AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 2, 1995
REGISTRATION NO. 33-62037
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------------
AMENDMENT NO. 1
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
MULTISTATE SERIES - 97
DEFINED ASSET FUNDS
B. NAMES OF DEPOSITORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.
C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE, FENNER & SMITH SMITH BARNEY INC.
INCORPORATED 388 GREENWICH STREET--23RD FLOOR
DEFINED ASSET FUNDS NEW YORK, N.Y. 10013
P.O. BOX 9051
PRINCETON, N.J. 08543-9051
PAINEWEBBER INCORPORATED PRUDENTIAL SECURITIES DEAN WITTER REYNOLDS INC.
1285 AVENUE OF THE INCORPORATED TWO WORLD TRADE
AMERICAS ONE SEAPORT PLAZA CENTER--59TH FLOOR
NEW YORK, N.Y. 10019 199 WATER STREET NEW YORK, N.Y. 10048
NEW YORK, N.Y. 10292
D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:
TERESA KONCICK, ESQ. LAURIE A. HESSLEIN LEE B. SPENCER, JR.
P.O. BOX 9051 388 GREENWICH STREET ONE SEAPORT PLAZA
PRINCETON, N.J. 8543-9051 NEW YORK, NY 10013 199 WATER STREET
NEW YORK, N.Y. 10292
COPIES TO:
DOUGLAS LOWE, ESQ. ROBERT E. HOLLEY PIERRE DE SAINT PHALLE,
130 LIBERTY STREET--29TH 1200 HARBOR BLVD. ESQ.
FLOOR WEEHAWKEN, N.J. 07087 450 LEXINGTON AVENUE
NEW YORK, N.Y. 10019 NEW YORK, N.Y. 10017
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Beneficial Interest pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended.
F. PROPOSED MAXIMUM OFFERING PRICE TO THE PUBLIC OF THE SECURITIES BEING
REGISTERED: Indefinite
G. AMOUNT OF FILING FEE: $500 (as required by Rule 24f-2)
H. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of the registration statement.
/ x / Check box if it is proposed that this filing will become effective at 9:30
a.m. on November 2, 1995 pursuant to Rule 487.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
DEFINED ASSET FUNDSSM
- --------------------------------------------------------------------------------
MUNICIPAL INVESTMENT ESTIMATED CURRENT RETURN shows the estimated
TRUST FUND annual cash to be received from interest-bearing
MULTISTATE SERIES 97 bonds in the Portfolio (net of estimated annual
(UNIT INVESTMENT expenses) divided by the Public Offering Price
TRUSTS) (including the maximum sales charge).
- ------------------------------ESTIMATED LONG TERM RETURN is a measure of the
/ / DESIGNED FOR estimated return over the estimated life of the
TAX-FREE INCOME Fund. This represents an average of the yields to
/ / DEFINED PORTFOLIOS OF maturity (or in certain cases, to an earlier call
MUNICIPAL BONDS date) of the individual bonds in the Portfolio,
/ / MONTHLY INCOME adjusted to reflect the maximum sales charge and
/ / AAA-RATED estimated expenses. The average yield for the
CALIFORNIA INSURED TRUST Portfolio is derived by weighting each bond's
5.19% yield by its market value and the time remaining
ESTIMATED CURRENT RETURN to the call or maturity date, depending on how the
5.26% bond is priced. Unlike Estimated Current Return,
ESTIMATED LONG TERM RETURN Estimated Long Term Return takes into account
NEW JERSEY INSURED TRUST maturities, discounts and premiums of the
5.09% underlying bonds.
ESTIMATED CURRENT RETURN No return estimate can be predictive of your
5.13% actual return because returns will vary with
ESTIMATED LONG TERM RETURN purchase price (including sales charges), how long
NEW YORK INSURED TRUST units are held, changes in Portfolio composition,
5.10% changes in interest income and changes in fees and
ESTIMATED CURRENT RETURN expenses. Therefore, Estimated Current Return and
5.10% Estimated Long Term Return are designed to be
ESTIMATED LONG TERM RETURN comparative rather than predictive. A yield
PENNSYLVANIA INSURED TRUST calculation which is more comparable to an
5.15% individual bond may be higher or lower than
ESTIMATED CURRENT RETURN Estimated Current Return or Estimated Long Term
5.18% Return which are more comparable to return
ESTIMATED LONG TERM RETURN calculations used by other investment products.
AS OF NOVEMBER 1, 1995
-------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
SPONSORS: HAS THE COMMISSION OR ANY STATE SECURITIES
Merrill Lynch, COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
Pierce, Fenner & Smith OF THIS DOCUMENT. ANY REPRESENTATION TO THE
Incorporated CONTRARY IS A CRIMINAL OFFENSE.
Smith Barney Inc. Inquiries should be directed to the Trustee at
PaineWebber Incorporated 1-800-221-7771.
Prudential Securities Prospectus dated November 2, 1995.
Incorporated INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
Dean Witter Reynolds Inc. AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
- --------------------------------------------------------------------------------
Defined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $100 billion sponsored in the last 25 years. Each Defined
Asset Fund is a portfolio of preselected securities. Each portfolio is divided
into 'units' representing equal shares of the underlying assets. Each unit
receives an equal share of income and principal distributions.
Defined Asset Funds offer several defined 'distinctives'. You know in advance
what you are investing in and that changes in the portfolio are limited - a
defined portfolio. Most defined bond funds pay interest monthly - defined
income. The portfolio offers a convenient and simple way to invest - simplicity
defined.
Your financial professional can help you select a Defined Asset Fund to meet
your personal investment objectives. Our size and market presence enable us to
offer a wide variety of investments. The Defined Asset Funds family offers:
o Municipal portfolios
o Corporate portfolios
o Government portfolios
o Equity portfolios
o International portfolios
The terms of Defined Funds are as short as one year or as long as 30 years.
Special defined funds are available including: insured funds, double and triple
tax-free funds and funds with 'laddered maturities' to help protect against
changing interest rates. Defined Asset Funds are offered by prospectus only.
- ----------------------------------------------------------------
Defined Multistate Series
- ----------------------------------------------------------------
Our defined portfolios of municipal bonds offers you a simple and convenient way
to earn tax-free monthly income. And by purchasing Defined Asset Funds, you not
only receive professional selection but also gain the advantage of reduced risk
by investing in bonds of several different issuers.
INVESTMENT OBJECTIVE
To provide interest income exempt from regular federal income taxes through
investment in a fixed portfolio consisting primarily of municipal bonds issued
by or on behalf of a single state and its local governments and authorities.
Units may also be exempt from certain state and local taxes for residents of the
State.
DIVERSIFICATION
Each Portfolio contains a number of different bond issues. Spreading your
investment among different issuers reduces your risk, but does not eliminate it,
especially since each Portfolio contains bonds of only one State. Because of
maturities, sales or other dispositions of bonds, the size, composition and
return of the Portfolio will change over time.
- ----------------------------------------------------------------
Defining Your Portfolio
- ----------------------------------------------------------------
PROFESSIONAL SELECTION AND SUPERVISION
Each Portfolio contains a variety of bonds selected by experienced buyers and
research analysts. The Fund is not actively managed; however, it is regularly
reviewed and a bond can be sold if retaining it is considered detrimental to
investors' interests.
MONTHLY FEDERALLY TAX-FREE INTEREST INCOME
Each Portfolio pays monthly income, even though the bonds generally pay interest
semi-annually.
AAA-RATED AND INSURED
The bonds included in each Portfolio are insured. This insurance guarantees the
timely payment of principal and interest of the bonds, but does not guarantee
the value of the bonds or the units. As a result of the insurance, the units of
the Portfolios are AAA-rated by Standard & Poor's Ratings Group. Insurance does
not cover accelerated payments of principal or any increase in interest payments
or premiums payable on mandatory redemptions, including if interest on a bond is
determined to be taxable. (See Bonds Backed by Letters of Credit or Insurance in
Part B).
BOND CALL FEATURES
It is possible that during periods of falling interest rates, a bond with a
coupon higher than current market rates will be prepaid or 'called', at the
option of the bond issuer, before its expected maturity. When bonds are
initially callable, the price is usually at a premium to par which then declines
to par over time. Bonds may also be subject to a mandatory sinking fund or have
extraordinary redemption provisions. For example, if the bond's proceeds are not
able to be used as intended the bond may be redeemed. This redemption and the
sinking fund are often at par.
CALL PROTECTION
Although the bonds may be subject to optional refunding or call provisions, we
have selected bonds with call protection. This call protection means that any
bond in a Portfolio generally cannot be called for a number of years and
thereafter at a declining premium over par.
TAX INFORMATION
Based on the opinion of bond counsel, income from the bonds held by this Fund is
generally 100% exempt under existing laws from regular federal income tax and
certain state and local personal income taxes for residents of a particular
State. Any gain on a disposition of the underlying bonds or units will be
subject to tax.
A-2
<PAGE>
- ----------------------------------------------------------------
Defining Your Investment
- ----------------------------------------------------------------
PUBLIC OFFERING PRICE
The Public Offering Price as of November 1, 1995, the business day prior to the
Initial Date of Deposit, is based on the aggregate offer side value of the
underlying bonds in the Portfolio, plus cash, divided by the number of units
outstanding, plus a maximum sales charge of 4.50% on the underlying bonds. The
Public Offering Price on any subsequent date will vary. An amount equal to
principal cash, if any, as well as net accrued but undistributed interest on the
unit is added to the Public Offering Price. The underlying bonds are evaluated
by an independent evaluator at 3:30 p.m. Eastern time on every business day.
UNIT PAR VALUE
The par value of your unit--the amount of money you will receive by termination
of the Fund, assuming all the bonds are paid at maturity or are redeemed by the
issuer at par or sold by the Fund at par to meet redemptions--is $1,000.
LOW MINIMUM INVESTMENT
You can get started with a minimum purchase of about $1,000.
REINVESTMENT OPTION
You can elect to automatically reinvest your distributions into a separate
portfolio of federally tax-exempt bonds. Most or all of the bonds in that
portfolio, however, will not be insured or exempt from state and local taxes.
Reinvesting helps to compound your income free of federal income taxes.
PRINCIPAL DISTRIBUTIONS
Principal from sales, redemptions and maturities of bonds in the Portfolios will
be distributed to investors periodically when the amount to be distributed is
more than $5.00 per unit.
TERMINATION DATE
The Portfolios will generally terminate no later than the maturity date of the
last maturing bond listed in the Portfolio. The Portfolios may be terminated if
the value is less than 40% of the face amount of bonds deposited.
SPONSORS' PROFIT OR LOSS
The Sponsors' profit or loss associated with each Portfolio will include the
receipt of applicable sales charges, any fees for underwriting or placing bonds,
fluctuations in the Public Offering Price or secondary market price of units and
a gain or loss on the deposit of the bonds (see Underwriters' and Sponsors'
Profit in Part B).
SELLING YOUR INVESTMENT
You may sell your units at any time. Your price is based on the then current net
asset value of the Portfolio (generally based on the lower, bid side evaluation
of the bonds, as determined by an independent evaluator, plus principal cash, if
any, as well as accrued interest). There is no fee for selling your units.
- ----------------------------------------------------------------
Defining Your Risks
- ----------------------------------------------------------------
RISK FACTORS
Unit price fluctuates and could be adversely affected by increasing interest
rates as well as the financial condition of the issuers of the bonds and any
insurance companies backing certain of the bonds. Because of the possible
maturity, sale or other disposition of securities, the size, composition and
return of the portfolio may change at any time. Because of the sales charges,
returns of principal and fluctuations in unit price, among other reasons, the
sale price will generally be less than the cost of your units. Unit prices could
also be adversely affected if a limited trading market exists in any security to
be sold. There is no guarantee that the Fund will achieve its investment
objective.
In addition, each Portfolio has fewer bond issues than a national fund, and is
concentrated in bonds of issuers located in only one State. There may be
additional risk from decreased diversification as well as from factors
particular to that State.
UNDERWRITING ACCOUNT
None of the Sponsors have participated as sole underwriter, managing underwriter
or member of an underwriting syndicate from which any of the bonds in the
Portfolio were acquired.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
P.O. Box 9051,
Princeton, NJ 08543-9051 38.64%
SMITH BARNEY INC.
388 Greenwich Street--23rd Floor,
New York, NY 10013 23.30%
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas,
New York, NY 10019 23.30%
PRUDENTIAL SECURITIES INCORPORATED
One Seaport Plaza--199 Water Street,
New York, NY 10292 6.99%
DEAN WITTER REYNOLDS INC.
Two World Trade Center--59th Floor,
New York, NY 10048 7.77%
---------
100.00%
---------
---------
A-3
<PAGE>
- -------------------------------------------------------------------------------
Defined California Insured Trust
- -------------------------------------------------------------------------------
PORTFOLIO DIVERSIFICATION
The Portfolio contains 7 California bond issues.
TYPES OF BONDS
The Portfolio consists of $5,000,000 face amount of municipal bonds of the
following types:
APPROXIMATE
PORTFOLIO PERCENTAGE
/ / Special Tax Issues 25%
/ / Municipal Water/Sewer Utilities 15%
/ / State/Local Municipal Electric Utilities 15%
/ / Hospitals/Health Care Facilities 30%
/ / Industrial Development Revenue 15%
AAA-RATED AND INSURED
The approximate percentage of the aggregate face amount insured by each
insurance company is:
MBIA Insurance Corporation 55%
Financial Guaranty Insurance Company 30%
AMBAC Indemnity Corporation 15%
PORTFOLIO CONCENTRATIONS
The Portfolio is concentrated in Hospitals/Health Care Facility and Special Tax
Issue bonds and is therefore dependent to a significant degree on revenues
generated from those particular activities (see Risk Factors in Part B). The
Portfolio is also concentrated in bonds of California issuers and is subject to
additional risk from decreased diversification as well as from factors that may
be particular to California, which are briefly described on page A-6.
- ----------------------------------------------------------------
Defining Your Income
- ----------------------------------------------------------------
WHAT YOU MAY EXPECT
(PAYABLE ON THE 25TH DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 10TH DAY OF
THE MONTH):
First Distribution per unit
(November 25, 1995): $ 1.17
Regular Monthly Income per unit
(Beginning on December 25, 1995): $ 4.41
Annual Income per unit: $ 52.97
These figures are estimates determined as of the business day prior to the
Initial Date of Deposit and actual payments may vary.
Estimated cash flows are available upon request from the Sponsors.
- ----------------------------------------------------------------
Defining Your Costs
- ----------------------------------------------------------------
SALES CHARGE
Although the Trust is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.
As a %
of Initial As a %
Offering Period of Secondary
Public Market Public
Offering Price Offering Price
----------------- -----------------
Maximum Sales Charges 4.50% 5.50%
The Trust (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states and the initial audit of the Portfolio--as is common for mutual
funds. Historically, the Sponsors of unit investment trusts have paid all the
costs of establishing those trusts.
ESTIMATED ANNUAL FUND OPERATING EXPENSES
As a %
of Average
Net Assets* Per Unit
----------------- ---------------
Trustee's Fee .071% $ 0.69
Maximum Portfolio Supervision
and Bookkeeping Fees .046% 0.45
Evaluator's Fee .026% 0.25
Organizational Costs .021% 0.20
Other Operating Expenses .048% 0.47
----------------- ---------------
TOTAL .212% $ 2.06
- ---------------
* Based on the mean of the bid and offer side evaluations.
COSTS OVER TIME
You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods:
1 Year 3 Years 5 Years 10 Years
$47 $52 $56 $71
The example assumes reinvestment of all distributions into additional units of
the Fund (a reinvestment option different from that offered by this Fund) and
uses a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The Costs Over Time above
reflect both sales charges and operating expenses on an increasing investment
(because the net annual return is reinvested). The example should not be
considered a representation of past or future expenses or annual rate of return;
the actual expenses and annual rate of return may be more or less than the
example.
As of November 1, 1995, the Public Offering Price was $1,020.14, based on the
aggregate offer side value of the bonds ($4,872,072.50), plus cash ($47,000),
divided by the number of units outstanding (5,047), plus a maximum sales charge
of 4.50% on the underlying bonds. An amount equal to principal cash, if any, as
well as net accrued but undistributed interest on the unit is added to the
Public Offering Price. Sponsors' profit on deposit was $49,945.00.
The bid side redemption and secondary market repurchase price as of November 1,
1995 was $970.69 ($49.45 less than the Public Offering Price).
A-4
<PAGE>
<TABLE><CAPTION>
- --------------------------------------------------------------------------------
Defined California Insured Portfolio
- --------------------------------------------------------------------------------
Municipal Investment Trust Fund
Multistate Series--97
California Insured Trust November 2, 1995
OPTIONAL SINKING
RATING REFUNDING FUND COST
PORTFOLIO TITLE OF ISSUES (1) REDEMPTIONS (2) REDEMPTIONS (2) TO FUND (3)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. $750,000 California Statewide
Communities Dev. Auth. (Sutter
Hlth. Oblig. Grp.) (MBIA Ins.),
5.50%, 8/15/23 AAA 8/15/03 @ 102 8/15/14 $ 729,127.50
2. $750,000 Southern California
Pub. Pwr. Auth., San Juan Pwr.
Proj. Rev. Bonds, 1993 Ser. A (MBIA
Ins.), 5.00%, 1/1/20 AAA 1/1/03 @ 100 1/1/15 686,100.00
3. $750,000 City of Fresno, CA,
Wtr. Sys. Rev. Rfdg. Bonds, 1993
Ser. A (Financial Guaranty Ins.),
5.30%, 6/1/20 AAA 6/1/03 @ 101 6/1/16 715,305.00
4. $750,000 County of Madera, CA,
Certs. of Part. (Valley Children's
Hosp. Proj.), Ser. 1995 (MBIA
Ins.), 5.75%, 3/15/28 AAA 3/15/05 @ 102 3/15/24 744,487.50
5. $750,000 Poway Redev. Agy., CA,
Paguay Redev. Proj., Sub. Tax
Alloc. Rfdg. Bonds, Ser. 1993
(Financial Guaranty Ins.), 5.75%,
12/15/26 AAA 12/15/03 @ 102 6/15/24 741,645.00
6. $750,000 City of San Diego, CA,
Indl. Dev. Rev. Rfdg. Bonds (San
Diego Gas & Elec. Co.), 1993 Ser. A
(AMBAC Ins.), 5.90%, 6/1/18 AAA 6/1/03 @ 102 -- 755,407.50
7. $500,000 Brea Redev. Agy.,
Orange Cnty., CA, 1993 Tax Alloc.
Rfdg. Bonds (MBIA Ins.), 5.75%,
8/1/23 AAA 8/1/03 @ 102 8/1/18 500,000.00
------------------
$ 4,872,072.50
------------------
------------------
</TABLE>
- ------------------------------------
(1) All ratings are by Standard & Poor's Ratings Group. (See Appendix A to Part
B.)
(2) Bonds are first subject to optional redemptions (which may be exercised in
whole or in part) on the dates and at the prices indicated under the Optional
Refunding Redemptions column. In subsequent years, bonds are redeemable at
declining prices, but typically not below par value. Some issues may be subject
to sinking fund redemption or extraordinary redemption without premium prior to
the dates shown.
(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, 15% of the bonds were deposited at a
premium, 10% at par and 75% of the bonds were deposited at a discount from par.
A-5
<PAGE>
- --------------------------------------------------------------------------------
California Taxes and Risks
- --------------------------------------------------------------------------------
CALIFORNIA RISK FACTORS
The State of California continues to confront budgetary concerns. State
expenditures in recent years have exceeded projected amounts mainly because of
increased health and welfare caseloads, lower property taxes (requiring State
support for certain education expenses), lower than expected federal government
payments for immigration related costs, significant additional costs associated
with the construction and operation of correctional institutions and
extraordinary expenditures related to the January 1994 Los Angeles earthquake
and the recent severe flooding in various parts of the State. Also, in December
1994, Orange County, California and its Investment Pool filed for bankruptcy in
connection with substantial losses experienced by the Pool. The County has since
defaulted on certain of its obligations and substantial budget deficits may be
experienced by the County and other public agencies which participate in the
Pool. The ultimate financial impact of these events upon the County and other
Pool investors and the State of California, generally, or the liquidity or value
of their securities, cannot be predicted.
To balance the budget, the Governor of California has proposed, among other
things, a series of revenue shifts from local government, reliance on increased
federal aid and reductions in state spending. Major adjustments reflected in
recent budgets include a shift in property taxes from cities, counties, special
districts and redevelopment agencies to school and community college districts,
severe reductions in support for health and welfare programs and higher
education, and various other cuts in services, suspensions of tax credits and
payment deferrals.
Certain California constitutional amendments, legislative measures,
executive orders, administrative regulations and voter initiatives could have
adverse effects on the California economy. Among these are measures that have
established tax, spending or appropriations limits and prohibited the imposition
of certain new taxes, authorized the transfers of tax liabilities and
reallocations of tax receipts among governmental entities and provided for
minimum levels of funding.
Certain bonds in the Trust may be subject to provisions of California law
that could adversely affect payments on those bonds or limit the remedies
available to bondholders. Among these are bonds of health care 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
beneficiaries, and bonds secured by liens on real property.
General obligation bonds of the State of California are currently rated A1
by Moody's and A by Standard & Poor's.
CALIFORNIA TAXES
In the opinion of O'Melveny & Myers, Los Angeles, California, special
counsel on California tax matters, under existing California law:
The Trust is not an association taxable as a corporation for California tax
purposes. Each holder will be considered the owner of a pro rata portion of the
Trust Fund and will be deemed to receive his pro rata portion of the income
therefrom. To the extent interest on the Debt Obligations is exempt from
California personal income taxes, said interest is similarly exempt from
California personal income taxes in the hands of the holders, except to the
extent such holders are banks or corporations subject to the California
franchise tax. Holders will be subject to California income tax on any gain on
the disposition of all or part of his pro rata portion of a Debt Obligation in
the Trust Fund. A holder will be considered to have disposed of all or part of
his pro rata portion of each Debt Obligation when he sells or redeems all or
some of his Units. A holder will also be considered to have disposed of all or
part of his pro rata portion of a Debt Obligation when all or part of the Debt
Obligation is sold by the Trust Fund or is redeemed or paid at maturity. The
Debt Obligations and the Units are not taxable under the California personal
property tax law.
A-6
<PAGE>
- -------------------------------------------------------------------------------
Defined New Jersey Insured Trust
- -------------------------------------------------------------------------------
PORTFOLIO DIVERSIFICATION
The Portfolio contains 7 New Jersey bond issues.
TYPES OF BONDS
The Portfolio consists of $3,250,000 face amount of municipal bonds of the
following types:
APPROXIMATE
PORTFOLIO PERCENTAGE
/ / Industrial Development Revenue 15%
/ / Housing 15%
/ / General Obligations 40%
/ / Universities/Colleges 14%
/ / Municipal Water/Sewer Utilities 15%
AAA-RATED AND INSURED
The approximate percentage of the aggregate face amount insured by each
insurance company is:
MBIA Insurance Corporation 31%
Financial Guaranty Insurance Company 31%
AMBAC Indemnity Corporation 38%
PORTFOLIO CONCENTRATIONS
The Portfolio is considered to be concentrated in General Obligation bonds. (See
Risk Factors in Part B). The Portfolio is also concentrated in bonds of New
Jersey issuers and is subject to additional risk from decreased diversification
as well as from factors that may be particular to New Jersey, which are briefly
described on page A-9.
- ----------------------------------------------------------------
Defining Your Income
- ----------------------------------------------------------------
WHAT YOU MAY EXPECT
(PAYABLE ON THE 25TH DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 10TH DAY OF
THE MONTH):
First Distribution per unit
(November 25, 1995): $ 1.16
Regular Monthly Income per unit
(Beginning on December 25, 1995): $ 4.35
Annual Income per unit: $ 52.30
These figures are estimates determined as of the business day prior to the
Initial Date of Deposit and actual payments may vary.
Estimated cash flows are available upon request from the Sponsors.
- ----------------------------------------------------------------
Defining Your Costs
- ----------------------------------------------------------------
SALES CHARGE
Although the Trust is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.
As a %
of Initial As a %
Offering Period of Secondary
Public Market Public
Offering Price Offering Price
----------------- -----------------
Maximum Sales Charges 4.50% 5.50%
The Trust (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states and the initial audit of the Portfolio--as is common for mutual
funds. Historically, the Sponsors of unit investment trusts have paid all the
costs of establishing those trusts.
ESTIMATED ANNUAL FUND OPERATING EXPENSES
As a %
of Average
Net Assets* Per Unit
----------------- --------------
Trustee's Fee .071% $ 0.69
Maximum Portfolio Supervision
and Bookkeeping Fees .046% 0.45
Evaluator's Fee .040% 0.39
Organizational Costs .021% 0.20
Other Operating Expenses .071% 0.69
----------------- --------------
TOTAL .249% $ 2.42
- ---------------
* Based on the mean of the bid and offer side evaluations.
COSTS OVER TIME
You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods:
1 Year 3 Years 5 Years 10 Years
$47 $53 $58 $75
The example assumes reinvestment of all distributions into additional units of
the Fund (a reinvestment option different from that offered by this Fund) and
uses a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The Costs Over Time above
reflect both sales charges and operating expenses on an increasing investment
(because the net annual return is reinvested). The example should not be
considered a representation of past or future expenses or annual rate of return;
the actual expenses and annual rate of return may be more or less than the
example.
As of November 1, 1995, the Public Offering Price was $1,028.40, based on the
aggregate offer side value of the bonds ($3,192,741.75), plus cash ($31,000),
divided by the number of units outstanding (3,281), plus a maximum sales charge
of 4.50% on the value of the underlying bonds. An amount equal to principal
cash, if any, as well as net accrued but undistributed interest on the unit is
added to the Public Offering Price. Sponsors' profit on deposit was $42,825.30.
The bid side redemption and secondary market repurchase price as of November 1,
1995 was $978.59 ($49.81 less than the Public Offering Price).
A-7
<PAGE>
<TABLE><CAPTION>
- --------------------------------------------------------------------------------
Defined New Jersey Insured Portfolio
- --------------------------------------------------------------------------------
Municipal Investment Trust Fund
Multistate Series--97
New Jersey Insured Trust November 2, 1995
OPTIONAL SINKING
RATING REFUNDING FUND COST
PORTFOLIO TITLE OF ISSUES (1) REDEMPTIONS (2) REDEMPTIONS (2) TO FUND (3)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. $470,000 New Jersey Educl. Fac.
Auth., Rev. Bonds, Rowan College of
New Jersey Iss., Ser. 1993 A (AMBAC
Ins.), 5.75%, 7/1/23 AAA 7/1/03 @ 102 7/1/14 $ 475,165.30
2. $500,000 New Jersey Hsg. and
Mtge. Fin. Agy., Multi-Family Hsg.
Rev. Bonds, 1995 Ser. A (AMBAC
Ins.), 6.10%, 5/1/30 AAA 5/1/05 @ 102 5/1/21 507,500.00
3. $275,000 County of Essex, NJ,
G.O. Rfdg. Bonds of 1995, Ser. A
(AMBAC Ins.), 5.50%, 9/1/15 AAA 9/1/05 @ 102 9/1/10 275,000.00
4. $500,000 The Pollution Ctl. Fin.
Auth. of Salem Cnty., NJ, Poll.
Ctl. Rev. Rfdg. Bonds (PSE&G Co.
Proj.), 1993 Ser. C (MBIA Ins.),
5.55%, 11/1/33 AAA 11/1/03 @ 102 -- 488,395.00
5. $500,000 The Jersey City
Sewerage Auth., Hudson Cnty., NJ,
Swr. Rev. Rfdg. Bonds, 1993 Ser. B
(Financial Guaranty Ins.), 4.50%,
1/1/19 (4) AAA 1/1/03 @ 100 1/1/14 434,920.00
6. $500,000 School Bonds of the Bd.
of Educ. of the Twp. of Branchburg
in the Cnty. of Somerset, NJ
(Financial Guaranty Ins.), 5.65%,
2/1/25 AAA 2/1/07 @ 100 -- 504,090.00
7. $505,000 The Board of Educ. of
the Twp. of Lumberton in the Cnty.
of Burlington, NJ, School Bonds
(MBIA Ins.), 5.625%, 2/15/20 AAA 2/15/03 @ 102 -- 507,671.45
------------------
$ 3,192,741.75
------------------
------------------
</TABLE>
- ------------------------------------
(1) All ratings are by Standard & Poor's Ratings Group. (See Appendix A to Part
B.)
(2) Bonds are first subject to optional redemptions (which may be exercised in
whole or in part) on the dates and at the prices indicated under the Optional
Refunding Redemptions column. In subsequent years, bonds are redeemable at
declining prices, but typically not below par value. Some issues may be subject
to sinking fund redemption or extraordinary redemption without premium prior to
the dates shown.
(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, 61% of the bonds were deposited at a
premium, 8% at par and 31% at a discount from par.
(4) These bonds are when-issued bonds that are expected to settle 8 days after
the settlement date for Units. The Trustee's fees and expenses will be reduced
by $0.16 per unit to compensate for interest that would have accrued on the
bonds between the settlement date for the Units and the actual date of delivery
of the bonds. (See Income, Distributions and Reinvestment-- Income in Part B.)
A-8
<PAGE>
- --------------------------------------------------------------------------------
New Jersey Taxes and Risks
- --------------------------------------------------------------------------------
NEW JERSEY RISK FACTORS
New Jersey and certain of its public authorities have in recent years
experienced financial difficulties and pressures to a significant degree.
Employment in manufacturing, wholesale and retail trade and construction have
been in decline although gains have been recorded in the services, government,
financial/insurance/real estate and tranportation/communication/public utilities
sectors. The economic recovery in New Jersey is likely to be slow and uneven
because some sectors, like commercial and industrial construction, suffer from
excess capacity, and even in rebounding sectors, employers are expected to be
cautious about hiring.
State appropriations of funds are distributed among a diverse group of
public recipients. In fiscal 1996, the largest state aid appropriation was
provided for local elementary and secondary education programs, followed by
appropriations for operation of the state government (including the State
Legislature, Judiciary and Executive Office) and other programs including, among
others, correctional facilities and the State Police, higher education and
environmental protection. The effect on these appropriations and other State
funding requirements cannot yet be evaluated. By a bill signed into law on July
4, 1995, New Jersey personal income tax rates have been reduced so that coupled
with the prior rate reductions, beginning with tax year 1996, personal income
tax rates will be, depending on taxpayers' level of income and filing status,
30%, 15%, or 9% lower than 1993 rates.
The primary method for State financing of capital projects is through the
sale of the general obligation bonds of the State. These bonds are backed by the
full faith and credit of the State. Tax revenues and certain other fees are
pledged to meet the principal and interest payments required to pay the debt
fully. With certain exceptions, no general obligation debt can be issued by the
State without prior voter approval.
General obligation bonds of New Jersey are currently rated Aa1 by Moody's
and AA+ by Standard & Poor's.
NEW JERSEY TAXES
In the opinion of Shanley & Fisher, P.C., Morristown, New Jersey, special
counsel on New Jersey tax matters, under existing New Jersey law:
1. The proposed activities of the Fund will not cause it to be subject to
the New Jersey Corporation Business Tax Act.
2. The income of the Fund will be treated as the income of individuals,
estates and trusts who are the investors in the Fund for purposes of the New
Jersey Gross Income Tax Act, and interest which is exempt from tax under the New
Jersey Gross Income Tax Act when received by the Fund will retain its status as
tax exempt in the hands of such investors. Gains arising from the sale or
redemption by an investor of his Units or from the sale or redemption by the
Fund of any Bond are exempt from taxation under the New Jersey Gross Income Tax
Act, as enacted and construed on the date hereof, to the extent such gains are
attributable to Bonds the interest on which is exempt from tax under the New
Jersey Gross Income Tax Act.
3. Units of the Fund may be subject, in the estates of New Jersey
residents, to taxation under the Transfer Inheritance Tax Law of the State of
New Jersey.
A-9
<PAGE>
- -------------------------------------------------------------------------------
Defined New York Insured Trust
- -------------------------------------------------------------------------------
PORTFOLIO DIVERSIFICATION
The Portfolio contains 6 New York bond issues and 1 Puerto Rico issue.
TYPES OF BONDS
The Portfolio consists of $4,000,000 face amount of municipal bonds of the
following types:
APPROXIMATE
PORTFOLIO PERCENTAGE
/ / Hospitals/Health Care Facilities 30%
/ / Lease Rental Appropriation 25%
/ / Municipal Water/Sewer Utilities 15%
/ / Universities/Colleges 30%
AAA-RATED AND INSURED
The percentage of the aggregate face amount of the Portfolio insured by each
insurance company is:
MBIA Insurance Corporation 30%
AMBAC Indemnity Corporation 25%
Financial Guaranty Insurance Company 15%
Capital Guaranty Insurance Company (CGIC) 30%
PORTFOLIO CONCENTRATIONS
The Portfolio is considered to be concentrated in Hospital/Health Care Facility,
University/College and Lease Rental Appropriation bonds and is therefore
dependent to a significant degree on revenues generated from those particular
activities (see Risk Factors in Part B). In addition, the Portfolio is
concentrated in bonds of New York issuers and is subject to additional risk from
decreased diversification as well as from factors that may be particular to New
York, which are briefly described on page A-12.
- ----------------------------------------------------------------
Defining Your Income
- ----------------------------------------------------------------
WHAT YOU MAY EXPECT
(PAYABLE ON THE 25TH DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 10TH DAY OF
THE MONTH):
First Distribution per unit
(November 25, 1995): $ 1.16
Regular Monthly Income per unit
(Beginning on December 25, 1995): $ 4.36
Annual Income per unit: $ 52.32
These figures are estimates determined as of the business day prior to the
Initial Date of Deposit and actual payments may vary.
Estimated cash flows are available upon request from the Sponsors.
- ----------------------------------------------------------------
Defining Your Costs
- ----------------------------------------------------------------
SALES CHARGE
Although the Trust is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.
As a %
of Initial As a %
Offering Period of Secondary
Public Market Public
Offering Price Offering Price
----------------- -----------------
Maximum Sales Charges 4.50% 5.50%
The Trust (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states and the initial audit of the Portfolio--as is common for mutual
funds. Historically, the Sponsors of unit investment trusts have paid all the
costs of establishing those trusts.
ESTIMATED ANNUAL FUND OPERATING EXPENSES
As a %
of Average
Net Assets* Per Unit
----------------- --------------
Trustee's Fee .070% $ 0.69
Maximum Portfolio Supervision
and Bookkeeping Fees .046% 0.45
Evaluator's Fee .032% 0.31
Organizational Costs .021% 0.20
Other Operating Expenses .058% 0.57
----------------- --------------
TOTAL .227% $ 2.22
- ---------------
* Based on the mean of the bid and offer side evaluations.
COSTS OVER TIME
You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods:
1 Year 3 Years 5 Years 10 Years
$47 $52 $57 $73
The example assumes reinvestment of all distributions into additional units of
the Fund (a reinvestment option different from that offered by this Fund) and
uses a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The Costs Over Time above
reflect both sales charges and operating expenses on an increasing investment
(because the net annual return is reinvested). The example should not be
considered a representation of past or future expenses or annual rate of return;
the actual expenses and annual rate of return may be more or less than the
example.
As of November 1, 1995, the Public Offering Price was $1,025.45, based on the
aggregate offer side value of the bonds ($3,918,154.00), plus cash ($38,000.00),
divided by the number of units outstanding (4,038), plus a maximum sales charge
of 4.50% on the underlying bonds. An amount equal to principal cash, if any, as
well as net accrued but undistributed interest on the unit is added to the
Public Offering Price. Sponsors' profit on deposit was $30,886.00.
The bid side redemption and secondary market repurchase price as of November 1,
1995 was $975.77 ($49.68 less than the Public Offering Price).
A-10
<PAGE>
<TABLE><CAPTION>
- --------------------------------------------------------------------------------
Defined New York Insured Portfolio
- --------------------------------------------------------------------------------
Municipal Investment Trust Fund
Multistate Series--97
New York Insured Trust November 2, 1995
OPTIONAL SINKING
RATING REFUNDING FUND COST
PORTFOLIO TITLE OF ISSUES (1) REDEMPTIONS (2) REDEMPTIONS (2) TO FUND (3)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. $600,000 Dormitory Auth. of The
State of New York, Fordham Univ.,
Ins. Rev. Bonds, Ser. 1994
(Financial Guaranty Ins.), 5.50%,
7/1/23 AAA 7/1/04 @ 102 7/1/16 $ 591,558.00
2. $600,000 Dormitory Auth. of the
State of New York, Mt. Sinai Sch.
of Med. Ins. Rev. Bonds, Ser. 1994
A (MBIA Ins.), 5.00%, 7/1/21 AAA 7/1/04 @ 102 7/1/17 551,244.00
3. $600,000 Dormitory Auth. of the
State of New York, Univ. of
Rochester, Strong Memorial Hosp.,
Rev. Bonds, Ser. 1994 (MBIA Ins.),
5.75%, 7/1/14 AAA 7/1/04 @ 102 7/1/10 604,704.00
4. $600,000 New York State Med.
Care Fac. Fin. Agy., Mental Hlth.
Svc. Fac. Imp. Rev. Bonds, 1993
Ser. F Rfdg. (CGIC Ins.), 5.375%,
2/15/14 AAA 2/15/04 @ 102 2/15/09 581,280.00
5. $600,000 New York State Urban
Dev. Corp., Corr. Fac. Rev. Bonds,
1993 Rfdg. Ser. (AMBAC Ins.),
5.25%, 1/1/18 AAA 1/1/03 @ 102 1/1/16 574,284.00
6. $600,000 New York City, NY, Mun.
Wtr. Fin. Auth., Wtr. and Swr. Sys.
Rev. Bonds, Fiscal 1993 Ser. A
(CGIC Ins.), 6.00%, 6/15/17 AAA 6/15/02 @ 101.5 6/15/12 610,032.00
7. $400,000 Puerto Rico Pub. Bldgs.
Auth., Govt. Fac. Rev. Bonds, Ser.
A (AMBAC Ins.), 5.75%, 7/1/22 AAA 7/1/05 @ 101.5 -- 405,052.00
------------------
$ 3,918,154.00
------------------
------------------
</TABLE>
- ------------------------------------
(1) All ratings are by Standard & Poor's Ratings Group. (See Appendix A to Part
B.)
(2) Bonds are first subject to optional redemptions (which may be exercised in
whole or in part) on the dates and at the prices indicated under the Optional
Refunding Redemptions column. In subsequent years, bonds are redeemable at
declining prices, but typically not below par value. Some issues may be subject
to sinking fund redemption or extraordinary redemption without premium prior to
the dates shown.
(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, 40% of the bonds were deposited at a
premium and 60% at a discount from par.
A-11
<PAGE>
- --------------------------------------------------------------------------------
New York Taxes and Risks
- --------------------------------------------------------------------------------
NEW YORK RISK FACTORS
The State of New York and several of its public authorities and
municipalities including, in particular, New York City, continue to face
financial difficulties. For many years, the State accumulated deficits by
extraordinary borrowing, which have been paid off by the issuance of long-term
bonds under legislation limiting future borrowing for deficits. In June 1995
(two months after the beginning of the fiscal year) it adopted a budget to close
a projected gap of approximately $5 billion, of which nearly $1 billion
represents non-recurring measures. Closing the deficit for future years will be
more difficult because of plans proposed by the State's new Governor to reduce
personal income taxes by 25% during his four-year term and because of potential
decreases in Federal aid. The State's general obligation debt is rated A-by
Standard & Poor's and A by Moody's; at March 31, 1995, approximately $5.2
billion face amount was outstanding. 18 State authorities had an aggregate of
$70.3 billion of debt outstanding at September 30, 1994, of which approximately
$28 billion was State supported.
New York City implemented nearly $3.5 billion of gap-closing measures for
the latest fiscal year ended June 30, 1995, and has adopted a budget which seeks
to close a projected $3.1 billion budget gap for the current fiscal year. New
York City bonds are rated BBB+ by Standard & Poor's and Baa1 by Moody's. At
March 31, 1995, approximately $23.3 billion of New York City bonds (excluding
City debt held by The Municipal Assistance Corporation for the City of New York
(MAC)) and approximately $4.1 billion of MAC bonds were outstanding. Other
localities in the State had an aggregate of approximately $17.7 billion of
indebtedness outstanding in 1993.
For decades, the State's economy has grown more slowly than that of the
rest of the nation as a whole. This low growth rate has been attributed, in
part, to the combined State and New York City tax burden which is among the
highest in the U.S. Because their tax structures are particularly sensitive to
economic cycles, both the State and New York City are prone to substantial
budget gaps during periods of economic weakness. Each has suffered a decline in
population and in manufacturing jobs over many years, and has become
particularly dependent on the financial services industry. Unemployment rates,
especially in New York City, have been above the national average for several
years.
Both the State and New York City suffer from long-term structural
imbalances between revenues and expenditures, which historically have been
narrowed through extensive use of non-recurring measures such as bond
refinancings, depletion of reserves, sales of assets, cost-cuts and layoffs.
Except for property taxes, changes in New York City revenue measures require
State approval. Based on the City's current debt and proposed issuances, the
City Comptroller has estimated that by fiscal 1998 debt service will consume
19.5% of New York City's tax revenue. The City is also particularly subject to
unanticipated increases in labor costs, resulting primarily from expiring union
contracts and overtime expense. Both the State and New York City also face
substantial replacement costs for infrastructure (such as roads, bridges and
other public facilities) which has suffered from reduced maintenance
expenditures during various economic declines.
Various municipalities and State and local authorities in New York
(particularly, the Metropolitan Transportation Authority) are dependent to
varying degrees on State and federal aid, and could be adversely affected by the
State's and federal government's actions to balance their budgets. The State's
dependence on federal aid and sensitivity to economic cycles, as well as high
levels of taxes and unemployment, may continue to make it difficult to balance
State and local budgets in the future.
NEW YORK TAXES
In the opinion of Davis Polk and Wardwell, special counsel for the
Sponsors, under existing New York law:
Under the income tax laws of the State and City of New York, the Fund is
not an association taxable as a corporation and income received by the Fund
will be treated as the income of the investors in the same manner as for
federal income tax purposes. Accordingly, each investor will be considered
to have received the interest on his pro rata portion of each Bond when
interest on the Bond is received by the Trust. In the opinion of bond
counsel delivered on the date of issuance of the Bonds, such interest will
be exempt from New York State and City personal income taxes except where
such interest is subject to federal income taxes (see Taxes). A
noncorporate investor in Units of the Trust who is a New York State (and
City) resident will be subject to New York State (and City) personal income
taxes on any gain recognized when he disposes of all or part of his pro
rata portion of a Bond. A noncorporate investor who is not a New York State
resident will not be subject to New York State or City personal income
taxes on any such gain unless such Units are attributable to a business,
trade, profession or occupation carried on in New York. A New York State
(and City) resident should determine his tax basis for his pro rata portion
of each Bond for New York State (and City) income tax purposes in the same
manner as for federal income tax purposes. Interest income on, as well as
any gain recognized on the disposition of, an investor's pro rata portion
of the Bonds is generally not excludable from income in computing New York
State and City corporate franchise taxes.
A-12
<PAGE>
- -------------------------------------------------------------------------------
Defined Pennsylvania Insured Trust
- -------------------------------------------------------------------------------
PORTFOLIO DIVERSIFICATION
The Portfolio contains 7 Pennsylvania bond issues.
TYPES OF BONDS
The Portfolio consists of $3,250,000 face amount of municipal bonds of the
following types:
APPROXIMATE
PORTFOLIO PERCENTAGE
/ / Housing Obligations 15%
/ / Universities/Colleges 15%
/ / Special Tax Issues 16%
/ / State/Local Government Supported 7%
/ / Parking Facilities 15%
/ / Municipal Water/Sewer Utilities 16%
/ / General Obligations 15%
AAA-RATED AND INSURED
The percentage of the aggregate face amount of the Portfolio insured by each
insurance company is:
MBIA Insurance Corporation 47%
AMBAC Indemnity Corporation 30%
Financial Guaranty Insurance Company 7%
Connie Lee Insurance Company 15%
PORTFOLIO CONCENTRATIONS
The Portfolio is not considered to be concentrated in any particular category of
bonds but the Portfolio is concentrated in bonds of Pennsylvania issuers and is
subject to additional risk from decreased diversification as well as from
factors that may be particular to Pennsylvania, which are briefly described on
page A-15.
- ----------------------------------------------------------------
Defining Your Income
- ----------------------------------------------------------------
WHAT YOU MAY EXPECT
(PAYABLE ON THE 25TH DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 10TH DAY OF
THE MONTH):
First Distribution per unit
(November 25, 1995): $ 1.18
Regular Monthly Income per unit
(Beginning on December 25, 1995): $ 4.42
Annual Income per unit: $ 53.10
These figures are estimates determined as of the business day prior to the
Initial Date of Deposit and actual payments may vary.
Estimated cash flows are available upon request from the Sponsors.
- ----------------------------------------------------------------
Defining Your Costs
- ----------------------------------------------------------------
SALES CHARGE
Although the Trust is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.
As a %
of Initial As a %
Offering Period of Secondary
Public Market Public
Offering Price Offering Price
----------------- -----------------
Maximum Sales Charges 4.50% 5.50%
The Trust (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states and the initial audit of the Portfolio--as is common for mutual
funds. Historically, the Sponsors of unit investment trusts have paid all the
costs of establishing those trusts.
ESTIMATED ANNUAL FUND OPERATING EXPENSES
As a %
of Average
Net Assets* Per Unit
----------------- --------------
Trustee's Fee .072% $ 0.69
Maximum Portfolio Supervision
and Bookkeeping Fees .047% 0.45
Evaluator's Fee .040% 0.39
Organizational Costs .021% 0.20
Other Operating Expenses .071% 0.69
----------------- --------------
TOTAL .251% $ 2.42
- ---------------
* Based on the mean of the bid and offer side evaluations.
COSTS OVER TIME
You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods:
1 Year 3 Years 5 Years 10 Years
$47 $53 $58 $76
The example assumes reinvestment of all distributions into additional units of
the Fund (a reinvestment option different from that offered by this Fund) and
uses a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The Costs Over Time above
reflect both sales charges and operating expenses on an increasing investment
(because the net annual return is reinvested). The example should not be
considered a representation of past or future expenses or annual rate of return;
the actual expenses and annual rate of return may be more or less than the
example.
As of November 1, 1995, the Public Offering Price was $1,031.60, based on the
aggregate offer side value of the bonds ($3,202,770.00), plus cash ($31,000),
divided by the number of units outstanding (3,281), plus a maximum sales charge
of 4.50% on the underlying bonds. An amount equal to principal cash, if any, as
well as net accrued but undistributed interest on the unit is added to the
Public Offering Price. Sponsors' profit on deposit was $36,732.40.
The bid side redemption and secondary market repurchase price as of November 1,
1995 was $981.64 ($49.96 less than the Public Offering Price).
A-13
<PAGE>
<TABLE><CAPTION>
- --------------------------------------------------------------------------------
Defined Pennsylvania Insured Portfolio
- --------------------------------------------------------------------------------
Municipal Investment Trust Fund
Multistate Series--97
Pennsylvania Insured Trust November 2, 1995
OPTIONAL SINKING
RATING REFUNDING FUND COST
PORTFOLIO TITLE OF ISSUES (1) REDEMPTIONS (2) REDEMPTIONS (2) TO FUND (3)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. $525,000 Pennsylvania
Intergovernmental Coop. Auth.,
Spec. Tax Rev. Bonds (City of
Philadelphia Funding Prog.), Ser.
1993 (MBIA Ins.), 5.60%, 6/15/15 AAA 6/15/03 @ 100 6/15/10 $ 518,805.00
2. $500,000 Pennsylvania State
Higher Educl. Facs. Auth., Coll.
and Univ. Rev. Bonds (St. Joseph's
Univ. Issue) (Connie Lee Ins.),
5.875%, 7/15/25 AAA 7/15/05 @ 102 7/15/16 503,100.00
3. $500,000 Philadelphia Auth. for
Indl. Dev., PA, Proj., Rev. Rfdg.
Bonds (PGH/CHDC Parking Facs.),
Ser. 1993 (MBIA Ins.), 5.25%,
7/1/17 AAA 7/1/03 @ 102 7/1/11 472,165.00
4. $500,000 School Dist. of
Philadelphia, PA, G.O. Rfdg. Bonds,
Ser. 1995 B (AMBAC Ins.), 5.50%,
9/1/25 AAA 9/1/05 @ 101 9/1/19 489,200.00
5. $510,000 City of Philadelphia,
PA, Wtr. and Wastewater Rev. Bonds,
Ser. 1993 (MBIA Ins.), 5.75%,
6/15/13 AAA 6/15/03 @ 102 -- 513,707.70
6. $490,000 Urban Redev. Auth. of
Pittsburgh, PA, Mtge. Rev. Bonds,
Ser. 1993 A (AMBAC Ins.), 5.65%,
10/1/24 AAA 10/1/03 @ 102 4/1/14 483,100.80
7. $225,000 Washington Cnty. Auth.,
PA, Lease Rev. Rfdg. Bonds, Ser.
1993 A (Financial Guaranty Ins.),
5.625%, 6/1/22 AAA 6/1/03 @ 100 6/1/14 222,691.50
------------------
$ 3,202,770.00
------------------
------------------
</TABLE>
- ------------------------------------
(1) All ratings are by Standard & Poor's Ratings Group. (See Appendix A to Part
B.)
(2) Bonds are first subject to optional redemptions (which may be exercised in
whole or in part) on the dates and at the prices indicated under the Optional
Refunding Redemptions column. In subsequent years, bonds are redeemable at
declining prices, but typically not below par value. Some issues may be subject
to sinking fund redemption or extraordinary redemption without premium prior to
the dates shown.
(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, 31% of the bonds were deposited at a
premium and 69% at a discount from par.
A-14
<PAGE>
- --------------------------------------------------------------------------------
Pennsylvania Taxes and Risks
- --------------------------------------------------------------------------------
PENNSYLVANIA RISK FACTORS
The Commonwealth of Pennsylvania and certain of its municipal subdivisions,
including the City of Philadelphia, have undergone the financial difficulties
and pressures that accompany a decline in economic conditions. As the heavy
industries historically associated with Pennsylvania -- e.g., coal, steel and
railroad -- have declined with increasing competition from foreign producers,
the services sector, including trade, medical and health services, education and
financial institutions, has provided major new sources of growth. Agriculture
and related industries continue to be an important part of Pennsylvania's
economy.
Both the Commonwealth of Pennsylvania and the City of Philadelphia have
historically experienced significant revenue shortfalls. On the other hand,
rising demands on state programs, particularly for medical assistance and cash
assistance programs, and the increased cost of special education programs and
correction facilities and programs, have contributed to increased expenditures.
In response, the Commonwealth and the City of Philadelphia have, in recent
years, sought to balance budgets with a combination of tax increases and
expenditure restraints.
To deal with its budget deficits, Philadelphia has considered significant
service cuts and a plan to privatize certain city-provided services. In
addition, in 1991 the Commonwealth created the Pennsylvania Inter-Governmental
Cooperation Authority (PICA), with authority to issue notes and bonds on behalf
of Philadelphia to cover budget shortfalls, to eliminate projected deficits and
fund Philadelphia capital spending. The enabling legislation contemplates such
notes and bonds to be repaid, in part, by revenues generated from Philadelphia's
new one percent sales tax. PICA is also authorized to review Philadelphia's
required five-year financial plans, which include balanced annual budgets. If
Philadelphia does not comply with the legislation's requirements, PICA may
withhold bond revenues and certain Commonwealth funding. PICA's authority to
issue bonds to finance a capital project or deficit expired on December 31,
1994. However, PICA retains its authority to issue debt to finance cash flow
deficit until December 31, 1996.
Although there can be no assurance that such conditions will continue, the
Commonwealth's general obligation bonds are currently rated AA-by Standard &
Poor's and A1 by Moody's, while Philadelphia's general obligation bonds are
rated BB and Baa by Standard & Poor's and Moody's, respectively.
PENNSYLVANIA TAXES
The following summarizes the opinion of Drinker Biddle & Reath,
Philadelphia, Pennsylvania, special counsel on Pennsylvania tax matters, under
existing law:
The Pennsylvania Trust will be recognized as a trust and will not be
taxable as a corporation for purposes of Pennsylvania state and local taxes.
Units evidencing fractional undivided interests in the Pennsylvania Trust
('Units') are not subject to the Pennsylvania personal property tax to the
extent that the Pennsylvania Trust is comprised of bonds issued by the
Commonwealth of Pennsylvania, any public authority, commission, board or other
agency created by the Commonwealth of Pennsylvania or any public authority
created by any such political subdivision ('Pennsylvania Bonds'), The portion,
if any, of Units representing bonds or other obligations issued by the
Government of Guam or by its authorities, and bonds issued by the Government of
Puerto Rico or by its authorities (collectively, 'Possession Bonds') is not
expressly exempt from personal property taxation under Pennsylvania law.
However, such bonds are expressly relieved from direct state taxation by United
States statutes. Therefore, Units are not subject to Personal Property Tax to
the extent that the Pennsylvania Trust is comprised of Possession Bonds.
Units may be subject to tax in the estate of a resident decedent under the
Pennsylvania inheritance and estate taxes.
Income received by a Holder of Units ('Holders') attributable to interest
realized by the Pennsylvania Trust from Pennsylvania Bonds and Possession Bonds
is not taxable to individuals, estates or trusts under the Personal Income Tax
imposed by Article III of the Tax Reform Code of 1971; to corporations under the
Corporate Net Income Tax imposed by Article IV of the Tax Reform Code of 1971;
nor to individuals under the Philadelphia School District Net Income Tax
('School District Tax') imposed on Philadelphia resident individuals under the
authority of the Act of August 9, 1963, P.L. 640. Income received by a Holder
attributable to insurance proceeds paid in lieu of interest on defaulted
tax-exempt bonds also will be exempt or excluded from those income taxes.
Income received by a Holder attributable to gain on the sale or other
disposition by the Pennsylvania Trust of Pennsylvania Bonds or Possession Bonds
is taxable under the Personal Income Tax, the Corporate Net Income Tax, and,
unless these assets were held by the Pennsylvania Trust for more than six
months, the School District Tax.
Gain on the disposition of a Unit is subject to the Personal Income Tax and
Corporate Net Income Tax. Such gain also is subject to the School District Tax,
except that gain realized with respect to a Unit held for more than six months
is not subject to the School District Tax.
No opinion is expressed regarding the extent, if any, to which Units, or
interest and gain thereon, is subject to, or included in the measure of, the
special taxes imposed by the Commonwealth of Pennsylvania on banks and other
financial institutions or with respect to any privilege, excise, franchise or
other tax imposed on business entities not discussed here (including the
Corporate Capital Stock/Foreign Franchise Tax).
A-15
<PAGE>
<TABLE><CAPTION>
- --------------------------------------------------------------------------------
TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS
FOR CALIFORNIA RESIDENTS
- --------------------------------------------------------------------------------
COMBINED
EFFECTIVE
TAXABLE INCOME 1995* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5% 7%
IS EQUIVALENT TO A TAXABLE YIELD OF
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0- 23,350 $ 0- 39,000 20.10 5.01 5.63 6.26 6.88 7.51 8.14 8.76
$ 23,350- 56,550 $ 39,000- 94,250 34.70 6.13 6.89 7.66 8.42 9.19 9.95 10.72
$ 94,250-143,600 37.42 6.39 7.19 7.99 8.79 9.59 10.39 11.19
$ 56,550-117,950 37.90 6.44 7.25 8.05 8.86 9.66 10.47 11.27
$143,600-256,500 42.40 6.94 7.81 8.68 9.55 10.42 11.28 12.15
$117,950-256,500 43.04 7.02 7.90 8.78 9.66 10.53 11.41 12.29
OVER $256,500 OVER $256,500 46.24 7.44 8.37 9.30 10.23 11.16 12.09 13.02
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TAXABLE INCOME 1995*
SINGLE RETURN 7.5% 8%
0- 23,350 9.39 10.01
$ 23,350- 56,550 11.48 12.25
11.98 12.78
$ 56,550-117,950 12.08 12.88
13.02 13.89
$117,950-256,500 13.17 14.04
OVER $256,500 13.95 14.88
<TABLE><CAPTION>
FOR NEW JERSEY RESIDENTS
- --------------------------------------------------------------------------------
COMBINED
EFFECTIVE
TAXABLE INCOME 1995* 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- 23,350 $ 0- 39,000 16.81 4.81 5.41 6.01 6.61 7.21 7.81 8.41 9.02 9.62
$ 23,350- 56,550 $ 39,000- 94,250 32.33 5.91 6.65 7.39 8.13 8.87 9.61 10.34 11.08 11.82
$ 94,250-143,600 35.15 6.17 6.94 7.71 8.48 9.25 10.02 10.79 11.56 12.34
$ 56,550-117,950 35.54 6.21 6.98 7.76 8.53 9.31 10.08 10.86 11.64 12.41
$117,950-256,500 $143,600-256,500 40.21 6.69 7.53 8.36 9.20 10.04 10.87 11.71 12.54 13.38
OVER $256,500 OVER $256,500 43.57 7.09 7.98 8.86 9.75 10.63 11.52 12.41 13.29 14.18
FOR PENNSYLVANIA RESIDENTS
- --------------------------------------------------------------------------------
COMBINED
EFFECTIVE TAX-FREE YIELD
TAXABLE INCOME 1995* TAX RATE 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
- ------------------------------------------------------------------------------------------------------------------
0- 23,350 $ 0- 39,000 17.38 4.84 5.45 6.05 6.66 7.26 7.87 8.47 9.08 9.68
$ 23,350- 56,550 $ 39,000- 94,250 30.02 5.72 6.43 7.14 7.86 8.57 9.29 10.00 10.72 11.43
$ 56,550-117,950 $ 94,250-143,600 32.93 5.96 6.71 7.46 8.20 8.95 9.69 10.44 11.18 11.93
$117,950-256,500 $143,600-256,500 37.79 6.43 7.23 8.04 8.84 9.65 10.45 11.25 12.06 12.86
OVER $256,500 OVER $256,500 41.29 6.81 7.66 8.52 9.37 10.22 11.07 11.92 12.77 13.63
</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
projected 1995 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, investors are urged to consult their own tax advisers
in this regard.
A-16
<PAGE>
<TABLE><CAPTION>
- --------------------------------------------------------------------------------
TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS
FOR NEW YORK CITY RESIDENTS
- --------------------------------------------------------------------------------
COMBINED
EFFECTIVE
TAXABLE INCOME 1995* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5% 7%
IS EQUIVALENT TO A TAXABLE YIELD OF
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0- 23,350 $ 0- 39,000 24.26 5.28 5.94 6.60 7.26 7.92 8.58 9.24
$ 23,350- 56,550 $ 39,000- 94,250 35.88 6.24 7.02 7.80 8.58 9.36 10.14 10.92
$ 56,550-117,950 $ 94,250-143,600 38.59 6.51 7.33 8.14 8.96 9.77 10.58 11.40
$117,950-256,500 $143,600-256,500 43.04 7.02 7.90 8.78 9.66 10.53 11.41 12.29
OVER $256,500 OVER $256,500 46.24 7.44 8.37 9.30 10.23 11.16 12.09 13.02
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TAXABLE INCOME 1995*
SINGLE RETURN 7.5% 8%
0- 23,350 9.90 10.56
$ 23,350- 56,550 11.70 12.48
$ 56,550-117,950 12.21 13.03
$117,950-256,500 13.17 14.04
OVER $256,500 13.95 14.88
<TABLE><CAPTION>
FOR NEW YORK STATE RESIDENTS
- --------------------------------------------------------------------------------
COMBINED
EFFECTIVE
TAXABLE INCOME 1995* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5% 7%
IS EQUIVALENT TO A TAXABLE YIELD OF
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0- 23,350 $ 0- 39,000 21.45 5.09 5.73 6.37 7.00 7.64 8.28 8.91
$ 23,350- 56,550 $ 39,000- 94,250 33.47 6.01 6.76 7.52 8.27 9.02 9.77 10.52
$ 56,550-117,950 $ 94,250-143,600 36.24 6.27 7.06 7.84 8.63 9.41 10.19 10.98
$117,950-256,500 $143,600-256,500 40.86 6.76 7.61 8.45 9.30 10.15 10.99 11.84
OVER $256,500 OVER $256,500 44.19 7.17 8.06 8.96 9.85 10.75 11.65 12.54
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TAXABLE INCOME 1995*
SINGLE RETURN 7.5% 8%
0- 23,350 9.55 10.19
$ 23,350- 56,550 11.27 12.02
$ 56,550-117,950 11.76 12.55
$117,950-256,500 12.68 13.53
OVER $256,500 13.44 14.33
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
projected 1995 federal and applicable State (and City) income tax rates and
assumes that all income would otherwise be taxed at the investor's highest tax
rate. Yield figures are for example only.
*Based upon net amount subject to federal income tax after deductions and
exemptions. This table does not reflect the possible effect of other tax
factors, such as alternative minimum tax, personal exemptions, the phase out of
exemptions, itemized deductions or the possible partial disallowance of
deductions. Consequently, investors are urged to consult their own tax advisers
in this regard.
A-17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders of Municipal Investment Trust Fund, Multistate
Series--97, Defined Asset Funds (California, New Jersey, New York and
Pennsylvania Trusts):
We have audited the accompanying statements of condition and the related defined
portfolios included in the prospectus of the Trusts as of November 2, 1995.
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 audits 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 statement. Our procedures included
confirmation of cash and an irrevocable letter of credit deposited for the
purchase of securities, as described in the statements of condition, with 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 each of the Trusts as of
November 2, 1995 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
November 2, 1995
<TABLE><CAPTION>
STATEMENT OF CONDITION AS OF NOVEMBER 2, 1995
TRUST PROPERTY
CALIFORNIA NEW JERSEY NEW YORK
TRUST TRUST TRUST
-------------------- -------------------- --------------------
<S> <C> <C> <C>
Investments--Bonds and Contracts to purchase Bonds(1) $ 4,872,072.50 $ 3,192,741.75 $ 3,918,154.00
Cash 47,000.00 31,000.00 38,000.00
Accrued interest to initial date of deposit on underlying
Bonds 93,156.96 27,129.33 72,709.03
Organizational Costs(2) 5,047.00 3,281.00 4,038.00
-------------------- -------------------- --------------------
Total $ 5,017,276.46 $ 3,254,152.08 $ 4,032,901.03
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
LIABILITIES AND INTEREST OF HOLDERS
Liabilities: Advance by the Trustee for accrued
interest(3) $ 93,156.96 $ 27,129.33 $ 72,709.03
Accrued Liability(2) 5,047.00 3,281.00 4,038.00
-------------------- -------------------- --------------------
Subtotal 98,203.96 30,410.33 76,747.03
-------------------- -------------------- --------------------
Interest of Holders of fractional undivided interest
outstanding
(California Trust--5,047; New Jersey Trust-- 3,281; New
York Trust--4,038; Pennsylvania
Trust--3,281)
Cost to investors(4) 5,148,660.53 3,374,175.60 4,140,771.36
Gross underwriting commissions(5) (229,588.03) (150,433.85) (184,617.36)
-------------------- -------------------- --------------------
Subtotal 4,919,072.50 3,223,741.75 3,956,154.00
-------------------- -------------------- --------------------
Total $ 5,017,276.46 $ 3,254,152.08 $ 4,032,901.03
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
</TABLE>
PENNSYLVANIA
TRUST
--------------------
Investments--Bonds and Contracts to purchase Bonds(1) $ 3,202,770.00
Cash 31,000.00
Accrued interest to initial date of deposit on underlying
Bonds 54,858.42
Organizational Costs(2) 3,281.00
--------------------
Total $ 3,291,909.42
--------------------
--------------------
LIABILITIES AND INTEREST OF HOLDERS
Liabilities: Advance by the Trustee for accrued
interest(3) $ 54,858.42
Accrued Liability(2) 3,281.00
--------------------
Subtotal 58,139.42
--------------------
Interest of Holders of fractional undivided interest
outstanding
(California Trust--5,047; New Jersey Trust-- 3,281; New
York Trust--4,038; Pennsylvania
Trust--3,281)
Cost to investors(4) 3,384,663.19
Gross underwriting commissions(5) (150,893.19)
--------------------
Subtotal 3,233,770.00
--------------------
Total $ 3,291,909.42
--------------------
--------------------
- ---------------
(1) Aggregate cost to the Fund of the bonds listed under Defined
Portfolio is based upon the offer side evaluation determined by the Evaluator at
the evaluation time on the business day prior to the initial date of deposit.
The contracts to purchase the bonds are collateralized by an irrevocable letter
of credit which has been issued by San Paolo Bank, New York Branch, in the
amount of $14,776,077.99 deposited with the Trustee. The amount of the letter of
credit includes $14,525,349.55 for the purchase of $15,000,000 face amount of
the bonds, plus $250,728.44 for accrued interest.
(2) This represents a portion of the Fund's organizational costs,
which will be deferred and amortized over five years.
(3) Representing a special distribution to the Sponsors by the Trustee
of an amount equal to the accrued interest on the bonds as of the initial date
of deposit.
(4) Aggregate public offering price (exclusive of interest) computed
on the basis of the offer side evaluation of the underlying bonds as of the
evaluation time on the business day prior to the Initial Date of Deposit (3:30
p.m., Eastern time).
(5) Assumes the maximum sales charge of 4.50%.
A-18
<PAGE>
DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
DEFINED ASSET FUNDS MUNICIPAL SERIES
MUNICIPAL INVESTMENT TRUST FUND
FURTHER DETAIL REGARDING ANY OF THE INFORMATION PROVIDED IN THE PROSPECTUS MAY
BE OBTAINED
WITHIN FIVE DAYS OF WRITTEN OR TELEPHONIC REQUEST TO THE TRUSTEE, THE ADDRESS
AND
TELEPHONE NUMBER OF WHICH ARE SET FORTH ON THE BACK COVER OF THIS PROSPECTUS.
Index
PAGE
---------
Fund Description...................................... 1
Risk Factors.......................................... 2
How to Buy Units...................................... 7
How to Sell Units..................................... 9
Income, Distributions and Reinvestment................ 10
Fund Expenses......................................... 11
Taxes................................................. 11
Records and Reports................................... 12
PAGE
---------
Trust Indenture....................................... 13
Miscellaneous......................................... 13
Exchange Option....................................... 15
Supplemental Information.............................. 16
Appendix A--Description of Ratings.................... a-1
Appendix B--Sales Charge Schedules for Defined Asset
Funds Municipal Series................................ b-1
Appendix C--Sales Charge Schedules for Municipal
Investment Trust Fund................................. c-1
FUND DESCRIPTION
BOND PORTFOLIO SELECTION
Professional buyers and research analysts for Defined Asset Funds, with
access to extensive research, selected the Bonds for the Portfolio after
considering the Fund's investment objective as well as the quality of the Bonds
(all Bonds in the Portfolio are initially rated in the category A or better by
at least one nationally recognized rating organization or have comparable credit
characteristics), the yield and price of the Bonds compared to similar
securities, the maturities of the Bonds and the diversification of the
Portfolio. Only issues meeting these stringent criteria of the Defined Asset
Funds team of dedicated research analysts are included in the Portfolio. No
leverage or borrowing is used nor does the Portfolio contain other kinds of
securities to enhance yield. A summary of the Bonds in the Portfolio appears in
Part A of the Prospectus. In a Fund that includes multiple Trusts or Portfolios,
the word Fund should be understood to mean each individual Trust or Portfolio.
The deposit of the Bonds in the Fund on the initial date of deposit
established a proportionate relationship among the face amounts of the Bonds.
During the 90-day period following the initial date of deposit the Sponsors may
deposit additional Bonds in order to create new Units, maintaining to the extent
possible that original proportionate relationship. Deposits of additional Bonds
subsequent to the 90-day period must generally replicate exactly the
proportionate relationship among the face amounts of the Bonds at the end of the
initial 90-day period.
Yields on 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. Ratings represent opinions of the rating
organizations as to the quality of the bonds rated, based on the credit of the
issuer or any guarantor, insurer or other credit provider, but these ratings are
only general standards of quality (see Appendix A).
After the initial date of deposit, the ratings of some Bonds may be reduced
or withdrawn, or the credit characteristics of the Bonds may no longer be
comparable to bonds rated A or better. Bonds rated BBB or Baa (the lowest
investment grade rating) or lower may have speculative characteristics, and
changes in economic conditions or other
1
<PAGE>
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case with higher grade bonds. Bonds rated
below investment grade or unrated bonds with similar credit characteristics are
often subject to greater market fluctuations and risk of loss of principal and
income than higher grade bonds and their value may decline precipitously in
response to rising interest rates.
Because each Defined Asset Fund is a preselected portfolio of bonds, you
know the securities, maturities, call dates and ratings before you invest. Of
course, the Portfolio will change somewhat over time, as Bonds mature, are
redeemed or are sold to meet Unit redemptions or in other limited circumstances.
Because the Portfolio is not actively managed and principal is returned as the
Bonds are disposed of, this principal should be relatively unaffected by changes
in interest rates.
BOND PORTFOLIO SUPERVISION
The Fund follows a buy and hold investment strategy in contrast to the
frequent portfolio changes of a managed fund based on economic, financial and
market analyses. The Fund may retain an issuer's bonds despite adverse financial
developments. Experienced financial analysts regularly review the Portfolio and
a Bond may be sold in certain circumstances including the occurrence of a
default in payment or other default on the Bond, a decline in the projected
income pledged for debt service on a revenue bond, institution of certain legal
proceedings, if the Bond becomes taxable or is otherwise inconsistent with the
Fund's investment objectives, a decline in the price of the Bond or the
occurrence of other market or credit factors (including advance refunding) that,
in the opinion of Defined Asset Funds research analysts, makes retention of the
Bond detrimental to the interests of investors. The Trustee must generally
reject any offer by an issuer of a Bond to exchange another security pursuant to
a refunding or refinancing plan.
The Sponsors and the Trustee are not liable for any default or defect in a
Bond. If a contract to purchase any Bond fails, the Sponsors may generally
deposit a replacement bond so long as it is a tax-exempt bond, has a fixed
maturity or disposition date substantially similar to the failed Bond and is
rated A or better by at least one nationally recognized rating organization or
has comparable credit characteristics. A replacement bond must be deposited
within 110 days after deposit of the failed contract, at a cost that does not
exceed the funds reserved for purchasing the failed Bond and at a yield to
maturity and current return substantially equivalent (considering then current
market conditions and relative creditworthiness) to those of the failed Bond, as
of the date the failed contract was deposited.
RISK FACTORS
An investment in the Fund entails certain risks, including the risk that
the value of your investment will decline with increases in interest rates.
Generally speaking, bonds with longer maturities will fluctuate in value more
than bonds with shorter maturities. In recent years there have been wide
fluctuations in interest rates and in the value of fixed-rate bonds generally.
The Sponsors cannot predict the direction or scope of any future fluctuations.
Certain of the Bonds may have been deposited at a market discount or
premium principally because their interest rates are lower or higher than
prevailing rates on comparable debt securities. The current returns of market
discount bonds are lower than comparably rated bonds selling at par because
discount bonds tend to increase in market value as they approach maturity. The
current returns of market premium bonds are higher than comparably rated bonds
selling at par because premium bonds tend to decrease in market value as they
approach maturity. Because part of the purchase price is returned through
current income payments and not at maturity, an early redemption at par of a
premium bond will result in a reduction in yield to the Fund. Market premium or
discount attributable to interest rate changes does not indicate market
confidence or lack of confidence in the issue.
Certain Bonds deposited into the Fund may have been acquired on a
when-issued or delayed delivery basis. The purchase price for these Bonds is
determined prior to their delivery to the Fund and a gain or loss may result
from fluctuations in the value of the Bonds. Additionally, in any Defined Asset
Funds Municipal Series, if the value of the Bonds reserved for payment of the
periodic deferred sales charge, together with the interest thereon, were to
become insufficient to pay these charges, additional bonds would be required to
be sold.
The Fund may be concentrated in one or more of types of bonds.
Concentration in a State may involve additional risk because of the decreased
diversification of economic, political, financial and market risks. Set forth
below is a brief description of certain risks associated with bonds which may be
held by the Fund. Additional information is contained in the Information
Supplement which is available from the Trustee at no charge to the investor.
2
<PAGE>
GENERAL OBLIGATION BONDS
Certain of the Bonds may be general obligations of a governmental entity.
General obligation bonds are backed by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and interest. However, the
taxing power of any governmental entity may be limited by provisions of state
constitutions or laws and its credit will depend on many factors, including an
erosion of the tax base resulting from population declines, natural disasters,
declines in the state's industrial base or an inability to attract new
industries, economic limits on the ability to tax without eroding the tax base
and the extent to which the entity relies on federal or state aid, access to
capital markets or other factors beyond the entity's control. In addition,
political restrictions on the ability to tax and budgetary constraints affecting
state governmental aid may have an adverse impact on the creditworthiness of
cities, counties, school districts and other local governmental units.
As a result of the recent recession's adverse impact upon both revenues and
expenditures, as well as other factors, many state and local governments have
confronted deficits which were the most severe in recent years. Many issuers are
facing highly difficult choices about significant tax increases and spending
reductions in order to restore budgetary balance. The failure to implement these
actions on a timely basis could force these issuers to issue additional debt to
finance deficits or cash flow needs and could lead to a reduction of their bond
ratings and the value of their outstanding bonds.
MORAL OBLIGATION BONDS
The Portfolio may include 'moral obligation' bonds. If an issuer of moral
obligation bonds is unable to meet its obligations, the repayment of the bonds
becomes a moral commitment but not a legal obligation of the state or local
government in question. Even though the state or local government may be called
on to restore any deficits in capital reserve funds of the agencies or
authorities which issued the bonds, any restoration generally requires
appropriation by the state or local legislature and does not constitute a
legally enforceable obligation or debt of the state or local government. The
agencies or authorities generally have no taxing power.
REFUNDED BONDS
Refunded bonds are typically secured by direct obligations of the U.S.
Government or in some cases obligations guaranteed by the U.S. Government placed
in an escrow account maintained by an independent trustee until maturity or a
predetermined redemption date. These obligations are generally noncallable prior
to maturity or the predetermined redemption date. In a few isolated instances,
however, bonds which were thought to be escrowed to maturity have been called
for redemption prior to maturity.
MUNICIPAL REVENUE BONDS
Municipal revenue bonds are tax-exempt securities issued by states,
municipalities, public authorities or similar entities to finance the cost of
acquiring, constructing or improving various projects. Municipal revenue bonds
are not general obligations of governmental entities backed by their taxing
power and payment is generally solely dependent upon the creditworthiness of the
public issuer or the financed project or state appropriations. Examples of
municipal revenue bonds are:
Municipal utility bonds, including electrical, water and sewer revenue
bonds, whose payments are dependent on various factors, including the rates
the utilities may charge, the demand for their services and their operating
costs, including expenses to comply with environmental legislation and
other energy and licensing laws and regulations. Utilities are particularly
sensitive to, among other things, the effects of inflation on operating and
construction costs, the unpredictability of future usage requirements, the
costs and availability of fuel and, with certain electric utilities, the
risks associated with the nuclear industry;
Lease rental bonds which are generally issued by governmental financing
authorities with no direct taxing power for the purchase of equipment or
construction of buildings that will be used by a state or local government.
Lease rental bonds are generally subject to an annual risk that the lessee
government might not appropriate funds for the leasing rental payments to
service the bonds and may also be subject to the risk that rental
obligations may terminate in the event of damage to or destruction or
condemnation of the equipment or building;
Multi-family housing revenue bonds and single family mortgage revenue
bonds which are issued to provide financing for various housing projects
and which are payable primarily from the revenues derived from mortgage
3
<PAGE>
loans to housing projects for low to moderate income families or notes
secured by mortgages on residences; repayment of this type of bonds is
therefore dependent upon, among other things, occupancy levels, rental
income, the rate of default on underlying mortgage loans, the ability of
mortgage insurers to pay claims, the continued availability of federal,
state or local housing subsidy programs, economic conditions in local
markets, construction costs, taxes, utility costs and other operating
expenses and the managerial ability of project managers. Housing bonds are
generally prepayable at any time and therefore their average life will
ordinarily be less than their stated maturities;
Hospital and health care facility bonds whose payments are dependent
upon revenues of hospitals and other health care facilities. These revenues
come from private third-party payors and government programs, including the
Medicare and Medicaid programs, which have generally undertaken cost
containment measures to limit payments to health care facilities. Hospitals
and health care facilities are subject to various legal claims by patients
and others and are adversely affected by increasing costs of insurance;
Airport, port, highway and transit authority revenue bonds which are
dependent for payment on revenues from the financed projects, including
user fees from ports and airports, tolls on turnpikes and bridges, rents
from buildings, transit fare revenues and additional financial resources
including federal and state subsidies, lease rentals paid by state or local
governments or a pledge of a special tax such as a sales tax or a property
tax. In the case of the air travel industry, airport income is largely
affected by the airlines' ability to meet their obligations under use
agreements which in turn is affected by increased competition among
airlines, excess capacity and increased fuel costs, among other factors.
Solid waste disposal bonds which are generally payable from dumping and
user fees and from revenues that may be earned by the facility on the sale
of electrical energy generated in the combustion of waste products and
which are therefore dependent upon the ability of municipalities to fully
utilize the facilities, sufficient supply of waste for disposal, economic
or population growth, the level of construction and maintenance costs, the
existence of lower-cost alternative modes of waste processing and
increasing environmental regulation. A recent decision of the U.S. Supreme
Court limiting a municipality's ability to require use of its facilities
may have an adverse affect on the credit quality of various issues of these
bonds;
Special tax bonds which are not secured by general tax revenues but are
only payable from and secured by the revenues derived by a municipality
from a particular tax--for example, a tax on the rental of a hotel room, on
the purchase of food and beverages, on the rental of automobiles or on the
consumption of liquor and may therefore be adversely affected by a
reduction in revenues resulting from a decline in the local economy or
population or a decline in the consumption, use or cost of the goods and
services that are subject to taxation;
Student loan revenue bonds which are typically secured by pledges of new
or existing student loans. The loans, in turn, are generally either
guaranteed by eligible guarantors and reinsured by the Secretary of the
U.S. Department of Education, directly insured by the federal government,
or financed as part of supplemental or alternative loan programs within a
state (e.g., loan repayments are not guaranteed). These bonds often permit
the issuer to enter into interest rate swap agreements with eligible
counterparties in which event the bonds are subject to the additional risk
of the counterparty's ability to fulfill its swap obligation;
University and college bonds, the payments on which are dependent upon
various factors, including the size and diversity of their sources of
revenues, enrollment, reputation, the availability of endowments and other
funds and, in the case of public institutions, the financial condition of
the relevant state or other governmental entity and its policies with
respect to education; and
Tax increment and tax allocation bonds, which are secured by ad valorem
taxes imposed on the incremental increase of taxable assessed valuation of
property within a jurisdiction above an established base of assessed value.
The issuers of these bonds do not have general taxing authority and the tax
assessments on which the taxes used to service the bonds are based may be
subject to devaluation due to market price declines or governmental action.
Puerto Rico. Certain Bonds may be affected by general economic conditions
in the Commonwealth of Puerto Rico. Puerto Rico's economy is largely dependent
for its development on federal programs and current federal budgetary policies
suggest that an expansion of its programs is unlikely. Reductions in federal tax
benefits or incentives or curtailment of spending programs could adversely
affect the Puerto Rican economy.
4
<PAGE>
Industrial Development Revenue Bonds. Industrial development revenue bonds
are municipal obligations issued to finance various privately operated projects
including pollution control and manufacturing facilities. Payment is generally
solely dependent upon the creditworthiness of the corporate operator of the
project and, in certain cases, an affiliated or third party guarantor and may be
affected by economic factors relating to the particular industry as well as
varying degrees of governmental regulation. In many cases industrial revenue
bonds do not have the benefit of covenants which would prevent the corporations
from engaging in capital restructurings or borrowing transactions which could
reduce their ability to meet their obligations and result in a reduction in the
value of the Portfolio.
BONDS BACKED BY LETTERS OF CREDIT OR INSURANCE
Certain Bonds may be secured by letters of credit issued by commercial
banks or savings banks, savings and loan associations and similar thrift
institutions or are direct obligations of banks or thrifts. The letter of credit
may be drawn upon, and the Bonds redeemed, if an issuer fails to pay amounts due
on the Bonds or, in certain cases, if the interest on the Bond becomes taxable.
Letters of credit are irrevocable obligations of the issuing institutions. The
profitability of a financial institution is largely dependent upon the credit
quality of its loan portfolio which, in turn, is affected by the institution's
underwriting criteria, concentrations within the portfolio and specific industry
and general economic conditions. The operating performance of financial
institutions is also impacted by changes in interest rates, the availability and
cost of funds, the intensity of competition and the degree of governmental
regulation.
Certain Bonds may be insured or guaranteed by insurance companies listed
below. The claims-paying ability of each of these companies, unless otherwise
indicated, was rated AAA by Standard & Poor's or another nationally recognized
rating organization at the time the insured Bonds were purchased by the Fund.
The ratings are subject to change at any time at the discretion of the rating
agencies. In the event that the rating of an Insured Fund is reduced, the
Sponsors are authorized to direct the Trustee to obtain other insurance on
behalf of the Fund. The insurance policies guarantee the timely payment of
principal and interest on the Bonds but do not guarantee their market value or
the value of the Units. The insurance policies generally do not provide for
accelerated payments of principal or cover redemptions resulting from events of
taxability.
The following summary information relating to the listed insurance
companies has been obtained from publicly available information:
<TABLE><CAPTION>
FINANCIAL INFORMATION
AS OF JUNE 30, 1995
(IN MILLIONS OF DOLLARS)
-------------------------------------
POLICYHOLDERS'
NAME DATE ESTABLISHED ADMITTED ASSETS SURPLUS
- ----------------------------------------------------- ----------------- --------------- --------------------
<S> <C> <C> <C>
AMBAC Indemnity Corporation.......................... 1970 $ 2,230 $ 805
Asset Guaranty Insurance Co. (AA by S&P)............. 1988 173 78
Capital Guaranty Insurance Company................... 1986 316 171
Capital Markets Assurance Corp....................... 1987 221 136
Connie Lee Insurance Company......................... 1987 202 108
Continental Casualty Company......................... 1948 20,114 3,747
Financial Guaranty Insurance Company................. 1984 2,249 978
Financial Security Assurance Inc..................... 1984 776 344
Industrial Indemnity Co. (HIBI)...................... 1920 1,706 302
MBIA Insurance Corporation........................... 1986 3,623 1,165
</TABLE>
Insurance companies are subject to extensive regulation and supervision
where they do business by state insurance commissioners who regulate the
standards of solvency which must be maintained, the nature of and limitations on
investments, reports of financial condition, and requirements regarding reserves
for unearned premiums, losses and other matters. A significant portion of the
assets of insurance companies are required by law to be held in reserve against
potential claims on policies and is not available to general creditors. Although
the federal government does not regulate the business of insurance, federal
initiatives including pension regulation, controls on medical care costs,
minimum standards for no-fault automobile insurance, national health insurance,
tax law changes affecting life insurance companies and repeal of the antitrust
exemption for the insurance business can significantly impact the insurance
business.
5
<PAGE>
STATE RISK FACTORS
Investment in a single State Trust, as opposed to a Fund which invests in
the obligations of several states, may involve some additional risk due to the
decreased diversification of economic, political, financial and market risks. A
brief description of the factors which may affect the financial condition of the
applicable State for any State Trust, together with a summary of tax
considerations relating to that State, appear in Part A (or for certain State
Trusts, Part C), of the Prospectus; further information is contained in the
Information Supplement.
LITIGATION AND LEGISLATION
The Sponsors do not know of any pending litigation as of the initial date
of deposit which might reasonably be expected to have a material adverse effect
upon the Fund. At any time after the initial date of deposit, litigation may be
initiated on a variety of grounds, or legislation may be enacted, affecting the
Bonds in the Fund. Litigation, for example, challenging the issuance of
pollution control revenue bonds under environmental protection statutes may
affect the validity of certain Bonds or the tax-free nature of their interest.
While the outcome of litigation of this nature can never be entirely predicted,
opinions of bond counsel are delivered on the date of issuance of each Bond to
the effect that it has been validly issued and that the interest thereon is
exempt from federal income tax. From time to time, proposals are introduced in
Congress to, among other things, reduce federal income tax rates, impose a flat
tax, exempt investment income from tax or abolish the federal income tax and
replace it with another form of tax. Enactment of any such legislation could
adversely affect the value of the Units. The Fund, however, cannot predict what
legislation, if any, in respect of tax rates may be proposed, nor can it predict
which proposals, if any, might be enacted.
Also, certain proposals, in the form of state legislative proposals or
voter initiatives, seeking to limit real property taxes have been introduced in
various states, and an amendment to the constitution of the State of California,
providing for strict limitations on real property taxes, has had a significant
impact on the taxing powers of local governments and on the financial condition
of school districts and local governments in California. In addition, other
factors may arise from time to time which potentially may impair the ability of
issuers to make payments due on the Bonds. Under the Federal Bankruptcy Code,
for example, municipal bond issuers, as well as any underlying corporate
obligors or guarantors, may proceed to restructure or otherwise alter the terms
of their obligations.
From time to time Congress considers proposals to prospectively and
retroactively tax the interest on state and local obligations, such as the
Bonds. The Supreme Court clarified in South Carolina v. Baker (decided on April
20, 1988) that the U.S. Constitution does not prohibit Congress from passing a
nondiscriminatory tax on interest on state and local obligations. This type of
legislation, if enacted into law, could require investors to pay income tax on
interest from the Bonds and could adversely affect an investment in Units. See
Taxes.
PAYMENT OF THE BONDS AND LIFE OF THE FUND
The size and composition of the Portfolio will change over time. Most of
the Bonds are subject to redemption prior to their stated maturity dates
pursuant to optional refunding or sinking fund redemption provisions or
otherwise. In general, optional refunding redemption provisions are more likely
to be exercised when the value of a Bond is at a premium over par than when it
is at a discount from par. Some Bonds may be subject to sinking fund and
extraordinary redemption provisions which may commence early in the life of the
Fund. Additionally, the size and composition of the Fund will be affected by the
level of redemptions of Units that may occur from time to time. Principally,
this will depend upon the number of investors seeking to sell or redeem their
Units and whether or not the Sponsors are able to sell the Units acquired by
them in the secondary market. As a result, Units offered in the secondary market
may not represent the same face amount of Bonds as on the initial date of
deposit. Factors that the Sponsors will consider in determining whether or not
to sell Units acquired in the secondary market include the diversity of the
Portfolio, the size of the Fund relative to its original size, the ratio of Fund
expenses to income, the Fund's current and long-term returns, the degree to
which Units may be selling at a premium over par and the cost of maintaining a
current prospectus for the Fund. These factors may also lead the Sponsors to
seek to terminate the Fund earlier than its mandatory termination date.
FUND TERMINATION
The Fund will be terminated no later than the mandatory termination date
specified in Part A of the Prospectus. It will terminate earlier upon the
disposition of the last Bond or upon the consent of investors holding 51% of the
Units. The Fund may also be terminated earlier by the Sponsors once the total
assets of the Fund have fallen below the
6
<PAGE>
minimum value specified in Part A of the Prospectus. A decision by the Sponsors
to terminate the Fund early will be based on factors similar to those considered
by the Sponsors in determining whether to continue the sale of Units in the
secondary market.
Notice of impending termination will be provided to investors and
thereafter units will no longer be redeemable. On or shortly before termination,
the Fund will seek to dispose of any Bonds remaining in the Portfolio although
any Bond unable to be sold at a reasonable price may continue to be held by the
Trustee in a liquidating trust pending its final disposition. A proportional
share of the expenses associated with termination, including brokerage costs in
disposing of Bonds, will be borne by investors remaining at that time. This may
have the effect of reducing the amount of proceeds those investors are to
receive in any final distribution.
LIQUIDITY
Up to 40% of the value of the Portfolio may be attributable to guarantees
or similar security provided by corporate entities. These guarantees or other
security may constitute restricted securities that cannot be sold publicly by
the Trustee without registration under the Securities Act of 1933, as amended.
The Sponsors nevertheless believe that, should a sale of the Bonds guaranteed or
secured be necessary in order to meet redemption of Units, the Trustee should be
able to consummate a sale with institutional investors.
The principal trading market for the Bonds will generally be in the
over-the-counter market and the existence of a liquid trading market for the
Bonds may depend on whether dealers will make a market in them. There can be no
assurance that a liquid trading market will exist for any of the Bonds,
especially since the Fund may be restricted under the Investment Company Act of
1940 from selling Bonds to any Sponsor. The value of the Portfolio will be
adversely affected if trading markets for the Bonds are limited or absent.
HOW TO BUY UNITS
Units are available from any of the Sponsors, Underwriters and other
broker-dealers at the Public Offering Price plus accrued interest on the Units.
The Public Offering Price varies each Business Day with changes in the value of
the Portfolio and other assets and liabilities of the Fund.
PUBLIC OFFERING PRICE--DEFINED ASSET FUNDS MUNICIPAL SERIES
To allow Units to be priced at $1,000, the Units outstanding as of the
Evaluation Time on the Initial Date of Deposit (all of which are held by the
Sponsors) will be split (or split in reverse).
During the initial offering period for at least the first three months of
the Fund, the Public Offering Price (and the Initial Repurchase Price) is based
on the higher, offer side evaluation of the Bonds at the next Evaluation Time
after the order is received. In the secondary market (after the initial offering
period), the Public Offering Price (and the Sponsors' Repurchase Price and the
Redemption Price) is based on the lower, bid side evaluation of the Bonds.
Investors will be subject to differing types and amounts of sales charge
depending upon the timing of their purchases and redemptions of Units. A
periodic deferred sales charge will be payable quarterly through about the fifth
anniversary of the Fund from a portion of the interest on and principal of Bonds
reserved for that purpose. Commencing on the first anniversary of the Fund, the
Public Offering Price will also include an up-front sales charge applied to the
value of the Bonds in the Portfolio. Lastly, investors redeeming their Units
prior to the fourth anniversary of the Fund will be charged a contingent
deferred sales charge payable out of the redemption proceeds of their Units.
These charges may be less than you would pay to buy and hold a comparable
managed fund. A complete schedule of sales charges appears in Appendix B. The
Sponsors have received an opinion of their counsel that the deferred sales
charge described in this Prospectus is consistent with an exemptive order
received from the SEC.
The regular Monthly Income Distribution is stated in Part A of the
Prospectus and will change as the composition of the Portfolio changes over
time.
PUBLIC OFFERING PRICE--MUNICIPAL INVESTMENT TRUST FUND
In the initial offering period, the Public Offering Price is based on the
next offer side evaluation of the Bonds, and includes a sales charge based on
the number of Units of a single Fund or Trust purchased on the same or any
preceding day by a single purchaser. See Initial Offering sales charge schedule
in Appendix C. The purchaser or his dealer must
7
<PAGE>
notify the Sponsors at the time of purchase of any previous purchase to be
aggregated and supply sufficient information to permit confirmation of
eligibility; acceptance of the purchase order is subject to confirmation.
Purchases of Fund Units may not be aggregated with purchases of any other unit
trust. This procedure may be amended or terminated at any time without notice.
In the secondary market (after the initial offering period), the Public
Offering Price is based on the bid side evaluation of the Bonds, and includes a
sales charge based (a) on the number of Units of the Fund and any other Series
of Municipal Investment Trust Fund purchased in the secondary market on the same
day by a single purchaser (see Secondary Market sales charge schedule in
Appendix C) and (b) the maturities of the underlying Bonds (see Effective Sales
Charge Schedule in Appendix C). To qualify for a reduced sales charge, the
dealer must confirm that the sale is to a single purchaser or is purchased for
its own account and not for distribution. For these purposes, Units held in the
name of the purchaser's spouse or child under 21 years of age are deemed to be
purchased by a single purchaser. A trustee or other fiduciary purchasing
securities for a single trust estate or single fiduciary account is also
considered a single purchaser.
In the secondary market, the Public Offering Price is further reduced
depending on the maturities of the various Bonds in the Portfolio, by
determining a sales charge percentage for each Bond, as stated in Effective
Sales Charge in Appendix C. The sales charges so determined, multiplied by the
bid side evaluation of the Bonds, are aggregated and the total divided by the
number of Units outstanding to determine the Effective Sales Charge. On any
purchase, the Effective Sales Charge is multiplied by the applicable secondary
market sales charge percentage (depending on the number of Units purchased) in
order to determine the sales charge component of the Public Offering Price.
* * *
Employees of certain Sponsors and Sponsor affiliates and non-employee
directors of Merrill Lynch & Co. Inc. may purchase Units at any time at prices
including a sales charge of not less than $5 per Unit.
Because accrued interest on the Bonds is not received by the Fund at a
constant rate throughout the year, any Monthly Income Distribution may be more
or less than the interest actually received by the Fund. To eliminate
fluctuations in the Monthly Income Distribution, a portion of the Public
Offering Price consists of cash to enable the Trustee to advance an amount
necessary to provide approximately equal distributions. Upon the sale or
redemption of Units, investors will receive their proportionate share of the
Trustee advance. In addition, if a Bond is sold, redeemed or otherwise disposed
of, the Fund will periodically distribute to investors the portion of the
Trustee advance that is attributable to the Bond.
Net accrued interest is added to the Public Offering Price, the Sponsors'
Repurchase Price and the Redemption Price per Unit. This represents the interest
accrued on the Bonds, net of Fund expenses, from the initial date of deposit to,
but not including, the settlement date for Units (less any prior distributions
of interest income to investors). Bonds deposited also carry accrued but unpaid
interest up to the initial date of deposit. To avoid having investors pay this
additional accrued interest (which earns no return) when they purchase Units,
the Trustee advances and distributes this amount to the Sponsors; it recovers
this advance from interest received on the Bonds. Because of varying interest
payment dates on the Bonds, accrued interest at any time will exceed the
interest actually received by the Fund.
EVALUATIONS
Evaluations are determined by the independent Evaluator on each Business
Day. This excludes Saturdays, Sundays and the following holidays as observed by
the New York Stock Exchange: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. Bond
evaluations are based on closing sales prices (unless the Evaluator deems these
prices inappropriate). If closing sales prices are not available, the evaluation
is generally determined on the basis of current bid or offer prices for the
Bonds or comparable securities or by appraisal or by any combination of these
methods. In the past, the bid prices of publicly offered tax-exempt issues have
been lower than the offer prices by as much as 3 1/2% or more of face amount in
the case of inactively traded issues and as little as 1/2 of 1% in the case of
actively traded issues, but the difference between the offer and bid prices has
averaged between 1 and 2% of face amount. Neither the Sponsors, the Trustee or
the Evaluator will be liable for errors in the Evaluator's judgment. The fees of
the Evaluator will be borne by the Fund.
8
<PAGE>
CERTIFICATES
Certificates for Units are issued upon request and may be transferred by
paying any taxes or governmental charges and by complying with the requirements
for redeeming Certificates (see How To Sell Units--Trustee's Redemption of
Units). Certain Sponsors collect additional charges for registering and shipping
Certificates to purchasers. Lost or mutilated Certificates can be replaced upon
delivery of satisfactory indemnity and payment of costs.
HOW TO SELL UNITS
SPONSORS' MARKET FOR UNITS
You can sell your Units at any time without a fee. The Sponsors (although
not obligated to do so) will normally buy any Units offered for sale at the
repurchase price next computed after receipt of the order. The Sponsors have
maintained secondary markets in Defined Asset Funds for over 20 years. Primarily
because of the sales charge and fluctuations in the market value of the Bonds,
the sale price may be less than the cost of your Units. You should consult your
financial professional for current market prices to determine if other
broker-dealers or banks are offering higher prices for Units.
The Sponsors may discontinue this market without prior notice if the supply
of Units exceeds demand or for other business reasons; in that event, the
Sponsors may still purchase Units at the redemption price as a service to
investors. The Sponsors may reoffer or redeem Units repurchased.
TRUSTEE'S REDEMPTION OF UNITS
You may redeem your Units by sending the Trustee a redemption request
together with any certificates you hold. Certificates must be properly endorsed
or accompanied by a written transfer instrument with signatures guaranteed by an
eligible institution. In certain instances, additional documents may be required
such as a certificate of death, trust instrument, certificate of corporate
authority or appointment as executor, administrator or guardian. If the Sponsors
are maintaining a market for Units, they will purchase any Units tendered at the
repurchase price described above. While Defined Asset Funds Municipal Series
have a declining deferred sales charge payable on redemption (see Appendix B),
Municipal Investment Trust Fund has no back-end load or 12b-1 fees, so there is
never a fee for cashing in your investment (see Appendix C). If they do not
purchase Units tendered, the Trustee is authorized in its discretion to sell
Units in the over-the-counter market if it believes it will obtain a higher net
price for the redeeming investor.
By the seventh calendar day after tender you will be mailed an amount equal
to the Redemption Price per Unit. Because of market movements or changes in the
Portfolio, this price may be more or less than the cost of your Units. The
Redemption Price per Unit is computed each Business Day by adding the value of
the Bonds, net accrued interest, cash and the value of any other Fund assets;
deducting unpaid taxes or other governmental charges, accrued but unpaid Fund
expenses, unreimbursed Trustee advances, cash held to redeem Units or for
distribution to investors and the value of any other Fund liabilities; and
dividing the result by the number of outstanding Units.
For Defined Asset Funds Municipal Series, Bonds are evaluated on the offer
side during the initial offering period and for at least the first three months
of the Fund (even in the secondary market) and on the bid side thereafter. For
Municipal Investment Trust Fund, Bonds are evaluated on the offer side during
the initial offering period and on the bid side thereafter.
If cash is not available in the Fund's Income and Capital Accounts to pay
redemptions, the Trustee may sell Bonds selected by the Agent for the Sponsors
based on market and credit factors determined to be in the best interest of the
Fund. These sales are often made at times when the Bonds would not otherwise be
sold and may result in lower prices than might be realized otherwise and will
also reduce the size and diversity of the Fund.
Redemptions may be suspended or payment postponed if the New York Stock
Exchange is closed other than for customary weekend and holiday closings, if the
SEC determines that trading on that Exchange is restricted or that an emergency
exists making disposal or evaluation of the Bonds not reasonably practicable, or
for any other period permitted by the SEC.
9
<PAGE>
INCOME, DISTRIBUTIONS AND REINVESTMENT
INCOME
Some of the Bonds may have been purchased on a when-issued basis or may
have a delayed delivery. Since interest on these Bonds does not begin to accrue
until the date of their delivery to the Fund, the Trustee's annual fee and
expenses may be reduced to provide tax-exempt income to investors for this
non-accrual period. If a when-issued Bond is not delivered until later than
expected and the amount of the Trustee's annual fee and expenses is insufficient
to cover the additional accrued interest, the Sponsors will treat the contracts
as failed Bonds. The Trustee is compensated for its fee reduction by drawing on
the letter of credit deposited by the Sponsors before the settlement date for
these Bonds and depositing the proceeds in a non-interest bearing account for
the Fund.
Interest received is credited to an Income Account and other receipts to a
Capital Account. A Reserve Account may be created by withdrawing from the Income
and Capital Accounts amounts considered appropriate by the Trustee to reserve
for any material amount that may be payable out of the Fund.
DISTRIBUTIONS
Each Unit receives an equal share of monthly distributions of interest
income net of estimated expenses. Interest on the Bonds is generally received by
the Fund on a semi-annual or annual basis. Because interest on the Bonds is not
received at a constant rate throughout the year, any Monthly Income Distribution
may be more or less than the interest actually received. To eliminate
fluctuations in the Monthly Income Distribution, the Trustee will advance
amounts necessary to provide approximately equal interest distributions; it will
be reimbursed, without interest, from interest received on the Bonds, but the
Trustee is compensated, in part, by holding the Fund's cash balances in
non-interest bearing accounts. Along with the Monthly Income Distributions, the
Trustee will distribute the investor's pro rata share of principal received from
any disposition of a Bond to the extent available for distribution. In addition,
for Defined Asset Funds Municipal Series, distributions of amounts necessary to
pay the deferred portion of the sales charge will be made from the Capital and
Income Accounts to an account maintained by the Trustee for purposes of
satisfying investors' sales charge obligations.
The initial estimated annual income per Unit, after deducting estimated
annual Fund expenses (and, for Defined Asset Funds Municipal Series, the portion
of the deferred sales charge payable from interest income) as stated in Part A
of the Prospectus, will change as Bonds mature, are called or sold or otherwise
disposed of, as replacement bonds are deposited and as Fund expenses change.
Because the Portfolio is not actively managed, income distributions will
generally not be affected by changes in interest rates. Depending on the
financial conditions of the issuers of the Bonds, the amount of income should be
substantially maintained as long as the Portfolio remains unchanged; however,
optional bond redemptions or other Portfolio changes may occur more frequently
when interest rates decline, which would result in early returns of principal
and possibly earlier termination of the Fund.
REINVESTMENT
Distributions will be paid in cash unless the investor elects to have
distributions reinvested without sales charge in the Municipal Fund Accumulation
Program, Inc. The Program is an open-end management investment company whose
investment objective is to obtain income exempt from regular federal income
taxes by investing in a diversified portfolio of state, municipal and public
authority bonds rated A or better or with comparable credit characteristics.
Reinvesting compounds earnings free from federal tax. Investors participating in
the Program will be subject to state and local income taxes to the same extent
as if the distributions had been received in cash, and most of the income on the
Program is subject to state and local income taxes. For more complete
information about the Program, including charges and expenses, request the
Program's prospectus from the Trustee. Read it carefully before you decide to
participate. Written notice of election to participate must be received by the
Trustee at least ten days before the Record Day for the first distribution to
which the election is to apply.
FUND EXPENSES
Estimated annual Fund expenses are listed in Part A of the Prospectus; if
actual expenses exceed the estimate, the excess will be borne by the Fund. The
Trustee's annual fee is payable in monthly installments. The Trustee also
benefits when it holds cash for the Fund in non-interest bearing accounts.
Possible additional charges include Trustee fees and expenses for maintaining
the Fund's registration statement current with Federal and State authorities,
extraordinary services, costs of indemnifying the Trustee and the Sponsors,
costs of action taken to protect the Fund and other
10
<PAGE>
legal fees and expenses, Fund termination expenses and any governmental charges.
The Trustee has a lien on Fund assets to secure reimbursement of these amounts
and may sell Bonds for this purpose if cash is not available. The Sponsors
receive an annual fee of a maximum of $0.35 per $1,000 face amount to reimburse
them for the cost of providing Portfolio supervisory services to the Fund. While
the fee may exceed their costs of providing these services to the Fund, the
total supervision fees from all Defined Asset Funds Municipal Series will not
exceed their costs for these services to all of those Series during any calendar
year; and the total supervision fees from all Series of Municipal Investment
Trust Fund will not exceed their costs for these services to all of those Series
during any calendar year. The Sponsors may also be reimbursed for their costs of
providing bookkeeping and administrative services to the Fund, currently
estimated at $0.10 per Unit. The Trustee's, Sponsors' and Evaluator's fees may
be adjusted for inflation without investors' approval.
All or a portion of expenses incurred in establishing the Fund, including
the cost of the initial preparation of documents relating to the Fund, Federal
and State registration fees, the initial fees and expenses of the Trustee, legal
expenses and any other out-of-pocket expenses will be paid by the Fund and
amortized over five years. Advertising and selling expenses will be paid from
the Underwriting Account at no charge to the Fund. Sales charges on Defined
Asset Funds range from under 1.0% to 5.5%. This may be less than you might pay
to buy and hold a comparable managed fund. Defined Asset Funds can be a
cost-effective way to purchase and hold investments. Annual operating expenses
are generally lower than for managed funds. Because Defined Asset Funds have no
management fees, limited transaction costs and no ongoing marketing expenses,
operating expenses are generally less than 0.25% a year. When compounded
annually, small differences in expense ratios can make a big difference in your
investment results. Because our portfolios rarely hold any significant amount of
cash, your money is more fully invested.
TAXES
The following discussion addresses only the U.S. federal and certain New
York State and City income tax consequences under current law of Units held as
capital assets and does not address the tax consequences of Units held by
dealers, financial institutions or insurance companies or other investors with
special circumstances.
In the opinion of Davis Polk & Wardwell, special counsel for the Sponsors,
under existing law:
The Fund is not an association taxable as a corporation for federal
income tax purposes. Each investor will be considered the owner of a pro
rata portion of each Bond in the Fund under the grantor trust rules of
Sections 671-679 of the Internal Revenue Code of 1986, as amended (the
'Code'). Each investor will be considered to have received the interest and
accrued the original issue discount, if any, on his pro rata portion of
each Bond when interest on the Bond is received or original issue discount
is accrued by the Fund. The investor's basis in his Units will be equal to
the cost of his Units, including any up-front sales charge and the
organizational expenses borne by the investor.
When an investor pays for accrued interest, the investor's confirmation
of purchase will report to him the amount of accrued interest for which he
paid. These investors will receive the accrued interest amount as part of
their first monthly distribution. Accordingly, these investors should
reduce their tax basis by the accrued interest amount after the first
monthly distribution.
An investor will recognize taxable gain or loss when all or part of his
pro rata portion of a Bond is disposed of by the Fund. An investor will
also be considered to have disposed of all or a portion of his pro rata
portion of each Bond when he sells or redeems all or some of his Units. An
investor who is treated as having acquired his pro rata portion of a Bond
at a premium will be required to amortize the premium over the term of the
Bond. The amortization is only a reduction of basis for the investor's pro
rata portion of the Bond and does not result in any deduction against the
investor's income. Therefore, under some circumstances, an investor may
recognize taxable gain when his pro rata portion of a Bond is disposed of
for an amount equal to or less than his original tax basis therefor.
Under Section 265 of the Code, a non-corporate investor is not entitled
to a deduction for his pro rata share of fees and expenses of the Fund,
because the fees and expenses are incurred in connection with the
production of tax-exempt income. Further, if borrowed funds are used by an
investor to purchase or carry Units of the Fund, interest on this
indebtedness will not be deductible for federal income tax purposes. In
addition, under rules used by the Internal Revenue Service, the purchase of
Units may be considered to have been made with borrowed funds even though
the borrowed funds are not directly traceable to the purchase of Units.
11
<PAGE>
Under the income tax laws of the State and City of New York, the Fund is
not an association taxable as a corporation and income received by the Fund
will be treated as the income of the investors in the same manner as for
federal income tax purposes, but will not be tax-exempt except to the
extent such income is earned by bonds in the Fund that are otherwise
tax-exempt for New York purposes.
The foregoing discussion relates only to U.S. federal and certain
aspects of New York State and City income taxes. Depending on their state
of residence, investors may be subject to state and local taxation and
should consult their own tax advisers in this regard.
* * *
In the opinion of bond counsel rendered on the date of issuance of each
Bond, the interest on each Bond is excludable from gross income under existing
law for regular federal income tax purposes (except in certain circumstances
depending on the investor) but may be subject to state and local taxes, and
interest on some or all of the Bonds may become subject to regular federal
income tax, perhaps retroactively to their date of issuance, as a result of
changes in federal law or as a result of the failure of issuers (or other users
of the proceeds of the Bonds) to comply with certain ongoing requirements. If
the interest on a Bond should be determined to be taxable, the Bond would
generally have to be sold at a substantial discount. In addition, investors
could be required to pay income tax on interest received prior to the date on
which the interest is determined to be taxable.
Neither the Sponsors nor Davis Polk & Wardwell have made or will make any
review of the proceedings relating to the issuance of the Bonds or the basis for
these opinions and there can be no assurance that the issuer (and other users)
will comply with any ongoing requirements necessary for a Bond to maintain its
tax-exempt character.
The Internal Revenue Service is currently engaged in a program of intensive
audits of certain tax-exempt hospital and health care facility organizations.
Although these audits have not yet been completed, it has been reported that the
tax-exempt status of some of these organizations may be revoked. At this time,
it is uncertain whether any of the hospital and health care facility obligations
held by the Fund will be affected by such audit proceedings.
RECORDS AND REPORTS
The Trustee keeps a register of the names, addresses and holdings of all
investors. The Trustee also keeps records of the transactions of the Fund,
including a current list of the Bonds and a copy of the Indenture, and
supplemental information on the operations of the Fund and the risks associated
with the Bonds held by the Fund, which may be inspected by investors at
reasonable times during business hours.
With each distribution, the Trustee includes a statement of the interest
and any other receipts being distributed. Within five days after deposit of
Bonds in exchange or substitution for Bonds (or contracts) previously deposited,
the Trustee will send a notice to each investor, identifying both the Bonds
removed and the replacement bonds deposited. The Trustee sends each investor of
record an annual report summarizing transactions in the Fund's accounts and
amounts distributed during the year and Bonds held, the number of Units
outstanding and the Redemption Price at year end, the interest received by the
Fund on the Bonds, the gross proceeds received by the Fund from the disposition
of any Bond (resulting from redemption or payment at maturity or sale of any
Bond), and the fees and expenses paid by the Fund, among other matters. The
Trustee will also furnish annual information returns to each investor and to the
Internal Revenue Service. Investors are required to report to the Internal
Revenue Service the amount of tax-exempt interest received during the year.
Investors may obtain copies of Bond evaluations from the Trustee to enable them
to comply with federal and state tax reporting requirements. Fund accounts are
audited annually by independent accountants selected by the Sponsors. Audited
financial statements are available from the Trustee on request.
TRUST INDENTURE
The Fund is a 'unit investment trust' created under New York law by a Trust
Indenture among the Sponsors, the Trustee and the Evaluator. This Prospectus
summarizes various provisions of the Indenture, but each statement is qualified
in its entirety by reference to the Indenture.
The Indenture may be amended by the Sponsors and the Trustee without
consent by investors to cure ambiguities or to correct or supplement any
defective or inconsistent provision, to make any amendment required by the SEC
12
<PAGE>
or other governmental agency or to make any other change not materially adverse
to the interest of investors (as determined in good faith by the Sponsors). The
Indenture may also generally be amended upon consent of investors holding 51% of
the Units. No amendment may reduce the interest of any investor in the Fund
without the investor's consent or reduce the percentage of Units required to
consent to any amendment without unanimous consent of investors. Investors will
be notified on the substance of any amendment.
The Trustee may resign upon notice to the Sponsors. It may be removed by
investors holding 51% of the Units at any time or by the Sponsors without the
consent of investors if it becomes incapable of acting or bankrupt, its affairs
are taken over by public authorities, or if under certain conditions the
Sponsors determine in good faith that its replacement is in the best interest of
the investors. The Evaluator may resign or be removed by the Sponsors and the
Trustee without the investors' consent. The resignation or removal of either
becomes effective upon acceptance of appointment by a successor; in this case,
the Sponsors will use their best efforts to appoint a successor promptly;
however, if upon resignation no successor has accepted appointment within 30
days after notification, the resigning Trustee or Evaluator may apply to a court
of competent jurisdiction to appoint a successor.
Any Sponsor may resign so long as one Sponsor with a net worth of
$2,000,000 remains and is agreeable to the resignation. A new Sponsor may be
appointed by the remaining Sponsors and the Trustee to assume the duties of the
resigning Sponsor. If there is only one Sponsor and it fails to perform its
duties or becomes incapable of acting or bankrupt or its affairs are taken over
by public authorities, the Trustee may appoint a successor Sponsor at reasonable
rates of compensation, terminate the Indenture and liquidate the Fund or
continue to act as Trustee without a Sponsor. Merrill Lynch, Pierce, Fenner &
Smith Incorporated has been appointed as Agent for the Sponsors by the other
Sponsors.
The Sponsors, the Trustee and the Evaluator are not liable to investors or
any other party for any act or omission in the conduct of their responsibilities
absent bad faith, willful misfeasance, negligence (gross negligence in the case
of a Sponsor or the Evaluator) or reckless disregard of duty. The Indenture
contains customary provisions limiting the liability of the Trustee.
MISCELLANEOUS
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsors.
AUDITORS
The Statement of Condition on the back cover of the Prospectus was audited
by Deloitte & Touche LLP, independent accountants, as stated in their opinion.
It is included in reliance upon that opinion given on the authority of that firm
as experts in accounting and auditing.
TRUSTEE
The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and either the
Comptroller of the Currency or state banking authorities.
SPONSORS
The Sponsors are listed on the back cover of the Prospectus. They may
include Merrill Lynch, Pierce, Fenner & Smith Incorporated, a wholly-owned
subsidiary of Merrill Lynch Co. Inc.; Smith Barney Inc., an indirect wholly-
owned subsidiary of The Travelers Inc.; Prudential Securities Incorporated, an
indirect wholly-owned subsidiary of the Prudential Insurance Company of America;
Dean Witter Reynolds, Inc., a principal operating subsidiary of Dean Witter
Discover & Co. and PaineWebber Incorporated, a wholly-owned subsidiary of
PaineWebber Group Inc. Each Sponsor, or one of its predecessor corporations, has
acted as Sponsor of a number of series of unit investment trusts. Each Sponsor
has acted as principal underwriter and managing underwriter of other investment
companies. The Sponsors, in addition to participating as members of various
selling groups or as agents of other investment companies, execute orders on
behalf of investment companies for the purchase and sale of securities of these
companies and sell securities to these companies in their capacities as brokers
or dealers in securities.
13
<PAGE>
PUBLIC DISTRIBUTION
In the initial offering period Units will be distributed to the public
through the Underwriting Account and dealers who are members of the National
Association of Securities Dealers, Inc. The initial offering period is 30 days
or less if all Units are sold. If some Units initially offered have not been
sold, the Sponsors may extend the initial offering period for up to four
additional successive 30-day periods.
The Sponsors intend to qualify Units for sale in all states in which
qualification is deemed necessary through the Underwriting Account and by
dealers who are members of the National Association of Securities Dealers, Inc.;
however, Units of a State trust will be offered for sale only in the State for
which the trust is named, except that Units of a New Jersey trust will also be
offered in Connecticut, Units of a Florida trust will also be offered in New
York and Units of a New York trust will also be offered in Connecticut, Florida
and Puerto Rico. The Sponsors do not intend to qualify Units for sale in any
foreign countries and this Prospectus does not constitute an offer to sell Units
in any country where Units cannot lawfully be sold. Sales to dealers and to
introducing dealers, if any, will initially be made at prices which represent a
concession from the Public Offering Price, but the Agent for the Sponsors
reserves the right to change the rate of any concession from time to time. Any
dealer or introducing dealer may reallow a concession up to the concession to
dealers.
UNDERWRITERS' AND SPONSORS' PROFITS
Upon sale of the Units, the Underwriters will be entitled to receive sales
charges. The Sponsors also realize a profit or loss on deposit of the Bonds
equal to the difference between the cost of the Bonds to the Fund (based on the
offer side evaluation on the initial date of deposit) and the Sponsors' cost of
the Bonds. In addition, a Sponsor or Underwriter may realize profits or sustain
losses on Bonds it deposits in the Fund which were acquired from underwriting
syndicates of which it was a member. During the initial offering period, the
Underwriting Account also may realize profits or sustain losses as a result of
fluctuations after the initial date of deposit in the Public Offering Price of
the Units. In maintaining a secondary market for Units, 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 these Units
(which include the sales charge) or the prices at which they redeem the Units.
Cash, if any, made available by buyers of Units to the Sponsors prior to a
settlement date for the purchase of Units may be used in the Sponsors'
businesses to the extent permitted by Rule 15c3-3 under the Securities Exchange
Act of 1934 and may be of benefit to the Sponsors.
FUND PERFORMANCE
Information on the performance of the Fund for various periods, on the
basis of changes in Unit price plus the amount of income and principal
distributions reinvested, may be included from time to time in advertisements,
sales literature, reports and other information furnished to current or
prospective investors. Total return figures are not averaged, and may not
reflect deduction of the sales charge, which would decrease the return. Average
annualized return figures reflect deduction of the maximum sales charge. No
provision is made for any income taxes payable.
Past performance may not be indicative of future results. The Fund is not
actively managed. Unit price and return fluctuate with the value of the Bonds in
the Portfolio, so there may be a gain or loss when Units are sold.
Fund performance may be compared to performance on the same basis (with
distributions reinvested) of Moody's Municipal Bond Averages or performance data
from publications such as Lipper Analytical Services, Inc., Morningstar
Publications, Inc., Money Magazine, The New York Times, U.S. News and World
Report, Barron's Business Week, CDA Investment Technology, Inc., Forbes Magazine
or Fortune Magazine. As with other performance data, performance comparisons
should not be considered representative of the Fund's relative performance for
any future period.
DEFINED ASSET FUNDS
Municipal Investment Trust Funds have provided investors with tax-free
income for more than 30 years. For decades informed investors have purchased
unit investment trusts for dependability and professional selection of
investments. Defined Asset Funds' philosophy is to allow investors to 'buy with
knowledge' (because, unlike managed funds, the portfolio of municipal bonds and
the return are relatively fixed) and 'hold with confidence' (because the
portfolio is professionally selected and regularly reviewed). Defined Asset
Funds offers an array of simple and convenient investment choices, suited to fit
a wide variety of personal financial goals--a buy and hold strategy for capital
accumulation, such as for children's education or retirement, or attractive,
regular current income consistent with the preservation of principal. Tax-exempt
income can help investors keep more today for a more secure financial future. It
can also be important in planning because tax brackets may increase with higher
earnings or changes in tax laws.
14
<PAGE>
Unit investment trusts are particularly suited for the many investors who prefer
to seek long-term income by purchasing sound investments and holding them,
rather than through active trading. Few individuals have the knowledge,
resources or capital to buy and hold a diversified portfolio on their own; it
would generally take a considerable sum of money to obtain the breadth and
diversity that Defined Asset Funds offer. One's investment objectives may call
for a combination of Defined Asset Funds.
Defined Asset Funds reflect a buy and hold strategy that the Sponsors
believe can be more effective and cheaper than active management. This strategy
is premised on selection criteria and procedures, diversification and regular
monitoring by investment professionals. Various advertisements and sales
literature may summarize the results of economic studies concerning how stock
market movement has tended to be concentrated and how longer-term investments
can tend to reduce risk.
One of the most important investment decisions you face may be how to
allocate your investments among asset classes. Diversification among different
kinds of investments can balance the risks and rewards of each one. Most
investment experts recommend stocks for long-term capital growth. Long-term
corporate bonds offer relatively high rates of interest income. By purchasing
both defined equity and defined bond funds, investors can receive attractive
current income, as well as growth potential, offering some protection against
inflation. From time to time various advertisements, sales literature, reports
and other information furnished to current or prospective investors may present
the average annual compounded rate of return of selected asset classes over
various periods of time, compared to the rate of inflation over the same
periods.
EXCHANGE OPTION--MUNICIPAL INVESTMENT TRUST FUND ONLY.
You may exchange Fund Units for units of certain other Defined Asset Funds
subject only to a reduced sales charge. You may exchange your units of any
Municipal Investment Trust Fund Intermediate Term Series with a regular maximum
sales charge of at least 3.25%, of any other Defined Asset Fund with a regular
maximum sales charge of at least 3.50%, or of any unaffiliated unit trust with a
regular maximum sales charge of at least 3.0%, for Units of this Fund at their
relative net asset values, subject only to a reduced sales charge, or to any
remaining Deferred Sales Charge, as applicable.
To make an exchange, you should contact your financial professional to find
out what suitable Exchange Funds are available and to obtain a prospectus. You
may acquire units of only those Exchange Funds in which the Sponsors are
maintaining a secondary market and which are lawfully for sale in the state
where you reside. Except for the reduced sales charge, an exchange is a taxable
event normally requiring recognition of any gain or loss on the units exchanged.
However, the Internal Revenue Service may seek to disallow a loss if the
portfolio of the units acquired is not materially different from the portfolio
of the units exchanged; you should consult your own tax advisor. If the proceeds
of units exchanged are insufficient to acquire a whole number of Exchange Fund
units, you may pay the difference in cash (not exceeding the price of a single
unit acquired).
As the Sponsors are not obligated to maintain a secondary market in any
series, there can be no assurance that units of a desired series will be
available for exchange. The Exchange Option may be amended or terminated at any
time without notice.
SUPPLEMENTAL INFORMATION
Upon written or telephonic request to the Trustee shown on the back cover
of this Prospectus, investors will receive at no cost to the investor
supplemental information about the Fund, which has been filed with the SEC. The
supplemental information includes more detailed risk factor disclosure about the
types of Bonds that may be part of the Fund's Portfolio, general risk disclosure
concerning any letters of credit or insurance securing certain Bonds, and
general information about the structure and operation of the Fund.
15
<PAGE>
APPENDIX A
DESCRIPTION OF RATINGS (AS DESCRIBED BY THE RATING COMPANIES THEMSELVES)
STANDARD & POOR'S RATINGS GROUP, A DIVISION OF MCGRAW-HILL, INC.
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC--Debt rated BB, B, CCC and CC is regarded, on balance, as
predominately speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
The ratings from AA to CCC may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
A provisional rating, indicated by 'p' following a rating, assumes the
successful completion of the project being financed by the issuance of the debt
being rated and indicates that payment of debt service requirements is largely
or entirely dependent upon the successful and timely completion of the project.
This rating, however, while addressing credit quality subsequent to completion
of the project, makes no comment on the likelihood of, or the risk of default
upon failure of, such completion.
* Continuance of the rating is contingent upon S&P's receipt of an executed
copy of the escrow agreement or closing documentation confirming investments and
cash flows.
NR--Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that Standard & Poor's does not rate a
particular type of obligation as a matter of policy.
MOODY'S INVESTORS SERVICE, INC.
Aaa--Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
'gilt edge'. Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
a-1
<PAGE>
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Rating symbols may include numerical modifiers 1, 2 or 3. The numerical
modifier 1 indicates that the security ranks at the high end, 2 in the
mid-range, and 3 nearer the low end, of the generic category. These modifiers of
rating symbols give investors a more precise indication of relative debt quality
in each of the historically defined categories.
Conditional ratings, indicated by 'Con.', are sometimes given when the
security for the bond depends upon the completion of some act or the fulfillment
of some condition. Such bonds are given a conditional rating that denotes their
probable credit stature upon completion of that act or fulfillment of that
condition.
NR--Should no rating be assigned, the reason may be one of the following:
(a) an application for rating was not received or accepted; (b) the issue or
issuer belongs to a group of securities that are not rated as a matter of
policy; (c) there is a lack of essential data pertaining to the issue or issuer
or (d) the issue was privately placed, in which case the rating is not published
in Moody's publications.
FITCH INVESTORS SERVICE, INC.
AAA--These bonds are considered to be investment grade and of the highest
quality. The obligor has an extraordinary ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--These bonds are considered to be investment grade and of high quality.
The obligor's ability to pay interest and repay principal, while very strong, is
somewhat less than for AAA rated securities or more subject to possible change
over the term of the issue.
A--These bonds are considered to be investment grade and of good quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--These bonds are considered to be investment grade and of satisfactory
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however are more likely to weaken this ability than bonds with higher ratings.
A '+' or a '-' sign after a rating symbol indicates relative standing in
its rating.
DUFF & PHELPS CREDIT RATING CO.
AAA--Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA--High credit quality. Protection factors are strong. Risk is modest but
may vary slightly from time to time because of economic condtions.
A--Protection factors are average but adequate. However, risk factors are
more variable and greater in periods of economic stress.
A '+' or a '-' sign after a rating symbol indicates relative standing in
its rating.
a-2
<PAGE>
APPENDIX B
SALES CHARGE SCHEDULES FOR DEFINED ASSET FUNDS, MUNICIPAL SERIES
DEFERRED AND UP-FRONT SALES CHARGES. Units purchased during the first year
of the Fund will be subject to periodic deferred and contingent deferred sales
charges. Units purchased in the second through fifth year will be subject to an
up-front sales charge as well as periodic deferred and contingent deferred sales
charges. Units purchased thereafter will be subject only to an up-front sales
charge. During the first five years of the Fund, a fixed periodic deferred sales
charge of $2.75 per Unit is payable on 20 quarterly payment dates occurring on
the 10th day of February, May, August and November, commencing no earlier than
45 days after the initial date of deposit. Investors purchasing Units on the
initial date of deposit and holding for at least five years, for example, would
incur total periodic deferred sales charges of $55.00 per Unit. Because of the
time value of money, however, as of the initial date of deposit this periodic
deferred sales charge obligation would, at current interest rates, equate to an
up-front sales charge of approximately 4.75%.
The Public Offering Price subsequent to the Initial Date of Deposit will
fluctuate. As the periodic deferred sales charge is a fixed dollar amount
irrespective of the Public Offering Price, it will represent a varying
percentage of the Public Offering Price. An up-front sales charge will be
imposed on all unit purchases after the first year of the Fund. The following
table illustrates the combined maximum up-front and periodic deferred sales
charges that would be incurred by an investor who purchases Units at the
beginning of each of the first five years of the Fund (based on a constant Unit
price) and holds them through the fifth year of the Fund:
<TABLE><CAPTION>
TOTAL
UP-FRONT AND
UP-FRONT SALES CHARGE MAXIMUM PERIODIC
AMOUNT DEFERRED SALES
DEFERRED PER CHARGES
$1,000 INVESTED PER $1,000 INVESTED
----------------------------------------------------------- --------------- --------------------
YEAR OF UNIT AS PERCENT OF PUBLIC AS PERCENT OF NET AMOUNT PER
PURCHASE OFFERING PRICE AMOUNT INVESTED $1,000 INVESTED
- ----------------- --------------------- ------------------- ---------------
<S> <C> <C> <C> <C> <C>
1 None None None $ 55.00 $ 55.00
2 1.10% 1.11% $ 11.00 44.00 55.00
3 2.20 2.25 22.00 33.00 55.00
4 3.30 3.41 33.00 22.00 55.00
5 4.40 4.60 44.00 11.00 55.00
</TABLE>
CONTINGENT DEFERRED SALES CHARGE. Units redeemed or repurchased within 4
years after the Fund's initial date of deposit will not only incur the periodic
deferred sales charge until the quarter of redemption or repurchase but will
also be subject to a contingent deferred sales charge:
YEAR SINCE FUND'S CONTINGENT DEFERRED
INITIAL DATE OF SALES CHARGE PER
DEPOSIT UNIT
- -------------------- --------------------
1 $ 25.00
2 15.00
3 10.00
4 5.00
5 and thereafter None
The contingent deferred sales charge is waived on any redemption or
repurchase of Units after the death (including the death of a single joint
tenant with rights of survivorship) or disability (as defined in the Internal
Revenue Code) of an investor, provided the redemption or repurchase is requested
within one year of the death or initial determination of disability. The
Sponsors may require receipt of satisfactory proof of disability before
releasing the portion of the proceeds representing the amount of the contingent
deferred sales charge waived.
To assist investors in understanding the total costs of purchasing units
during the first four years of the Fund and disposing of those units by the
fifth year, the following tables set forth the maximum combined up-front,
periodic and contingent deferred sales charges that would be incurred (assuming
a constant Unit price) by an investor:
UNITS PURCHASED ON INITIAL OFFERING DATE
<TABLE><CAPTION>
YEAR OF UNIT DEFERRED SALES CONTINGENT DEFERRED
DISPOSITION UP-FRONT SALES CHARGE CHARGE SALES CHARGE TOTAL SALES CHARGES
- ------------------- --------------------- ---------------- ------------------- -------------------
<S> <C> <C> <C> <C>
1 None $ 11.00 $ 25.00 $ 36.00
2 None 22.00 15.00 37.00
3 None 33.00 10.00 43.00
4 None 44.00 5.00 49.00
5 None 55.00 0.00 55.00
</TABLE>
b-1
<PAGE>
<TABLE><CAPTION>
UNITS PURCHASED ON FIRST ANNIVERSARY OF FUND
YEAR OF UNIT DEFERRED SALES CONTINGENT DEFERRED
DISPOSITION UP-FRONT SALES CHARGE CHARGE SALES CHARGE TOTAL SALES CHARGES
- ----------------- --------------------- ---------------- ------------------- -------------------
<S> <C> <C> <C> <C>
2 $ 11.00 $ 11.00 $ 15.00 $ 37.00
3 11.00 22.00 10.00 43.00
4 11.00 33.00 5.00 49.00
5 11.00 44.00 0.00 55.00
UNITS PURCHASED ON SECOND ANNIVERSARY OF FUND
YEAR OF UNIT DEFERRED SALES CONTINGENT DEFERRED
DISPOSITION UP-FRONT SALES CHARGE CHARGE SALES CHARGE TOTAL SALES CHARGES
- ------------------- --------------------- ---------------- ------------------- -------------------
3 $ 22.00 $ 11.00 $ 10.00 $ 43.00
4 22.00 22.00 5.00 49.00
5 22.00 33.00 0.00 55.00
UNITS PURCHASED ON THIRD ANNIVERSARY OF FUND
YEAR OF UNIT DEFERRED SALES CONTINGENT DEFERRED
DISPOSITION UP-FRONT SALES CHARGE CHARGE SALES CHARGE TOTAL SALES CHARGES
- ----------------- --------------------- ---------------- ------------------- -------------------
4 $ 33.00 $ 11.00 $ 5.00 $ 49.00
5 33.00 22.00 0.00 55.00
UNITS PURCHASED ON FOURTH ANNIVERSARY OF FUND
YEAR OF UNIT DEFERRED SALES CONTINGENT DEFERRED
DISPOSITION UP-FRONT SALES CHARGE CHARGE SALES CHARGE TOTAL SALES CHARGES
- ----------------- --------------------- ---------------- ------------------- -------------------
5 $ 44.00 $ 11.00 $ 0.00 $ 55.00
</TABLE>
b-2
<PAGE>
APPENDIX C
SALES CHARGE SCHEDULES FOR MUNICIPAL INVESTMENT TRUST FUND
INITIAL OFFERING
<TABLE><CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT)
---------------------------------- PRIMARY MARKET
AS PERCENT OF AS PERCENT OF DEALER CONCESSION AS CONCESSION TO
OFFER SIDE PUBLIC NET AMOUNT PERCENT OF PUBLIC INTRODUCING
NUMBER OF UNITS OFFERING PRICE INVESTED OFFERING PRICE DEALERS
- ----------------------------------- ------------------- ------------- --------------------- ------------------
<S> <C> <C> <C> <C>
MONTHLY PAYMENT SERIES, MULTISTATE SERIES, INSURED SERIES
Less than 250...................... 4.50% 4.712% 2.925% $ 32.40
250 - 499.......................... 3.50 3.627 2.275 25.20
500 - 749.......................... 3.00 3.093 1.950 21.60
750 - 999.......................... 2.50 2.564 1.625 18.00
1,000 or more...................... 2.00 2.041 1.300 14.40
INTERMEDIATE SERIES (TEN YEAR MATURITIES)
Less than 250...................... 4.00% 4.167% 2.600% $ 28.80
250 - 499.......................... 3.00 3.093 1.950 21.60
500 - 749.......................... 2.50 2.564 1.625 18.00
750 - 999.......................... 2.00 2.041 1.300 14.40
1,000 or more...................... 1.50 1.523 0.975 10.00
INTERMEDIATE SERIES (SHORT INTERMEDIATE MATURITIES)
Less than 250...................... 2.75% 2.828% 1.788% $ 19.80
250 - 499.......................... 2.25 2.302 1.463 16.20
500 - 749.......................... 1.75 1.781 1.138 12.60
750 - 999.......................... 1.25 1.266 0.813 9.00
1,000 or more...................... 1.00 1.010 0.650 7.20
</TABLE>
SECONDARY MARKET
ACTUAL SALES CHARGE AS DEALER CONCESSION AS
PERCENT OF EFFECTIVE PERCENT OF EFFECTIVE
NUMBER OF UNITS SALES CHARGE SALES CHARGE
- ---------------- ----------------------- -----------------------
1-249 100% 65%
250-499 80 52
500-749 60 39
750-999 45 29.25
1,000 or more 35 22.75
EFFECTIVE SALES CHARGE
AS PERCENT AS PERCENT
TIME TO OF BID SIDE OF PUBLIC
MATURITY EVALUATION OFFERING PRICE
- --------------------------- ----------- -----------------
Less than six months 0% 0%
Six months to 1 year 0.756 0.75
Over 1 year to 2 years 1.523 1.50
Over 2 years to 4 years 2.564 2.50
Over 4 years to 8 years 3.627 3.50
Over 8 years to 15 years 4.712 4.50
Over 15 years 5.820 5.50
For this purpose, a Bond will be considered to mature on its stated
maturity date unless it has been called for redemption or funds or securities
have been placed in escrow to redeem it on an earlier date, or is subject to a
mandatory tender, in which case the earlier date will be considered the maturity
date.
c-1
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES
DEFINED ASSET FUNDS
I want to learn more about automatic reinvestment in the Investment Accumulation
Program. Please send me information about participation in the Municipal Fund
Accumulation Program, Inc. and a current Prospectus.
My name (please
print) _________________________________________________________________________
My address (please print):
Street and Apt.
No. ____________________________________________________________________________
City, State, Zip
Code ___________________________________________________________________________
This page is a self-mailer. Please complete the information above, cut along the
dotted line, fold along the lines on the reverse side, tape, and mail with the
Trustee's address displayed on the outside.
<PAGE>
BUSINESS REPLY MAIL NO POSTAGE
FIRST CLASS PERMIT NO. 1313 NEW YORK, NY NECESSARY
IF MAILED
POSTAGE WILL BE PAID BY ADDRESSEE IN THE
THE BANK OF NEW YORK UNITED STATES
UNIT INVESTMENT TRUST DEPARTMENT
P.O. BOX 974
WALL STREET STATION
NEW YORK, NY 10268-0974
- --------------------------------------------------------------------------------
(Fold along this line.)
- --------------------------------------------------------------------------------
(Fold along this line.)
<PAGE>
Defined
Asset FundsSM
SPONSORS: MUNICIPAL INVESTMENT
Merrill Lynch, TRUST FUND
Pierce, Fenner & Smith IncorporatedMultistate Series--97
Defined Asset Funds (Unit Investment Trusts)
P.O. Box 9051,
Princeton, NJ This Prospectus does not contain all of the
08543-9051 information with respect to the investment
(609) 282-8500 company set forth in its registration
Smith Barney Inc. statement and exhibits relating thereto which
388 Greenwich Street--23rd Floor, have been filed with the Securities and
New York, NY Exchange Commission, Washington, D.C. under
10013 the Securities Act of 1933 and the Investment
(800) 223-2532 Company Act of 1940, and to which reference
PaineWebber Incorporated is hereby made.
1285 Avenue of the Americas, ------------------------------
New York, NY No person is authorized to give any
10019 information or to make any representations
(201) 902-3000 with respect to this investment company not
Prudential Securities Incorporated contained in this Prospectus; and any
One Seaport Plaza--199 Water information or representation not contained
Street, herein must not be relied upon as having been
New York, NY authorized.
10292 ------------------------------
(212) 776-1000 When Units of this Fund are no longer
Dean Witter Reynolds Inc. available this Prospectus may be used as a
Two World Trade Center--59th Floor,preliminary prospectus for a future series,
New York, NY and investors should note the following:
10048 Information contained herein is subject to
(212) 392-2222 amendment. A registration statement relating
EVALUATOR: to securities of a future series has been
Kenny S&P Evaluation Services, filed with the Securities and Exchange
a division of J. J. Kenny Co., Inc.Commission. These securities may not be sold
65 Broadway, New York, NY 10019 nor may offers to buy be accepted prior to
TRUSTEE: the time the registration statement becomes
The Bank of New York effective.
(a New York Banking Corporation) This Prospectus shall not constitute an offer
Box 974--Wall Street Division to sell or the solicitation of an offer to
New York, NY 10268-0974 buy nor shall there be any sale of these
1-800-221-7771 securities in any State in which such offer
solicitation or sale would be unlawful prior
to registration or qualification under the
securities laws of any such State.
15156--11/95
<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS
<TABLE><CAPTION>
A. The following information relating to the Depositors is incorporated by reference to the SEC
filings indicated and made a part of this Registration Statement.
SEC FILE OR
IDENTIFICATION DATE
NUMBER FILED
----------------------------------------
<S> <C> <C>
I. Bonding Arrangements and Date of Organization of the
Depositors filed pursuant to Items A and B of
Part II of the Registration Statement on Form
S-6 under the Securities Act of 1933:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 2-52691 1/17/95
Smith Barney Inc. .............................. 33-29106 6/29/89
PaineWebber Incorporated........................ 2-87965 11/18/83
Prudential Securities Incorporated.............. 2-61418 4/26/78
Dean Witter Reynolds Inc. ...................... 2-60599 1/4/78
II. Information as to Officers and Directors of the
Depositors filed pursuant to Schedules A and D
of Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 8-7221 5/26/94, 6/29/92
Smith Barney Inc. .............................. 8-8177 8/29/94, 8/2/93
PaineWebber Incorporated........................ 8-16267 4/20/94, 7/31/86
Prudential Securities Incorporated.............. 8-27154 6/30/94, 6/20/88
Dean Witter Reynolds Inc. ...................... 8-14172 2/23/94, 4/9/91
III. Charter documents of the Depositors filed as
Exhibits to the Registration Statement on Form
S-6 under the Securities Act of 1933 (Charter,
By-Laws):
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 2-73866, 2-77549 9/22/81, 6/15/82
Smith Barney Inc. .............................. 33-20499 3/30/88
PaineWebber Incorporated........................ 2-87965 11/18/83
Prudential Securities Incorporated.............. 2-52947 3/4/75
Dean Witter Reynolds Inc. ...................... 2-60599 1/4/78
B. The Internal Revenue Service Employer Identification
Numbers of the Sponsors and Trustee are as follows:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 13-5674085
Smith Barney Inc. .............................. 13-1912900
PaineWebber Incorporated........................ 13-2638166
Prudential Securities Incorporated.............. 22-2347336
Dean Witter Reynolds Inc. ...................... 94-0899825
The Bank of New York, Trustee................... 13-4941102
</TABLE>
UNDERTAKING
The Sponsors undertake that they will not instruct the Trustee to accept from
(i) Asset Guaranty Reinsurance Company, Municipal Bond Investors Assurance
Corporation or any other insurance company affiliated with any of the Sponsors,
in settlement of any claim, less than an amount sufficient to pay any principal
or interest (and, in the case of a taxability redemption, premium) then due on
any Security in accordance with the municipal bond guaranty insurance policy
attached to such Security or (ii) any affiliate of the Sponsors who has any
obligation with respect to any Security, less than the full amount due pursuant
to the obligation, unless such instructions have been approved by the Securities
and Exchange Commission pursuant to Rule 17d-1 under the Investment Company Act
of 1940.
II-1
<PAGE>
SERIES OF MUNICIPAL INVESTMENT TRUST FUND, EQUITY INCOME FUND
AND DEFINED ASSET FUNDS MUNICIPAL INSURED SERIES
DESIGNATED PURSUANT TO RULE 487 UNDER THE SECURITIES ACT OF 1933
SEC
SERIES NUMBER FILE NUMBER
- --------------------------------------------------------------------------------
Municipal Investment Trust Fund:
Thirty-Eighth Intermediate Term Series.................... 2-84267
Thirty-Eighth Insured Series.............................. 2-96953
Four Hundred Thirty-Eighth Monthly Payment Series......... 33-16561
Multistate Series 6E...................................... 33-29412
Multistate Series--48..................................... 33-50247
Multistate Series--83..................................... 33-57443
Defined Asset Funds Municipal Insured Series................ 33-54565
Equity Income Fund, Select Ten Portfolio--1995 Spring
Series...................................................... 33-55807
CONTENTS OF REGISTRATION STATEMENT
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.
Additional Information not included in the Prospectus (Part II).
The following exhibits:
1.1 --Form of Trust Indenture (incorporated by reference to Exhibit
1.1 to the Registration Statement of Municipal Investment Trust
Fund, Multistate Series--89, 1933 Act File No. 33-58531.
1.1.1 --Form of Standard Terms and Conditions of Trust Effective
October 21, 1993 (incorporated by reference to Exhibit 1.1.1 to
the Registration Statement of Municipal Investment Trust Fund,
Multistate Series--48, 1933 Act File No. 33-50247).
1.2 --Form of Master Agreement Among Underwriters (incorporated by
reference to Exhibit 1.2 to the Registration Statement of The
Corporate Income Fund, One Hundred Ninety-Fourth Monthly
Payment Series, 1933 Act File No. 2-90925).
2.1 --Form of Certificate of Beneficial Interest (included in Exhibit
1.1.1).
3.1 --Opinion of counsel as to the legality of the securities being
issued including their consent to the use of their names under
the headings 'Taxes' and 'Miscellaneous--Legal Opinion' in the
Prospectus.
4.1.1 --Consent of the Evaluator.
4.1.2 --Consent of the Ratings Agency.
5.1 --Consent of independent accountants.
5.21 --Form of Purchase Agreement for purchases in secondary market
with letter of credit backing (incorporated by reference to
Exhibit 5.21 to the Registration Statement of Municipal
Investment Trust Fund, Fifty-Fifth Intermediate Term Series,
1933 Act File No. 2-94809).
5.22 --Form of Purchase Agreement for purchases in secondary market
with guarantees (incorporated by reference to Exhibit 5.22 to
the Registration Statement of Municipal Investment Trust Fund,
Fifty-Fifth Intermediate Term Series, 1933 Act File No.
2-94809).
5.23 --Form of Purchase Agreement for purchases in secondary market
with collateralized backing (incorporated by reference to
Exhibit 5.23 to the Registration Statement of Municipal
Investment Trust Fund, Fifty-Fifth Intermediate Term Series,
1933 Act File No. 2-94809).
6.1 --Form of Collateral Agreement (incorporated by reference to
Exhibit 6.1 to the Registration Statement of Municipal
Investment Trust Fund, Fifty-Fifth Intermediate Term Series,
1933 Act File No. 2-94809).
9.1 --Information Supplement (incorporated by reference to Exhibit
9.1 to the Registration Statement of Municipal Investment Trust
Fund, Insured Series 226, 1933 Act File No. 33-61281).
R-1
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES--97
DEFINED ASSET FUNDS
SIGNATURES
The registrant hereby identifies the series numbers of Municipal Investment
Trust Fund, Equity Income Fund and Defined Asset Funds Municipal Insured Series
listed on page R-1 for the purposes of the representations required by Rule 487
and represents the following:
1) That the portfolio securities deposited in the series as to which this
registration statement is being filed do not differ materially in type
or quality from those deposited in such previous series;
2) That, except to the extent necessary to identify the specific portfolio
securities deposited in, and to provide essential information for, the
series with respect to which this registration statement is being filed,
this registration statement does not contain disclosures that differ in
any material respect from those contained in the registration statements
for such previous series as to which the effective date was determined
by the Commission or the staff; and
3) That it has complied with Rule 460 under the Securities Act of 1933.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT 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 2ND DAY OF
NOVEMBER 1995.
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 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 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 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 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
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: 33-43466 and 33-51607
HERBERT M. ALLISON, JR.
BARRY S. FREIDBERG
EDWARD L. GOLDBERG
STEPHEN L. HAMMERMAN
JEROME P. KENNEY
DAVID H. KOMANSKY
DANIEL T. NAPOLI
THOMAS H. PATRICK
JOHN L. STEFFENS
DANIEL P. TULLY
ROGER M. VASEY
ARTHUR H. ZEIKEL
By
ERNEST V. FABIO
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
R-3
<PAGE>
SMITH BARNEY INC.
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Smith Barney Inc.: have been filed
under the 1933 Act
File Number:
33-56722 and
33-51999
STEVEN D. BLACK
JAMES BOSHART III
ROBERT A. CASE
JAMES DIMON
ROBERT DRUSKIN
ROBERT F. GREENHILL
JEFFREY LANE
ROBERT H. LESSIN
JACK L. RIVKIN
By GINA LEMON
(As authorized signatory for
Smith Barney Inc. and
Attorney-in-fact for the persons listed above)
R-4
<PAGE>
PAINEWEBBER INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Executive Committee of the Board the following 1933 Act File
of Directors of PaineWebber Number: 33-55073
Incorporated:
DONALD J. MARRON
JOSEPH J. GRANO, JR.
By
ROBERT E. HOLLEY
(As authorized signatory for
PaineWebber Incorporated
and Attorney-in-fact for the persons listed above)
R-5
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under Form SE and the following 1933
the Executive Committee of the Board Act File Number: 33-41631
of Directors of
Prudential Securities Incorporated:
ALAN D. HOGAN
GEORGE A. MURRAY
LELAND B. PATON
HARDWICK SIMMONS
By
RICHARD R. HOFFMANN
(As authorized signatory for Prudential Securities
Incorporated and Attorney-in-fact for the persons listed above)
R-6
<PAGE>
DEAN WITTER REYNOLDS INC.
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under Form SE and the following
the Board of Directors of Dean Witter 1933 Act File Number: 33-17085
Reynolds Inc.:
NANCY DONOVAN
CHARLES A. FIUMEFREDDO
JAMES F. HIGGINS
STEPHEN R. MILLER
PHILIP J. PURCELL
THOMAS C. SCHNEIDER
WILLIAM B. SMITH
By
MICHAEL D. BROWNE
(As authorized signatory for Dean Witter Reynolds Inc.
and Attorney-in-fact for the persons listed above)
R-7
EXHIBIT 3.1
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
NOVEMBER 2, 1995
Municipal Investment Trust Fund,
Multistate Series - 97
Defined Asset Funds
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Smith Barney Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
Dean Witter Reynolds Inc.
c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
Defined Asset Funds
P.O. Box 9051
Princeton, NJ 08543-9051
Dear Sirs:
We have acted as special counsel for you, as sponsors (the 'Sponsors') of
Multistate Series - 97 of Municipal Investment Trust Fund, Defined Asset Funds
(the 'Trusts'), in connection with the issuance of units of fractional undivided
interest in the Trusts (the 'Units') in accordance with the Trust Indentures
relating to the Trusts (the 'Indentures').
We have examined and are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of such documents and instruments as
we have deemed necessary or advisable for the purpose of this opinion.
Based upon the foregoing, we are of the opinion that (i) the execution and
delivery of the Indentures and the issuance of the Units have been duly
authorized by the Sponsors and (ii) the Units, when duly issued and delivered by
the Sponsors and the Trustee in accordance with the applicable Indentures, will
be legally issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as Exhibit 3.1 to the
Registration Statement relating to the Units filed under the Securities Act of
1933 and to the use of our name in such Registration Statement and in the
related prospectus under the headings 'Taxes', 'New York Taxes and Risks-- New
York Taxes' and 'Miscellaneous--Legal Opinion'.
Very truly yours,
DAVIS POLK & WARDWELL
EXHIBIT 4.1.1
KENNY INFORMATION SYSTEMS,
A Division of J. J. Kenny Co., Inc.
65 Broadway
New York, New York 10006
Telephone: 212/770-4422
Fax: 212/797-8681
Frank A. Ciccotto, Jr.
Vice President
November 2, 1995
Merrill Lynch Pierce Fenner & Smith
Incorporated
Defined Asset Funds
P.O. Box 9051
Princeton, NJ 08543-9051
The Bank of New York
Unit Investment Trust Department
P.O. Box 974
Wall Street Division
New York, N.Y. 10268-0974
Re: Municipal Investment Trust Fund, Multistate Series - 97, Defined Asset Funds
Gentlemen:
We have examined the Registration Statement File No. 33-62037 for the
above-captioned fund. We hereby acknowledge that Kenny Information Systems, a
Division of J. J. Kenny Co., Inc. is currently acting as the evaluator for the
fund. We hereby consent to the use in the Registration Statement of the
reference to Kenny Information Systems, a Division of J. J. Kenny Co., Inc. as
evaluator.
In addition, we hereby confirm that the ratings indicated in the
Registration Statement for the respective bonds comprising the trust portfolio
are the ratings indicated in our KENNYBASE database as of the date of the
Evaluation Report.
You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
Sincerely,
FRANK A. CICCOTTO, JR.
VICE PRESIDENT
EXHIBIT 4.1.2
STANDARD & POOR'S RATINGS GROUP
BOND INSURANCE ADMINISTRATION
25 BROADWAY
NEW YORK, NEW YORK 10004
TELEPHONE (212) 208-1061
November 2, 1995
Merrill Lynch Pierce The Bank of New York
Fenner & Smith Incorporated Unit Investment Trust Department
Defined Asset Funds P.O. Box 974
P.O. Box 9051 Wall Street Division
Princeton, NJ 08543-9051 New York, NY 10268-0974
Re: Municipal Investment Trust Fund, Multistate Series - 97,
Defined Asset Funds (California, New Jersey, New York and Pennsylvania
Trusts)
Gentlemen:
Pursuant to your request for a Standard & Poor's rating on the units of the
above-captioned trusts, SEC No. 33-62037, we have reviewed the information
presented to us and have assigned a 'AAA' rating to the units of the trusts and
a 'AAA' rating to the securities contained in the trusts. The ratings are direct
reflections, of the portfolios of the trusts, which will be composed solely of
securities covered by bond insurance policies that insure against default in the
payment of principal and interest on the securities so long as they remain
outstanding. Since such policies have been issued by one or more insurance
companies which have been assigned 'AAA' claims paying ability ratings by S&P,
S&P has assigned a 'AAA' rating to the units of the trusts and to the securities
contained in the trusts.
You have permission to use the name of Standard & Poor's Corporation and
the above-assigned ratings in connection with your dissemination of information
relating to these units, provided that it is understood that the ratings are not
'market' ratings nor recommendations to buy, hold, or sell the units of the
trusts or the securities contained in the trusts. Further, it should be
understood the rating on the units does not take into account the extent to
which trust expenses or portfolio asset sales for less than the trust's purchase
price will reduce payment to the unit holders of the interest and principal
required to be paid on the portfolio assets. S&P reserves the right to advise
its own clients, subscribers, and the public of the ratings. S&P relies on the
sponsor and its counsel, accountants, and other experts for the accuracy and
completeness of the information submitted in connection with the ratings. S&P
does not independently verify the truth or accuracy of any such information.
This letter evidences our consent to the use of the name of Standard &
Poor's Corporation in connection with the rating assigned to the units in the
registration statement or prospectus relating to the units or the trusts.
However, this letter should not be construed as a consent by us, within the
meaning of Section 7 of the Securities Act of 1933, to the use of the name of
Standard & Poor's Corporation in connection with the ratings assigned to the
securities contained in the trusts. You are hereby authorized to file a copy of
this letter with the Securities and Exchange Commission.
Please be certain to send us three copies of your final prospectus as soon
as it becomes available. Should we not receive them within a reasonable time
after the closing or should they not conform to the representations made to us,
we reserve the right to withdraw the rating.
We are pleased to have had the opportunity to be of service to you. If we
can be of further help, please do not hesitate to call upon us.
Very truly yours,
VINCENT S. ORGO
Standard & Poor's Corporation
EXHIBIT 5.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Sponsors and Trustee of Municipal Investment Trust Fund, Multistate
Series--97,
Defined Asset Funds (California, New Jersey, New York and Pennsylvania Trusts):
We consent to the use in this Registration Statement No. 33-62037 of our opinion
dated November 2, 1995, relating to the Statements of Condition of Municipal
Investment Trust Fund, Multistate Series--97, Defined Asset Funds (California,
New Jersey, New York and Pennsylvania Trusts ) and to the reference to us under
the heading 'Miscellaneous--Auditors' in the Prospectus which is a part of this
Registration Statement.
DELOITTE & TOUCHE LLP
New York, N.Y.
November 2, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> CALIFORNIA TRUST
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> NOV-2-1995
<INVESTMENTS-AT-COST> 4,872,073
<INVESTMENTS-AT-VALUE> 4,872,073
<RECEIVABLES> 93,157
<ASSETS-OTHER> 5,047
<OTHER-ITEMS-ASSETS> 47,000
<TOTAL-ASSETS> 5,017,277
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 98,204
<TOTAL-LIABILITIES> 98,204
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,919,073
<SHARES-COMMON-STOCK> 5,047
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,919,073
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,047
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> NEW JERSEY TRUST
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> NOV-2-1995
<INVESTMENTS-AT-COST> 3,192,742
<INVESTMENTS-AT-VALUE> 3,192,742
<RECEIVABLES> 27,129
<ASSETS-OTHER> 3,281
<OTHER-ITEMS-ASSETS> 31,000
<TOTAL-ASSETS> 3,254,152
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30,410
<TOTAL-LIABILITIES> 30,410
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,223,742
<SHARES-COMMON-STOCK> 3,281
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,919,073
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,047
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> NEW YORK TRUST
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> NOV-2-1995
<INVESTMENTS-AT-COST> 3,918,154
<INVESTMENTS-AT-VALUE> 3,918,154
<RECEIVABLES> 72,709
<ASSETS-OTHER> 4,038
<OTHER-ITEMS-ASSETS> 38,000
<TOTAL-ASSETS> 4,032,901
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 76,747
<TOTAL-LIABILITIES> 76,747
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,956,154
<SHARES-COMMON-STOCK> 4,038
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,956,154
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,038
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> PENNSYLVANIA TRUST
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> NOV-2-1995
<INVESTMENTS-AT-COST> 3,202,770
<INVESTMENTS-AT-VALUE> 3,202,770
<RECEIVABLES> 54,858
<ASSETS-OTHER> 3,281
<OTHER-ITEMS-ASSETS> 31,000
<TOTAL-ASSETS> 3,291,909
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58,139
<TOTAL-LIABILITIES> 58,139
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,233,770
<SHARES-COMMON-STOCK> 3,281
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,233,770
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,281
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
