISK

A reduction in a bond's rating may decrease its value and, indirectly, the value
of your investment in the Fund.

INSURANCE RELATED RISK

The bonds are backed by insurance companies (as shown under Defined Portfolio).
Insurance policies generally make payments only according to a bond's original
payment schedule and do not make early payments when a bond defaults or becomes
taxable. Although the federal government does not regulate the insurance
business, various state laws and federal initiatives and tax law changes could
significantly affect the insurance business. The claims-paying ability of the
insurance companies is generally rated A or better by Standard & Poor's or
another nationally recognized rating organization. The insurance company ratings
are subject to change at any time at the discretion of the rating agencies.

LITIGATION AND LEGISLATION RISKS

We do not know of any pending litigation that might have a material adverse
effect upon the Fund.

Future tax legislation could affect the value of the portfolio by:
- limiting real property taxes,
- reducing tax rates,
- imposing a flat or other form of tax, or
- exempting investment income from tax.

SELLING OR EXCHANGING UNITS

You can sell your units at any time for a price based on net asset value. Your
net asset value is calculated each business day by:
- ADDING the value of the bonds, net accrued interest, cash and any other Fund
assets;
- SUBTRACTING accrued but unpaid Fund expenses, unreimbursed Trustee advances,
cash held to buy back units or for distribution to investors and any other
Fund liabilities; and
- DIVIDING the result by the number of outstanding units.

Your net asset value when you sell may be more or less than your cost because of
sales fees, market movements and changes in the portfolio.

SPONSORS' SECONDARY MARKET

While we are not obligated to do so, we will buy back units at net asset value
without any other fee or charge. We may resell the units to other buyers or to
the Trustee. You should consult your financial professional for current market
prices to determine if other broker-dealers or banks are offering higher prices.

We have maintained a secondary market continuously for over 28 years, but we
could discontinue it without prior notice for any business reason.

9
<PAGE>
SELLING UNITS TO THE TRUSTEE

Regardless of whether we maintain a secondary market, you can sell your units to
the Trustee at any time by sending the Trustee a letter (with any outstanding
certificates if you hold unit certificates). You must properly endorse your
certificates (or execute a written transfer instrument with signatures
guaranteed by an eligible institution). Sometimes, additional documents are
needed such as a trust document, certificate of corporate authority, certificate
of death or appointment as executor, administrator or guardian.

Within seven days after your request and the necessary documents are received,
the Trustee will mail a check to you. Contact the Trustee for additional
information.

As long as we are maintaining a secondary market, the Trustee will sell your
units to us at a price based on net asset value. If there is no secondary
market, the Trustee may sell your units in the over-the-counter market for a
higher price, but it is not obligated to do so. In that case, you will receive
the net proceeds of the sale.

If the Fund does not have cash available to pay you for units you are selling,
the agent for the Sponsors will select bonds to be sold. Bonds will be selected
based on market and credit factors. These sales could be made at times when the
bonds would not otherwise be sold and may result in your receiving less than the
unit par value and also reduce the size and diversity of the Fund.

There could be a delay in paying you for your units:
- if the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- if the SEC determines that trading on the New York Stock Exchange is
restricted or that an emergency exists making sale or evaluation of the
bonds not reasonably practicable; and
- for any other period permitted by SEC order.

EXCHANGE OPTION

You may exchange units of certain Defined Asset Funds for units of this Fund at
a maximum exchange fee of 1.90%. You may exchange units of this Fund for units
of certain other funds at a reduced sales fee if your investment goals change.
To exchange units, you should talk to your financial professional about what
funds are exchangeable, suitable and currently available.

Normally, an exchange is taxable and you must recognize any gain or loss on the
exchange. However, the IRS may try to disallow a loss if the portfolios of the
two funds are not materially different; you should consult your own tax adviser.

We may amend or terminate this exchange option at any time without notice.

HOW THE FUND WORKS

PRICING

The price of a unit includes interest accrued on the bonds, less expenses, from
the most recent Record Day up to, but not including, the settlement date, which
is usually three

10
<PAGE>
business days after the purchase date of the unit.

A portion of the price of a unit consists of cash so that the Trustee can
provide you with regular monthly income. When you sell your units you will
receive your share of this cash.

EVALUATIONS

An independent Evaluator values the bonds on each business day (excluding
Saturdays, Sundays and the following holidays as observed by the New York Stock
Exchange: New Year's Day, Presidents' Day, Martin Luther King, Jr. Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas).
Bond values are based on current bid or offer prices for the bonds or comparable
bonds. In the past, the difference between bid and offer prices of publicly
offered tax-exempt bonds has ranged from 0.5% of face amount on actively traded
issues to 3.5% on inactively traded issues; the difference has averaged between
1 and 2%.

INCOME

The Trustee credits interest to an Income Account and other receipts to a
Capital Account. The Trustee may establish a Reserve Account by withdrawing from
these accounts amounts it considers appropriate to pay any material liability.
These accounts do not bear interest.

EXPENSES

The Trustee is paid monthly. It also benefits when it holds cash for the Fund in
non-interest bearing accounts. The Trustee may also receive additional amounts:
- 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.

[Any quarterly deferred sales charges you owe are paid with interest and
principal from certain bonds. If these amounts are not enough, the rest will be
paid out of distributions to you from the Fund's Capital and Income Accounts.]

11
<PAGE>
The Sponsors will pay advertising and selling expenses at no charge to the Fund.
If Fund expenses exceed initial estimates, the Fund will owe the excess. The
Trustee has a lien on Fund assets to secure reimbursement of Fund expenses and
may sell bonds if cash is not available.

PORTFOLIO CHANGES

The Sponsors and Trustee are not liable for any default or defect in a bond.

Unlike a mutual fund, the portfolio is designed to remain intact and we may keep
bonds in the portfolio even if their credit quality declines or other adverse
financial circumstances occur. However, we may sell a bond in certain cases if
we believe that certain adverse credit conditions exist or if a bond becomes
taxable.

If we maintain a secondary market in units but are unable to sell the units that
we buy in the secondary market, we will redeem units, which may affect the
composition of the portfolio. Units offered in the secondary market may not
represent the same face amount of bonds that they did originally.

We decide whether or not to offer units for sale that we acquire in the
secondary market after reviewing:
- diversity of the portfolio;
- size of the Fund relative to its original size;
- ratio of Fund expenses to income;
- current and long-term returns;
- degree to which units may be selling at a premium over par; and
- cost of maintaining a current prospectus.

FUND TERMINATION

The Fund will terminate following the stated maturity or sale of the last bond
in the portfolio. The Fund may also terminate earlier with the consent of
investors holding 51% of the units or if total assets of the Fund have fallen
below 40% of the face amount of bonds deposited. We will decide whether to
terminate the Fund early based on the same factors used in deciding whether or
not to offer units in the secondary market.

When the Fund is about to terminate you will receive a notice, and you will be
unable to sell your units after that time. On or shortly before termination, we
will sell any remaining bonds, and you will receive your final distribution. Any
bond that cannot be sold at a reasonable price may continue to be held by the
Trustee in a liquidating trust pending its final sale.

You will pay your share of the expenses associated with termination, including
brokerage costs in selling bonds. This may reduce the amount you receive as your
final distribution.

CERTIFICATES

Certificates for units are issued on request. You may transfer certificates by
complying with the requirements for redeeming certificates, described above. You
can replace lost or mutilated certificates by delivering satisfactory indemnity
and paying the associated costs.

TRUST INDENTURE

The Fund is a "unit investment trust" governed by a Trust Indenture, a contract

12
<PAGE>
among the Sponsors, the Trustee and the Evaluator, which sets forth their duties
and obligations and your rights. A copy of the Indenture is available to you on
request to the Trustee. The following summarizes certain provisions of the
Indenture.

The Sponsors and the Trustee may amend the Indenture without your consent:
- to cure ambiguities;
- to correct or supplement any defective or inconsistent provision;
- to make any amendment required by any governmental agency; or
- to make other changes determined not to be materially adverse to your best
interest (as determined by the Sponsors).

Investors holding 51% of the units may amend the Indenture. Every investor must
consent to any amendment that changes the 51% requirement. No amendment may
reduce your interest in the Fund without your written consent.

The Trustee may resign by notifying the Sponsors. The Sponsors may remove the
Trustee without your consent if:
- it fails to perform its duties and the Sponsors determine that its
replacement is in your best interest; or
- it becomes incapable of acting or bankrupt or its affairs are taken over by
public authorities.

Investors holding 51% of the units may remove the Trustee. The Evaluator may
resign or be removed by the Sponsors and the Trustee without the consent of
investors. The resignation or removal of either becomes effective when a
successor accepts appointment. The Sponsors will try to appoint a successor
promptly; however, if no successor has accepted within 30 days after notice of
resignation, the resigning Trustee or Evaluator may petition a court to appoint
a successor.

Any Sponsor may resign as long as one Sponsor with a net worth of $2 million
remains and agrees to the resignation. The remaining Sponsors and the Trustee
may appoint a replacement. If there is only one Sponsor and it fails to perform
its duties or becomes bankrupt the Trustee may:
- remove it and appoint a replacement Sponsor;
- liquidate the Fund; or
- continue to act as Trustee without a Sponsor.

Merrill Lynch, Pierce, Fenner & Smith Incorporated acts as agent for the
Sponsors.

The Trust Indenture contains customary provisions limiting the liability of the
Trustee, the Sponsors and the Evaluator.

LEGAL OPINION

Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, as
special counsel for the Sponsors, has given an opinion that the units are
validly issued.

AUDITORS

Deloitte & Touche LLP, 2 World Financial Center, New York, New York 10281,
independent accountants, audited the Statement of Condition included in this
prospectus.

13
<PAGE>
SPONSORS

The Sponsors are:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (a wholly-owned subsidiary of
Merrill Lynch & Co., Inc.)
P.O. Box 9051,
Princeton, NJ 08543-9051
SALOMON SMITH BARNEY INC. (an indirectly wholly-owned subsidiary of Citigroup
Inc.)
388 Greenwich Street--23rd Floor,
New York, NY 10013
DEAN WITTER REYNOLDS INC. (a principal operating subsidiary of Morgan Stanley
Dean Witter & Co.)
Two World Trade Center--59th Floor,
New York, NY 10048
PRUDENTIAL SECURITIES INCORPORATED (an indirect wholly-owned subsidiary of the
Prudential Insurance Company of America)
One New York Plaza
New York, NY 10292
PAINEWEBBER INCORPORATED (a wholly-owned subsidiary of PaineWebber Group Inc.)
1285 Avenue of the Americas,
New York, NY 10019

Each Sponsor is a Delaware corporation and it, or its predecessor, has acted as
sponsor to many unit investment trusts. As a registered broker-dealer each
Sponsor buys and sells securities (including investment company shares) for
others (including investment companies) and participates as an underwriter in
various selling groups.

TRUSTEE

The Chase Manhattan Bank, Unit Investment Trust Department, 4 New York
Plaza--6th Floor, New York, New York 10004, is the Trustee.

It is supervised by the Federal Deposit Insurance Corporation, the Board of
Governors of the Federal Reserve System and New York State banking authorities.

UNDERWRITERS' AND SPONSORS' PROFITS

Underwriters receive sales charges when they sell units. The Sponsors also
realized a profit or loss on the initial deposit of the bonds. Any cash made
available by you to the Sponsors before the settlement date for those units may
be used in the Sponsors' businesses to the extent permitted by federal law and
may benefit the Sponsors.

A Sponsor or Underwriter may realize profits or sustain losses on bonds in the
Fund which were acquired from underwriting syndicates of which it was a member.

In maintaining a secondary market, the Sponsors will also realize profits or
sustain losses in the amount of any difference between the prices at which they
buy units and the prices at which they resell or redeem them.

PUBLIC DISTRIBUTION

The Sponsors do not intend to qualify units for sale in any foreign countries.
This prospectus does not constitute an offer to sell units in any country where
units cannot lawfully be sold.

CODE OF ETHICS

Merrill Lynch, as agent for the Sponsors, has adopted a code of ethics requiring
preclearance and reporting of personal securities transactions by its employees
with access to information on portfolio

14
<PAGE>
transactions. The goal of the code is to prevent fraud, deception or misconduct
against the Fund and to provide reasonable standards of conduct.

YEAR 2000 ISSUES

Many computer systems were designed in such a way that they may be unable to
distinguish between the year 2000 and the year 1900 (commonly known as the "Year
2000 Problem"). We do not expect that the computer system changes necessary to
prepare for the Year 2000 will cause any major operational difficulties for the
Fund. The Year 2000 Problem may adversely affect the issuers of the bonds
contained in the Portfolio, but we cannot predict whether any impact will be
material to the Fund as a whole.

TAXES

The following summary describes some of the important income tax consequences of
holding units. It assumes that you are not a dealer, financial institution,
insurance company or other investor with special circumstances or subject to
special rules. You should consult your own tax adviser about your particular
circumstances.

At the date of issue of each bond, counsel for the issuer delivered an opinion
to the effect that interest on the bond is exempt from regular federal income
tax. However, interest may be subject to state and local taxes and may be taken
into account in determining your preference items for alternative minumum tax
purposes. Neither we nor our counsel have reviewed the issuance of the bonds,
related proceedings or the basis for the opinions of counsel for the issuers. We
cannot assure you that the issuer (or other users) have complied or will comply
with any requirements necessary for a bond to be tax-exempt. If any of the bonds
were determined not to be tax-exempt, you could be required to pay income tax
for current and prior years, and if the Fund were to sell the bond, it might
have to sell it at a substantial discount.

In the opinion of our counsel, under existing law:

GENERAL TREATMENT OF THE FUND AND YOUR INVESTMENT

The Fund will not be taxed as a corporation for federal income tax purposes, and
you will be considered to own directly your share of each bond in the Fund.

GAIN OR LOSS UPON DISPOSITION

When all or part of your share of a bond is disposed of (for example, when the
Fund sells, exchanges or redeems a bond or when you sell or exchange your
units), you will generally recognize capital gain or loss. Your gain, however,
will generally be ordinary income to the extent of any accrued "market
discount". Generally you will have market discount to the extent that your basis
in a bond when you purchase a unit is less than its stated redemption price at
maturity (or, if it is an original issue discount bond, the issue price
increased by original issue discount that has accrued on the bond before your
purchase). You should consult your tax adviser in this regard.

If your net long-term capital gains exceed your net short-term capital losses,
the excess may be subject to tax at a lower rate than

15
<PAGE>
ordinary income. Any capital gain from the Fund will be long-term if you are
considered to have held your investment on each bond for more than one year and
short-term otherwise. If you are an individual and sell your units after holding
them for more than one year, you may be entitled to a 20% maximum federal tax
rate on any resulting gains. Consult your tax adviser in this regard. Because
the deductibility of capital losses is subject to limitations, you may not be
able to deduct all of your capital losses.

YOUR BASIS IN THE BONDS

Your aggregate basis in the bonds will be equal to the cost of your units,
including any sales charges and the organizational expenses you pay, adjusted to
reflect any accruals of "original issue discount," "acquisition premium" and
"bond premium". You should consult your tax adviser in this regard.

EXPENSES

If you are not a corporate investor, you will not be entitled to a deduction for
your share of fees and expenses of the Fund. Also, if you borrowed money in
order to purchase or carry your units, you will not be able to deduct the
interest on this borrowing for federal income tax purposes. The IRS may treat
your purchase of units as made with borrowed money even if the money is not
directly traceable to the purchase of units.

STATE AND LOCAL TAXES

Under the income tax laws of the State and City of New York, the Fund will not
be taxed as a corporation. If you are a New York taxpayer, your income from the
Fund will not be tax-exempt in New York except to the extent that the income is
earned on bonds that are tax-exempt for New York purposes. Depending on where
you live, your income from the Fund may be subject to state and local taxation.
You should consult your tax adviser in this regard.

SUPPLEMENTAL INFORMATION

You can receive at no cost supplemental information about the Fund by calling
the Trustee. The supplemental information includes more detailed risk disclosure
about the types of bonds that may be in the Fund's portfolio, general risk
disclosure concerning any insurance securing certain bonds, and general
information about the structure and operation of the Fund. The supplemental
information is also available from the SEC.

16
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES - 196, DEFINED ASSET FUNDS

REPORT OF INDEPENDENT ACCOUNTANTS

The Sponsors, Trustee and Holders of Municipal Investment Trust Fund,
Insured Series - 196, Defined Asset Funds:

We have audited the accompanying statement of condition of Municipal
Investment Trust Fund, Insured Series - 196, Defined Asset Funds,
including the portfolio, as of October 31, 1999 and the related
statements of operations and of changes in net assets for the years
ended October 31, 1999, 1998 and 1997. These financial statements are
the responsibility of the Trustee. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. Securities owned at October 31, 1999, 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, Insured Series - 196, Defined Asset Funds at
October 31, 1999 and the results of its operations and changes in its
net assets for the above-stated years in conformity with generally
accepted accounting principles.

DELOITTE & TOUCHE LLP

New York, N.Y.
November 23, 1999

D - 1.
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES - 196, DEFINED ASSET FUNDS

STATEMENT OF CONDITION
As of October 31, 1999

<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities
at value (cost $ 7,843,265)(Note 1) ......... $ 7,516,625
Accrued interest................................ 142,137
Cash - income .................................. 740
Cash - principal ............................... 26,279
-------------
Total trust property ......................... 7,685,781

LESS LIABILITIES:
Income advance from Trustee..................... $ 28,005
Accrued Sponsors' fees ......................... 3,117
Trustee's fees and expenses payable ............ 3,188 34,310
------------- -------------

NET ASSETS, REPRESENTED BY:
8,967 units of fractional undivided
interest outstanding (Note 3) ............... 7,542,904

Undistributed net investment income ............ 108,567 $ 7,651,471
------------- =============

UNIT VALUE ($ 7,651,471 / 8,967 units)............ $ 853.29
=============
</TABLE>

See Notes to Financial Statements.

D - 2.
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES - 196, DEFINED ASSET FUNDS

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Years Ended October 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:

Interest income ........................ $ 458,452 $ 482,273 $ 528,583
Trustee's fees and expenses ............ (11,319) (11,764) (12,502)
Sponsors' fees ......................... (3,687) (3,535) (3,600)
----------------------------------------------
Net investment income .................. 443,446 466,974 512,481
----------------------------------------------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain (loss) on
securities sold or redeemed .......... 17,974 7,361 (4,250)
Unrealized appreciation (depreciation)
of investments ....................... (771,150) 303,590 366,630
----------------------------------------------
Net realized and unrealized
gain (loss) on investments ........... (753,176) 310,951 362,380
----------------------------------------------

NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ (309,730) $ 777,925 $ 874,861
==============================================
</TABLE>

See Notes to Financial Statements.

D - 3.
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES - 196, DEFINED ASSET FUNDS

STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
Years Ended October 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
Net investment income .................. $ 443,446 $ 466,974 $ 512,481
Realized gain (loss) on
securities sold or redeemed .......... 17,974 7,361 (4,250)
Unrealized appreciation (depreciation)
of investments ....................... (771,150) 303,590 366,630
----------------------------------------------
Net increase in net assets
resulting from operations ............ (309,730) 777,925 874,861
----------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income ................................ (444,017) (467,069) (515,900)
Principal .............................. (17,906) (1,000,000)
----------------------------------------------
Total distributions .................... (461,923) (467,069) (1,515,900)
----------------------------------------------
SHARE TRANSACTIONS:
Redemption amounts - income ............ (8,145) (3,889)
Redemption amounts - principal ......... (621,654) (302,121)
----------------------------------------------
Total share transactions ............... (629,799) (306,010)
----------------------------------------------

NET INCREASE (DECREASE) IN NET ASSETS .... (1,401,452) 4,846 (641,039)

NET ASSETS AT BEGINNING OF YEAR .......... 9,052,923 9,048,077 9,689,116
----------------------------------------------
NET ASSETS AT END OF YEAR ................ $ 7,651,471 $ 9,052,923 $ 9,048,077
==============================================
PER UNIT:
Income distributions during
year ................................. $ 47.16 $ 47.32 $ 51.59
==============================================
Principal distributions during
year ................................. $ 1.86 $ 100.00
================= ===========
Net asset value at end of
year ................................. $ 853.29 $ 936.28 $ 904.81
==============================================
TRUST UNITS:
Redeemed during year ................... 702 331
Outstanding at end of year ............. 8,967 9,669 10,000
==============================================
</TABLE>

See Notes to Financial Statements.

D - 4.
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES - 196, 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 generally accepted accounting principles.

(A) Securities are stated at value as determined by the Evaluator
based on bid side evaluations for the securities.

(B) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.

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

Cost of 8,967 units at Date of Deposit ..................... $ 9,192,556
Less sales charge .......................................... 413,738
-----------
Net amount applicable to Holders ........................... 8,778,818
Redemptions of units - net cost of 1,033 units redeemed
less redemption amounts (principal)....................... 87,547
Realized gain on securities sold or redeemed ............... 21,085
Principal distributions .................................... (1,017,906)
Net unrealized depreciation of investments.................. (326,640)
-----------

Net capital applicable to Holders .......................... $ 7,542,904
===========

4. INCOME TAXES

As of October 31, 1999, net unrealized depreciation of investments,
based on cost for Federal income tax purposes, aggregated $326,640, of
which $ 375,260 related to depreciated securities and $ 48,620 related
to appreciated securities. The cost of investment securities for
Federal income tax purposes was $7,843,265 at October 31, 1999.

D - 5.
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES - 196, DEFINED ASSET FUNDS

PORTFOLIO
As of October 31, 1999

<TABLE>
<CAPTION>
Rating of Optional
Portfolio No. and Title of Issues Face Redemption
Securities (1) (4) Amount Coupon Maturities(3) Provisions(3) Cost Value(2)
---------- --------- ----------- ----------- ----------- ------------ ---------- ---------

<S> <C> <C> <C> <C> <C> <C> <C>
1 City of Sioux, IA, Hosp. Rev. Bonds AAA $ 885,000 5.250 % 2015 08/15/03 $ 844,104 $ 813,545
(Sisters of Mercy Hlth. Corp. @ 102.000
Obligated Group), 1993 Ser. O (MBIA Ins.)

2 Illinois Hlth. Facilities Auth. Rev. AAA 1,000,000 5.000 2022 08/15/03 908,050 844,810
Bonds, Ser. 1993 (The Childrens Mem. @ 102.000
Hosp.) (MBIA Ins.)

3 Indiana Hlth. Fac. Financing Auth., AAA 910,000 5.250 2023 09/01/03 861,497 806,105
Hosp. Rev. Bonds, Ser. 1993 (Union @ 102.000
Hospital) (MBIA Ins.)

4 Lower Colorado River Auth., TX, Jr. AAA 865,000 5.625 2017(5) 01/01/04 866,583 895,595
Lien Rfdg. Rev. Bonds, Fourth @ 100.000
Supplemental Ser. (FSA Ins.)

5 North Carolina Eastern Mun. Pwr. Agy., AAA 1,000,000 5.500 2021 01/01/03 992,960 924,640
Pwr. Sys. Rfdg. Rev. Bonds, Ser. @ 100.000
1993 B (Financial Guaranty Ins.)

6 Pennsylvania Intergovernmental Coop. AAA 645,000 5.625 2023(5) 06/15/03 648,521 668,130
Auth., Spec. Tax Rev. Bonds (City of @ 100.000
Philadelphia Funding Prog.),
Ser. of 1993 (MBIA Ins.)

7 Rhode Island Conv. Ctr. Auth., Rev. AAA 750,000 5.750 2020 05/15/03 766,650 722,010
Bonds, Ser. 1993 A (AMBAC Ins.) @ 102.000

8 Sabine River Auth. of Texas, AAA 1,000,000 5.550 2022 11/01/03 994,300 941,300
Collateralized Poll. Ctl. Rev. Rfdg. @ 102.000
Bonds (Texas Util. Elec. Co. Proj.),
Ser. 1993 (FSA Ins.)

</TABLE>

D - 6.
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES - 196, DEFINED ASSET FUNDS

PORTFOLIO
As of October 31, 1999

Rating of Optional
Portfolio No. and Title of Issues Face Redemption
Securities (1) (4) Amount Coupon Maturities(3) Provisions(3) Cost Value(2)
---------- --------- ----------- ----------- ----------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
9 The Comanche Cnty. Hosp. Auth., AAA $ 1,000,000 5.375 % 2023 07/01/03 $ 960,600 $ 900,490
(Lawton, OK, Hosp. Rev. Bonds, {199875DY8} @ 100.000
Ser. 1993 A (Connie Lee Ins.)

--------- --------- ---------
$ 8,055,000 $ 7,843,265 $ 7,516,625
========= ========= =========
</TABLE>

See Notes to Portfolio.

D - 7.
<PAGE>

MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES - 196, DEFINED ASSET FUNDS

NOTES TO PORTFOLIO
As of October 31, 1999

(1) The ratings of the bonds are by Standard & Poor's Ratings Group, or by
Moody's Investors Service, Inc. if followed by "(m)", or by Fitch
Investors Service, Inc. if followed by "(f)"; "NR" indicates that this
bond is not currently rated by any of the above-mentioned rating services.
These ratings have been furnished by the Evaluator but not confirmed with
the rating agencies.

(2) See Notes to Financial Statements.

(3) Optional redemption provisions, which may be exercised in whole or in
part, are initially at prices of par plus a premium, then subsequently at
prices declining to par. Certain securities may provide for redemption at
par prior or in addition to any optional or mandatory redemption dates or
maturity, for example, through the operation of a maintenance and
replacement fund, if proceeds are not able to be used as contemplated, the
project is condemned or sold or the project is destroyed and insurance
proceeds are used to redeem the securities. Many of the securities are
also subject to mandatory sinking fund redemption commencing on dates
which may be prior to the date on which securities may be optionally
redeemed. Sinking fund redemptions are at par and redeem only part of the
issue. Some of the securities have mandatory sinking funds which contain
optional provisions permitting the issuer to increase the principal amount
of securities called on a mandatory redemption date. The sinking fund
redemptions with optional provisions may, and optional refunding
redemptions generally will, occur at times when the redeemed securities
have an offering side evaluation which represents a premium over par. To
the extent that the securities were acquired at a price higher than the
redemption price, this will represent a loss of capital when compared with
the Public Offering Price of the Units when acquired. Distributions will
generally be reduced by the amount of the income which would otherwise
have been paid with respect to redeemed securities and there will be
distributed to Holders any principal amount and premium received on such
redemption after satisfying any redemption requests for Units received by
the Fund. The estimated current return may be affected by redemptions.

(4) All securities are insured, either on an individual basis or by portfolio
insurance, by a municipal bond insurance company which has been assigned
"AAA" claims paying ability by Standard & Poor's. Accordingly, Standard &
Poor's has assigned a "AAA" rating to the securities. Securities covered
by portfolio insurance are rated "AAA" only as long as they remain in the
Trust.

(5) Bonds with an aggregate face amount of $ 1,510,000 have been pre-refunded
and are expected to be called for redemption on the optional redemption
provision dates shown.

D - 8.
<PAGE>

DEFINED ASSET FUNDS-SM-

<TABLE>
<S> <C>
HAVE QUESTIONS ? MUNICIPAL INVESTMENT TRUST FUND
Request the most recent free INSURED SERIES--196
Information Supplement (A Unit Investment Trust)
that gives more details about ---------------------------------------
the Fund, by calling: This Prospectus does not contain
The Chase Manhattan Bank complete information about the
1-800-323-1508 investment company filed with the
The Bank of New York Securities and Exchange Commission in
1-800-221-7771 Washington, D.C. under the:
- Securities Act of 1933 (file no.
33-50437) 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.
14656--1/00
</TABLE>
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND
INSURED SERIES
DEFINED ASSET FUNDS
CONTENTS OF REGISTRATION STATEMENT

This Post-Effective Amendment to the Registration Statement on Form S-6
comprises the following papers and documents:

The facing sheet of Form S-6.

The cross-reference sheet (incorporated by reference to the Cross-Reference
Sheet to the Registration Statement of Defined Asset Funds Municipal Insured
Series, 1933 Act File No. 33-54565).

The Prospectus.

The Signatures.

The following exhibits:

1.1.1-- Form of Standard Terms and Conditions of Trust Effective as of
October 21, 1993 (incorporated by reference to Exhibit 1.1.1 to the
Registration Statement of Municipal Investment Trust Fund,
Multi-state Series--48, 1933 Act File No. 33-50247).

4.1 --Consent of the Evaluator.

5.1 --Consent of independent accountants.

9.1 -- Information Supplement (incorporated by reference to Exhibit 9.1 to
Amendment No. 1 to the Registration Statement of Municipal Investment
Trust Fund, Multistate Series--409, 1933 Act File No. 333-81777).

R-1
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND
INSURED SERIES--196
DEFINED ASSET FUNDS

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
MUNICIPAL INVESTMENT TRUST FUND, INSURED SERIES--196, DEFINED ASSET FUNDS
CERTIFIES THAT IT MEETS ALL OF THE REQUIREMENTS FOR EFFECTIVENESS OF THIS
REGISTRATION STATEMENT PURSUANT TO RULE 485(B) UNDER THE SECURITIES ACT OF 1933
AND HAS DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY
AUTHORIZED IN THE CITY OF NEW YORK AND STATE OF NEW YORK ON THE 19TH DAY OF
JANUARY, 2000.

SIGNATURES APPEAR ON PAGES R-3, R-4, R-5, R-6 AND R-7.

A majority of the members of the Board of Directors of Merrill Lynch,
Pierce, Fenner & Smith Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.

A majority of the members of the Board of Directors of Salomon Smith Barney
Inc. has signed this Registration Statement or Amendment to the Registration
Statement pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.

A majority of the members of the Board of Directors of Prudential Securities
Incorporated has signed this Registration Statement or Amendment to the
Registration Statement pursuant to Powers of Attorney authorizing the person
signing this Registration Statement or Amendment to the Registration Statement
to do so on behalf of such members.

A majority of the members of the Executive Committee of the Board of
Directors of PaineWebber Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.

A majority of the members of the Board of Directors of Dean Witter Reynolds
Inc. has signed this Registration Statement or Amendment to the Registration
Statement pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.

R-2
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR

<TABLE>
<S> <C>
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Board of Directors of Merrill Form SE and the following 1933 Act
Lynch, Pierce, File
Fenner & Smith Incorporated: Number: 333-70593
</TABLE>

GEORGE A. SCHIEREN
JOHN L. STEFFENS
By J. DAVID MEGLEN
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)

R-3
<PAGE>
SALOMON SMITH BARNEY INC.
DEPOSITOR

<TABLE>
<S> <C>
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Salomon Smith Barney Inc.: have been filed
under the 1933 Act
File Numbers:
333-63417 and
333-63033
</TABLE>

MICHAEL A. CARPENTER
DERYCK C. MAUGHAN

By GINA LEMON
(As authorized signatory for
Salomon Smith Barney Inc. and
Attorney-in-fact for the persons listed above)

R-4
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED
DEPOSITOR

<TABLE>
<S> <C>
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Prudential Securities have been filed
Incorporated: under Form SE and
the following 1933
Act File Numbers:
33-41631 and
333-15919
</TABLE>

ROBERT C. GOLDEN
ALAN D. HOGAN
A. LAURENCE NORTON, JR.
LELAND B. PATON
VINCENT T. PICA II
MARTIN PFINSGRAFF
HARDWICK SIMMONS
LEE B. SPENCER, JR.
BRIAN M. STORMS

By RICHARD R. HOFFMANN
(As authorized signatory for Prudential Securities
Incorporated and Attorney-in-fact for the persons
listed above)

R-5
<PAGE>
PAINEWEBBER INCORPORATED
DEPOSITOR

<TABLE>
<S> <C>
By the following persons, who constitute Powers of Attorney have been filed
the Board of Directors of PaineWebber under
Incorporated: the following 1933 Act File
Number: 33-55073
</TABLE>

MARGO N. ALEXANDER
TERRY L. ATKINSON
BRIAN M. BAREFOOT
STEVEN P. BAUM
MICHAEL CULP
REGINA A. DOLAN
JOSEPH J. GRANO, JR.
EDWARD M. KERSCHNER
JAMES P. MacGILVRAY
DONALD B. MARRON
ROBERT H. SILVER
MARK B. SUTTON
By ROBERT E. HOLLEY
(As authorized signatory for
PaineWebber Incorporated
and Attorney-in-fact for the persons listed above)

R-6
<PAGE>
DEAN WITTER REYNOLDS INC.
DEPOSITOR

<TABLE>
<S> <C>
By the following persons, who constitute Powers of Attorney have been filed
a majority of under Form SE and the following 1933
the Board of Directors of Dean Witter Act File Numbers: 33-17085,
Reynolds Inc.: 333-13039, 333-47553 and 89045
</TABLE>

BRUCE F. ALONSO
RICHARD M. DeMARTINI
RAYMOND J. DROP
JAMES F. HIGGINS
JOHN J. MACK
MITCHELL M. MERIN
STEPHEN R. MILLER
PHILIP J. PURCELL
JOHN H. SCHAEFER
THOMAS C. SCHNEIDER
ALAN A. SCHRODER
ROBERT G. SCOTT
By MICHAEL D. BROWNE
(As authorized signatory for
Dean Witter Reynolds Inc.
and Attorney-in-fact for the persons listed above)

R-7

EXHIBIT 4.1

STANDARD & POOR'S
A DIVISION OF THE McGRAW-HILL COMPANIES
J. J. KENNY
65 BROADWAY
NEW YORK, N.Y. 10006-2551
TELEPHONE (212) 770-4422
FAX 212/797-8681

January 19, 2000

Frank A. Ciccotto, Jr
Vice President
Tax-Exempt Evaluations

<TABLE>
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Defined Asset Funds
P.O. Box 9051
Princeton, New Jersey 08543-9051

The Chase Manhattan Bank
4 New York Plaza--6th Floor
New York, New York 10004
</TABLE>

RE: MUNICIPAL INVESTMENT TRUST FUND,
INSURED SERIES--196, DEFINED ASSET FUNDS

Gentlemen:

We have examined the post-effective Amendment to the Registration Statement
File No. 33-50437 for the above-captioned trust. We hereby acknowledge that
Kenny S&P Evaluation Services, a division of J. J. Kenny Co., Inc. is currently
acting as the evaluator for the trust. We hereby consent to the use in the
Amendment of the reference to Kenny S&P Evaluation Services, a division of J. J.
Kenny Co., Inc. as evaluator.

In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings currently indicated in our
KENNYBASE database.

You are hereby authorized to file copies of this letter with the Securities
and Exchange Commission.

Sincerely,
FRANK A. CICCOTTO
Vice President

Exhibit 5.1
CONSENT OF INDEPENDENT ACCOUNTANTS

The Sponsors and Trustee of
Municipal Investment Trust Fund--Insured Series--196 Defined Asset Funds

We consent to the use in this Post-Effective Amendment No. 6 to Registration
Stateme nt No. 33-50437 of our opinion dated November 23, 1999 appearing in the
Prospectus, which is part of such Registration Statement, and to the reference
to us under the heading "Miscellaneous--Auditors" in such Prospectus.

DELOITTE & TOUCHE LLP
New York, N.Y.
January 19, 2000