DEFINED ASSET FUNDS--REGISTERED TRADEMARK--
------------------------------
----------------------
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES--98
(A UNIT INVESTMENT TRUST)
- CALIFORNIA, FLORIDA AND NEW YORK PORTFOLIOS
- PORTFOLIOS OF INSURED INTERMEDIATE AND LONG-TERM
MUNICIPAL BONDS
- DESIGNED TO BE FREE OF REGULAR FEDERAL INCOME TAX
- EXEMPT FROM SOME STATE TAXES
- MONTHLY DISTRIBUTIONS
SPONSORS:
MERRILL LYNCH,
PIERCE, FENNER & SMITH
INCORPORATED -----------------------------------------------------
SALOMON SMITH BARNEY INC. The Securities and Exchange Commission has not
PRUDENTIAL SECURITIES approved or disapproved these Securities or passed
INC. upon the adequacy of this prospectus. Any
PAINEWEBBER INCORPORATED representation to the contrary is a criminal offense.
DEAN WITTER REYNOLDS INC. Prospectus dated February 25, 2000.
<PAGE>
- --------------------------------------------------------------------------------
Defined Asset Funds--Registered Trademark--
Defined Asset Funds-Registered Trademark- is America's oldest and largest family
of unit investment trusts, with over $160 billion sponsored over the last 28
years. Defined Asset Funds has been a leader in unit investment trust research
and product innovation. Our family of Funds helps investors work toward their
financial goals with a full range of quality investments, including municipal,
corporate and government bond portfolios, as well as domestic and international
equity portfolios.
Defined Asset Funds offer a number of advantages:
- A Disciplined strategy of buying and holding with a long-term view is the
cornerstone of Defined Asset Funds.
- Fixed portfolio: Defined Funds follow a buy and hold investment strategy;
funds are not managed and portfolio changes are limited.
- Defined Portfolios: We choose the stocks and bonds in advance, so you know
what you're investing in.
- Professional research: Our dedicated research team seeks out stocks or bonds
appropriate for a particular fund's objectives.
- Ongoing supervision: We monitor each portfolio on an ongoing basis.
No matter what your investment goals, tolerance for risk or time horizon,
there's probably a Defined Asset Fund that suits your investment style. Your
financial professional can help you select a Defined Asset Fund that works best
for your investment portfolio.
THE FINANCIAL INFORMATION IN THIS PROSPECTUS IS AS OF NOVEMBER 30, 1999, THE
EVALUATION DATE.
<TABLE>
<S> <C>
CONTENTS
PAGE
---
California Intermediate Insured
Portfolio--
Risk/Return Summary................ 3
Florida Insured
Portfolio--Risk/Return Summary..... 6
New York Insured
Portfolio--Risk/Return Summary..... 9
What You Can Expect From Your
Investment......................... 13
Monthly Income..................... 13
Return Figures..................... 13
Records and Reports................ 13
The Risks You Face................... 14
Interest Rate Risk................. 14
Call Risk.......................... 14
Reduced Diversification Risk....... 14
Liquidity Risk..................... 14
Concentration Risk................. 14
State Concentration Risk........... 15
Bond Quality Risk.................. 17
Insurance Related Risk............. 17
Litigation and Legislation Risks... 17
Selling or Exchanging Units.......... 18
Sponsors' Secondary Market......... 18
Selling Units to the Trustee....... 18
Exchange Option.................... 19
How The Fund Works................... 19
Pricing............................ 19
Evaluations........................ 19
Income............................. 20
Expenses........................... 20
Portfolio Changes.................. 20
Fund Termination................... 21
Certificates....................... 21
Trust Indenture.................... 21
Legal Opinion...................... 22
Auditors........................... 22
Sponsors........................... 22
Trustee............................ 23
Underwriters' and Sponsors'
Profits.......................... 23
Public Distribution................ 23
Code of Ethics..................... 23
Taxes................................ 23
Supplemental Information............. 25
Financial Statements................. D-1
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
CALIFORNIA INTERMEDIATE INSURED PORTFOLIO--RISK/RETURN SUMMARY
<TABLE>
<C> <S>
1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks interest income that is
exempt from regular federal income taxes
and some state and local taxes by
investing in a fixed portfolio
consisting primarily of insured,
intermediate term municipal revenue
bonds with an estimated average life of
about 7 years.
2. WHAT ARE MUNICIPAL REVENUE BONDS?
Municipal revenue bonds are bonds issued
by states, municipalities and public
authorities to finance the cost of
buying, building or improving various
projects intended to generate revenue,
such as airports, health care
facilities, housing and municipal
electric, water and sewer utilities.
Generally, payments on these bonds
depend solely on the revenues generated
by the projects, excise taxes or state
appropriations, and are not backed by
the government's taxing power.
3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
- The Fund plans to hold to maturity 7
intermediate-term tax-exempt municipal
bonds with an aggregate face amount of
$3,205,000.
- The Fund is a unit investment trust
which means that, unlike a mutual fund,
the Portfolio is not managed.
- The bonds are rated AAA or Aaa by
Standard & Poor's, Moody's or Fitch.
- Many of the bonds can be called at a
premium declining over time to par
value. Some bonds may be called earlier
at par for extraordinary reasons.
- 100% of the bonds are insured by
insurance companies that guarantee
timely payments of principal and
interest on the bonds (but not Fund
units or the market value of the bonds
before they mature).
The Portfolio consists of municipal
bonds of the following types:
</TABLE>
<TABLE>
/ / Hospitals/Health Care 32%
<S> <C>
/ / Lease Rental 33%
/ / Municipal Electric Utilities 16%
/ / Universities/Colleges 19%
</TABLE>
<TABLE>
<C> <S>
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE
FUND. THIS CAN HAPPEN FOR VARIOUS
REASONS, INCLUDING:
- Rising interest rates, an issuer's
worsening financial condition or a drop
in bond ratings can reduce the price of
your units.
- Because the Fund is concentrated in
hospital/health care and lease rental
bonds, adverse developments in these
sectors may affect the value of your
units.
- Assuming no changes in interest rates,
when you sell your units, they will
generally be worth less than your cost
because your cost included a sales fee.
- The Fund will receive early returns of
principal if bonds are called or sold
before they mature. If this happens your
income will decline and you may not be
able to reinvest the money you receive at
as high a yield or as long a maturity.
ALSO, THE PORTFOLIO IS CONCENTRATED IN
BONDS OF CALIFORNIA SO IT IS LESS
DIVERSIFIED THAN A NATIONAL FUND AND IS
SUBJECT TO RISKS PARTICULAR TO CALIFORNIA
WHICH ARE BRIEFLY DESCRIBED UNDER STATE
CONCENTRATION RISKS LATER IN THIS
PROSPECTUS.
</TABLE>
3
<PAGE>
<TABLE>
<C> <S>
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want federally tax-free
income. You will benefit from a
professionally selected and supervised
portfolio whose risk is reduced by
investing in insured bonds of several
different issuers.
The Fund is NOT appropriate for you if
you want a speculative investment that
changes to take advantage of market
movements, if you do not want a
tax-advantaged investment or if you
cannot tolerate any risk.
</TABLE>
<TABLE>
<C> <S>
DEFINING YOUR INCOME
</TABLE>
<TABLE>
<C> <S> <C>
WHAT YOU MAY EXPECT (Payable on the 25th day
of the month to holders of record on the
10th day of the month):
Regular Monthly Income per unit $ 3.86
Annual Income per unit: $46.36
THESE FIGURES ARE ESTIMATES DETERMINED ON THE
EVALUATION DAY; ACTUAL PAYMENTS MAY VARY.
</TABLE>
<TABLE>
<C> <S>
6. WHAT ARE THE FUND'S FEES AND EXPENSES?
This table shows the costs and expenses you may pay,
directly or indirectly, when you invest in the Fund.
INVESTOR FEES
Maximum Sales Fee (Load) on new
purchases (as a percentage of
$1,000 invested) 2.75%
Employees of some of the Sponsors and their affiliates
may pay a reduced sales fee of no less than $5.00 per
unit.
The maximum sales fee is reduced if you invest at
least $100,000, as follows:
</TABLE>
<TABLE>
<CAPTION>
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
-------------- ------------
<C> <S> <C>
Less than $100,000 2.75%
$100,000 to $249,999 2.50%
$250,000 to $499,999 2.25%
$500,000 to $999,999 2.00%
$1,000,000 and over 1.75%
Maximum Exchange Fee 1.75%
</TABLE>
<TABLE>
<C> <S>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
</TABLE>
<TABLE>
<CAPTION>
AMOUNT
PER UNIT
--------
<C> <S> <C>
$0.68
Trustee's Fee
$0.54
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
$0.42
Evaluator's Fee
$0.20
Organization Costs
$0.49
Other Operating Expenses
-----
$2.33
TOTAL
</TABLE>
<TABLE>
<C> <S>
The Sponsors historically paid organization
costs and updating expenses.
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
IN THE FOLLOWING CHART WE SHOW PAST PERFORMANCE
OF PRIOR CALIFORNIA PORTFOLIOS, WHICH HAD
INVESTMENT OBJECTIVES, STRATEGIES AND TYPES OF
BONDS SUBSTANTIALLY SIMILAR TO THIS FUND. THESE
PRIOR SERIES DIFFERED IN THAT THEY CHARGED A
HIGHER SALES FEE. These prior California Series
were offered between June 22, 1988 and
September 27, 1996 and were outstanding on
December 31, 1999. OF COURSE, PAST PERFORMANCE
OF PRIOR SERIES IS NO GUARANTEE OF FUTURE
RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
REFLECTING ALL EXPENSES. FOR PERIODS ENDED
12/31/99.
</TABLE>
-------------------------------------------------------------------
<TABLE>
High 3.14% 6.73% 5.38% 3.54% 7.92% 5.97%
<S> <C> <C> <C> <C> <C> <C>
Average -3.57 5.28 5.21 -1.71 6.34 5.80
Low -8.58 2.79 5.04 -6.00 3.55 5.63
</TABLE>
-----------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Average
Sales fee 1.96% 5.20% 5.82%
</TABLE>
-----------------------------------------------------------
NOTE: ALL RETURNS REPRESENT CHANGES IN UNIT PRICE WITH DISTRIBUTIONS REINVESTED
INTO THE MUNICIPAL FUND INVESTMENT ACCUMULATION PROGRAM.
<TABLE>
<C> <S>
8. IS THE FUND MANAGED?
Unlike a mutual fund, the Fund is not managed
and bonds are not sold because of market
changes. Rather, experienced Defined Asset Funds
financial analysts regularly review the bonds in
the Fund. The Fund may sell a bond if certain
adverse credit or other conditions exist.
</TABLE>
4
<PAGE>
<TABLE>
<C> <S>
9. HOW DO I BUY UNITS?
The minimum investment is one unit.
You can buy units from any of the
Sponsors and other broker-dealers. The
Sponsors are listed later in this
prospectus. Some banks may offer units
for sale through special arrangements
with the Sponsors, although certain
legal restrictions may apply.
UNIT PRICE PER UNIT $1,021.31
(as of November 30, 1999)
Unit price is based on the net asset
value of the Fund plus the sales fee.
An amount equal to any principal cash,
as well as net accrued but
undistributed interest on the unit, is
added to the unit price. An independent
evaluator prices the bonds at 3:30 p.m.
Eastern time every business day. Unit
price changes every day with changes in
the prices of the bonds in the Fund.
10. HOW DO I SELL UNITS?
You may sell your units at any time to
any Sponsor or the Trustee for the net
asset value determined at the close of
business on the date of sale. You will
not pay any other fee when you sell
your units.
</TABLE>
<TABLE>
<C> <S>
11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly.
In the opinion of bond counsel when each
bond was issued, interest on the bonds
in this Fund is generally 100% exempt
from regular federal income tax. Your
income may also be exempt from some
California state and local personal
income taxes if you live in California.
You will also receive principal payments
if bonds are sold or called or mature,
when the cash available is more than
$5.00 per unit. You will be subject to
tax on any gain realized by the Fund on
the disposition of bonds.
12. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You will receive your income in cash
unless you choose to compound your
income by reinvesting at no sales fee in
the Municipal Fund Investment
Accumulation Program, Inc. This program
is an open-end mutual fund with a
comparable investment objective, but the
bonds will generally not be insured.
Income from this program will generally
be subject to state and local income
taxes. FOR MORE COMPLETE INFORMATION
ABOUT THE PROGRAM, INCLUDING CHARGES AND
FEES, ASK THE TRUSTEE FOR THE PROGRAM'S
PROSPECTUS. READ IT CAREFULLY BEFORE YOU
INVEST. THE TRUSTEE MUST RECEIVE YOUR
WRITTEN ELECTION TO REINVEST AT LEAST 10
DAYS BEFORE THE RECORD DAY OF AN INCOME
PAYMENT.
EXCHANGE PRIVILEGES
You may exchange units of this Fund for
units of certain other Defined Asset
Funds. You may also exchange into this
Fund from certain other funds. We charge
a reduced sales fee on exchanges.
</TABLE>
5
<PAGE>
- --------------------------------------------------------------------------------
FLORIDA INSURED PORTFOLIO--RISK/RETURN SUMMARY
<TABLE>
<C> <S>
1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks interest income that is
exempt from regular federal income taxes
and some state and local taxes by
investing in a fixed portfolio
consisting primarily of insured, long
term municipal revenue bonds.
2. WHAT ARE MUNICIPAL REVENUE BONDS?
Municipal revenue bonds are bonds issued
by states, municipalities and public
authorities to finance the cost of
buying, building or improving various
projects intended to generate revenue,
such as airports, health care
facilities, housing and municipal
electric, water and sewer utilities.
Generally, payments on these bonds
depend solely on the revenues generated
by the projects, excise taxes or state
appropriations, and are not backed by
the government's taxing power.
3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
- The Fund plans to hold to maturity 7
long-term tax-exempt municipal bonds
with an aggregate face amount of
$1,980,000.
- The Fund is a unit investment trust
which means that, unlike a mutual fund,
the Portfolio is not managed.
- The bonds are rated AAA or Aaa by
Standard & Poor's, Moody's or Fitch.
- Many of the bonds can be called at a
premium declining over time to par
value. Some bonds may be called earlier
at par for extraordinary reasons.
- 100% of the bonds are insured by
insurance companies that guarantee
timely payments of principal and
interest on the bonds (but not Fund
units or the market value of the bonds
before they mature).
The Portfolio consists of municipal
bonds of the following types:
</TABLE>
<TABLE>
/ / Hospitals/Health Care 25%
<S> <C>
/ / Lease Rental Appropriation 25%
/ / Municipal Water/Sewer
Utilities 21%
/ / Refunded Bonds 4%
/ / Special Tax 25%
</TABLE>
<TABLE>
<C> <S>
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE
FUND. THIS CAN HAPPEN FOR VARIOUS
REASONS, INCLUDING:
- Rising interest rates, an issuer's
worsening financial condition or a drop
in bond ratings can reduce the price of
your units.
- Because the Fund is concentrated in
hospital/health care, special tax and
lease rental bonds, adverse developments
in these sectors may affect the value of
your units.
- Assuming no changes in interest rates,
when you sell your units, they will
generally be worth less than your cost
because your cost included a sales fee.
- The Fund will receive early returns of
principal if bonds are called or sold
before they mature. If this happens your
income will decline and you may not be
able to reinvest the money you receive
at as high a yield or as long a
maturity.
ALSO, THE PORTFOLIO IS CONCENTRATED IN
BONDS OF FLORIDA SO IT IS LESS
DIVERSIFIED THAN A NATIONAL FUND AND IS
SUBJECT TO RISKS PARTICULAR TO FLORIDA
WHICH ARE BRIEFLY DESCRIBED UNDER STATE
CONCENTRATION RISKS LATER IN THIS
PROSPECTUS.
</TABLE>
6
<PAGE>
<TABLE>
<C> <S>
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want federally tax-free
income. You will benefit from a
professionally selected and supervised
portfolio whose risk is reduced by
investing in insured bonds of several
different issuers.
The Fund is NOT appropriate for you if
you want a speculative investment that
changes to take advantage of market
movements, if you do not want a
tax-advantaged investment or if you
cannot tolerate any risk.
</TABLE>
<TABLE>
<C> <S>
DEFINING YOUR INCOME
</TABLE>
<TABLE>
<C> <S> <C>
WHAT YOU MAY EXPECT (Payable on the 25th day
of the month to holders of record on the
10th day of the month):
Regular Monthly Income per unit $ 3.59
Annual Income per unit: $43.19
THESE FIGURES ARE ESTIMATES DETERMINED ON THE
EVALUATION DAY; ACTUAL PAYMENTS MAY VARY.
</TABLE>
<TABLE>
<C> <S>
6. WHAT ARE THE FUND'S FEES AND EXPENSES?
This table shows the costs and expenses you may pay,
directly or indirectly, when you invest in the Fund.
INVESTOR FEES
Maximum Sales Fee (Load) on new
purchases (as a percentage of
$1,000 invested) 2.90%
Employees of some of the Sponsors and their affiliates
may pay a reduced sales fee of no less than $5.00 per
unit.
The maximum sales fee is reduced if you invest at
least $100,000, as follows:
</TABLE>
<TABLE>
<CAPTION>
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
-------------- ------------
<C> <S> <C>
Less than $100,000 2.90%
$100,000 to $249,999 2.65%
$250,000 to $499,999 2.40%
$500,000 to $999,999 2.15%
$1,000,000 and over 1.90%
Maximum Exchange Fee 1.90%
</TABLE>
<TABLE>
<C> <S>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
</TABLE>
<TABLE>
<CAPTION>
AMOUNT
PER UNIT
--------
<C> <S> <C>
$0.60
Trustee's Fee
$0.50
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
$0.60
Evaluator's Fee
$0.20
Organization Costs
$0.77
Other Operating Expenses
-----
$2.67
TOTAL
</TABLE>
<TABLE>
<C> <S>
The Sponsors historically paid organization
costs and updating expenses.
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
IN THE FOLLOWING CHART WE SHOW PAST PERFORMANCE
OF PRIOR FLORIDA PORTFOLIOS, WHICH HAD
INVESTMENT OBJECTIVES, STRATEGIES AND TYPES OF
BONDS SUBSTANTIALLY SIMILAR TO THIS FUND. THESE
PRIOR SERIES DIFFERED IN THAT THEY CHARGED A
HIGHER SALES FEE. These prior Florida Series
were offered between August 25, 1988 and
December 6, 1996 and were outstanding on
December 31, 1999. OF COURSE, PAST PERFORMANCE
OF PRIOR SERIES IS NO GUARANTEE OF FUTURE
RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
REFLECTING ALL EXPENSES. FOR PERIODS ENDED
12/31/99.
</TABLE>
-------------------------------------------------------------------
<TABLE>
High 4.18% 6.26% 5.37% 4.34% 7.45% 5.96%
<S> <C> <C> <C> <C> <C> <C>
Average -3.40 5.16 5.27 -1.58 6.23 5.86
Low -11.09 3.16 5.17 -8.35 3.93 5.76
</TABLE>
-----------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Average
Sales fee 1.93% 5.28% 5.82%
</TABLE>
-----------------------------------------------------------
NOTE: ALL RETURNS REPRESENT CHANGES IN UNIT PRICE WITH DISTRIBUTIONS REINVESTED
INTO THE MUNICIPAL FUND INVESTMENT ACCUMULATION PROGRAM.
<TABLE>
<C> <S>
8. IS THE FUND MANAGED?
Unlike a mutual fund, the Fund is not managed and
bonds are not sold because of market changes.
Rather, experienced Defined Asset Funds financial
analysts regularly review the bonds in the Fund.
The Fund may sell a bond if certain adverse credit
or other conditions exist.
</TABLE>
7
<PAGE>
<TABLE>
<C> <S>
9. HOW DO I BUY UNITS?
The minimum investment is one unit.
You can buy units from any of the Sponsors
and other broker-dealers. The Sponsors are
listed later in this prospectus. Some
banks may offer units for sale through
special arrangements with the Sponsors,
although certain legal restrictions may
apply.
UNIT PRICE PER UNIT $832.03
(as of November 30, 1999)
Unit price is based on the net asset value
of the Fund plus the sales fee. An amount
equal to any principal cash, as well as
net accrued but undistributed interest on
the unit, is added to the unit price. An
independent evaluator prices the bonds at
3:30 p.m. Eastern time every business day.
Unit price changes every day with changes
in the prices of the bonds in the Fund.
10. HOW DO I SELL UNITS?
You may sell your units at any time to any
Sponsor or the Trustee for the net asset
value determined at the close of business
on the date of sale. You will not pay any
other fee when you sell your units.
</TABLE>
<TABLE>
<C> <S>
11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly.
In the opinion of bond counsel when each
bond was issued, interest on the bonds in
this Fund is generally 100% exempt from
regular federal income tax. Your income
may also be exempt from some Florida state
and local taxes if you live in Florida.
You will also receive principal payments
if bonds are sold or called or mature,
when the cash available is more than $5.00
per unit. You will be subject to tax on
any gain realized by the Fund on the
disposition of bonds.
12. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You will receive your income in cash
unless you choose to compound your income
by reinvesting at no sales fee in the
Municipal Fund Investment Accumulation
Program, Inc. This program is an open-end
mutual fund with a comparable investment
objective, but the bonds generally will
not be insured. Income from this program
will generally be subject to state and
local income taxes. FOR MORE COMPLETE
INFORMATION ABOUT THE PROGRAM, INCLUDING
CHARGES AND FEES, ASK THE TRUSTEE FOR THE
PROGRAM'S PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST. THE TRUSTEE MUST
RECEIVE YOUR WRITTEN ELECTION TO REINVEST
AT LEAST 10 DAYS BEFORE THE RECORD DAY OF
AN INCOME PAYMENT.
EXCHANGE PRIVILEGES
You may exchange units of this Fund for
units of certain other Defined Asset
Funds. You may also exchange into this
Fund from certain other funds. We charge a
reduced sales fee on exchanges.
</TABLE>
8
<PAGE>
- --------------------------------------------------------------------------------
NEW YORK INSURED PORTFOLIO--RISK/RETURN SUMMARY
<TABLE>
<C> <S>
1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks interest income that is
exempt from regular federal income taxes
and some state and local taxes by
investing in a fixed portfolio
consisting primarily of insured, long
term municipal revenue bonds.
2. WHAT ARE MUNICIPAL REVENUE BONDS?
Municipal revenue bonds are bonds issued
by states, municipalities and public
authorities to finance the cost of
buying, building or improving various
projects intended to generate revenue,
such as airports, health care
facilities, housing and municipal
electric, water and sewer utilities.
Generally, payments on these bonds
depend solely on the revenues generated
by the projects, excise taxes or state
appropriations, and are not backed by
the government's taxing power.
3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
- The Fund plans to hold to maturity 8
long-term tax-exempt municipal bonds
with an aggregate face amount of
$3,575,000.
- The Fund is a unit investment trust
which means that, unlike a mutual fund,
the Portfolio is not managed.
- The bonds are rated AAA or Aaa by
Standard & Poor's, Moody's or Fitch.
- Many of the bonds can be called at a
premium declining over time to par
value. Some bonds may be called earlier
at par for extraordinary reasons.
- 100% of the bonds are insured by
insurance companies that guarantee
timely payments of principal and
interest on the bonds (but not Fund
units or the market value of the bonds
before they mature).
The Portfolio consists of municipal
bonds of the following types:
</TABLE>
<TABLE>
/ / Hospitals/Health Care 31%
<S> <C>
/ / Lease Rental Appropriation 14%
/ / Municipal Water/Sewer
Utilities 16%
/ / Municipal Electric Utilities 9%
/ / Universities/Colleges 30%
</TABLE>
<TABLE>
<C> <S>
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE
FUND. THIS CAN HAPPEN FOR VARIOUS
REASONS, INCLUDING:
- Rising interest rates, an issuer's
worsening financial condition or a drop
in bond ratings can reduce the price of
your units.
- Because the Fund is concentrated in
hospital/health care and
university/college bonds, adverse
developments in these sectors may affect
the value of your units.
- Assuming no changes in interest rates,
when you sell your units, they will
generally be worth less than your cost
because your cost included a sales fee.
- The Fund will receive early returns of
principal if bonds are called or sold
before they mature. If this happens your
income will decline and you may not be
able to reinvest the money you receive
at as high a yield or as long a
maturity.
ALSO, THE PORTFOLIO IS CONCENTRATED IN
BONDS OF NEW YORK SO IT IS LESS
DIVERSIFIED THAN A NATIONAL FUND AND IS
SUBJECT TO RISKS PARTICULAR TO NEW YORK
WHICH ARE BRIEFLY DESCRIBED UNDER STATE
CONCENTRATION RISKS LATER IN THIS
PROSPECTUS.
</TABLE>
9
<PAGE>
<TABLE>
<C> <S>
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want federally tax-free
income. You will benefit from a
professionally selected and supervised
portfolio whose risk is reduced by
investing in insured bonds of several
different issuers.
The Fund is NOT appropriate for you if
you want a speculative investment that
changes to take advantage of market
movements, if you do not want a
tax-advantaged investment or if you
cannot tolerate any risk.
</TABLE>
<TABLE>
<C> <S>
DEFINING YOUR INCOME
</TABLE>
<TABLE>
<C> <S> <C>
WHAT YOU MAY EXPECT (Payable on the 25th day
of the month to holders of record on the
10th day of the month):
Regular Monthly Income per unit $ 4.33
Annual Income per unit: $51.97
THESE FIGURES ARE ESTIMATES DETERMINED ON THE
EVALUATION DAY; ACTUAL PAYMENTS MAY VARY.
</TABLE>
<TABLE>
<C> <S>
6. WHAT ARE THE FUND'S FEES AND EXPENSES?
This table shows the costs and expenses you may pay,
directly or indirectly, when you invest in the Fund.
INVESTOR FEES
Maximum Sales Fee (Load) on new
purchases (as a percentage of
$1,000 invested) 2.90%
Employees of some of the Sponsors and their affiliates
may pay a reduced sales fee of no less than $5.00 per
unit.
The maximum sales fee is reduced if you invest at
least $100,000, as follows:
</TABLE>
<TABLE>
<CAPTION>
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
-------------- ------------
<C> <S> <C>
Less than $100,000 2.90%
$100,000 to $249,999 2.65%
$250,000 to $499,999 2.40%
$500,000 to $999,999 2.15%
$1,000,000 and over 1.90%
Maximum Exchange Fee 1.90%
</TABLE>
<TABLE>
<C> <S>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
</TABLE>
<TABLE>
<CAPTION>
AMOUNT
PER UNIT
--------
<C> <S> <C>
$0.69
Trustee's Fee
$0.55
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
$0.38
Evaluator's Fee
$0.20
Organization Costs
$0.46
Other Operating Expenses
-----
$2.28
TOTAL
</TABLE>
<TABLE>
<C> <S>
The Sponsors historically paid organization
costs and updating expenses.
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
IN THE FOLLOWING CHART WE SHOW PAST PERFORMANCE
OF PRIOR NEW YORK PORTFOLIOS, WHICH HAD
INVESTMENT OBJECTIVES, STRATEGIES AND TYPES OF
BONDS SUBSTANTIALLY SIMILAR TO THIS FUND. THESE
PRIOR SERIES DIFFERED IN THAT THEY CHARGED A
HIGHER SALES FEE. These prior New York Series
were offered between January 14, 1988 and
October 16, 1996 and were outstanding on
December 31, 1999. OF COURSE, PAST PERFORMANCE
OF PRIOR SERIES IS NO GUARANTEE OF FUTURE
RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
REFLECTING ALL EXPENSES. FOR PERIODS ENDED
12/31/99.
</TABLE>
-------------------------------------------------------------------
<TABLE>
High 3.92% 6.86% 5.82% 4.47% 8.06% 6.35%
<S> <C> <C> <C> <C> <C> <C>
Average -3.75 4.82 5.44 -1.84 5.84 6.03
Low -12.35 3.05 5.21 -9.84 3.83 5.79
</TABLE>
-----------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Average
Sales fee 2.01% 5.02% 5.77%
</TABLE>
-----------------------------------------------------------
NOTE: ALL RETURNS REPRESENT CHANGES IN UNIT PRICE WITH DISTRIBUTIONS REINVESTED
INTO THE MUNICIPAL FUND INVESTMENT ACCUMULATION PROGRAM.
<TABLE>
<C> <S>
8. IS THE FUND MANAGED?
Unlike a mutual fund, the Fund is not managed and
bonds are not sold because of market changes.
Rather, experienced Defined Asset Funds financial
analysts regularly review the bonds in the Fund.
The Fund may sell a bond if certain adverse
credit or other conditions exist.
</TABLE>
10
<PAGE>
<TABLE>
<C> <S>
9. HOW DO I BUY UNITS?
The minimum investment is one unit.
You can buy units from any of the
Sponsors and other broker-dealers. The
Sponsors are listed later in this
prospectus. Some banks may offer units
for sale through special arrangements
with the Sponsors, although certain
legal restrictions may apply.
UNIT PRICE PER UNIT $959.65
(as of November 30, 1999)
Unit price is based on the net asset
value of the Fund plus the sales fee. An
amount equal to any principal cash, as
well as net accrued but undistributed
interest on the unit, is added to the
unit price. An independent evaluator
prices the bonds at 3:30 p.m. Eastern
time every business day. Unit price
changes every day with changes in the
prices of the bonds in the Fund.
10. HOW DO I SELL UNITS?
You may sell your units at any time to
any Sponsor or the Trustee for the net
asset value determined at the close of
business on the date of sale. You will
not pay any other fee when you sell your
units.
</TABLE>
<TABLE>
<C> <S>
11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly.
In the opinion of bond counsel when each
bond was issued, interest on the bonds in
this Fund is generally 100% exempt from
regular federal income tax. Your income
may also be exempt from some New York
state and local personal income taxes if
you live in New York.
You will also receive principal payments
if bonds are sold or called or mature,
when the cash available is more than
$5.00 per unit. You will be subject to
tax on any gain realized by the Fund on
the disposition of bonds.
12. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You will receive your income in cash
unless you choose to compound your income
by reinvesting at no sales fee in the
Municipal Fund Investment Accumulation
Program, Inc. This program is an open-end
mutual fund with a comparable investment
objective, but the bonds generally will
not be insured. Income from this program
will generally be subject to state and
local income taxes. FOR MORE COMPLETE
INFORMATION ABOUT THE PROGRAM, INCLUDING
CHARGES AND FEES, ASK THE TRUSTEE FOR THE
PROGRAM'S PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST. THE TRUSTEE MUST
RECEIVE YOUR WRITTEN ELECTION TO REINVEST
AT LEAST 10 DAYS BEFORE THE RECORD DAY OF
AN INCOME PAYMENT.
EXCHANGE PRIVILEGES
You may exchange units of this Fund for
units of certain other Defined Asset
Funds. You may also exchange into this
Fund from certain other funds. We charge
a reduced sales fee on exchanges.
</TABLE>
11
<PAGE>
- --------------------------------------------------------------------------------
TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS
FOR CALIFORNIA RESIDENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 2000* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IS EQUIVALENT TO A TAXABLE YIELD OF
<CAPTION>
TAXABLE INCOME 2000* TAX-FREE YIELD OF
SINGLE RETURN 7% 7.5% 8%
<S> <C> <C> <C>
IS EQUIVALENT TO A
TAXABLE YIELD OF
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 26,250 $ $0- 43,050 20.10 3.75 4.38 5.01 5.63 6.26 6.88 7.51
$ 26,251- 63,550 $ 43,851-105,950 34.70 4.59 5.36 6.13 6.89 7.66 8.42 9.19
$ 63,551-132,600 $105,951-161,450 37.42 4.79 5.59 6.39 7.19 7.99 8.79 9.59
$132,601-288,350 $161,451-288,350 41.95 5.17 6.03 6.89 7.75 8.61 9.47 10.34
OVER $288,350 OVER $288,350 45.22 5.48 6.39 7.30 8.21 9.13 10.04 10.95
<S> <C> <C> <C> <C>
$ 0- 26,250 8.14 8.76 9.39 10.01
$ 26,251- 63,550 9.95 10.72 11.48 12.25
$ 63,551-132,600 10.39 11.19 11.98 12.78
$132,601-288,350 11.20 12.06 12.92 13.78
OVER $288,350 11.87 12.78 13.69 14.60
</TABLE>
FOR FLORIDA RESIDENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EFFECTIVE
TAXABLE INCOME 2000* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 3% 3.5% 4% 4.5% 5% 5.5%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IS EQUIVALENT TO A TAXABLE YIELD OF
<CAPTION>
TAXABLE INCOME 2000* TAX-FREE YIELD OF
SINGLE RETURN 6% 6.5% 7%
<S> <C> <C> <C>
IS EQUIVALENT TO A
TAXABLE YIELD OF
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 26,250 $ 0- 43,850 15.00 3.53 4.12 4.71 5.29 5.88 6.47 7.06
$ 26,251- 63,550 $ 43,851-105,950 28.00 4.17 4.86 5.56 6.25 6.94 7.64 8.33
$ 63,551-132,600 $105,951-161,450 31.00 4.35 5.07 5.80 6.52 7.25 7.97 8.70
$132,601-288,350 $161,451-288,350 36.00 4.69 5.47 6.25 7.03 7.81 8.59 9.38
OVER $288,350 OVER $288,350 39.60 4.97 5.79 6.62 7.45 8.28 9.11 9.93
<S> <C> <C>
$ 0- 26,250 7.65 8.24
$ 26,251- 63,550 9.03 9.72
$ 63,551-132,600 9.42 10.14
$132,601-288,350 10.16 10.94
OVER $288,350 10.76 11.59
</TABLE>
FOR NEW YORK CITY RESIDENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 2000* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IS EQUIVALENT TO A TAXABLE YIELD OF
<CAPTION>
TAXABLE INCOME 2000* TAX-FREE YIELD OF
SINGLE RETURN 7% 8%
<S> <C> <C> <C>
IS EQUIVALENT TO A
TAXABLE YIELD OF
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 43,850 23.94 5.26 5.92 6.57 7.23 7.89 8.55 9.20
$ 0- 26,250 23.99 5.26 5.92 6.58 7.24 7.89 8.55 9.21
$ 26,251- 63,550 $ 43,851-105,950 35.65 6.22 6.99 7.77 8.55 9.32 10.10 10.88
$ 63,551-132,600 $105,951-161,450 38.33 6.49 7.30 8.11 8.92 9.73 10.54 11.35
$132,601-288,350 $161,451-288,350 42.80 6.99 7.87 8.74 9.62 10.49 11.36 12.24
OVER $288,350 OVER $288,350 46.02 7.41 8.34 9.26 10.19 11.12 12.04 12.97
<S> <C> <C>
9.86 10.52
$ 0- 26,250 9.87 10.52
$ 26,251- 63,550 11.66 12.43
$ 63,551-132,600 12.16 12.97
$132,601-288,350 13.11 13.99
OVER $288,350 13.89 14.82
</TABLE>
FOR NEW YORK STATE RESIDENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 2000* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IS EQUIVALENT TO A TAXABLE YIELD OF
<CAPTION>
TAXABLE INCOME 2000* TAX-FREE YIELD OF
SINGLE RETURN 7% 8%
<S> <C> <C> <C>
IS EQUIVALENT TO A
TAXABLE YIELD OF
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 26,250 $ $0- 43,850 20.82 5.05 5.68 6.31 6.95 7.58 8.21 8.84
$ 26,251- 63,550 $ 43,851-105,950 32.93 5.96 6.71 7.46 8.20 8.95 9.69 10.44
$ 63,551-132,600 $105,951-161,450 35.73 6.22 7.00 7.78 8.56 9.34 10.11 10.89
$132,601-288,350 $161,451-288,350 40.38 6.71 7.55 8.39 9.23 10.06 10.90 11.74
OVER $288,350 OVER $288,350 43.74 7.11 8.00 8.89 9.78 10.66 11.55 12.44
<S> <C> <C>
$ 0- 26,250 9.47 10.10
$ 26,251- 63,550 11.18 11.93
$ 63,551-132,600 11.67 12.45
$132,601-288,350 12.58 13.42
OVER $288,350 13.33 14.22
</TABLE>
To compare the yield of a taxable security with the yield of a tax-free
security, find your taxable income and read across. The table incorporates 2000
federal and applicable State (and City) income tax rates and assumes that all
income would otherwise be taxed at the investor's highest tax rate. Yield
figures are for example only.
*Based upon net amount subject to federal income tax after deductions and
exemptions. This table does not reflect the possible effect of other tax
factors, such as alternative minimum tax, personal exemptions, the phase out of
exemptions, itemized deductions or the possible partial disallowance of
deductions. Consequently, investors are urged to consult their own tax advisers
in this regard.
12
<PAGE>
WHAT YOU CAN EXPECT FROM YOUR INVESTMENT
MONTHLY INCOME
The Fund will pay you regular monthly income. Your monthly income may vary
because of:
- elimination of one or more bonds from the Fund's portfolio because of calls,
redemptions or sales;
- a change in the Fund's expenses; or
- the failure by a bond's issuer to pay interest.
Changes in interest rates generally will not affect your income because the
portfolio is fixed.
Along with your income, you will receive your share of any available bond
principal.
RETURN FIGURES
We cannot predict your actual return, which will vary with unit price, how long
you hold your investment and changes in the portfolio, interest income and
expenses.
ESTIMATED CURRENT RETURN equals the estimated annual cash to be received from
the bonds in the Fund less estimated annual Fund expenses, divided by the Unit
Price (including the maximum sales fee):
<TABLE>
<S> <C> <C>
Estimated Annual Estimated
Interest Income - Annual Expenses
- -------------------------------------
Unit Price
</TABLE>
ESTIMATED LONG TERM RETURN is a measure of the estimated return over the
estimated life of the Fund. Unlike Estimated Current Return, Estimated Long Term
Return reflects maturities, discounts and premiums of the bonds in the Fund. It
is an average of the yields to maturity (or in certain cases, to an earlier call
date) of the individual bonds in the portfolio, adjusted to reflect the Fund's
maximum sales fee and estimated expenses. We calculate the average yield for the
portfolio by weighting each bond's yield by its market value and the time
remaining to the call or maturity date.
Yields on individual bonds depend on many factors including general conditions
of the bond markets, the size of a particular offering and the maturity and
quality rating of the particular issues. Yields can vary among bonds with
similar maturities, coupons and ratings.
These return quotations are designed to be comparative rather than predictive.
RECORDS AND REPORTS
You will receive:
- - a monthly statement of income payments and any principal payments;
- - a notice from the Trustee when new bonds are deposited in exchange or
substitution for bonds originally deposited;
- - an annual report on Fund activity; and
- - annual tax information. THIS WILL ALSO BE SENT TO THE IRS. YOU MUST REPORT THE
AMOUNT OF TAX-EXEMPT INTEREST RECEIVED DURING THE YEAR.
You may request:
- - copies of bond evaluations to enable you to comply with federal and state tax
reporting requirements; and
- - audited financial statements of the Fund.
You may inspect records of Fund transactions at the Trustee's office during
regular business hours.
13
<PAGE>
THE RISKS YOU FACE
INTEREST RATE RISK
Investing involves risks, including the risk that your investment will decline
in value if interest rates rise. Generally, bonds with longer maturities will
change in value more than bonds with shorter maturities. Bonds in the Fund are
more likely to be called when interest rates decline. This would result in early
returns of principal to you and may result in early termination of the Fund. Of
course, we cannot predict how interest rates may change.
CALL RISK
Many bonds can be prepaid or "called" by the issuer before their stated
maturity.
For example, some bonds may be required to be called pursuant to mandatory
sinking fund provisions.
Also, an issuer might call its bonds during periods of falling interest rates,
if the issuer's bonds have a coupon higher than current market rates.
An issuer might call its bonds in extraordinary cases, including if:
- it no longer needs the money for the original purpose;
- the project is condemned or sold;
- the project is destroyed and insurance proceeds are used to redeem the
bonds;
- any related credit support expires and is not replaced; or
- interest on the bonds become taxable.
If the bonds are called, your income will decline and you may not be able to
reinvest the money you receive at as high a yield or as long a maturity. An
early call at par of a premium bond will reduce your return.
REDUCED DIVERSIFICATION RISK
If many investors sell their units, the Fund will have to sell bonds. This could
reduce the diversification of your investment and increase your share of Fund
expenses.
LIQUIDITY RISK
You can always sell back your units, but we cannot assure you that a liquid
trading market will always exist for the bonds in the portfolio, especially
since current law may restrict the Fund from selling bonds to any Sponsor. The
bonds will generally trade in the over-the-counter market. The value of the
bonds, and of your investment, may be reduced if trading in bonds is limited or
absent.
CONCENTRATION RISK
When a certain type of bond makes up 25% or more of the portfolio, it is said to
be "concentrated" in that bond type, which makes the Portfolio less diversified.
Here is what you should know about the California, Florida and New York
Portfolios' concentrations in hospital and health care bonds.
- payment for these bonds depends on revenues from private third-party payors
and government programs, including Medicare and Medicaid, which have
generally undertaken cost containment measures to limit payments to health
care providers;
- hospitals face increasing competition resulting from hospital mergers and
affiliations;
- hospitals need to reduce costs as HMOs increase market penetration and
hospital supply and drug companies raise prices;
- hospitals and health care providers are subject to various legal claims by
patients
14
<PAGE>
and others and are adversely affected by increasing costs of insurance; and
- many hospitals are aggressively buying physician practices and assuming risk
contracts to gain market share. If revenues do not increase accordingly,
this practice could reduce profits;
- Medicare is changing its reimbursement system for nursing homes. Many
nursing home providers are not sure how they will be treated. In many cases,
the providers may receive lower reimbursements and these would have to cut
expenses to maintain profitability; and
- most retirement/nursing home providers rely on entrance fees for operating
revenues. If people live longer than expected and turnover is lower than
budgeted, operating revenues would be adversely affected by less than
expected entrance fees.
Here is what you should know about the California and Florida Portfolios'
concentrations in lease rental bonds. Lease rental bonds are generally issued by
governmental financing authorities that cannot assess a tax to cover the cost of
equipment or construction of buildings that will be used by a state or local
government. The risks associated with these bonds include:
- the failure of the government to appropriate funds for the leasing rental
payments to service the bonds; and
- rental obligations, and therefore payments, may terminate in the event of
damages to or destruction or condemnation of the of the equipment or
building.
Here is what you should know about the Florida Portfolio's concentration in
special tax bonds. Special tax bonds are payable from and secured by the
revenues a municipality derives from a particular tax; for example, a tax on
hotel rentals, on the purchase of food and beverages, car rentals, or liquor
consumption. These bonds are not secured by general tax revenues. Payment on
these bonds may 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.
Here is what you should know about the New York Portfolio's concentration in
university/college bonds. Payment for these bonds depends on:
- level or amount and diversity of sources of revenue;
- availability of endowments and other funds;
- enrollment;
- financial management;
- reputation; and
- for public institutions, the financial condition of the government and its
educational policies.
Changes to the portfolio from bond redemptions, maturities and sales may affect
the Fund's concentrations over time.
STATE CONCENTRATION RISK
CALIFORNIA RISKS
GENERALLY
From the late 1980s through the early 1990s, an economic recession eroded
California's revenue base. At the same time rapid population growth caused State
expenditures to exceed budget appropriations.
- As a result California experienced a period of sustained budget imbalance.
15
<PAGE>
- Since that time the California economy has improved markedly and the extreme
budgetary pressures have begun to lessen. However, the Asian economic crisis
is expected to continue to have some negative effectt on the State's
economy.
STATE GOVERNMENT
The 1997-98 Budget Act allocated a State budget of approximately $66.9 Billion
and contains no tax increases or reductions. Despite this somewhat improved
state, California's budget is still subject to certain unforeseeable events. For
example:
- In December, 1994, Orange County and its investment pool filed for
bankruptcy. While a settlement has been reached, the full impact on the
State and Orange County is still unknown.
- California faces constant fluctuations in other expenses (including health
and welfare caseloads, property tax receipts, federal funding and natural
disaster relief) that will undoubtedly create new budgetary pressure and
reduce issuers' ability to pay their debts.
- California's general obligation bonds are currently rated A1 by Moody's and
A+ by Standard & Poor's.
OTHER RISKS
Issuers' ability to make payments on bonds (and the remedies available to
bondholders) could also be adversely affected by the following constraints:
- Certain provisions of California's Constitution, laws and regulatory system
contain tax, spending and appropriations limits and prohibit certain new
taxes.
- Certain other California laws subject the users of bond proceeds to strict
rules and limits regarding revenue repayment.
- Bonds of healthcare institutions which are subject to the strict rules and
limits regarding reimbursement payments of California's Medi-Cal program for
health care services to welfare recipients and bonds secured by liens on
real property are two of the types of bonds affected by these provisions.
FLORIDA RISKS
GENERALLY
Florida's financial condition is affected by numerous national, economic, social
and environmental policies and conditions. For example:
- south Florida is heavily involved with foreign tourism, trade and investment
capital. As a result, the region is susceptible to international trade and
currency imbalances and economic problems in Central and South America;
- central and northern Florida are more vulnerable to agricultural problems,
such as crop failures or severe weather conditions, especially in the citrus
and sugar industries; and
- the state as a whole is also very dependent on tourism and construction.
STATE AND LOCAL GOVERNMENT
The state of Florida and its local governments are restricted in their ability
to raise taxes and incur debts. These restrictions limit their ability to
generate revenue, and so could hurt their ability to pay debts.
16
<PAGE>
General obligations of the state are rated Aa2 by Moody's, AA+ by Standard &
Poor's and AA by Fitch.
NEW YORK RISKS
GENERALLY
For decades, New York's economy has trailed the rest of the nation. Both the
state and New York City have experienced long-term structural imbalances between
revenues and expenses, and have repeatedly relied substantially on non-recurring
measures to achieve budget balance. The pressures that contribute to budgetary
problems at both the state and local level include:
- the high combined state and local tax burden;
- a decline in manufacturing jobs, leading to above-average unemployment;
- sensitivity to the financial services industry; and
- dependence on federal aid.
STATE GOVERNMENT
The State government frequently has difficulty approving budgets on time. Budget
gaps of $1 billion and $4 billion are projected for the next two years. The
State's general obligation bonds are rated A by Standard & Poor's and A2 by
Moody's. There is $37 billion of state-related debt outstanding.
NEW YORK CITY GOVERNMENT
Even though the City had budget surpluses each year from 1981, budget gaps of $2
billion are projected for each of the next three years. New York City faces
fiscal pressures from:
- aging public facilities that need repair or replacement;
- welfare and medical costs;
- expiring labor contracts; and
- a high and increasing debt burden.
The City requires substantial state aid, and its fiscal strength depends heavily
on the securities industry. Its general obligation bonds are rated A- by
Standard & Poor's and A3 by Moody's.
BOND QUALITY RISK
A reduction in a bond's rating may decrease its value and, indirectly, the value
of your investment in the Fund.
INSURANCE RELATED RISK
The bonds are backed by insurance companies (as shown under Portfolios).
Insurance policies generally make payments only according to a bond's original
payment schedule and do not make early payments when a bond defaults or becomes
taxable. Although the federal government does not regulate the insurance
business, various state laws and federal initiatives and tax law changes could
significantly affect the insurance business. The claims-paying ability of the
insurance companies is generally rated A or better by Standard & Poor's or
another nationally recognized rating organization. The insurance company ratings
are subject to change at any time at the discretion of the rating agencies.
LITIGATION AND LEGISLATION RISKS
We do not know of any pending litigation that might have a material adverse
effect upon the Fund.
Future tax legislation could affect the value of the portfolio by:
- limiting real property taxes,
- reducing tax rates,
17
<PAGE>
- imposing a flat or other form of tax, or
- exempting investment income from tax.
SELLING OR EXCHANGING UNITS
You can sell your units at any time for a price based on net asset value. Your
net asset value is calculated each business day by:
- ADDING the value of the bonds, net accrued interest, cash and any other Fund
assets;
- SUBTRACTING accrued but unpaid Fund expenses, unreimbursed Trustee advances,
cash held to buy back units or for distribution to investors and any other
Fund liabilities; and
- DIVIDING the result by the number of outstanding units.
Your net asset value when you sell may be more or less than your cost because of
sales fees, market movements and changes in the portfolio.
SPONSORS' SECONDARY MARKET
While we are not obligated to do so, we will buy back units at net asset value
without any other fee or charge. We may resell the units to other buyers or to
the Trustee. You should consult your financial professional for current market
prices to determine if other broker-dealers or banks are offering higher prices.
We have maintained the secondary market continuously for over 25 years, but we
could discontinue it without prior notice for any business reason.
SELLING UNITS TO THE TRUSTEE
Regardless of whether we maintain a secondary market, you can sell your units to
the Trustee at any time by sending the Trustee a letter (with any outstanding
certificates if you hold Unit certificates). You must properly endorse your
certificates (or execute a written transfer instrument with signatures
guaranteed by an eligible institution). Sometimes, additional documents are
needed such as a trust document, certificate of corporate authority, certificate
of death or appointment as executor, administrator or guardian.
Within seven days after your request and the necessary documents are received,
the Trustee will mail a check to you. Contact the Trustee for additional
information.
As long as we are maintaining a secondary market, the Trustee will sell your
units to us at a price based on net asset value. If there is no secondary
market, the Trustee may sell your units in the over-the-counter market for a
higher price, but it is not obligated to do so. In that case, you will receive
the net proceeds of the sale.
If the Fund does not have cash available to pay you for units you are selling,
the agent for the Sponsors will select bonds to be sold. Bonds will be selected
based on market and credit factors. These sales could be made at times when the
bonds would not otherwise be sold and may result in your receiving less than the
unit par value and also reduce the size and diversity of the Fund.
There could be a delay in paying you for your units:
18
<PAGE>
- if the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- if the SEC determines that trading on the New York Stock Exchange is
restricted or that an emergency exists making sale or evaluation of the
bonds not reasonably practicable; and
- for any other period permitted by SEC order.
EXCHANGE OPTION
You may exchange units of certain Defined Asset Funds for units of this Fund at
a maximum exchange fee of 1.90%. You may exchange units of this Fund for units
of certain other Defined Asset Funds at a reduced sales fee if your investment
goals change. To exchange units, you should talk to your financial professional
about what funds are exchangeable, suitable and currently available.
Normally, an exchange is taxable and you must recognize any gain or loss on the
exchange. However, the IRS may try to disallow a loss if the portfolios of the
two funds are not materially different; you should consult your own tax adviser.
We may amend or terminate this exchange option at any time without notice.
HOW THE FUND WORKS
PRICING
The price of a unit includes interest accrued on the bonds, less expenses, from
the initial most recent Record Day up to, but not including, the settlement
date, which is usually three business days after the purchase date of the unit.
A portion of the price of a unit consists of cash so that the Trustee can
provide you with regular monthly income. When you sell your units you will
receive your share of this cash.
In addition, as with mutual funds, the Fund (and therefore the investors) pay
all or some of the costs of organizing the Fund including:
- cost of initial preparation of legal documents;
- federal and state registration fees;
- initial fees and expenses of the Trustee;
- initial audit; and
- legal expenses and other out-of-pocket expenses.
EVALUATIONS
An independent Evaluator values the bonds on each business day (excluding
Saturdays, Sundays and the following holidays as observed by the New York Stock
Exchange: New Year's Day, Presidents' Day, Martin Luther King, Jr. Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas).
Bond values are based on current bid or offer prices for the bonds or comparable
bonds. In the past, the difference between bid and offer prices of publicly
offered tax-exempt bonds has ranged from 0.5% of face amount on actively traded
issues to 3.5% on inactively traded issues; the difference has averaged between
1 and 2%.
19
<PAGE>
INCOME
The Trustee credits interest to an Income Account and other receipts to a
Capital Account. The Trustee may establish a Reserve Account by withdrawing from
these accounts amounts it considers appropriate to pay any material liability.
These accounts do not bear interest.
EXPENSES
The Trustee is paid monthly. It also benefits when it holds cash for the Fund in
non-interest bearing accounts. The Trustee may also receive additional amounts:
- to reimburse the Trustee for the Fund's operating expenses;
- for extraordinary services and costs of indemnifying the Trustee and the
Sponsors;
- costs of actions taken to protect the Fund and other legal fees and
expenses;
- expenses for keeping the Fund's registration statement current; and
- Fund termination expenses and any governmental charges.
The Sponsors are currently reimbursed up to 55 CENTS per $1,000 face amount
annually for providing portfolio supervisory, bookkeeping and administrative
services and for any other expenses properly chargeable to the Fund. Legal,
typesetting, electronic filing and regulatory filing fees and expenses
associated with updating the Portfolio's registration statement yearly are also
now chargeable to the Portfolio. While this fee may exceed the amount of these
costs and expenses attributable to this Fund, the total of these fees for all
Series of Defined Asset Funds will not exceed the aggregate amount attributable
to all of these Series for any calendar year. The Fund also pays the Evaluator's
fees.
The Trustee's, Sponsors' and Evaluator's fees may be adjusted for inflation
without investors' approval.
The Sponsors will pay advertising and selling expenses at no charge to the Fund.
If Fund expenses exceed initial estimates, the Fund will owe the excess. The
Trustee has a lien on Fund assets to secure reimbursement of Fund expenses and
may sell bonds if cash is not available.
PORTFOLIO CHANGES
The Sponsors and Trustee are not liable for any default or defect in a bond; if
a contract to buy any bond.
Unlike a mutual fund, the portfolio is designed to remain intact and we may keep
bonds in the portfolio even if their credit quality declines or other adverse
financial circumstances occur. However, we may sell a bond in certain cases if
we believe that certain adverse credit conditions exist or if a bond becomes
taxable.
If we maintain a secondary market in units but are unable to sell the units that
we buy in the secondary market, we will redeem units, which may affect the
composition of the portfolio. Units offered in the secondary market may not
represent the same face amount of bonds that they did originally.
We decide whether or not to offer units for sale that we acquire in the
secondary market after reviewing:
- diversity of the portfolio;
20
<PAGE>
- size of the Fund relative to its original size;
- ratio of Fund expenses to income;
- current and long-term returns;
- degree to which units may be selling at a premium over par; and
- cost of maintaining a current prospectus.
FUND TERMINATION
The Fund will terminate following the stated maturity or sale of the last bond
in the portfolio. The Fund may also terminate earlier with the consent of
investors holding 51% of the units or if total assets of the Fund have fallen
below 40% of the face amount of bonds deposited. We will decide whether to
terminate the Fund early based on the same factors used in deciding whether or
not to offer units in the secondary market.
When the Fund is about to terminate you will receive a notice, and you will be
unable to sell your units after that time. On or shortly before termination, we
will sell any remaining bonds, and you will receive your final distribution. Any
bond that cannot be sold at a reasonable price may continue to be held by the
Trustee in a liquidating trust pending its final sale.
You will pay your share of the expenses associated with termination, including
brokerage costs in selling bonds. This may reduce the amount you receive as your
final distribution.
CERTIFICATES
Certificates for units are issued on request. You may transfer certificates by
complying with the requirements for redeeming certificates, described above. You
can replace lost or mutilated certificates by delivering satisfactory indemnity
and paying the associated costs.
TRUST INDENTURE
The Fund is a "unit investment trust" governed by a Trust Indenture, a contract
among the Sponsors, the Trustee and the Evaluator, which sets forth their duties
and obligations and your rights. A copy of the Indenture is available to you on
request to the Trustee. The following summarizes certain provisions of the
Indenture.
The Sponsors and the Trustee may amend the Indenture without your consent:
- to cure ambiguities;
- to correct or supplement any defective or inconsistent provision;
- to make any amendment required by any governmental agency; or
- to make other changes determined not to be materially adverse to your best
interest (as determined by the Sponsors).
Investors holding 51% of the units may amend the Indenture. Every investor must
consent to any amendment that changes the 51% requirement. No amendment may
reduce your interest in the Fund without your written consent.
The Trustee may resign by notifying the Sponsors. The Sponsors may remove the
Trustee without your consent if:
- it fails to perform its duties and the Sponsors determine that its
replacement is in your best interest; or
21
<PAGE>
- it becomes incapable of acting or bankrupt or its affairs are taken over by
public authorities.
Investors holding 51% of the units may remove the Trustee. The Evaluator may
resign or be removed by the Sponsors and the Trustee without the consent of
investors. The resignation or removal of either becomes effective when a
successor accepts appointment. The Sponsors will try to appoint a successor
promptly; however, if no successor has accepted within 30 days after notice of
resignation, the resigning Trustee or Evaluator may petition a court to appoint
a successor.
Any Sponsor may resign as long as one Sponsor with a net worth of $2 million
remains and agrees to the resignation. The remaining Sponsors and the Trustee
may appoint a replacement. If there is only one Sponsor and it fails to perform
its duties or becomes bankrupt the Trustee may:
- remove it and appoint a replacement Sponsor;
- liquidate the Fund; or
- continue to act as Trustee without a Sponsor.
Merrill Lynch, Pierce, Fenner & Smith Incorporated acts as agent for the
Sponsors.
The Trust Indenture contains customary provisions limiting the liability of the
Trustee, the Sponsors and the Evaluator.
LEGAL OPINION
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, as
counsel for the Sponsors, has given an opinion that the units are validly
issued. Special counsel located in the relevant states have given state and
local tax opinions.
AUDITORS
Deloitte & Touche LLP, 2 World Financial Center, New York, New York 10281,
independent accountants, audited the Statements of Condition included in this
prospectus.
SPONSORS
The Sponsors are:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (a wholly-owned subsidiary of
Merrill Lynch & Co., Inc.)
P.O. Box 9051,
Princeton, NJ 08543-9051
SALOMON SMITH BARNEY INC. (an indirectly wholly-owned subsidiary of Citigroup
Inc.)
388 Greenwich Street--23rd Floor,
New York, NY 10013
DEAN WITTER REYNOLDS INC. (a principal operating subsidiary of Morgan Stanley
Dean Witter & Co.)
Two World Trade Center--59th Floor,
New York, NY 10048
PRUDENTIAL SECURITIES INCORPORATED (an
indirect wholly-owned subsidiary of the
Prudential Insurance Company of America)
One New York Plaza
New York, NY 10292
PAINEWEBBER INCORPORATED (a wholly-owned subsidiary of PaineWebber Group Inc.)
1285 Avenue of the Americas,
New York, NY 10019
Each Sponsor is a Delaware corporation and it, or its predecessor, has acted as
sponsor to many unit investment trusts. As a registered broker-dealer each
Sponsor buys and sells securities (including investment company
22
<PAGE>
shares) for others (including investment companies) and participates as an
underwriter in various selling groups.
TRUSTEE
The Chase Manhattan Bank, Unit Investment Trust Department, 4 New York
Plaza--6th Floor, New York, New York 10004, is the Trustee. It is supervised by
the Federal Deposit Insurance Corporation, the Board of Governors of the Federal
Reserve System and New York State banking authorities.
UNDERWRITERS' AND SPONSORS' PROFITS
Underwriters receive sales charges when they sell units. The Sponsors also
realized a profit or loss on the initial date of deposit of the bonds. Any cash
made available by you to the Sponsors before the settlement date for those units
may be used in the Sponsors' businesses to the extent permitted by federal law
and may benefit the Sponsors.
A Sponsor or Underwriter may realize profits or sustain losses on bonds in the
Fund which were acquired from underwriting syndicates of which it was a member.
In maintaining a secondary market, the Sponsors will also realize profits or
sustain losses in the amount of any difference between the prices at which they
buy units and the prices at which they resell or redeem them.
PUBLIC DISTRIBUTION
The Sponsors do not intend to qualify units for sale in any foreign countries.
This prospectus does not constitute an offer to sell units in any country where
units cannot lawfully be sold.
CODE OF ETHICS
Merrill Lynch, as agent for the Sponsors, has adopted a code of ethics requiring
preclearance and reporting of personal securities transactions by its employees
with access to information on portfolio transactions. The goal of the code is to
prevent fraud, deception or misconduct against the Fund and to provide
reasonable standards of conduct.
TAXES
The following summary describes some of the important income tax consequences of
holding units. It assumes that you are not a dealer, financial institution,
insurance company or other investor with special circumstances or subject to
special rules. You should consult your own tax adviser about your particular
circumstances.
At the date of issue of each bond, counsel for the issuer delivered an opinion
to the effect that interest on the bond is exempt from regular federal income
tax. However, interest may be subject to state and local taxes and may be taken
into account in determining your preference items for alternative minimum tax
purposes. Neither we nor our counsel have reviewed the issuance of the bonds,
related proceedings or the basis for the opinions of counsel for the issuers. We
cannot assure you that the issuer (or other users) have complied or will comply
with any requirements necessary for a bond to be tax-exempt. If any of the bonds
were determined not to be tax-exempt, you could be required to pay
23
<PAGE>
income tax for current and prior years, and if the Fund were to sell the bond,
it might have to sell it at a substantial discount.
In the opinion of our counsel, under existing law:
GENERAL TREATMENT OF THE FUND AND YOUR INVESTMENT
The Fund will not be taxed as a corporation for federal income tax purposes, and
you will be considered to own directly your share of each bond in the Fund.
GAIN OR LOSS UPON DISPOSITION
When all or part of your share of a bond is disposed of (for example, when the
Fund sells, exchanges or redeems a bond or when you sell or exchange your
units), you will generally recognize capital gain or loss. Your gain, however,
will generally be ordinary income to the extent of any accrued "market
discount". Generally you will have market discount to the extent that your basis
in a bond when you purchase a unit is less than its stated redemption price at
maturity (or, if it is an original issue discount bond, the issue price
increased by original issue discount that has accrued on the bond before your
purchase). You should consult your tax adviser in this regard.
If your net long-term capital gains exceed your net short-term capital losses,
the excess may be subject to tax at a lower rate than ordinary income. Any
capital gain from the Fund will be long-term if you are considered to have held
your investment on each bond for more than one year and short-term otherwise. If
you are an individual and sell your units after holding them for more than one
year, you may be entitled to a 20% maximum federal tax rate on any resulting
gains. Consult your tax adviser in this regard. Because the deductibility of
capital losses is subject to limitations, you may not be able to deduct all of
your capital losses.
YOUR BASIS IN THE BONDS
Your aggregate basis in the bonds will be equal to the cost of your units,
including any sales charges and the organizational expenses you pay, adjusted to
reflect any accruals of "original issue discount," "acquisition premium" and
"bond premium". You should consult your tax adviser in this regard.
EXPENSES
If you are not a corporate investor, you will not be entitled to a deduction for
your share of fees and expenses of the Fund. Also, if you borrowed money in
order to purchase or carry your units, you will not be able to deduct the
interest on this borrowing for federal income tax purposes. The IRS may treat
your purchase of units as made with borrowed money even if the money is not
directly traceable to the purchase of units.
STATE AND LOCAL TAXES
Under the income tax laws of the State and City of New York, the Fund will not
be taxed as a corporation. If you are a New York taxpayer, your income from the
Fund will not be tax-exempt in New York except to the extent that the income is
earned on bonds that are tax-exempt for New York purposes. Depending on where
you live, your income from the Fund may be subject
24
<PAGE>
to state and local taxation. You should consult your tax adviser in this regard.
CALIFORNIA TAXES
In the opinion of O'Melveny & Myers LLP, Los Angeles, California, special
counsel on California tax matters:
Under the income tax laws of the State of California, the Trust will not be
taxed as a corporation and you will be considered to own directly your share of
each bond of the Trust. If you are a California taxpayer, your share of the
income from the bonds of the Trust will not be tax-exempt in California except
for California personal income tax purposes and only to the extent that the
income is earned on bonds that are exempt for such purposes. If you are a
California taxpayer and all or part of your share of a bond is disposed of (for
example, when a bond is sold, exchanged or redeemed at maturity or you sell or
exchange your units), you will recognize gain or loss for California tax
purposes. Depending on where you live, your income from the Trust may be subject
to state and local taxation. You should consult your tax advisor in this regard.
FLORIDA TAXES
In the opinion of Greenberg, Traurig, P.A., Miami, Florida, special counsel on
Florida tax matters:
Under the income tax laws of the State of Florida, the Florida Trust will not be
taxed as a corporation. Florida imposes an income tax on corporations but does
not impose a personal income tax. Accordingly, if you are an individual taxpayer
your income from the Trust will not be subject to tax in Florida. However, if
you are an entity that is normally taxed as a corporation, your income from the
fund will not be exempt from tax in Florida and special rules for taxation apply
depending on the type of entity. You should consult your tax adviser in this
regard.
Florida also imposes a tax on intangible personal property, such as stocks,
bonds, notes and units in trusts. The tax is imposed on Florida taxpayers as of
January 1st of each year. Florida exempts certain types of bonds and debt
obligations from this tax. Your units will be exempt from the intangible
personal property tax as long as at least 90% of the Florida Trust is invested
exclusively in bonds and other debt obligations that are tax-exempt for Florida
purposes.
SUPPLEMENTAL INFORMATION
You can receive at no cost supplemental information about the Fund by calling
the Trustee. The supplemental information includes more detailed risk disclosure
about the types of bonds that may be in the Fund's portfolios, general risk
disclosure concerning any insurance securing certain bonds, and general
information about the structure and operation of the Fund. The supplemental
information is also available from the SEC.
25
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (CALIFORNIA, FLORIDA AND NEW YORK TRUSTS)
DEFINED ASSET FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders
of Municipal Investment Trust Fund,
Multistate Series - 98 (California, Florida and New York Trusts),
Defined Asset Funds:
We have audited the accompanying statements of condition of Municipal
Investment Trust Fund, Multistate Series - 98 (California, Florida and
New York Trusts), Defined Asset Funds, including the portfolios, as of
November 30, 1999 and the related statements of operations and of
changes in net assets for the years ended November 30, 1999, 1998 and
1997. These financial statements are the responsibility of the
Trustee. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. Securities owned at November 30, 1999, as shown
in such portfolios, were confirmed to us by The Chase Manhattan Bank,
the Trustee. An audit also includes assessing the accounting
principles used and significant estimates made by the Trustee, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Municipal
Investment Trust Fund, Multistate Series - 98 (California, Florida and
New York Trusts), Defined Asset Funds at November 30, 1999 and the
results of their operations and changes in their net assets for the
above-stated years in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
December 29, 1999
D - 1.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (CALIFORNIA TRUST),
DEFINED ASSET FUNDS
STATEMENT OF CONDITION
As of November 30, 1999
TRUST PROPERTY:
Investment in marketable securities
at value (cost $ 3,201,226)(Note 1) ....... $ 3,264,557
Accrued interest.............................. 51,701
Cash - principal ............................. 31,407
Deferred organization cost (Note 5) .......... 819
-------------
Total trust property ....................... 3,348,484
LESS LIABILITIES:
Income advance from Trustee................... $ 41,406
Accrued Sponsors' fees ....................... 1,494
Other liabilities (Note 5) ................... 819 43,719
------------- -------------
NET ASSETS, REPRESENTED BY:
3,281 units of fractional undivided
interest outstanding (Note 3) ............. 3,295,964
Undistributed net investment income .......... 8,801 $ 3,304,765
------------- =============
UNIT VALUE ($ 3,304,765 / 3,281 units).......... $ 1,007.24
=============
See Notes to Financial Statements.
D - 2.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (CALIFORNIA TRUST),
DEFINED ASSET FUNDS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended November 30,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income ........................ $ 163,160 $ 177,040 $ 195,347
Trustee's fees and expenses ............ (5,749) (5,967) (6,491)
Sponsors' fees ......................... (1,631) (1,673) (1,798)
----------------------------------------------
Net investment income .................. 155,780 169,400 187,058
----------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain on
securities sold or redeemed .......... 1,273 23,365 1,687
Unrealized appreciation (depreciation)
of investments ....................... (144,838) 103,209 63,263
----------------------------------------------
Net realized and unrealized
gain (loss) on investments ........... (143,565) 126,574 64,950
----------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ 12,215 $ 295,974 $ 252,008
==============================================
</TABLE>
See Notes to Financial Statements.
D - 3.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (CALIFORNIA TRUST),
DEFINED ASSET FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended November 30,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
Net investment income .................. $ 155,780 $ 169,400 $ 187,058
Realized gain on
securities sold or redeemed .......... 1,273 23,365 1,687
Unrealized appreciation (depreciation)
of investments ....................... (144,838) 103,209 63,263
----------------------------------------------
Net increase in net assets
resulting from operations ............ 12,215 295,974 252,008
----------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income ................................ (155,898) (169,832) (187,245)
Principal .............................. (42,083)
----------------------------------------------
Total distributions .................... (155,898) (211,915) (187,245)
----------------------------------------------
SHARE TRANSACTIONS:
Redemption amounts - income ............ (174) (825) (550)
Redemption amounts - principal ......... (79,859) (474,240) (224,933)
----------------------------------------------
Total share transactions ............... (80,033) (475,065) (225,483)
----------------------------------------------
NET DECREASE IN NET ASSETS ............... (223,716) (391,006) (160,720)
NET ASSETS AT BEGINNING OF YEAR .......... 3,528,481 3,919,487 4,080,207
----------------------------------------------
NET ASSETS AT END OF YEAR ................ $ 3,304,765 $ 3,528,481 $ 3,919,487
==============================================
PER UNIT:
Income distributions during
year ................................. $ 46.58 $ 46.73 $ 47.02
==============================================
Principal distributions during
year ................................. $ 11.72
==================
Net asset value at end of
year ................................. $ 1,007.24 $ 1,050.14 $ 1,027.39
==============================================
TRUST UNITS:
Redeemed during year ................... 79 455 221
Outstanding at end of year ............. 3,281 3,360 3,815
==============================================
</TABLE>
See Notes to Financial Statements.
D - 4.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (CALIFORNIA TRUST),
DEFINED ASSET FUNDS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a
Unit Investment Trust. The following is a summary of significant
accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
(A) Securities are stated at value as determined by the Evaluator
based on bid side evaluations for the securities.
(B) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.
(C) Interest income is recorded as earned.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and
applicable expenses, are also distributed periodically.
3. NET CAPITAL
<TABLE>
<S> <C>
Cost of 3,281 units at Date of Deposit ..................... $ 3,409,237
Less sales charge .......................................... 135,210
-----------
Net amount applicable to Holders ........................... 3,274,027
Redemptions of units - net cost of 755 units redeemed
less redemption amounts (principal)....................... (25,636)
Realized gain on securities sold or redeemed ............... 26,325
Principal distributions .................................... (42,083)
Unrealized appreciation of investments...................... 63,331
-----------
Net capital applicable to Holders .......................... $ 3,295,964
===========
</TABLE>
4. INCOME TAXES
As of November 30, 1999, unrealized appreciation of investments, based
on cost for Federal income tax purposes, aggregated $63,331, all of
which related to appreciated securities. The cost of investment
securities for Federal income tax purposes was $3,201,226 at November
30, 1999.
5. DEFERRED ORGANIZATION COSTS
Deferred organization costs are being amortized over a period of five
years. Included in "Other liabilities" in the accompanying Statement
of Condition is $ 819 payable to the Trustee for reimbursement of cost
related to the organization of the Trust.
D - 5.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (CALIFORNIA TRUST) (INSURED),
DEFINED ASSET FUNDS
PORTFOLIO
As of November 30, 1999
<TABLE>
<CAPTION>
Rating of Optional
Portfolio No. and Title of Issues Face Redemption
Securities (1) (4) Amount Coupon Maturities(3) Provisions(3) Cost Value(2)
---------- --------- ----------- ----------- ----------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Cathedral City Pub. Fin. Auth., CA, AAA $ 520,000 5.200 % 2008 08/01/05 $ 520,000 $ 533,853
1995 Tax Allocation Rev. Bonds @ 102.000
(Cathedral City Redev. Proj.), Ser. A
(MBIA Ins.)
2 City of Glendale, CA, Ins. Hlth. Fac. AAA 435,000 4.750 2006 11/15/05 422,337 437,040
Rev. Bonds (Glendale Mem. Hosp. and @ 102.000
Hlth. Ctr.), 1995 Ser. A (Connie Lee Ins.)
3 City of Loma Linda, CA, Hosp. Rev. AAA 600,000 5.000 2004 12/01/03 608,670 613,572
Rfdg. Bonds (Loma Linda Univ. Med. Ctr. @ 102.000
Proj.), Ser. 1993-B (MBIA Ins.)
4 County of Stanislaus, CA, Rfdg. Certs. AAA 65,000 5.000 2008 05/01/06 64,111 65,979
of Part. (Cap. Imp. Prog.), @ 102.000
Ser. A of 1996 (MBIA Ins.)
265,000 4.750 2004 None 265,000 269,105
5 Los Angeles Cnty. Pub. Wks. Fin. Auth., AAA 400,000 5.000 2008 None 398,108 406,376
CA, Lease Rev. Bonds, Multiple Cap.
Fac. Proj. IV (MBIA Ins.)
6 State Pub. Wks. Bd. of the State of AAA 320,000 4.875 2006 None 320,000 325,792
California, Lease Rev. Rfdg. Bonds
(Dept. of Corr.) (Del Norte),
1993 Ser. C (MBIA Ins.)
7 The Regents of the University of AAA 600,000 5.100 2007 09/01/03 603,000 612,840
California, Rfdg. Rev. Bonds (1989 @ 102.000
Multiple Purp. Proj.), Ser. C (AMBAC Ins.)
--------- --------- ---------
$ 3,205,000 $ 3,201,226 $ 3,264,557
========= ========= =========
</TABLE>
See Notes to Portfolios on page D - 17.
D - 6.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (FLORIDA TRUST),
DEFINED ASSET FUNDS
STATEMENT OF CONDITION
As of November 30, 1999
TRUST PROPERTY:
Investment in marketable securities
at value (cost $ 1,965,334)(Note 1) ...... $ 1,865,586
Accrued interest............................. 28,341
Cash - principal ............................ 25,773
Deferred organization cost (Note 5) ......... 665
-------------
Total trust property ...................... 1,920,365
LESS LIABILITIES:
Income advance from Trustee.................. $ 21,451
Accrued Sponsors' fees ...................... 1,132
Other liabilities (Note 5) .................. 665 23,248
------------- -------------
NET ASSETS, REPRESENTED BY:
2,308 units of fractional undivided
interest outstanding (Note 3) ............ 1,891,359
Undistributed net investment income ......... 5,758 $ 1,897,117
------------- =============
UNIT VALUE ($ 1,897,117 / 2,308 units)......... $ 821.97
=============
See Notes to Financial Statements.
D - 7.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (FLORIDA TRUST),
DEFINED ASSET FUNDS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended November 30,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income ........................ $ 121,909 $ 139,859 $ 153,355
Trustee's fees and expenses ............ (4,911) (5,145) (5,616)
Sponsors' fees ......................... (1,232) (1,219) (1,351)
----------------------------------------------
Net investment income .................. 115,766 133,495 146,388
----------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain (loss) on
securities sold or redeemed .......... 22,349 4,861 (6,760)
Unrealized appreciation (depreciation)
of investments ....................... (208,274) 117,944 43,772
----------------------------------------------
Net realized and unrealized
gain (loss) on investments ........... (185,925) 122,805 37,012
----------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ (70,159) $ 256,300 $ 183,400
==============================================
</TABLE>
See Notes to Financial Statements.
D - 8.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (FLORIDA TRUST),
DEFINED ASSET FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended November 30,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
Net investment income .................. $ 115,766 $ 133,495 $ 146,388
Realized gain (loss) on
securities sold or redeemed .......... 22,349 4,861 (6,760)
Unrealized appreciation (depreciation)
of investments ....................... (208,274) 117,944 43,772
----------------------------------------------
Net increase (decrease) in net assets
resulting from operations ............ (70,159) 256,300 183,400
----------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income ................................ (116,686) (133,807) (146,532)
Principal .............................. (143,007) (78,387) (67,845)
----------------------------------------------
Total distributions .................... (259,693) (212,194) (214,377)
----------------------------------------------
SHARE TRANSACTIONS:
Redemption amounts - income ............ (931) (203) (743)
Redemption amounts - principal ......... (393,731) (122,201) (276,430)
----------------------------------------------
Total share transactions ............... (394,662) (122,404) (277,173)
----------------------------------------------
NET DECREASE IN NET ASSETS ............... (724,514) (78,298) (308,150)
NET ASSETS AT BEGINNING OF YEAR .......... 2,621,631 2,699,929 3,008,079
----------------------------------------------
NET ASSETS AT END OF YEAR ................ $ 1,897,117 $ 2,621,631 $ 2,699,929
==============================================
PER UNIT:
Income distributions during
year ................................. $ 45.35 $ 47.29 $ 48.27
==============================================
Principal distributions during
year ................................. $ 57.84 $ 27.97 $ 22.41
==============================================
Net asset value at end of
year ................................. $ 821.97 $ 952.97 $ 937.48
==============================================
TRUST UNITS:
Redeemed during year ................... 443 129 300
Outstanding at end of year ............. 2,308 2,751 2,880
==============================================
</TABLE>
See Notes to Financial Statements.
D - 9.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (FLORIDA TRUST),
DEFINED ASSET FUNDS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a
Unit Investment Trust. The following is a summary of significant
accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
(A) Securities are stated at value as determined by the Evaluator
based on bid side evaluations for the securities.
(B) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.
(C) Interest income is recorded as earned.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and
applicable expenses, are also distributed periodically.
3. NET CAPITAL
<TABLE>
<S> <C>
Cost of 2,308 units at Date of Deposit ..................... $ 2,400,343
Less sales charge .......................................... 107,068
-----------
Net amount applicable to Holders ........................... 2,293,275
Redemptions of units - net cost of 972 units redeemed
less redemption amounts (principal)....................... 81,538
Realized gain on securities sold or redeemed ............... 15,511
Principal distributions .................................... (399,217)
Net unrealized depreciation of investments.................. (99,748)
-----------
Net capital applicable to Holders .......................... $ 1,891,359
===========
</TABLE>
4. INCOME TAXES
As of November 30, 1999, net unrealized depreciation of investments,
based on cost for Federal income tax purposes, aggregated $99,748, of
which $ 106,596 related to depreciated securities and $6,848 related
to appreciated securities. The cost of investment securities for
Federal income tax purposes was $1,965,334 at November 30, 1999.
5. DEFERRED ORGANIZATION COSTS
Deferred organization costs are being amortized over a period of five
years. Included in "Other liabilities" in the accompanying Statement
of Condition is $ 665 payable to the Trustee for reimbursement of cost
related to the organization of the Trust.
D - 10.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (FLORIDA TRUST) (INSURED),
DEFINED ASSET FUNDS
PORTFOLIO
As of November 30, 1999
<TABLE>
<CAPTION>
Rating of Optional
Portfolio No. and Title of Issues Face Redemption
Securities (1) (4) Amount Coupon Maturities(3) Provisions(3) Cost Value(2)
---------- --------- ----------- ----------- ----------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 City of Miramar, FL, Wtr. Imp. AAA $ 145,000 5.125 % 2020 10/01/03 $ 142,490 $ 146,227
Assessment Bonds, Ser. 1993 @ 102.000
(Financial Guaranty Ins.)
2 City of Tampa, FL, Wtr. and Swr. Sys. AAA 145,000 5.125 2017 10/01/05 142,650 134,656
Rev. Bonds, Ser. 1995 @ 102.000
(Financial Guaranty Ins.)
3 Dade Cnty., FL, Wtr. and Swr. Sys. Rev. AAA 125,000 5.500 2025 10/01/05 125,529 118,401
Bonds, Ser. 1995 @ 102.000
(Financial Guaranty Ins.)
4 Orange Cnty., FL, Sales Tax Rev. Bonds, AAA 500,000 5.375 2024 01/01/03 500,000 465,840
Ser. 1993 B (MBIA Ins.) @ 102.000
5 South Broward Hosp. Dist., FL, Hosp. AAA 500,000 5.500 2022 05/01/03 500,000 472,905
Rev. and Rfdg. Bonds, Ser. 1993 @ 102.000
(AMBAC Ins.)
6 The School Board of Seminole Cnty., FL, AAA 500,000 5.250 2021 07/01/05 489,665 459,445
Certs. of Part., Ser. 1995 A @ 101.000
(MBIA Ins.)
7 Village Center Cmnty. Dev. Dist. Lake AAA 65,000 5.375 2023(5) 11/01/03 65,000 68,112
Cnty., FL, Util. Rev. Bonds, Ser. 1993 @ 102.000
(Financial Guaranty Ins.)
--------- --------- ---------
$ 1,980,000 $ 1,965,334 $ 1,865,586
========= ========= =========
</TABLE>
See Notes to Portfolios on page D - 17.
D - 11.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (NEW YORK TRUST),
DEFINED ASSET FUNDS
STATEMENT OF CONDITION
As of November 30, 1999
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities
at value (cost $ 3,589,067)(Note 1) ......... $ 3,377,845
Accrued interest................................ 80,127
Cash - principal ............................... 36,187
Deferred organization cost (Note 5) ............ 817
-------------
Total trust property ......................... 3,494,976
LESS LIABILITIES:
Income advance from Trustee..................... $ 67,451
Accrued Sponsors' fees ......................... 1,657
Other liabilities (Note 5) ..................... 817 69,925
------------- -------------
NET ASSETS, REPRESENTED BY:
3,625 units of fractional undivided
interest outstanding (Note 3) ............... 3,414,032
Undistributed net investment income ............ 11,019 $ 3,425,051
------------- =============
UNIT VALUE ($ 3,425,051 / 3,625 units)............ $ 944.84
=============
</TABLE>
See Notes to Financial Statements.
D - 12.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (NEW YORK TRUST),
DEFINED ASSET FUNDS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended November 30,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income ........................ $ 199,302 $ 209,245 $ 219,463
Trustee's fees and expenses ............ (6,134) (6,334) (6,806)
Sponsors' fees ......................... (1,801) (1,745) (1,802)
----------------------------------------------
Net investment income .................. 191,367 201,166 210,855
----------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain (loss) on
securities sold or redeemed .......... 530 1,333 (167)
Unrealized appreciation (depreciation)
of investments ....................... (350,557) 125,936 88,422
----------------------------------------------
Net realized and unrealized
gain (loss) on investments ........... (350,027) 127,269 88,255
----------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ (158,660) $ 328,435 $ 299,110
==============================================
</TABLE>
See Notes to Financial Statements.
D - 13.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (NEW YORK TRUST),
DEFINED ASSET FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended November 30,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
Net investment income .................. $ 191,367 $ 201,166 $ 210,855
Realized gain (loss) on
securities sold or redeemed .......... 530 1,333 (167)
Unrealized appreciation (depreciation)
of investments ....................... (350,557) 125,936 88,422
----------------------------------------------
Net increase (decrease) in net assets
resulting from operations ............ (158,660) 328,435 299,110
----------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income ................................ (191,479) (201,256) (210,984)
Principal .............................. (9,136) (6,104)
----------------------------------------------
Total distributions .................... (200,615) (207,360) (210,984)
----------------------------------------------
SHARE TRANSACTIONS:
Redemption amounts - income ............ (224) (567) (219)
Redemption amounts - principal ......... (90,283) (204,849) (124,512)
----------------------------------------------
Total share transactions ............... (90,507) (205,416) (124,731)
----------------------------------------------
NET DECREASE IN NET ASSET ................ (449,782) (84,341) (36,605)
NET ASSETS AT BEGINNING OF YEAR .......... 3,874,833 3,959,174 3,995,779
----------------------------------------------
NET ASSETS AT END OF YEAR ................ $ 3,425,051 $ 3,874,833 $ 3,959,174
==============================================
PER UNIT:
Income distributions during
year ................................. $ 52.15 $ 52.33 $ 52.46
==============================================
Principal distributions during
year ................................. $ 2.46 $ 1.56
===================================
Net asset value at end of
year ................................. $ 944.84 $ 1,043.30 $ 1,011.80
==============================================
TRUST UNITS:
Redeemed during year ................... 89 199 125
Outstanding at end of year ............. 3,625 3,714 3,913
==============================================
</TABLE>
See Notes to Financial Statements.
D - 14.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (NEW YORK TRUST),
DEFINED ASSET FUNDS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a
Unit Investment Trust. The following is a summary of significant
accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
(A) Securities are stated at value as determined by the Evaluator
based on bid side evaluations for the securities.
(B) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.
(C) Interest income is recorded as earned.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and
applicable expenses, are also distributed periodically.
3. NET CAPITAL
Cost of 3,625 units at Date of Deposit .................... $ 3,813,437
Less sales charge ......................................... 170,085
-----------
Net amount applicable to Holders .......................... 3,643,352
Redemptions of units - net cost of 413 units redeemed
less redemption amounts (principal)...................... (4,555)
Realized gain on securities sold or redeemed .............. 1,697
Principal distributions ................................... (15,240)
Unrealized depreciation of investments..................... (211,222)
-----------
Net capital applicable to Holders ......................... $ 3,414,032
===========
4. INCOME TAXES
As of November 30, 1999, unrealized depreciation of investments, based
on cost for Federal income tax purposes, aggregated $211,222, all of
which related to depreciated securities. The cost of investment
securities for Federal income tax purposes was $3,589,067 at November
30, 1999.
5. DEFERRED ORGANIZATION COSTS
Deferred organization costs are being amortized over a period of five
years. Included in "Other liabilities" in the accompanying Statement
of Condition is $ 817 payable to the Trustee for reimbursement of cost
related to the organization of the Trust.
D - 15.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (NEW YORK TRUST) (INSURED),
DEFINED ASSET FUNDS
PORTFOLIO
As of November 30, 1999
<TABLE>
<CAPTION>
Rating of Optional
Portfolio No. and Title of Issues Face Redemption
Securities (1) (4) Amount Coupon Maturities(3) Provisions(3) Cost Value(2)
---------- --------- ----------- ----------- ----------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Albany Mun. Water Fin. Auth., NY, Wtr. AAA $ 520,000 5.500 % 2022 12/01/03 $ 521,976 $ 490,880
& Swr. Sys. Rev. Bonds, Ser. 1993A @ 102.000
(Financial Guaranty Ins.)
2 Dormitory Auth. of the State of New AAA 600,000 5.625 2035 08/01/05 603,774 562,992
York, Ellis Hosp., FHA - Ins. Mtge. @ 102.000
Hosp. Rev. Bonds, Ser. 1995 (MBIA Ins.)
3 Dormitory Auth. of the State of New AAA 500,000 5.625 2022 08/01/05 505,285 478,675
York, Long Beach Med. Ctr., FHA-Ins. @ 102.000
Mtge. Hosp. Rev. Bonds, Ser. 1995
(MBIA Ins.)
4 Dormitory Auth. of the State of New AAA 560,000 5.625 2016 07/01/05 563,522 550,200
York, Mercy College, Ins. Rev. Bonds, @ 102.000
Ser. 1995 (CAPMAC Ins.)
5 Dormitory Auth. of the State of New AAA 500,000 5.300 2024 07/01/05 496,335 455,990
York, Spec. Oblig. Bonds (State Univ. @ 102.000
Dorm. Fac.), 1995 Issue A (AMBAC Ins.)
6 New York City, NY, Mun. Wtr. Fin. AAA 335,000 5.500 2023 06/15/04 336,320 315,218
Auth., Wtr. and Swr. Sys. Rev. Bonds, @ 101.500
Ser. 1994 F (MBIA Ins.)
7 New York City, NY, Mun. Wtr. Fin. Auth. AAA 50,000 6.000 2017 06/15/02 51,855 50,472
, Wtr. and Swr. Sys. Rev. Bonds, @ 101.500
Fiscal 1993 Ser. A (CGIC Ins.)
8 New York State Urban Dev. Corp., Corr. AAA 510,000 5.250 2018 01/01/03 510,000 473,418
Fac. Rev. Bonds, Rfdg. Ser. 1993 @ 102.000
(AMBAC Ins.)
--------- --------- ---------
$ 3,575,000 $ 3,589,067 $ 3,377,845
========= ========= =========
</TABLE>
See Notes to Portfolios on page D - 17.
D - 16.
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND,
MULTISTATE SERIES - 98 (CALIFORNIA,
FLORIDA AND NEW YORK TRUSTS),
DEFINED ASSET FUNDS
NOTES TO PORTFOLIOS
As of November 30, 1999
(1) The ratings of the bonds are by Standard & Poor's Ratings Group, or by
Moody's Investors Service, Inc. if followed by "(m)", or by Fitch
Investors Service, Inc. if followed by "(f)"; "NR" indicates that this
bond is not currently rated by any of the above-mentioned rating
services. These ratings have been furnished by the Evaluator but not
confirmed with the rating agencies.
(2) See Notes to Financial Statements.
(3) Optional redemption provisions, which may be exercised in whole or in
part, are initially at prices of par plus a premium, then subsequently
at prices declining to par. Certain securities may provide for
redemption at par prior or in addition to any optional or mandatory
redemption dates or maturity, for example, through the operation of a
maintenance and replacement fund, if proceeds are not able to be used
as contemplated, the project is condemned or sold or the project is
destroyed and insurance proceeds are used to redeem the securities.
Many of the securities are also subject to mandatory sinking fund
redemption commencing on dates which may be prior to the date on which
securities may be optionally redeemed. Sinking fund redemptions are at
par and redeem only part of the issue. Some of the securities have
mandatory sinking funds which contain optional provisions permitting
the issuer to increase the principal amount of securities called on a
mandatory redemption date. The sinking fund redemptions with optional
provisions may, and optional refunding redemptions generally will,
occur at times when the redeemed securities have an offering side
evaluation which represents a premium over par. To the extent that the
securities were acquired at a price higher than the redemption price,
this will represent a loss of capital when compared with the Public
Offering Price of the Units when acquired. Distributions will
generally be reduced by the amount of the income which would otherwise
have been paid with respect to redeemed securities and there will be
distributed to Holders any principal amount and premium received on
such redemption after satisfying any redemption requests for Units
received by the Fund. The estimated current return may be affected by
redemptions.
(4) All securities are insured, either on an individual basis or by
portfolio insurance, by a municipal bond insurance company which has
been assigned "AAA" claims paying ability by Standard & Poor's.
Accordingly, Standard & Poor's has assigned a "AAA" rating to the
securities. Securities covered by portfolio insurance are rated "AAA"
only as long as they remain in the Trust.
(5) Bonds with an aggregate face amount of $ 65,000 of the Florida Trust
have been pre-refunded and are expected to be called for redemption on
the optional redemption provision date shown.
D - 17.
<PAGE>
DEFINED ASSET FUNDS--REGISTERED TRADEMARK--
<TABLE>
<S> <C>
HAVE QUESTIONS ? MUNICIPAL INVESTMENT TRUST FUND
Request the most MULTISTATE SERIES--98
recent free Information (A Unit Investment Trust)
Supplement that gives more ---------------------------------------
details about the Fund, This Prospectus does not contain
by calling: complete information about the
The Chase Manhattan Bank investment company filed with the
1-800-323-1508 Securities and Exchange Commission in
Washington, D.C. under the:
- Securities Act of 1933 (file no.
333-62373) and
- Investment Company Act of 1940 (file
no. 811-1777).
TO OBTAIN COPIES AT PRESCRIBED RATES--
WRITE: Public Reference Section of the
Commission
450 Fifth Street, N.W., Washington,
D.C. 20549-6009
CALL: 1-800-SEC-0330.
VISIT: http://www.sec.gov.
---------------------------------------
No person is authorized to give any
information or representations about
this Fund not contained in this
Prospectus or the Information
Supplement, and you should not rely on
any other information.
---------------------------------------
When units of this Fund are no longer
available, this Prospectus may be used
as a preliminary prospectus for a
future series, but some of the
information in this Prospectus will be
changed for that series.
UNITS OF ANY FUTURE SERIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED
UNTIL THAT SERIES HAS BECOME EFFECTIVE
WITH THE SECURITIES AND EXCHANGE
COMMISSION. NO UNITS CAN BE SOLD IN ANY
STATE WHERE A SALE WOULD BE ILLEGAL.
15160--2/00
</TABLE>
